RE: REPORT ON THE FINANCIAL AUDIT CONDUCTED AT THE MUNICIPAL TRIAL COURT IN CITIES, CEBU CITY.

Re: Report on the Financial Audit Conducted at the Municipal Trial Court in Cities, Cebu City

The Case

This is an administrative case that began as a financial audit of the Municipal Trial Court in Cities of Cebu City, and it reached the Supreme Court as a disciplinary proceeding against three court employees: the Clerk of Court, Josephine Teves, and two subordinates, Alma Bella Macaldo, a Records Officer, and Josefina Veraque, a Cashier. The Court sat en banc and decided the case in August 2019. It matters for two reasons. First, it fixes the standard of accountability of clerks of court over judiciary funds, whether they receive the money personally or through a cashier under their supervision. Second, it draws the line between grave misconduct and dishonesty on one hand, and simple neglect of duty on the other, and shows how the penalty is calibrated to the offense and to mitigating circumstances such as length of service.

Procedural History

The case did not travel through the trial courts or the Court of Appeals. It is an original administrative matter before the Supreme Court, arising from an audit conducted by a team drawn from the Fiscal Monitoring Division and the Court Management Office of the Office of the Court Administrator. The team audited the Office of the Clerk of Court of the Municipal Trial Court in Cities of Cebu City from November 2015 to October 2016, covering the accountability periods of three clerks of court. In its report dated May 2017, the team recommended that Macaldo and Veraque be dismissed for dishonesty and grave misconduct, that Teves be suspended and directed to explain, and that various ancillary reliefs be issued. The Court Administrator adopted the recommendations in a memorandum dated May 2017 and submitted them to the Court for approval. The employees filed their comments, and the Supreme Court resolved the matter directly, modifying the findings of the Office of the Court Administrator as to Teves.

Facts

An audit observation memorandum of the Commission on Audit reported that not all collections of the Municipal Trial Court in Cities of Cebu City were deposited on time. A team from the Office of the Court Administrator then conducted a financial audit of the Office of the Clerk of Court. Comparing the official receipts on file with the Office of the Administrative Services and the Office of the Court Administrator against the copies dispatched by the court, the team found alterations and erasures on the official receipts for the Judiciary Development Fund and the Special Allowance for the Judiciary Fund. Confronted, Macaldo and Veraque admitted that they had altered the duplicate and triplicate copies by understating the amount collected and changing the date of the transaction. Macaldo surrendered photocopies of some of the tampered receipts. The investigation showed that the two handled the court's financial transactions, and that Teves, in full trust and confidence, would simply sign the monthly reports.

For cases filed from January 2013 to December 2015, the team found a total variance of more than five million pesos between the amounts actually collected and the amounts reported. It also noted a shortage of twenty eight thousand seven hundred nine pesos and six centavos in the Fiduciary Fund. Macaldo executed an affidavit admitting that she received funds from Veraque and used them for personal matters. From December 2015 to May 2017, Veraque and Macaldo made partial restitutions, and they asked for time to pay the balance. They also executed an affidavit stating that Teves had no knowledge of the tampering.

In her comment, Veraque denied participation and claimed that no turn over or inventory had been conducted when she assumed her position. Macaldo admitted receiving the money and pleaded for leniency, saying she used it for her father's medication and for her children. Teves claimed she had taken measures to safeguard the funds, personally deposited collections, and that the scheme could only have been discovered by professional auditors, invoking the rule that a head of office is not required to examine every single detail of a transaction.

Issues

• Whether or not Macaldo and Veraque are guilty of dishonesty and grave misconduct for tampering with official receipts and misappropriating judiciary collections.
• Whether or not Teves is administratively liable, and if so, whether for grave neglect or only for simple neglect of duty, for failing to supervise her subordinates.
• Whether or not the penalties and the restitution ordered against each respondent are proper.

Applicable Provisions

The decision applies the Revised Rules on Administrative Cases in the Civil Service on the penalty for grave offenses. Section 46, paragraph A, of Rule 10 provides:

Section 46. Classification of Offenses. A. Administrative offenses with its corresponding penalties are classified into grave, less grave, and light, based on the gravity of its commission and as defined herein below.

This is the provision under which dismissal was imposed on Macaldo and Veraque for grave misconduct and dishonesty.

