G.R. No. 208321. July 30, 2014.*

WESLEYAN UNIVERSITY­PHILIPPINES, petitioner, vs.NOWELLA REYES, respondent.

Remedial Law; Civil Procedure; Courts; Court of Appeals;Jurisdiction; It is settled that under Section 9 of Batas Pambansa(BP) Blg. 129, as amended by Republic Act (RA) No. 7902, theCourt of Appeals (CA), pursuant to the exercise of its originaljurisdiction over petitions for certiorari, is specifically given thepower to pass upon the evidence, if and when necessary, to resolvefactual issues.—It is settled that under Section 9 of BatasPambansa Blg. 129, as amended by Republic Act No. 7902, theCA, pursuant to the exercise of its original jurisdiction overpetitions for certiorari, is specifically given the power to pass uponthe evidence, if and when necessary, to resolve factual issues. Sec.9 clearly states: The Court of Appeals shall have the power to trycases and conduct hearings, receive evidence and perform any andall acts necessary to resolve factual issues raised in cases fallingwithin its original and appellate jurisdiction, including the powerto grant and conduct new trials or further proceedings. x x xHence, the appellate court acted within its sound discretion whenit reevaluated the NLRC’s factual findings and substituted thelatter’s own judgment.

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* THIRD DIVISION.

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Labor Law; Termination of Employment; Loss of Trust andConfidence; The question of whether she was a managerial orrank­and­file employee does not matter in this case because notonly is there basis for believing that she breached the trust of heremployer, her involvement in the irregularities attending topetitioner’s finances has also been proved.—There is no doubt that

respondent held a position of trust; thus, greater fidelity isexpected of her. She was not an ordinary rank­and­file employeebut an employee occupying a very sensitive position. AsUniversity Treasurer, she handled and supervised all monetarytransactions and was the highest custodian of funds belonging toWUP. To be sure, in the normal exercise of her functions, sheregularly handled significant amounts of money of her employerand managed a critical department. The presence of the firstrequisite is certain. So is as regards the second requisite. Indeed,the Court finds that petitioner adequately proved respondent’sdismissal was for a just cause, based on a willful breach of trustand founded on clearly established facts as required byjurisprudence. At the end of the day, the question of whether shewas a managerial or rank­and­file employee does not matter inthis case because not only is there basis for believing that shebreached the trust of her employer, her involvement in theirregularities attending to petitioner’s finances has also beenproved.

Mercantile Law; Negotiable Instruments Law; Checks;Crossed Checks; Jurisprudence has pronounced that the crossingof a check means that the check may not be encashed but onlydeposited in the bank.—Jurisprudence has pronounced that thecrossing of a check means that the check may not be encashed butonly deposited in the bank. As Treasurer, respondent knew or isat least expected to be aware of and abide by this basic bankingpractice and commercial custom. Clearly, the issuance of a crossedcheck reflects management’s intention to safeguard the fundscovered thereby, its special instruction to have the same depositedto another account and its restriction on its encashment.

Labor Law; Termination of Employment; An employer cannotbe compelled to retain an employee who is guilty of acts inimical tothe interests of the employer.—An employer cannot be compelled toretain an employee who is guilty of acts inimical to the interestsof the employer. A company has the right to dismiss its employeesif only as a measure of self­protection. This is all the more true inthe

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case of supervisors or personnel occupying positions ofresponsibility. In this case, let it be remembered that respondentwas not an ordinary rank­and­file employee as she was no less theTreasurer who was in charge of the coffers of the University. It

would be oppressive to require petitioner to retain in theirmanagement an officer who has admitted to knowingly andintentionally committing acts which jeopardized its finances andwho was untrustworthy in the handling and custody of Universityfunds.

PETITION for review on certiorari of a decision of theCourt of Appeals.The facts are stated in the opinion of the Court.J.V. Bautista Law Offices for petitioner.Romeo V. Viloria for respondent.

VELASCO, JR., J.:Nature of the Case

The issue in this petition boils down to the legality ofrespondent Nowella Reyes’ termination as UniversityTreasurer of petitioner Wesleyan University­Philippines(WUP) on the ground of loss of trust and confidence.Petitioner prays in this recourse that We reverse theFebruary 28, 2013 Decision of the Court of Appeals (CA) inC.A.­G.R. S.P. No. 122536 which declared respondent’stermination illegal.

The FactsOn March 16, 2004, respondent Nowella Reyes was

appointed as WUP’s University Treasurer on probationarybasis. A little over a year after, she was appointed as fulltime University Treasurer.

On April 27, 2009, a new WUP Board of Trustees wasconstituted. Among its first acts was to engage the servicesof Nepomuceno Suner & Associates Accounting Firm(External

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Auditor) to investigate circulating rumors on allegedanomalies in the contracts entered into by petitioner and inits finances.

