G.R. No. 208321, July 30, 2014
WESLEYAN UNIVERSITY-PHILIPPINES, Petitioner, v. NOWELLA REYES, Respondent.
D E C I S I O N
VELASCO JR., J.:
Treasury Department (Cash Management):
- It was noted that checks consisting of various checks payable to teachers, staffs and other third parties had been the subject of encashment directly with the Treasury Department under the stewardship of Mrs. Nowella A. Reyes, the University Treasurer. This practice is a clear violation of imprest system of cash management, hence, resulting to unsound accounting practice. This laxity in cash management of those checks were paid as intended for them.
For internal control reasons, the treasury should not accept any check encashment from its daily collections. Checks are being issued for encashment with our depository bank for security reasons. The mere acceptance of checks from the collections is tantamount to cash disbursement out of collections.
- It was also noted that various checks payable to the Treasurer of WUP x x x had been negotiated for encashment directly to China Bank – Cabanatuan Branch, while the intention of the management for these checks were merely for fund transfer with the other account maintained at China Bank. This practice is a violation not only in the practice of accounting/cash custodianship but had been mingled with spurious elements. Unfortunately, check vouchers relating to this exception are nowhere to be found or not on file.
- A crossed check payable to the Treasurer – [WUP] x x x had been negotiated for encashment to China Bank – Cabanatuan Branch despite of the restriction indicated in the face of the check. Unfortunately, the used check was no longer found on file.
(a) your encashment of Php300,000.00 of a crossed check you issued payable to yourself (Chinabank Check No. 000873613 dated 26 November 2008) x x x; (b) the encashment of various checks without any supporting vouchers x x x; (c) unliquidated cash advances in the aggregate amount of Php9.7 million x x x.3
WHEREFORE, premises considered, judgment is hereby rendered, DECLARING that complainant Nowella Reyes x x x [was] illegally dismissed by respondent Wesleyan University Philippines.
Accordingly, respondent Wesleyan University Philippines through its President is hereby DIRECTED to:cralawlawlibrary
(1) Reinstate complainant Nowella Reyes to her former or equivalent position without loss of seniority right; (1.1) Since reinstatement is immediately executory, to render a Report of Compliance to this Office within ten (10) days from receipt of this Decision. (2) Pay complainant Reyes her backwages, from the time of her dismissal until reinstatement, the present sum of which is P429,000.00; (3) Pay complainant Reyes, her 13th month pay in the sum of P52,000; her shared (sic) in related learning experience fee, P12,000.00; clothing allowance, P6,000.00; Honorarium as member of standing committees, P4,000.00; and her vacation leave credits in the sum of P17,862.59; (4) Pay complainant Reyes, moral damages in the sum of P150,000.00, exemplary damages in the amount of P100,000.00, and 10% attorney’s fees in the sum of P77,086.25;
x x x x
Anent the alleged finding of the university that there was material alteration on the documents as regards the Check Disbursement Voucher (CDV), for allegedly there was an absence of Board Resolution entry in the CDV filed in the Accounting while the copy submitted by the Treasurer has a Board Resolution entry as well as the word ATM on the payee portion on the photocopy as crossed out while in the original it was not crossed out, respondent cannot summarily state that complainant was at fault. The Human Resource should have conducted an in-depth investigation on this matter. Unfortunately, respondent just followed the twin-notice rule, and did not conduct a thorough administrative investigation in accordance with their own internal rules and policies in the Manual. Consequently, this Office has serious doubt that such matter was the fault of the complainant for the blame may fall on the accounting personnel who is handling the CDV.
With respect to the unliquidated cash advances, it is not likewise the fault of the complainant. She pointed out that follow ups of the liquidation is [sic] being handled by the auditor, while respondent claims that she was previously handling the same before it was transferred to Accounting Office in August 2008. We see no evidence to prove that the liquidation is being handled by the complainant prior to August 2008. Moreover, it is common practice that the Treasurer disburses the funds such as cash advances but the liquidation must be done by the beneficiary of the fund, and the responsible people who should follow up the liquidation is the accounting office.