On the penalty for less grave offenses, Section 46, paragraph D, of the same Rule provides:

Section 46. Classification of Offenses. D. The penalties for less grave offenses are: 1. Dismissal; or 2. Suspension for six months and one day to one year, for the first offense; and 3. Demotion, for the second offense.

The Court used this scale, together with the range for simple neglect of duty, to fix the penalty on Teves.

On mitigating circumstances, Section 48, paragraph n, of Rule 10 provides:

Section 48. Mitigating and Aggravating Circumstances. n. Length of service.

The Court treated Teves's thirty two years of service as a mitigating circumstance in her favor.

Ruling

On the first issue, the Court found Macaldo and Veraque guilty of dishonesty and grave misconduct. It defined dishonesty as the disposition to lie, cheat, deceive, or defraud, and misconduct as a transgression of some established and definite rule of action, willful in character, and grave when it involves corruption, willful intent to violate the law, or disregard of established rules. Tampering with official receipts and over withdrawals from court funds are grave misconduct and serious dishonesty. Macaldo had consistently admitted the charges. Veraque's belated denial was unconvincing: she had partially restituted the amount lost, she had signed a joint affidavit with Macaldo admitting that they altered official receipts to gain access to the collection, and she had admitted the taking in a meeting with the Executive Judge. The Court held that financial difficulty is of no moment, because no personal problem can justify the misuse of public funds, and that nothing less than dismissal befits the offense.

On the second issue, the Court modified the findings of the Office of the Court Administrator and held Teves liable only for simple neglect of duty. Clerks of court are primarily accountable for all funds collected for the Court, whether personally received by them or by a duly appointed cashier under their supervision and control, and they are liable for any loss, shortage, destruction, or impairment of those funds. Simple neglect of duty is the failure to give attention to a task, or the disregard of a duty due to carelessness or indifference. Although Macaldo and Veraque absolved Teves of participation, she failed to exercise the diligence expected of her in supervising them; had she been more vigilant, the transgression might have been discovered sooner or prevented altogether. The Court found that the requirement of substantial evidence in administrative cases was satisfied.

On the third issue, the Court imposed dismissal on Macaldo and Veraque, with forfeiture of withheld salaries, allowances, and benefits in favor of the two judiciary funds, and directed them to restitute the remaining balance. As for Teves, the penalty for simple neglect of duty ranges from one month and one day to six months, and crediting her length of service, the Court imposed the minimum of one month and one day, plus restitution of the Fiduciary Fund shortage.

Doctrine

A clerk of court is the primary accountable officer for all funds collected for the Court, whether received personally or through a cashier under the clerk's supervision and control, and is liable for any loss, shortage, destruction, or impairment of those funds. Failure to properly supervise and manage the financial transactions of the court makes the clerk liable for simple neglect of duty, which is the failure to give attention to a task or the disregard of a duty due to carelessness or indifference. Tampering with official receipts and over withdrawals from court funds constitute grave misconduct and serious dishonesty, punishable by dismissal under Section 46, paragraph A, of Rule 10 of the Revised Rules on Administrative Cases in the Civil Service. Financial difficulty never justifies the misuse of public funds. Length of service, under Section 48, paragraph n, of the same Rule, may be credited as a mitigating circumstance to impose the minimum penalty.

Disposition

Macaldo and Veraque were dismissed from the service with prejudice to re-employment in any branch of the government, their withheld benefits were forfeited in favor of the Judiciary Development Fund and the Special Allowance for the Judiciary Fund, they were ordered to restitute the remaining balance, and the Office of the Court Administrator was ordered to file the appropriate criminal charges against them; Teves was found guilty of simple neglect of duty, suspended for one month and one day, ordered to immediately restitute the Fiduciary Fund shortage of twenty eight thousand seven hundred nine pesos and six centavos, and sternly warned.

Remember This

The line worth memorizing is that the clerk of court is primarily accountable for all judiciary funds, whether received personally or through a cashier under the clerk's supervision, and failure to supervise makes the clerk liable for simple neglect of duty. Examiners use this case to test the distinction between grave misconduct and dishonesty, which carry dismissal, and simple neglect of duty, which carries the lighter range of suspension, and to test whether a candidate knows that length of service may mitigate the penalty.