Discovered following an audit were irregularities in thehandling of petitioner’s finances, mainly, the encashmentby its Treasury Department of checks issued to WUPpersonnel, a practice purportedly in violation of the imprestsystem of cash management, and the encashment ofvarious crossed checks payable to the University Treasurerby Chinabank despite management’s intention to merelyhave the funds covered thereby transferred from one of

petitioner’s bank accounts to another. The ExternalAuditor’s report embodied the following findings andrecommendations:1

Treasury Department (Cash Management):Findings:1. It was noted that checks consisting of various checks payable toteachers, staffs and other third parties had been the subject ofencashment directly with the Treasury Department under thestewardship of Mrs. Nowella A. Reyes, the University Treasurer.This practice is a clear violation of imprest system of cashmanagement, hence, resulting to unsound accounting practice.This laxity in cash management of those checks were paid asintended for them.Recommendations:

For internal control reasons, the treasury should not acceptany check encashment from its daily collections. Checks are beingissued for encashment with our depository bank for securityreasons. The mere acceptance of checks from the collections istantamount to cash disbursement out of collections.

_______________1 Rollo, p. 36.

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Findings:2. It was also noted that various checks payable to the Treasurerof WUP x x x had been negotiated for encashment directly toChina Bank­Cabanatuan Branch, while the intention of themanagement for these checks were merely for fund transfer withthe other account maintained at China Bank. This practice is aviolation not only in the practice ofaccounting/cash custodianship but had been mingled withspurious elements. Unfortunately, check vouchers relating to thisexception are nowhere to be found or not on file.Findings:3. A crossed check payable to the Treasurer­[WUP] x x x had beennegotiated for encashment to China Bank­Cabanatuan Branchdespite of the restriction indicated in the face of the check.Unfortunately, the used check was no longer found on file.

As a result of said audit, petitioner served respondent aShow Cause Order and placed her under preventivesuspension.2 The said Show Cause Order required her toexplain the following matters found by the External

Auditors:

(a) your encashment of Php300,000.00 of a crossed check youissued payable to yourself (Chinabank Check No. 000873613dated 26 November 2008) x x x;(b) the encashment of various checks without any supportingvouchers x x x;(c) unliquidated cash advances in the aggregate amount of Php9.7million x x x.3

On June 18, 2009, respondent submitted herExplanation. Following which, WUP’s Human ResourcesDevelopment

_______________2 Id., at p. 47.3 Id.

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Office (HRDO) conducted an investigation. Findingrespondent’s Explanation unsatisfactory, the HRDO, onJuly 2, 2009, submitted an Investigation Report4 to theUniversity President containing its findings andrecommending respondent’s dismissal as UniversityTreasurer.

Upon receipt of her notice of termination on July 9,2009, respondent post­haste filed a complaint for illegaldismissal with the Arbitration Branch of the NationalLabor Relations Commission. She contended that herdismissal was illegal, void and unjust, for the followingreasons:

First, her 60­day preventive suspension violated theLabor Code provisions prohibiting such suspensions to lastfor more than thirty (30) days. Thus, the fact that she wasnot reinstated to her former position before the lapse ofthirty (30) days, amounted to constructive dismissal;5

Second, there was a violation of her right to substantiveand procedural due process, as evidenced by petitioner’sfailure to apply the pertinent due process provisions underits Administrative and Personnel Policy Manual;6 and

Finally, the charges against her were based on meresuspicion and speculations and unsupported by evidence.7

Petitioner, for its part, predicated its defense on thecontention that respondent was a highly confidential

employee who handled significant amounts of money asUniversity Treasurer and that the irregularities attributedto her in the performance of her duties justify her dismissalon the basis of loss of trust and confidence.8

Petitioner also averred that the 60­day preventivesuspension thus imposed does not necessarily make suchsuspension

_______________4 Id., at pp. 58­62.5 Id., at p. 23.6 Id.7 Id.8 Id.

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void, inasmuch as the law merely requires that after a 30­day preventive suspension, the affected employee shallautomatically be reinstated. But in the case of respondent,there was no need for her automatic reinstatementinasmuch as she was duly terminated within the 30­dayperiod of her preventive suspension.9 Moreover, respondentwas duly afforded her right to due process since WUPsubstantially complied with the twin­notice rule.

Ruling of the Labor ArbiterOn December 15, 2010, Labor Arbiter Reynaldo V.

Abdon rendered a Decision finding for respondent. Thedispositive portion of the Labor Arbiter Decision reads:

WHEREFORE, premises considered, judgment is herebyrendered, DECLARING that complainant Nowella Reyes x x x[was] illegally dismissed by respondent Wesleyan UniversityPhilippines.

Accordingly, respondent Wesleyan University Philippinesthrough its President is hereby DIRECTED to:

(1) Reinstate complainant Nowella Reyes to her former orequivalent position without loss of seniority right;

(1.1) Since reinstatement is immediately executory, to render aReport of Compliance to this Office within ten (10) days fromreceipt of this Decision.

