Gutierrez vs. Commission on Audit

A cashier who is negligent in keeping government funds under her custody — by storing them in enclosures other than the safety vault — cannot be relieved from accountability for amounts lost through robbery. Administrative due process does not require a trial-type hearing or the filing of an appeal memorandum; it is satisfied when the party is notified of the charges and given a reasonable opportunity to explain or defend, and such defense is considered by the deciding tribunal.

Maria Theresa G. Gutierrez served as Cash Collecting Officer, designated Cashier III, at the National Food Authority-National Capital Region, National District Office (NFA-NCR, NDO) since 1985. As an accountable officer under Presidential Decree No. 1445, she was responsible for the safekeeping of government funds collected from remittances and payments. The NFA-NCR, NDO premises were secured by guards from Lockheed Detective and Watchman Agency, Inc. The dispute arose against a backdrop of significantly increased collection volumes during a rice crisis beginning April 2008, when daily collections nearly doubled to an average of 6 to 9 million pesos in mixed denominations.

Maria Theresa G. Gutierrez had served as Cash Collecting Officer at the NFA-NCR, NDO since 1985, a position requiring her to receive, count, bundle, receipt, and safeguard government collections in various denominations ranging from twenty-five centavo coins to one-thousand-peso bills. Her office was located at the far end of the NFA building, where the "pearless" boxes and the wooden cabinet she used to keep her collections were situated. Starting April 2008, during a rice crisis, the volume of her daily collections nearly doubled, averaging 6 to 9 million pesos per day. She described her workday as running from approximately 6:30 a.m. to 6:30 p.m., with virtually no rest beyond brief trips to the restroom and lunch, as the sheer volume of mixed-denomination cash required continuous counting, bundling, and receipting.

On May 30, 2008, a Friday, Gutierrez had collections amounting to P9,390,834.00, which she placed in a wooden cabinet. The following day, her collections totaled P1,505,625.00, of which P714,852.75 plus an undeposited P0.50 from March 2008 were placed in the wooden cabinet while the remainder went into the safety vault. The total undeposited collection as of that date was P10,896,459.50, of which P10,105,687.25 was stored in "pearless" boxes inside the wooden cabinet and P790,772.25 in the safety vault. Gutierrez explained that the vault lacked sufficient space for all her collections and that since May 30 was a Friday, the money would have remained in her office until the next banking day regardless.

On June 1, 2008, at approximately 1:35 a.m., armed men in military uniforms bearing PNP-SAGSD identifications entered the NFA-NCR, NDO compound. They disarmed, threatened, and tied up the security guards on duty, then took Gutierrez's undeposited collections from the "pearless" boxes in the wooden cabinet. The security guards immediately reported the incident to the Valenzuela Police Station, which issued an investigation report consistent with the guards' sworn statements. Notably, the collections kept in the safety vault were not taken by the robbers.

On June 3, 2008, State Auditor Narcisa DJ Joaquin issued a demand letter requiring Gutierrez to produce the missing P10,105,686.75 and to submit a written explanation within 72 hours. Two days later, the COA issued a withholding order directing NFA Manager Roberto S. Musngi to withhold Gutierrez's salaries and emoluments pursuant to Section 37 of PD 1445. Gutierrez submitted an affidavit on June 6, 2008, explaining that she used "pearless" boxes for practical reasons due to the volume of collections and the insufficient vault space, and denying any involvement in the robbery. She requested relief from money accountability on June 10, 2008, and appealed the withholding order on June 26, 2008, which State Auditor Joaquin denied the same day, citing a prima facie case for malversation under Article 217 of the Revised Penal Code.

Gutierrez filed a notice of appeal on July 11, 2008. An internal NFA investigation found the security agency solidarity liable and Gutierrez grossly negligent for keeping collections in unsecured boxes, recommending administrative charges and restitution from the security agency. On September 11, 2008, COA Director IV Tito S. Nabua denied Gutierrez's appeal, acknowledging the robbery but holding that her failure to follow safekeeping procedures demonstrated lack of due care. Gutierrez moved for reconsideration, arguing she was denied the opportunity to file an appeal memorandum. On January 31, 2012, the Commission on Audit denied her request for relief from money accountability, finding positive fault or negligence in her safekeeping of government funds and holding her liable for P10,105,687.25, without prejudice to the NFA's right to proceed against the security agency for indemnification.