With respect to the duplicate checks, the same were done by a syndicate or individuals not connected with the University. The bank has already admitted responsibility in the encashment of these checks and had returned the amounts to the respondent University, thus complainant has no fault about this incident.12
In this case, complainant-appellee [herein respondent] may not have been guilty of willful breach of trust. But as Treasurer of [WUP] who handles and supervises all monetary transactions in the University and being a highly confidential employee at that, holding trust and confidence and after considering the series of irregular and anomalous transactions that transpired under complainant-appellee’s command responsibility, respondent has basis or ample reason to distrust complainant-appellee. Thus, we cannot justly deny [WUP] the authority to dismiss complainant-appellee.
The principle of respondent (sic) superior or command responsibility may be cited as basis for the termination of employment of managerial employees based on loss of trust and confidence.
In the Etcuban case (Ibid) the Supreme Court in upholding the validity of petitioner-employee’s dismissal on the ground of loss of trust and confidence, ruled that even if the employee x x x had no actual and direct participation in the alleged anomalies, his failure to detect any anomaly that would normally fall within the scope of his work reflects his ineffectiveness and amounts to gross negligence and incompetence which are likewise justifiable grounds for his irregularity, for what is material is that his actuations were more than sufficient to sow in his employer the seed of mistrust and loss of confidence.
As found by the External Auditor, complainant-appellee should have implemented an imprest system of cash management in order to secure the indicated payees in those checks and they were paid of the checks as intended for them. It appears that checks payable to teachers, staffs and other third parties had been the subject of encashment directly with the Treasury Department x x x and this is an unsound accounting practice.
Moreover, the External Auditors found that various checks payable to the Treasurer of Wesleyan University has been negotiated for encashment directly to China Bank-Cabanatuan Branch while the intention of the management for those checks were merely for fund transfer with the other account maintained at China Bank. That this practice violated accounting or cash custodianship and check vouchers are nowhere to be found.
Further, the crossed check payable to the Treasurer (complainant-appellee) in the amount of P300,000.00 dated 26 November 2008 had been negotiated for encashment to China Bank – Cabanatuan Branch despite of restriction indicated in the face of the check and that the used check was no longer found on file. There is a need for a clear policy when to issue crossed-checks or otherwise and the use of debit/credit memo to transfer one account to another with the same bank. That these acts of violation of cash and check custodianship by complainant-appellee resulted in the loss of respondent-appellant thus affecting the economy of the respondent-appellant institution.
In view of our finding that respondents-appellants (sic) has validly terminated complainant-appellee the latter’s claim for damages and attorney’s fees lacks sufficient factual and legal basis. Accordingly, the Labor Arbiter’s decision directing the reinstatement of complainant-appellee with full backwages is hereby vacated and set aside.15
WHEREFORE, premises considered, the assailed Decision and Resolution of the National Labor Relations Commission dated July 11, 2011 and September 29, 2011 are REVERSED and SET ASIDE. The Decision of the Labor Arbiter dated December 15, 2010 is hereby REINSTATED, subject to the modification that if reinstatement is no longer feasible, petitioner shall be awarded separation pay equivalent to one month salary for every year of service reckoned from the time of employment to the finality of this decision.17chanrobleslaw
- Whether or not the CA over-reached its power of review under Rule 65 of the Rules of Court when it reversed the judgment of the NLRC; andChanRoblesVirtualawlibrary
- Whether or not the CA erred in finding respondent illegally dismissed by petitioner on the ground of loss of trust and confidence.
