Leano vs. Domingo

An accountable public officer is liable under Section 105(2) of P.D. 1445 for losses attributable to negligence in keeping government funds; relief from accountability may be denied where the officer fails to exercise the diligence of a prudent person, and the COA’s factual findings, if supported by substantial evidence, will not be overturned absent grave abuse of discretion.

Petitioner Nenita L. Leano served as Acting Cashier I of the Bureau of Quarantine and was thus an accountable officer for government funds. Respondent Commission on Audit, through its Chairman and Commissioners, is the agency vested with authority to audit government funds and acted on petitioner’s request for relief from accountability. Section 105(2) of P.D. 1445 provides that every person accountable for government funds shall be liable for all losses resulting from the unlawful or improper deposit, use, or application thereof and for all loss attributable to negligence in keeping the same.

By Special Order No. 12 dated December 23, 1983, Nenita L. Leano was designated Acting Cashier I of the Bureau of Quarantine, effective January 1, 1984, for the duration of the absence of regular cashier Mrs. Adelaida Sanchez, who was then accused of Malversation of Public Funds before the Tanodbayan and remained at large. Leano assumed and performed the duties of the position.

Between 7:00 P.M. of December 17, 1984 and 8:45 A.M. of December 18, 1984, the Cashier’s Office was allegedly robbed of P12,500.00 in cash, representing the year-end bonus of several employees who had failed to collect it during office hours on December 17, 1984. Luisito Diaz, Payroll Clerk, reported the incident to the Western Police District at 10:00 A.M. on December 18, 1984. The ocular investigation found that the unknown suspects entered the Cashier’s Office through the teller’s window and opened the steel cabinet, possibly with the original key left inside a small wooden box near the cabinet or with a false key or similar instrument, since no sign of force on the cabinet was traced. The P12,500.00 was taken in pay envelopes, leaving several envelopes with cash.

Upon receipt of the report and petitioner’s request, a cash count was conducted by the resident auditor on December 18, 1984. It found that Leano incurred a shortage of P12,500.00 for account 8-70-500 and an overage of P16,910.00 for account 8-70400 (connection from Cagayan de Oro). The auditor recommended that she be immediately relieved from her duties as accountable officer due to negligence; that she use the safe instead of the steel cabinet and that a new safe combination be installed, limited to the cashier; and that erroneous subsidiary ledger entries be adjusted and kept up to date.

On December 26, 1984, Leano filed with the COA a request for relief from accountability for the P12,500.00 lost in the robbery. The COA denied the request in a 6th Indorsement dated September 7, 1987, finding that she was negligent in handling her cash accountability: she failed to use the safe as recommended by the auditor, used the steel cabinet and left its key inside a small box near it, and allowed other persons to have access to the cash box containing pay envelopes and to release the same. The COA cited Section 105(2) of P.D. 1445, which makes every person accountable for government funds liable for all losses attributable to negligence in keeping the same. Leano sought reconsideration, but the COA denied it in a letter-reply dated May 11, 1988. She then filed the present petition for review on certiorari seeking annulment of the COA decision and the letter-reply.

• Use of Steel Cabinet: Petitioner argued that the COA decision had no basis in fact because the combination of the one and only safe previously used by the former cashier was not entrusted to her; she therefore had no other recourse but to use the official steel cabinet, which she considered the safest repository of her cash accounts under the circumstances.
• Practice During Former Cashier’s Incumbency: Petitioner maintained that the use of the steel cabinet by other cashiering personnel with accountabilities was a practice during the incumbency of the former cashier, Mrs. Sanchez.
• No Prior Auditor Recommendation: Petitioner denied that the Auditor made any recommendation or suggested the use of the safe before the robbery incident.
• Access to Pay Envelopes: Petitioner argued that allowing one or two employees of the Cashier’s Office to give out pay envelopes and handle minor cash disbursements was a general practice in all government cashiering offices, anchored on eventualities such as when the Cashier is indisposed or unavailable and there is immediate or emergency need to release pay envelopes or disburse funds; it was a safety measure tolerated due to emergent necessities.
• Scope of Cashier’s Duties: Petitioner added that, with the multi-faceted official activities of a Cashier, she was not expected to alone and exclusively handle payments and releases of personnel salaries and bonuses.

• Proper Diligence and Safe Combination: Respondent, through the Solicitor General, argued that the exercise of proper diligence expected of petitioner’s position would have compelled her to request an immediate change of the combination of the safe.
• Negligence and Section 105(2): Respondent COA denied the request on the finding that petitioner was negligent in handling her cash accountability, having failed to use the safe, left the key accessible, and allowed other persons access to the cash box with pay envelopes.

• Grave Abuse of Discretion: Whether the COA acted with grave abuse of discretion in denying petitioner’s request for relief from accountability for the P12,500.00 lost in the robbery.