(2) Pay complainant Reyes her backwages, from the time of herdismissal until reinstatement, the present sum of which isP429,000.00;

(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 asmember of standing

_______________9 Id., at p. 24.

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committees, P4,000.00; and her vacation leave credits in the sumof P17,862.59;

(4) Pay complainant Reyes, moral damages in the sum ofP150,000.00, exemplary damages in the amount of P100,000.00,and 10% attorney’s fees in the sum of P77,086.25;

x x x xSO ORDERED.10

The Labor Arbiter noted, as respondent has insisted,that the charges against the latter were based on mererumors and speculations. As observed too by the LaborArbiter, petitioner itself was in the wrong because it had noproper policies on its accounting and financial proceduresand that the encashment and accommodation of checks topersonnel, especially after banking hours, had been thepractice of its previous and present administrations. Thus,it was unfair to put all the blame on respondent withoutany evidence that her actions were highly irregular, unfairor unjustified.11

As regards petitioner’s findings on the alterations in theCheck Disbursement Voucher (CDV), unliquidated cashadvances and duplicate checks, the Labor Arbiter foundand wrote:

Anent the alleged finding of the university that there wasmaterial alteration on the documents as regards the CheckDisbursement Voucher (CDV), for allegedly there was an absenceof Board Resolution entry in the CDV filed in the Accountingwhile the copy submitted by the Treasurer has a Board Resolutionentry as well as the word ATM on the payee portion on thephotocopy as crossed out while in the original it was not crossedout, respondent cannot summarily state that complainant was atfault. The Human Resource should have con­

_______________10 Id., at pp. 24­25.11 Id., at p. 39.

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ducted an in­depth investigation on this matter. Unfortunately,respondent just followed the twin­notice rule, and did not conducta thorough administrative investigation in accordance with theirown internal rules and policies in the Manual. Consequently, thisOffice has serious doubt that such matter was the fault of thecomplainant for the blame may fall on the accounting personnelwho is handling the CDV.

With respect to the unliquidated cash advances, it is notlikewise the fault of the complainant. She pointed out that followups of the liquidation is [sic] being handled by the auditor, whilerespondent claims that she was previously handling the samebefore it was transferred to Accounting Office in August 2008. Wesee no evidence to prove that the liquidation is being handled bythe complainant prior to August 2008. Moreover, it is commonpractice that the Treasurer disburses the funds such as cashadvances but the liquidation must be done by the beneficiary ofthe fund, and the responsible people who should follow up theliquidation is the accounting office.

With respect to the duplicate checks, the same were done by asyndicate or individuals not connected with the University. Thebank has already admitted responsibility in the encashment ofthese checks and had returned the amounts to the respondentUniversity, thus complainant has no fault about this incident.12

Ruling of the NLRCPetitioner filed an appeal with the National Labor

Relations Commission (NLRC) which was granted in thetribunal’s Decision dated July 11, 2011, declaring thatrespondent was legally dismissed. However, petitioner wasordered to pay respondent her proportionate 13th monthpay, the monetary value of her vacation leave, andattorney’s fees.

_______________12 Id., at p. 40.

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Adopting a stance entirely opposite to that of the Labor

Arbiter, the NLRC held that respondent failed tocontrovert and disprove the established charges ofpetitioner (as appellant­respondent) and insteadconveniently put the blame on other departments for herinculpatory acts. The NLRC opined that her terminationwas not motivated by the change of petitioner’s officers butby the University’s goal to promote the economy andefficiency of its Treasury Department.13

In net effect, the NLRC found petitioner’s contention ofloss of trust and confidence in respondent with sufficientbasis. While respondent, so the NLRC notes, may not havebeen guilty of willful breach of trust, the fact that she helda highly confidential position, and considering thatanomalous transactions transpired under her commandresponsibility, provided petitioner with ample ground todistrust and dismiss her.14 The NLRC explained:

In this case, complainant­appellee [herein respondent] may nothave been guilty of willful breach of trust. But as Treasurer of[WUP] who handles and supervises all monetary transactions inthe University and being a highly confidential employee at that,holding trust and confidence and after considering the series ofirregular and anomalous transactions that transpired undercomplainant­appellee’s command responsibility, respondent hasbasis or ample reason to distrust complainant­appellee. Thus, wecannot justly deny [WUP] the authority to dismiss complainant­appellee.

The principle of respondent (sic) superior or commandresponsibility may be cited as basis for the termination ofemployment of managerial employees based on loss of trust andconfidence.

In the Etcuban case (ibid.) the Supreme Court in upholding thevalidity of petitioner­employee’s dismissal on the ground of loss oftrust and confidence, ruled that

_______________13 Id., at p. 62.14 Id., at p. 63.

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even if the employee x x x had no actual and direct participationin the alleged anomalies, his failure to detect any anomaly thatwould normally fall within the scope of his work reflects hisineffectiveness and amounts to gross negligence and

incompetence which are likewise justifiable grounds for hisirregularity, for what is material is that his actuations were morethan sufficient to sow in his employer the seed of mistrust andloss of confidence.

As found by the External Auditor, complainant­appellee shouldhave implemented an imprest system of cash management inorder to secure the indicated payees in those checks and theywere paid of the checks as intended for them. It appears thatchecks payable to teachers, staffs and other third parties hadbeen the subject of encashment directly with the TreasuryDepartment x x x and this is an unsound accounting practice.