The Court of Appeals shall have the power to try cases and conduct hearings, receive evidence and perform any and all acts necessary to resolve factual issues raised in cases falling within its original and appellate jurisdiction, including the power to grant and conduct new trials or further proceedings. x x x
Article 282. Termination by employer. An employer may terminate an employment for any of the following causes:cralawlawlibrary
x x x x
c. Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative;chanrobleslaw
Article 282 (c) of the Labor Code allows an employer to terminate the services of an employee for loss of trust and confidence. Certain guidelines must be observed for the employer to terminate an employee for loss of trust and confidence. We held in General Bank and Trust Company v. Court of Appeals, viz.:[L]oss of confidence should not be simulated. It should not be used as a subterfuge for causes which are improper, illegal, or unjustified. Loss of confidence may not be arbitrarily asserted in the face of overwhelming evidence to the contrary. It must be genuine, not a mere afterthought to justify earlier action taken in bad faith.
The first requisite for dismissal on the ground of loss of trust and confidence is that the employee concerned must be one holding a position of trust and confidence.
There are two classes of positions of trust: managerial employees and fiduciary rank-and-file employees.
Managerial employees are defined as those vested with the powers or prerogatives to lay down management policies and to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees or effectively recommend such managerial actions. They refer to those whose primary duty consists of the management of the establishment in which they are employed or of a department or a subdivision thereof, and to other officers or members of the managerial staff. Officers and members of the managerial staff perform work directly related to management policies of their employer and customarily and regularly exercise discretion and independent judgment.
The second class or fiduciary rank-and-file employees consist of cashiers, auditors, property custodians, etc., or those who, in the normal exercise of their functions, regularly handle significant amounts of money or property. These employees, though rank-and-file, are routinely charged with the care and custody of the employer’s money or property, and are thus classified as occupying positions of trust and confidence.22cralawred
x x x x
The second requisite of terminating an employee for loss of trust and confidence is that there must be an act that would justify the loss of trust and confidence. To be a valid cause for dismissal, the loss of confidence must be based on a willful breach of trust and founded on clearly established facts.23
As firmly entrenched in our jurisprudence, loss of trust and confidence, as a just cause for termination of employment, is premised on the fact that an employee concerned holds a position where greater trust is placed by management and from whom greater fidelity to duty is correspondingly expected. This includes managerial personnel entrusted with confidence on delicate matters, such as the custody, handling, or care and protection of the employer’s property. The betrayal of this trust is the essence of the offense for which an employee is penalized.
It must be noted, however, that in a plethora of cases, this Court has distinguished the treatment of managerial employees from that of rank-and-file personnel, insofar as the application of the doctrine of loss of trust and confidence is concerned. Thus, with respect to rank-and-file personnel, loss of trust and confidence, as ground for valid dismissal, requires proof of involvement in the alleged events in question, and that mere uncorroborated assertions and accusations by the employer will not be sufficient. But as regards a managerial employee, the mere existence of a basis for believing that such employee has breached the trust of his employer would suffice for his dismissal. Hence, in the case of managerial employees, proof beyond reasonable doubt is not required, it being sufficient that there is some basis for such loss of confidence, such as when the employer has reasonable ground to believe that the employee concerned is responsible for the purported misconduct, and the nature of his participation therein renders him unworthy of the trust and confidence demanded of his position.