• Grave Abuse of Discretion: No. The COA did not act with grave abuse of discretion; its denial was supported by substantial evidence showing petitioner was negligent in handling her cash accountability under Section 105(2) of P.D. 1445.

• Grave Abuse of Discretion: The Court applied the negligence standard: negligence is the omission to do something which a reasonable man, guided by considerations that ordinarily regulate human affairs, would do, or the doing of something which a prudent and reasonable man would not do. The test is whether the defendant used the reasonable care and caution an ordinary prudent person would have used in the same situation; if not, he is guilty of negligence. Petitioner fell short of the demands of her position. Proper diligence would have compelled her to request an immediate change of the safe’s combination, but the record showed no effort to do so; she was content with the former cashier’s use of the steel cabinet. The steel cabinet was not a wise and prudent repository because it could be pulled open even when locked, and its original key was left inside a small wooden box near it, making it highly possible that it was opened with the original key. She also allowed other persons access to the cash box with pay envelopes and to release the same. The COA’s decision was amply supported by its internal records and findings and by the Police Report. Factual findings of administrative tribunals must be respected as long as supported by substantial evidence, even if not overwhelming or preponderant. Thus, no grave abuse of discretion attended the denial.

• Negligence and the prudent-person standard — Negligence is the omission to do something which a reasonable man, guided by considerations that ordinarily regulate human affairs, would do, or the doing of something which a prudent and reasonable man would not do. The test is whether the actor used the reasonable care and caution an ordinary prudent person would have used in the same situation; if not, he is guilty of negligence. The law adopts the standard of the discreet paterfamilias of Roman law. In this case, petitioner failed to meet that standard by not requesting a change in the safe combination, using a steel cabinet that could be pulled open, leaving the key nearby, and allowing others access to the cash box.
• Liability of accountable public officers under Section 105(2), P.D. 1445 — Every person accountable for government funds is liable for all losses resulting from the unlawful or improper deposit, use, or application thereof and for all loss attributable to negligence in keeping the same. The Court upheld the COA’s denial of relief because the loss was attributable to petitioner’s negligence in keeping the funds.
• Substantial evidence in administrative findings — Factual findings of administrative tribunals must be respected as long as they are supported by substantial evidence, even if not overwhelming or preponderant. The COA’s findings were supported by its internal records and the Police Report, so they were binding on the Court.
• Grave abuse of discretion in COA denials — Where the COA denies relief from accountability based on factual findings supported by substantial evidence, the denial will not be overturned for grave abuse of discretion. The Court found no grave abuse because the COA’s negligence findings were supported by its records and the Police Report.

• "Negligence is the omission to do something which a reasonable man, guided by those considerations which ordinarily regulate the conduct of human affairs, would do, or the doing of something which a prudent and reasonable man would do." — This passage states the definition of negligence applied by the Court to petitioner’s conduct as an accountable officer.
• "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 ordinary prudent person would have used in the same situation? If not, he is guilty of negligence." — This passage supplies the controlling test for negligence that the Court used to assess petitioner’s failure to secure the funds.
• "Finally, it should be stated that the factual findings of administrative tribunal must be respected as long as they are supported by substantial evidence, even if not overwhelming or preponderant" — This passage states the standard of review that led the Court to defer to the COA’s factual findings.
• "Every person accountable for government funds shall be liable for all losses resulting from the unlawful or improper deposit, use or application thereof and for all loss attributable to negligence in keeping of the same." — This passage is the statutory basis under Section 105(2) of P.D. 1445 for denying relief from accountability.

• Layugan vs. Intermediate Appellate Court, 167 SCRA 363, 372-373 [1988] — Cited for the definition and test of negligence, including the prudent-person and paterfamilias standard applied to petitioner.
• Assistant Executive Secretary for Legal Affairs of the Office of the President vs. Court of Appeals, 169 SCRA 27 [1989] — Cited for the rule that factual findings of administrative tribunals must be respected if supported by substantial evidence.
• Relucio III vs. Macaraig, Jr., 173 SCRA 635 [1989] — Cited for the same substantial-evidence standard governing administrative factual findings.

• Section 105(2), Presidential Decree No. 1445 — Provides that every person accountable for government funds shall be liable for all losses resulting from the unlawful or improper deposit, use, or application thereof and for all loss attributable to negligence in keeping the same. The Court applied it to uphold the COA’s denial of relief from accountability because petitioner was negligent in keeping the P12,500.00.

Justices Fernan (C.J.), Narvasa, Melencio-Herrera, Cruz, Feliciano, Padilla, Bidin, Sarmiento, Griño-Aquino, Medialdea, Regalado, and Davide, Jr. concurred. Justice Gutierrez, Jr. concurred in the result. Justice Gancayco was on leave.