G.R. No.: A.M. No. P-06-2179; January 12, 2011 (Formerly A.M. No. 06-5-169-MCTC)
Case Title: OFFICE OF THE COURT ADMINISTRATOR, Complainant, vs. MERLINDA T. CUACHON, Clerk of Court, and FE P. ALEJANO, Court Stenographer, both of the MCTC, Ilog-Candoni, Negros Occidental, Respondents.

FACTS

A financial audit was conducted on the Municipal Circuit Trial Court (MCTC) of Ilog-Candoni, Negros Occidental, prompted by the compulsory retirement of respondent Clerk of Court Merlinda T. Cuachon. The audit covered transactions from September 1, 2000, to September 30, 2005, and included the books of respondent Fe P. Alejano, Court Stenographer and designated Officer-in-Charge (OIC)–Clerk of Court from September 1, 2000, to March 15, 2001.
The audit revealed:
1. Cuachon incurred a shortage of ₱15,065.00 in her Fiduciary Fund collections, consisting of a difference between undeposited collections (₱49,065.00) and withdrawals from cash on hand (₱35,000.00), plus an unauthorized overwithdrawal of ₱1,000.00. She later restituted the full amount.
2. Alejano incurred a shortage of ₱31,800.00 for undeposited collections (₱26,800.00) and an unauthorized withdrawal (₱5,000.00). She also failed to account for 200 pieces of official receipts.
3. General irregularities included: failure to deposit collections with the Land Bank of the Philippines (LBP) within the prescribed period; withdrawals from the Fiduciary Fund without supporting documents; use of undeposited collections to pay for cash bond withdrawals; deposit of funds with the Municipal Treasurer’s Office (MTO) in violation of Supreme Court Circular No. 50-95; failure to record transactions in official cashbooks; and failure to reconcile cash on hand with cashbook entries.
The Office of the Court Administrator (OCA) recommended docketing the audit report as an administrative complaint. Cuachon acknowledged her violations, attributing them to unfamiliarity with accounting principles and court circulars, and requested leniency as she had made restitution. Alejano explained her shortages were due to a lack of proper turnover from the previous clerk and termite infestation that destroyed records. After review, the OCA found both respondents guilty of simple neglect of duty for violating SC Circular No. 50-95 and recommended a fine of ₱5,000.00 each.

ISSUE

Whether respondents Merlinda T. Cuachon and Fe P. Alejano are administratively liable for their handling of court fiduciary funds, and if so, what is the proper classification of their offense and the appropriate penalty.

RULING

The Supreme Court AGREED with the OCA’s recommended penalty but DISAGREED with the classification of the offense. The Court found both respondents liable for GROSS NEGLECT OF DUTY.
1. Liability and Classification of Offense: The Court held that the respondents’ failure to promptly remit fiduciary collections to the LBP within 24 hours as mandated by SC Circular No. 50-95, and the other irregularities uncovered (unauthorized withdrawals, use of undeposited collections, deposit with the MTO, poor record-keeping), constituted gross neglect of duty. The settled rule is that a clerk of court is grossly negligent for failing to promptly remit collections in accordance with court circulars. Protestations of good faith and restitution of shortages do not erase this administrative liability.
2. Violation of Specific Circular: The irregularities were direct violations of SC Circular No. 50-95, which requires immediate deposit of fiduciary funds with the LBP, prohibits withdrawals without a lawful court order, and mandates maintaining only one depository bank. The respondents’ actions circumvented the system of check and balance.
3. Penalty Imposed: For Gross Neglect of Duty, the penalty under the Civil Service Rules is dismissal for the first offense. However, considering that Cuachon had already compulsorily retired and Alejano was a first-time offender who had partially settled her accountability, the Court imposed a FINE of ₱5,000.00 each, payable to the Judiciary Development Fund. This was deemed sufficient to compensate the government for lost interest income and to serve as a corrective measure.