• Right to Counsel: Petitioner argued that her right to due process was violated because she was assisted by counsel only after the withholding order and the June 26, 2008 letter had already been issued by respondent auditor.
• Right to File Appeal Memorandum: Petitioner contended that her due process rights were violated when the COA Director rendered a decision without requiring her to file an appeal memorandum pursuant to Section 5 of Rule V of the Revised Rules of Procedure of the COA, which she characterized as her chance to raise issues, prove her case, and submit supporting evidence.
• Improper Resolution of Motion for Reconsideration: Petitioner argued that her motion for reconsideration was resolved by the Commission on Audit instead of by Director Nabua, thereby preventing her from filing a petition for review of Director Nabua's decision before the COA.
• Constitutional Basis for Due Process: Petitioner cited Article IX(A), Section 7 of the Constitution to support her right to present her side in a memorandum, maintaining that administrative due process requires not only the right to be heard but also the right to present evidence and for such evidence to be considered by the deciding tribunal.
• Cause of Loss: Petitioner maintained that the shortage was caused by the robbery, which was a result of the negligence of the security guards and not her own negligence, and that the vault assigned to her did not have enough space to accommodate her collections.

• Adequacy of Due Process: Respondents argued that petitioner was not deprived of due process when she was not given the opportunity to file an appeal memorandum, as her affidavit was a sufficient platform to raise her defenses.
• Counsel Not Required in Administrative Proceedings: Respondents contended that the presence of counsel is not required in administrative proceedings.
• Jurisdiction Over Relief from Accountability: Respondents argued that petitioner could not ask the Director or the Auditor to allow her to file an appeal memorandum because the COA has exclusive jurisdiction over requests for relief from accountability in excess of P500,000.00, pursuant to COA Resolution No. 93-605.
• Negligence of Petitioner: Respondents argued that the circumstances showed petitioner fell short of the demands of her position as cashier, and that she should have requested additional vaults if the vaults in her possession were insufficient to accommodate all her collections.

• Due Process — Right to Appeal Memorandum: Whether petitioner's due process rights were violated when the COA Director decided her appeal without requiring her to file an appeal memorandum under Section 5 of Rule V of the Revised Rules of Procedure of the COA.
• Due Process — Right to Counsel: Whether petitioner's right to counsel was violated in the administrative proceedings before the COA.
• Due Process — Resolution of Motion for Reconsideration: Whether petitioner's due process rights were violated when the COA, rather than Director Nabua, resolved her motion for reconsideration, thereby preventing her from filing a petition for review before the COA.
• Accountability — Negligence: Whether petitioner can be relieved from money accountability for government funds lost through robbery, given her act of keeping collections in "pearless" boxes instead of the safety vault.

• Due Process — Right to Appeal Memorandum: No. Administrative due process does not require an exchange of pleadings or a trial-type hearing; it is satisfied when the party is notified of the charges and given an opportunity to explain or defend, which petitioner had through her affidavit, motion for reconsideration, and petition before the Court.
• Due Process — Right to Counsel: No. The right to counsel under Section 12(1) of Article III of the Constitution applies to criminal proceedings, not administrative proceedings; a party in an administrative inquiry has the option of engaging counsel or not.
• Due Process — Resolution of Motion for Reconsideration: No. The right to appeal is not part of due process and is not a natural right; moreover, under COA Resolution No. 93-605, only the Commission Proper has jurisdiction over requests for relief from accountability exceeding P500,000.00.
• Accountability — Negligence: No. Petitioner was negligent in keeping funds outside the safety vault and cannot be relieved from liability under Section 105 of PD 1445, having failed to exercise the reasonable care and caution an ordinarily prudent person would have used in the same situation.