Moreover, the External Auditors found that various checkspayable to the Treasurer of Wesleyan University has beennegotiated for encashment directly to China Bank­CabanatuanBranch while the intention of the management for those checkswere merely for fund transfer with the other account maintainedat China Bank. That this practice violated accounting or cashcustodianship and check vouchers are nowhere to be found.

Further, the crossed check payable to the Treasurer(complainant­appellee) in the amount of P300,000.00 dated 26November 2008 had been negotiated for encashment to ChinaBank­Cabanatuan Branch despite of restriction indicated in theface of the check and that the used check was no longer found onfile. There is a need for a clear policy when to issue crossed­checksor otherwise and the use of debit/credit memo to transfer oneaccount to another with the same bank. That these acts ofviolation of cash and check custodianship by complainant­appelleeresulted in the loss of respondent­appellant thus affecting theeconomy of the respondent­appellant institution.

In view of our finding that respondents­appellants (sic) hasvalidly terminated complainant­appellee the latter’s claim fordamages and attorney’s fees lacks suffi­

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cient factual and legal basis. Accordingly, the Labor Arbiter’sdecision directing the reinstatement of complainant­appellee withfull backwages is hereby vacated and set aside.15

The NLRC denied respondent’s motion forreconsideration in a Resolution dated September 29, 2011.Therefrom, respondent went on Certiorari to the CA, inC.A.­G.R. S.P. No. 122536.

Ruling of the Court of Appeals

On February 28, 2013, the CA, through its assailedDecision,16 found the NLRC’s ruling tainted with graveabuse of discretion and reinstated the Decision of the LaborArbiter. The fallo of the CA Decision reads:

WHEREFORE, premises considered, the assailed Decisionand Resolution of the National Labor Relations Commission datedJuly 11, 2011 and September 29, 2011 are REVERSED and SETASIDE. The Decision of the Labor Arbiter dated December 15,2010 is hereby REINSTATED, subject to the modification that ifreinstatement is no longer feasible, petitioner shall be awardedseparation pay equivalent to one month salary for every year ofservice reckoned from the time of employment to the finality ofthis decision.17

Holding that respondent’s termination was unjust,the CA, in virtual restoration of the findings andconclusions of the Labor Arbiter, pointed out, amongothers, that: (1) respondent sufficiently countered allcharges against her; (2) it had been

_______________15 Id., at pp. 63­64.16 Penned by Associate Justice Pricilla J. Baltazar­Padilla and

concurred in by Associate Justices Rosalinda Asuncion­Vicente and AgnesReyes­Carpio.

17 Rollo, p. 41.

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the practice of the previous and present administrations ofpetitioner to encash and accommodate checks of WUPpersonnel; thus, it would be unjust to penalize respondentfor observing a practice already in place when she assumedoffice; (3) the duty to liquidate cash advances is assigned tothe internal auditor; (4) it has been established that theencashments of spurious duplicate checks were perpetratedby individuals not connected with WUP, and that the bankadmitted responsibility therefor and had returned theamount involved to petitioner; (5) there was no imputationof any violation of the University’s Administration andPersonnel Policy Manual; (6) while the acts complained ofviolated the imprest system of cash management, therewas no showing that the said system had been adopted andobserved in the school’s accounting and financial

procedures; and (7) there was no showing that respondenthad the responsibility to implement changes in petitioner’saccounting system even if it were not in accordance withthe generally accepted principles of accounting.18

Hence, the instant petition.The Issues

For consideration herein are the following issues raisedby petitioner:

1. Whether or not the CA overreached its power ofreview under Rule 65 of the Rules of Court when itreversed the judgment of the NLRC; and

2. Whether or not the CA erred in finding respondentillegally dismissed by petitioner on the ground of loss oftrust and confidence.

_______________18 Id., at pp. 37­38.

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The Court’s RulingThe petition is impressed with merit. The CA erred in

reinstating the Labor Arbiter’s Decision and in finding thatrespondent was illegally dismissed.The CA’s power of review

We first resolve the procedural issue raised in thisrecourse. Petitioner contends that the CA overreached itspower of review under Rule 65 when it substituted its ownjudgment over errors of judgment that it found in theNLRC Decision, stressing that the province of a writ ofcertiorari is to correct only errors of jurisdiction and noterrors of judgment.

This contention is misplaced. It is settled that underSection 9 of Batas Pambansa Blg. 129,19 as amended byRepublic Act No. 7902,20 the CA, pursuant to the exerciseof its original jurisdiction over petitions for certiorari, isspecifically given the power to pass upon the evidence, ifand when necessary, to resolve factual issues. Sec. 9 clearlystates:

The Court of Appeals shall have the power to try cases andconduct hearings, receive evidence and perform any and all actsnecessary to resolve factual issues raised in cases falling withinits original and appellate jurisdiction, including the power togrant and conduct new trials or further proceedings. x x x

_______________ 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, asAmended, Known as the Judiciary Reorganization Act of 1980.