On the other hand, loss of trust and confidence as a ground of dismissal has never been intended to afford an occasion for abuse because of its subjective nature. It should not be used as a subterfuge for causes which are illegal, improper, and unjustified. It must be genuine, not a mere afterthought intended to justify an earlier action taken in bad faith. Let it not be forgotten that what is at stake is the means of livelihood, the name, and the reputation of the employee. To countenance an arbitrary exercise of that prerogative is to negate the employee’s constitutional right to security of tenure.25
- That the alleged crossed check issued by her payable to THE TREASURER – WUP was done in the exercise of her duty and function as such, and not with her name and not to herself and personal favor, and that said check had been prepared passing through the usual system;
- That the University heads were the beneficiaries of said amount who strongly requested that their love gift be given, hence, the encashment;
- That the amount of the check was properly disposed of as evidenced by the document bearing the signatures of recipients;
- That the Office to point to if vouchers and supporting documents will have to be checked concerning payments made is the Accounting Office;
- That cash advances to various University personnel pass through her office in the exercise of her duties as such but the office who follow up the liquidation of payments received is the Office of the University Auditor;
- That respondent Reyes adopted her reply on the show-cause order in the investigation previously conducted by Dr. Jeremias Garcia about the duplicated checks alleging among others:cralawlawlibrary
a) She and her staff confirmed that only the checks issued to General Capulong and Leodigario David were encashed by the University Teller;
b) The check issued to Norma de Jesus was encashed by the Pick-up Chinabank Teller on December 5, 2008 while collecting deposits from the University with the assistance of the University teller;
c) That the check issued to Mercedes was not encashed with the University teller but with WEMCOOP;
d) As to the encashment and accommodation of checks to personnel, it has been the practice of previous and present administration moreso when employees cannot anymore go to Chinabank to transact business as it is mostly beyond banking hours when checks are ready for disbursement;
e) That Respondent’s department has no control over fraudulent transactions done outside the University, that it is the Bank’s duty to protect its clients as to the proper procedures to secure our account;
f) That the computer system program of the University’s depository bank has very limited capabilities to detect fraudulent entries;
g) That the signature verifier also had been remiss in carefully checking the authenticity of previous signatories.27
In the matter of unliquidated cash advances in the aggregate amount of Php9.7million as found by the External Auditors, respondent’s contention was that cash advances to various University personnel pass through her office in the exercise of her duties as such but the office who follows up the liquidation of payments received is the Office of the University Auditor.
On the inquiry done x x x of the Internal Auditor, Treasury and Accounting officer on July 1, 2009, it was found out that the responsibility of handling cash advances and liquidation report was transferred from Treasury Office to Accounting Office on August 2008, when Ms. Luzviminda Torres, the personnel handling the same detailed at the Treasury Office went on leave. It was transferred to Ms. Julieta Mateo. What was surprising was that as per certification and summary submitted by Ms. Mateo, the amount of unliquidated cash advances previous to August 2008, when the same was under the responsibility of the Treasury Office, was even bigger with the total amount of ELEVEN MILLION FIVE HUNDRED THIRTY THREE THOUSAND, TWO HUNDRED THIRTY PESOS AND THIRTY SEVEN CENTAVOS (Attached as Annex “G”)
Even if there is truth in the contention of herein Respondent that she was no longer the one in charge of the liquidation proceedings, the same would not absolve her from gross negligence of duties. The fact that the said function was with her office until August 2008, with unliquidated cash advances even bigger, still showed that she reneged in her duties which she had overlooked for so long. She now mistakenly points the responsibility to the Office of the University Auditor. These informations are enough to be considered as Respondent’s acts constitutive of breach of trust and confidence.32 x x x
Respondent Nowella C. Reyes has committed
breach of trust and confidence in the conduct
of her office.
In her answer, Respondent admitted the encashment of the crossed check with the defense that the same was done in the performance of her duty, not for her personal use but because of the request of University heads who wanted their love gifts be given. She also admitted habitual encashment of checks issued by the University to its personnel on the basis of practice of previous administration.
The charge against Respondent of the act of improper encashment of a check, which aside from being irregular is clearly violative of imprest system of cash management. Moreover, the same being a crossed check, should not be negotiated for encashment to Chinabank – Cabanatuan Branch because of the restriction indicated on its face, which Mrs. Reyes, by reason of her office knew very well.
During the investigation conducted, it was revealed that the check disbursement voucher attached by Respondent on her answer to justify the regularity of its issuance and eventual encashment was not exactly the same as the one filed at the Accounting Office. It showed that the photocopy of the original CDV which was attached by Respondent (attached as Annex “E”of this report) bear some material alterations, namely:
The absence of entry of the Board Resolution which was reflected as a sort of inquiry by the Internal Auditor, and which at present was left blank on the original, as compared to the photocopy submitted by respondent bearing an entry of the Board Resolution number;chanroblesvirtuallawlibrary
The word ATM on the payee portion of the CDV in the original as compared to the photocopy wherein the entry ATM was crossed out.