• Due Process — Right to Appeal Memorandum: Administrative due process, as articulated in Ang Tibay vs. Court of Industrial Relations, requires only that the party be allowed to present her case and submit evidence, that the tribunal consider such evidence, that the decision be supported by substantial evidence, and that the issues and reasons for the decision be made known to the parties. Due process in administrative proceedings does not necessarily require a trial-type hearing or an exchange of pleadings. Petitioner's substantive defenses — that the loss was caused by robbery and not her negligence, and that she used "pearless" boxes for practical reasons — were sufficiently expressed in her affidavit submitted to the COA, her motion for reconsideration of the COA Director's decision, and her petition and memorandum before the Supreme Court. The decisions of the State Auditor, the COA Director, and the COA Proper all considered these facts and defenses before rendering their conclusions. The right to appeal is not part of due process and is not a natural right; it is a statutory privilege that may be exercised only in accordance with law.
• Due Process — Right to Counsel: The right to counsel under Section 12(1) of Article III of the Constitution is a right given to persons accused of an offense during criminal investigation. Any proceeding conducted by an administrative body is not part of a criminal investigation or prosecution. The purpose of criminal proceedings is to determine whether a person has committed an offense, while the purpose of administrative proceedings is to determine whether a public officer has violated the trust reposed by the public. A party in an administrative inquiry may or may not be assisted by counsel, and no duty rests on the administrative body to furnish counsel. Petitioner was not being accused of or investigated for a crime; the COA's issuances were made after it found that money entrusted to petitioner was lost, and the COA has no jurisdiction to investigate a crime or make a finding of criminal liability.
• Due Process — Resolution of Motion for Reconsideration: Under COA Resolution No. 93-605, only the Commission Proper may approve requests for relief from accountabilities above P500,000.00. The lost accountability in this case amounted to P10,105,687.75, far exceeding that threshold. Thus, the COA could decide petitioner's request for relief from accountability at the first instance, and the failure to require a petition for review of the Director's decision did not violate due process. The right to appeal is not part of due process.
• Accountability — Negligence: As a cashier for the NFA, petitioner qualified as an accountable officer under Section 101 of PD 1445, charged with the safekeeping of government funds under her custody. Section 105 of PD 1445 makes every officer accountable for government funds liable for all losses resulting from unlawful deposit, use, or application, and for all losses attributable to negligence in the keeping of the funds. Petitioner did not deny that the money was lost through robbery, nor that she kept the greater portion outside the vault in "pearless" boxes. Her act of keeping money in boxes instead of the vault can be subsumed under "unlawful deposit" that may cause a cashier to incur liability. Applying the test of negligence from Picart vs. Smith — whether the defendant used that reasonable care and caution which an ordinarily prudent person would have used in the same situation — petitioner was negligent because a cashier in her position would have used the vault. Her negligence was aggravated by her 20 years of service, which should have made her more security-conscious. The fact that collections kept in the vault were not taken by the robbers further demonstrated that proper safekeeping would have prevented the loss. Petitioner admitted receiving large collections for three months prior to the robbery but failed to request additional vaults or set aside time to deposit collections to prevent accumulation. Following Leano vs. Domingo, where a cashier who kept money in a steel cabinet instead of a vault was denied relief from accountability, the safety of money cannot be ensured when deposited in enclosures other than the safety vault. A person who is negligent in keeping funds cannot be relieved from liability.

• Administrative Due Process (Ang Tibay Doctrine) — Administrative due process requires: (a) the party be allowed to present his or her own case and submit supporting evidence; (b) the deciding tribunal must consider the party's evidence; (c) there is evidence to support the decision; (d) the evidence must be substantial, i.e., "relevant evidence as a reasonable mind might accept as adequate to support a conclusion"; (e) the decision must be based on the evidence presented or the records disclosed to the parties; (f) the decision must be based on the tribunal's independent consideration of the facts and law; and (g) the decision must render the issues and reasons known to the parties. Due process in administrative proceedings does not necessarily require a trial-type hearing or an exchange of pleadings; it is satisfied if the party properly notified of the allegations is given an opportunity to defend herself, and such defense is considered by the tribunal. Applied to hold that petitioner's due process rights were not violated despite the absence of an appeal memorandum, as her affidavit and other pleadings sufficiently expressed her defenses and were considered by the COA.

• Right to Counsel in Administrative Proceedings — The right to counsel under Section 12(1) of Article III of the Constitution applies to criminal proceedings, not administrative proceedings. A party in an administrative inquiry has the option of engaging the services of counsel or not, and no duty rests on the administrative body to furnish the person being investigated with counsel. Applied to reject petitioner's claim that her right to counsel was violated when she was not assisted by counsel during the early stages of the COA proceedings.

• Test of Negligence (Picart vs. Smith) — Negligence is determined by whether the defendant used that reasonable care and caution which an ordinarily prudent person would have used in the same situation. The existence of negligence is not determined by reference to the personal judgment of the actor but by what would be reckless, blameworthy, or negligent in a person of ordinary intelligence and prudence. Applied to find petitioner negligent for keeping collections in "pearless" boxes instead of the safety vault, as a cashier in her position would have used the vault.

• Liability of Accountable Officers (Section 105, PD 1445) — Every officer accountable for government funds is liable for all losses resulting from unlawful deposit, use, or application thereof, and for all losses attributable to negligence in the keeping of the funds. Imposing liability on cashiers for lost money means the value of the lost money becomes their debt to the government. Applied to hold petitioner liable for P10,105,687.25 lost through robbery, as her keeping of collections outside the vault constituted both negligence and unlawful deposit.

• Right to Appeal — The right to appeal is not part of due process and is not a natural right; it is a statutory privilege that may be exercised only in accordance with law. Applied to reject petitioner's claim that her due process rights were violated when the COA resolved her motion for reconsideration without requiring a petition for review of the Director's decision.

• "A cashier who is found to have been negligent in keeping the funds in his or her custody cannot be relieved from his or her accountability for amounts lost through robbery." — The opening statement of the decision, articulating the core ruling that negligence in safekeeping government funds precludes relief from accountability even when the immediate cause of loss is a third-party robbery.