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Hence, the appellate court acted within its sounddiscretion when it reevaluated the NLRC’s factual findingsand substituted the latter’s own judgment.Loss of trust and confidence as a ground fortermination

We now proceed to the substantive issue on thepropriety of respondent’s dismissal due to loss of trust andconfidence. As provided in Art. 282(c) of PresidentialDecree No. 442, otherwise known as the Labor Code of thePhilippines:

Article 282. Termination by employer.—An employer mayterminate an employment for any of the following causes:x x x xc. Fraud or willful breach by the employee of the trust reposed inhim by his employer or duly authorized representative;

We explained in M+W Zander Philippines, Inc. v.Enriquez21 the requisites of a valid dismissal based on lossof trust and confidence. As the case elucidates:

Article 282(c) of the Labor Code allows an employer toterminate the services of an employee for loss of trust andconfidence. Certain guidelines must be observed for the employerto terminate an employee for loss of trust and confidence. We heldin General Bank and Trust Company v. Court of Appeals,viz.:

[L]oss of confidence should not be simulated. It should not beused as a subterfuge for causes which are improper, illegal, orunjustified. Loss of confidence may not be arbitrarily asserted inthe face of overwhelming evidence

_______________21 G.R. No. 169173, June 5, 2009, 588 SCRA 590.

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to the contrary. It must be genuine, not a mere afterthought tojustify earlier action taken in bad faith.

The first requisite for dismissal on the ground of loss of trustand confidence is that the employee concerned must be oneholding a position of trust and confidence.

There are two classes of positions of trust: managerialemployees and fiduciary rank­and­file employees.

Managerial employees are defined as those vested with thepowers or prerogatives to lay down management policies and tohire, transfer, suspend, lay­off, recall, discharge, assign ordiscipline employees or effectively recommend such managerialactions. They refer to those whose primary duty consists of themanagement of the establishment in which they are employed orof a department or a subdivision thereof, and to other officers ormembers of the managerial staff. Officers and members of themanagerial staff perform work directly related to managementpolicies of their employer and customarily and regularly exercisediscretion and independent judgment.

The second class or fiduciary rank­and­file employees consist ofcashiers, auditors, property custodians, etc., or those who, in thenormal exercise of their functions, regularly handle significantamounts of money or property. These employees, though rank­and­file, are routinely charged with the care and custody of theemployer’s money or property, and are thus classified asoccupying positions of trust and confidence.22

x x x xThe second requisite of terminating an employee for loss of

trust and confidence is that there must be an act that wouldjustify the loss of trust and confidence. To be a valid cause fordismissal, the loss of confidence must

_______________22 Id., at pp. 602­604.

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be based on a willful breach of trust and founded on clearlyestablished facts.23

To summarize, the first requisite is that the employeeconcerned must be one holding a position of trust andconfidence, thus, one who is either: (1) a managerial

employee; or (2) a fiduciary rank­and­file employee, who, inthe normal exercise of his or her functions, regularlyhandles significant amounts of money or property of theemployer. The second requisite is that the loss ofconfidence must be based on a willful breach of trust andfounded on clearly established facts.

In Lima Land, Inc. v. Cuevas,24 We discussed thedifference between the criteria for determining the validityof invoking loss of trust and confidence as a ground forterminating a managerial employee on the one hand and arank­and­file employee on the other. In the said case, Weheld that with respect to rank­and­file personnel, loss oftrust and confidence, as ground for valid dismissal,requires proof of involvement in the alleged events inquestion, and that mere uncorroborated assertions andaccusations by the employer would not suffice. With respectto a managerial employee, the mere existence of a basis forbelieving that such employee has breached the trust of hisemployer would suffice for his dismissal. The followingexcerpts from Lima Land are instructive:

As firmly entrenched in our jurisprudence, loss of trust andconfidence, as a just cause for termination of employment, ispremised on the fact that an employee concerned holds a positionwhere greater trust is placed by management and from whomgreater fidelity to duty is correspondingly expected. This includesmanagerial personnel entrusted with confidence on delicatematters, such as the custody, handling, or care and protection of

_______________23 Id., at p. 606.24 G.R. No. 169523, June 16, 2010, 621 SCRA 36.

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the employer’s property. The betrayal of this trust is the essenceof the offense for which an employee is penalized.

It must be noted, however, that in a plethora of cases, thisCourt has distinguished the treatment of managerial employeesfrom that of rank­and­file personnel, insofar as the application ofthe doctrine of loss of trust and confidence is concerned. Thus,with respect to rank­and­file personnel, loss of trust andconfidence, as ground for valid dismissal, requires proof ofinvolvement in the alleged events in question, and that mereuncorroborated assertions and accusations by the employer will

not be sufficient. But as regards a managerial employee, the mereexistence of a basis for believing that such employee has breachedthe trust of his employer would suffice for his dismissal. Hence, inthe case of managerial employees, proof beyond reasonable doubtis not required, it being sufficient that there is some basis for suchloss of confidence, such as when the employer has reasonableground to believe that the employee concerned is responsible forthe purported misconduct, and the nature of his participationtherein renders him unworthy of the trust and confidencedemanded of his position.