During a discussion with the external auditors, it was categorically stated by them that during the course of external audit, said document was inexistent in the records presented by the Accounting and Treasurer’s Offices. The production of the photocopy by Respondent already altered only after the suspension was effected cast doubt on the regularity of its issuance, negating her otherwise claim. Another significant observation was that the original copy of CDV (attached as Annex “F” of this report) and corresponding signatures of administrative heads who received payments showed folded marks halfways, with the fastener holes unmatched, showing that those two documents were not really filed together, as regularly done, and the same were not filed in the regular course and must have been kept previously on a different manner in possession of person other than the office which must file the same.
x x x x
On the last charge in the show cause order specifically the existence of duplicate checks in the account of the University amounting to Php 1.050 Million, included in Respondent’s defenses were that among the checks duplicated, only two of them were encashed with the University Teller, and the check originally named to Norma de Jesus as payee was paid by the pick-up teller only through the assistance of the University teller.
Again, Respondent’s defense were void of truth and merit. The act of encashing checks issued by the Treasury Office, clearly violative of imprest system of cash management which Mrs. Reyes by reason of her office knew very well, showed that Respondent directly reneged in her duty to observe economic security measures.
As found on the documents attached to the Investigation report of Dr. Garcia which had been expressly adopted by herein respondent in her answer is an Affidavit of Norma de Jesus stating that she actually encashed the check with the personnel of the Treasury Office particularly Shirley Punay, who gave her the amount equivalent days after the check was handed to the Treasury office.
However noble the intention of herein Respondent in helping her fellow workers in the University by her acts of accommodation by encashing their checks directly with the Treasury Office when Chinabank was already closed, the same still reneged in her duty to protect the economic security of the University. An act of misconduct which caused [sic]33
* Acting member per Special Order No. 1691 dated May 22, 2014.
1Rollo, p. 36.
2 Id. at 47.
4 Id. at 58-62.
5 Id. at 23.
9 Id. at 24.
10 Id. at 24-25.
11 Id. at 39.
12 Id. at 40.
13 Id. at 62.
14 Id. at 63.
15 Id. at 63-64.
16 Penned by Associate Justice Pricilla J. Baltazar-Padilla and concurred in by Associate Justices Rosalinda Asuncion-Vicente and Agnes Reyes-Carpio.
17Rollo, p. 41.
18 Id. at 37-38.
19 An Act Reorganizing the Judiciary, Appropriating Funds therefor, and for Other Purposes.
20 An Act Expanding the Jurisdiction of the Court of Appeals, Amending for the Purpose Section Nine of Batas Pambansa Blg. 129, as Amended, Known as the Judiciary Reorganization Act of 1980.
21 G.R. No. 169173, June 5, 2009, 588 SCRA 590.
22 Id. at 602-604.
23 Id. at 606.
24 G.R. No. 169523, June 16, 2010, 621 SCRA 36.
25 Id. at 46-47.
26Rollo, p. 52.
27 Id. at 61-62.
28 Id. at 97.
29Bataan Cigar and Cigarette Factory, Inc. v. Court of Appeals, G.R. No. 93048, March 3, 1994, 230 SCRA 643.
30 By definition, a check is a written order addressed to a bank or a person carrying on the business of banking, by a party having money in their hands, requesting them to pay on presentment, to a person named therein or to bearer or order, a named sum of money. See Moran v. Court of Appeals, G.R. No. 105836, March 7, 1994, 230 SCRA 799.
31Rollo, p. 98.
32 Id. at 59-60.
33 Id. at 58-60.
34MGG Marine Services, Inc. v. NLRC, G.R. No. 114313, July 29, 1996, 259 SCRA 664.