• "Due process is satisfied when a person is notified of the charge against him and given an opportunity to explain or defend himself. In administrative proceedings, the filing of charges and giving reasonable opportunity for the person so charged to answer the accusations against him constitute the minimum requirements of due process." — This passage, drawn from Ledesma vs. Court of Appeals, defines the minimum requirements of administrative due process and was applied to reject petitioner's claim that the lack of an appeal memorandum violated her right to due process.

• "The test by which to determine the existence of negligence in a particular case may be stated as follows: Did the defendant in doing the alleged negligent act use that reasonable care and caution which an ordinarily prudent person would have used in the same situation? If not, then he is guilty of negligence." — The canonical formulation of the test of negligence from Picart vs. Smith, applied to determine that petitioner was negligent in keeping collections outside the safety vault.

• "A person who is negligent in keeping the funds cannot be relieved from liability." — The concluding statement on the accountability issue, encapsulating the rule that negligence in safekeeping government funds bars relief from money accountability.

• Ang Tibay vs. Court of Industrial Relations, 69 Phil. 635 (1940) — Established the seven-fold requirements of administrative due process. Followed and applied to determine that petitioner's due process rights were not violated despite the absence of an appeal memorandum, as her defenses were adequately raised through her affidavit and other pleadings and were considered by the COA.

• Picart vs. Smith, 37 Phil. 809 (1918) — Established the standard test for negligence based on the conduct of an ordinarily prudent person. Followed and applied to find petitioner negligent for keeping government collections in "pearless" boxes instead of the safety vault.

• Leano vs. Domingo, G.R. No. 84378, July 4, 1991, 198 SCRA 800 — Held a government cashier negligent for keeping money in a steel cabinet instead of a vault and denied relief from accountability. Followed as directly analogous precedent involving a cashier whose money accountability was lost through robbery due to failure to use the safety vault.

• Remolona vs. Civil Service Commission, 414 Phil. 590 (2001) — Held that the right to counsel does not apply in administrative proceedings and that no duty rests on the administrative body to furnish counsel. Followed to reject petitioner's claim that her right to counsel was violated.

• Ledesma vs. Court of Appeals, 565 Phil. 731 (2007) — Defined the minimum requirements of administrative due process as notice of the charge and a reasonable opportunity to explain or defend. Followed to support the conclusion that petitioner's due process rights were satisfied.

• Section 105, Presidential Decree No. 1445 (Government Auditing Code of the Philippines) — Provides that every officer accountable for government funds shall be liable for all losses resulting from unlawful deposit, use, or application thereof, and for all losses attributable to negligence in the keeping of the funds. Applied to hold petitioner liable for the P10,105,687.25 lost through robbery, as her act of keeping collections in "pearless" boxes instead of the vault constituted both negligence and unlawful deposit.

• Section 37, Presidential Decree No. 1445 — Authorizes the COA to direct the proper officer to withhold payment of any money due to a person indebted to any government agency, to be applied in satisfaction of the indebtedness. Applied to uphold the withholding order on petitioner's salaries and emoluments.

• Section 101, Presidential Decree No. 1445 — Defines accountable officers as government officers whose duties require possession or custody of government funds or properties, charged with safekeeping thereof. Applied to classify petitioner as an accountable officer subject to the liabilities imposed by the Government Auditing Code.

• Section 12(1), Article III, 1987 Constitution — Provides the right to counsel for persons under investigation for the commission of an offense. Applied to distinguish criminal from administrative proceedings, holding that the right to counsel does not extend to administrative inquiries.

• Section 7, Article IX(A), 1987 Constitution — Governs the constitutional commissions' decision-making process, providing that a case is deemed submitted for decision upon the filing of the last pleading, brief, or memorandum required by the rules. Cited by petitioner but found not to support her claim, as the right to appeal is not part of due process.

• Section 5, Rule V, Revised Rules of Procedure of the COA — Requires the Director to issue an order requiring the appellant to file an appeal memorandum within 20 days from receipt. Cited by petitioner as the basis for her due process claim, but the Court found no violation because her substantive defenses were adequately raised through other pleadings.

• COA Resolution No. 93-605 — Delegates authority to approve requests for relief from accountability based on amount thresholds, with the Commission Proper having exclusive jurisdiction over amounts above P500,000.00. Applied to uphold the COA's original jurisdiction over petitioner's request, as the lost amount of P10,105,687.75 far exceeded the threshold.

• Article 217, Revised Penal Code — Defines malversation. Cited by State Auditor Joaquin as establishing a prima facie case against petitioner, though the Court did not rule on criminal liability, noting that the COA has no jurisdiction to investigate a crime or make a finding of criminal liability.

Sereno, C. J., Carpio, Velasco, Jr., Leonardo-De Castro, Peralta, Bersamin, Del Castillo, Villarama, Jr., Perez, Mendoza, Reyes, and Perlas-Bernabe, JJ., concur. Brion, J., on leave. Jardeleza, J., no part.