On the other hand, loss of trust and confidence as a ground ofdismissal has never been intended to afford an occasion for abusebecause of its subjective nature. It should not be used as asubterfuge for causes which are illegal, improper, and unjustified.It must be genuine, not a mere afterthought intended to justify anearlier action taken in bad faith. Let it not be forgotten that whatis at stake is the means of livelihood, the name, and thereputation of the employee. To countenance an arbitrary exerciseof that prerogative is to negate the employee’s constitutional rightto security of tenure.25

_______________25 Id., at pp. 46­47.

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Respondent’s employment classification isirrelevant in light of her proven willful breach

There is no doubt that respondent held a position oftrust; thus, greater fidelity is expected of her. She was notan ordinary rank­and­file employee but an employeeoccupying a very sensitive position. As UniversityTreasurer, she handled and supervised all monetarytransactions and was the highest custodian of fundsbelonging to WUP.26 To be sure, in the normal exercise ofher functions, she regularly handled significant amounts ofmoney of her employer and managed a critical department.

The presence of the first requisite is certain. So is asregards the second requisite. Indeed, the Court finds thatpetitioner adequately proved respondent’s dismissal wasfor a just cause, based on a willful breach of trust andfounded on clearly established facts as required byjurisprudence. At the end of the day, the question ofwhether she was a managerial or rank­and­file employee

does not matter in this case because not only is there basisfor believing that she breached the trust of her employer,her involvement in the irregularities attending topetitioner’s finances has also been proved.

To recall, petitioner, per its account, allegedly lost trustand confidence in respondent owing to any or an interplayof the following events: (1) she encashed a check payable tothe University Treasurer in the amount of three hundredthousand pesos (Php300,000); (2) she encashed crossedchecks payable to the University Treasurer, when theintention of management in this regard was to merelytransfer funds from one of petitioner’s accounts to anotherin the same bank; (3) she allowed the Treasury Departmentto encash the checks issued to WUP personnel rather thanrequiring the latter to have said checks encashed by thebank, in violation of the

_______________26 Rollo, p. 52.

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imprest system of accounting; (4) she caused thedisbursement of checks without supporting check vouchers;(5) there were unliquidated cash advances; and (6) spuriousduplicate checks bearing her signature were encashedcausing damage to petitioner.

We disagree with the CA’s finding that respondent hassufficiently countered all inculpatory allegations andaccusations against her. On the contrary, We find thathere, there was an admitted, actual and real breach of dutycommitted by respondent, which translates into a breach oftrust and confidence in her. For perspective, respondent’sexplanation as to the charges against her is as follows:

1. That the alleged crossed check issued by her payable toTHE TREASURER – WUP was done in the exercise of her dutyand function as such, and not with her name and not to herselfand personal favor, and that said check had been preparedpassing through the usual system;

2. That the University heads were the beneficiaries of saidamount who strongly requested that their love gift be given, hence,the encashment;

3. That the amount of the check was properly disposed of asevidenced by the document bearing the signatures of recipients;

4. That the Office to point to if vouchers and supportingdocuments will have to be checked concerning payments made isthe Accounting Office;

5. That cash advances to various University personnel passthrough her office in the exercise of her duties as such but the officewho follow up the liquidation of payments received is the Office ofthe University Auditor;

6. That respondent Reyes adopted her reply on the show­cause order in the investigation previously conducted by Dr.Jeremias Garcia about the duplicated checks alleging amongothers:

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a) She and her staff confirmed that only the checks issuedto General Capulong and Leodigario David were encashed by theUniversity Teller;

b) The check issued to Norma de Jesus was encashed by thePick­up Chinabank Teller on December 5, 2008 while collectingdeposits from the University with the assistance of the Universityteller;

c) That the check issued to Mercedes was not encashed withthe University teller but with WEMCOOP;

d) As to the encashment and accommodation of checks topersonnel, it has been the practice of previous and presentadministration moreso when employees cannot anymore go toChinabank to transact business as it is mostly beyond bankinghours when checks are ready for disbursement;

e) That Respondent’s department has no control overfraudulent transactions done outside the University, that it is theBank’s duty to protect its clients as to the proper procedures tosecure our account;

f) That the computer system program of the University’sdepository bank has very limited capabilities to detect fraudulententries;

g) That the signature verifier also had been remiss in carefullychecking the authenticity of previous signatories.27

a. Respondent’s encashment of checksAs it were, respondent did not deny, in fact admitted,

the encashment of the three hundred thousand peso(Php300,000) crossed check payable to the UniversityTreasurer which covered the total amount of the “love gift”for administrative and academic officials of WUP. Neitherdid she deny the fact

_______________27 Id., at pp. 61­62.

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that the Treasury Department encashed checks issued toWUP personnel rather than requiring them to have thechecks encashed by the bank. Instead, she explained thatthe beneficiaries of the amounts strongly requested thattheir love gifts be given in cash, hence the encashment ofthe Php300,000 crossed check and, thereafter, theaccommodation and encashment of their checks directly bythe Treasury Department. Moreover, she submitted adocument bearing the signatures of the recipients of the“love gift” as proof that the amount was disposedproperly.28 She further insisted that this was the usualpractice of the University and that she merelyaccommodated the requests of WUP personnel especiallywhen Chinabank was already closed.

Jurisprudence has pronounced that the crossing of acheck means that the check may not be encashed but onlydeposited in the bank.29 As Treasurer, respondent knew oris at least expected to be aware of and abide by this basicbanking practice and commercial custom. Clearly, theissuance of a crossed check reflects management’s intentionto safeguard the funds covered thereby, its specialinstruction to have the same deposited to another accountand its restriction on its encashment.

Here, respondent, as aptly detailed in the auditor’sreport, disregarded management’s intentions and ignoredthe measures in place to secure the handling of WUP’sfunds. By encashing the crossed checks, respondent put thefunds covered thereby under the risk of being lost, stolen,co­mingled with other funds or spent for other purposes.Furthermore, the accommodation and encashment by theTreasury Department of checks issued to WUP personnelwere highly irregular. First, WUP, not being a bank, hadno business encashing the

_______________28 Id., at p. 97.29 Bataan Cigar and Cigarette Factory, Inc. v. Court of Appeals, G.R.

No. 93048, March 3, 1994, 230 SCRA 643.

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538 SUPREME COURT REPORTS ANNOTATEDWesleyan University­Philippines vs. Reyes

checks of its personnel.30 More importantly, in encashingthe said checks, the Treasury Department madedisbursements contrary to the wishes of managementbecause, in issuing said checks, management has madeclear its intention that monies therefor would be sourcedfrom petitioner’s deposit with Chinabank, under a specificaccount, and not from the cash available in the TreasuryDepartment.

That the encashment of crossed checks and payment ofchecks directly to WUP personnel had been the practice ofthe previous and present administration of petitioner is ofno moment. To Our mind, this was simply respondent’sconvenient excuse, a poorly disguised afterthought, whenher unbecoming carelessness in managing WUP’s financeswas exposed. Moreover, the prevalence of this practicecould have been contained if only respondent consistentlyobserved the regular procedure for encashing crossedchecks and properly handled requests for accommodation ofchecks issued to the WUP personnel.

b. Unliquidated cash advancesOn the matter of unliquidated cash advances in the

aggregate amount of nine million seven hundred thousandpesos (Php9,700,000), respondent explained that while itwas true that cash advances to WUP personnel passedthrough her office in the exercise of her duties asUniversity Treasurer, the office that follows up theliquidation of advances received is the office of theUniversity Auditor.31 However, granting that theresponsibility of handling the liquidation of cash

_______________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 intheir hands, requesting them to pay on presentment, to a person namedtherein or to bearer or order, a named sum of money. See Moran v. Courtof Appeals, G.R. No. 105836, March 7, 1994, 230 SCRA 799.

31 Rollo, p. 98.

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advances is no longer lodged in her office, there is proofshowing that before the Treasury Department was relievedof said responsibility, the total unliquidated cash advanceswas even bigger, amounting to eleven million five hundredthirty­three thousand two hundred thirty pesos and thirty­seven centavos (Php11,533,230.37). There is nothing in therecords before us showing that respondent denied thefollowing findings in the Investigation Report of the WUP’sHuman Resource Development Office (HRDO) on thismatter, to wit:

In the matter of unliquidated cash advances in the aggregateamount of Php9.7million as found by the External Auditors,respondent’s contention was that cash advances to variousUniversity personnel pass through her office in the exercise of herduties as such but the office who follows up the liquidation ofpayments received is the Office of the University Auditor.

On the inquiry done x x x of the Internal Auditor, Treasury andAccounting officer on July 1, 2009, it was found out that theresponsibility of handling cash advances and liquidation reportwas transferred from Treasury Office to Accounting Office onAugust 2008, when Ms. Luzviminda Torres, the personnelhandling the same detailed at the Treasury Office went on leave. Itwas transferred to Ms. Julieta Mateo. What was surprising wasthat as per certification and summary submitted by Ms. Mateo, theamount 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 MILLIONFIVE HUNDRED THIRTY­THREE THOUSAND, TWOHUNDRED THIRTY PESOS AND THIRTY­SEVEN CENTAVOS(Attached as Annex “G”).Even if there is truth in the contention of herein Respondent thatshe 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 August2008, with unliquidated cash advances even bigger, still showedthat she reneged in her duties which she had overlooked for so

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long. She now mistakenly points the responsibility to the Office ofthe University Auditor. These informations are enough to beconsidered as Respondent’s acts constitutive of breach of trust andconfidence.32 x x x

c. Other irregularities in respondent’s performance

In all, We find the Investigation Report of the HRDO acredible, extensive and thorough account of respondent’sinvolvement in incidents which are sufficient grounds forpetitioner’s loss of trust and confidence in her, to wit:

Respondent Nowella C. Reyes has committed breach of trustand confidence in the conduct of her office.

In her answer, Respondent admitted the encashment of thecrossed check with the defense that the same was done in theperformance of her duty, not for her personal use but because of therequest of University heads who wanted their love gifts be given.She also admitted habitual encashment of checks issued by theUniversity to its personnel on the basis of practice of previousadministration.

The charge against Respondent of the act of improperencashment of a check, which aside from being irregular is clearlyviolative of imprest system of cash management. Moreover, thesame being a crossed check, should not be negotiated forencashment to Chinabank­Cabanatuan Branch because of therestriction indicated on its face, which Mrs. Reyes, by reason of heroffice knew very well.

During the investigation conducted, it was revealed that thecheck disbursement voucher attached by Respondent on heranswer to justify the regularity of its issuance and eventualencashment was not exactly the same as the one filed at theAccounting Office. It showed that the pho­

_______________32 Id., at pp. 59­60.

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tocopy of the original CDV which was attached by Respondent(attached as Annex “E” of this report) bear some materialalterations, namely:

1. The absence of entry of the Board Resolution which wasreflected as a sort of inquiry by the Internal Auditor, and which atpresent was left blank on the original, as compared to thephotocopy submitted by respondent bearing an entry of the BoardResolution number;

2. The word ATM on the payee portion of the CDV in theoriginal as compared to the photocopy wherein the entry ATM wascrossed out.

During a discussion with the external auditors, it wascategorically stated by them that during the course of external

audit, said document was inexistent in the records presented by theAccounting and Treasurer’s Offices. The production of thephotocopy by Respondent already altered only after the suspensionwas effected cast doubt on the regularity of its issuance, negatingher otherwise claim. Another significant observation was that theoriginal copy of CDV (attached as Annex “F” of this report) andcorresponding signatures of administrative heads who receivedpayments showed folded marks halfways, with the fastener holesunmatched, showing that those two documents were not reallyfiled together, as regularly done, and the same were not filed in theregular course and must have been kept previously on a differentmanner in possession of person other than the office which mustfile the same.

x x x xOn the last charge in the show cause order specifically the

existence of duplicate checks in the account of the Universityamounting to Php1.050 Million, included in Respondent’s defenseswere that among the checks duplicated, only two of them wereencashed with the University Teller, and the check originallynamed to Norma de Jesus as payee was paid by the pick­up telleronly through the assistance of the University teller.

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542 SUPREME COURT REPORTS ANNOTATEDWesleyan University­Philippines vs. Reyes

Again, Respondent’s defense were void of truth and merit.The act of encashing checks issued by the Treasury Office, clearlyviolative of imprest system of cash management which Mrs. Reyesby reason of her office knew very well, showed that Respondentdirectly reneged in her duty to observe economic security measures.

As found on the documents attached to the Investigation reportof Dr. Garcia which had been expressly adopted by hereinrespondent in her answer is an Affidavit of Norma de Jesusstating that she actually encashed the check with the personnel ofthe Treasury Office particularly Shirley Punay, who gave her theamount equivalent days after the check was handed to theTreasury office.

However noble the intention of herein Respondent in helping herfellow workers in the University by her acts of accommodation byencashing their checks directly with the Treasury Office whenChinabank was already closed, the same still reneged in her dutyto protect the economic security of the University. An act ofmisconduct which caused [sic].33

An employer cannot be compelled to retain anemployee who is guilty of acts inimical to the interests ofthe employer. A company has the right to dismiss its

employees if only as a measure of self­protection. This is allthe more true in the case of supervisors or personneloccupying positions of responsibility.34 In this case, let it beremembered that respondent was not an ordinary rank­and­file employee as she was no less the Treasurer whowas in charge of the coffers of the University. It would beoppressive to require petitioner to retain in theirmanagement an officer who has admitted to knowingly andintentionally committing acts which jeopardized itsfinances and who was untrustworthy in the handling andcustody of University funds.

_______________33 Id., at pp. 58­60.34 MGG Marine Services, Inc. v. NLRC, G.R. No. 114313, July 29,

1996, 259 SCRA 664.

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WHEREFORE, premises considered, we GRANT thepetition. The assailed Decision of the Court of Appeals inC.A.­G.R. S.P. No. 122536 is, thus, SET ASIDE. TheDecision of the National Labor Relations Commission inNLRC RAB III Case No. 07­15131­09 is REINSTATED.

SO ORDERED.

Peralta, Villarama, Jr.,** Mendoza and Leonen, JJ.,concur.

Petition granted, judgment set aside.

Notes.—When a bank allows its client to collect oncrossed checks issued in the name of another, the bank isguilty of negligence. (Bank of America, NT & SA vs.Associated Citizens Bank, 588 SCRA 51 [2009])

Loss of trust and confidence as a ground for dismissalhas never been intended to afford an occasion for abusebecause of its subjective nature. (Torres vs. Rural Bank ofSan Juan, Inc., 693 SCRA 357 [2013])

——o0o——

_______________** Acting member per Special Order No. 1691 dated May 22, 2014.

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