SC Affirms Dismissal of Accountant Who Used Payroll for Paluwagan
December 15, 2023
Using the company payroll for personal gain breaches the trust and confidence bestowed upon an accountant, which can be a ground for a valid dismissal.
Thus held the Supreme Court’s Second Division in a Resolution denying the appeal by certiorari under Rule 45 of the Rules of Court filed by Claudia Clemeña Varquez. The petition challenged the rulings of the Court of Appeals which had reversed the findings of the National Labor Relations Commission (NLRC) declaring Vasquez to have been legally dismissed from service by her employer, Rider Levett Bucknall, Phils. Inc. (RLBPI).
Varquez, as the chief accountant of RLBPI, was responsible for the checking of the semi-monthly payroll, preparing check vouchers and sales invoices, and acting as the company’s petty cash custodian, among others.
Varquez was later appointed as finance manager tasked with monitoring the company’s daily cash position; overseeing the issuance of checks; verifying the bimonthly payroll summary; reconciling bank accounts; preparing the balance sheet/income statement; reviewing and approving monthly billing statements; monitoring accounts payable and accounts receivable; managing employees’ health cards and retirement insurance; preparing quarterly reports; approving check vouchers for payment; and reviewing and finalizing cash flow, among others.
In 2005, a paluwagan called PYF was organized by RLBPI employees where they pooled a portion of their salary into a common fund. This fund would then be utilized to extend loans to employees at minimal interest rates. At the end of each year, the actual contribution of each member, with its corresponding interest, would later be distributed among the members.
In October 2015, the RLBPI Chairperson, Corazon C. Ballard (Ballard), notified Varquez and other officers and staff members that an audit would take place. Two months later, on December 2, 2015, Varquez received a Notice to Explain (NTE) requiring her to explain within 48 hours allegations of serious misconduct, fraud, and willful breach of trust against the company. Among the specific acts alleged in the NTE were: that RLBPI Chief Accountant Aurora Lizarondo maintained original company data of payroll summary in Varquez’s assigned computer that contained series of personal deductions coming from “PYF”, store, e-load, various cash advances; and that Varquez maintained an illegal bank account with account name “Claudia for PYF C Varquez” which contained series of crediting from personal deductions through employees’ payroll accounts which has not been approved by the RLBPI President/Chairperson.
Varquez only submitted her written explanation on December 8, 2015. A month after, she received a Notice of Preventive Suspension for 30 days without pay. Before the expiration of the suspension, Varquez received a Notice of Dismissal for gross dishonesty and serious breach of trust and confidence.
This prompted Varquez to file a complaint with the Labor Arbiter (LA) for illegal dismissal. The LA dismissed Varquez’s complaint but was reversed by the NLRC. On appeal to the CA, however, the CA reinstated the ruling of the LA, prompting Varquez to file the present petition with the Supreme Court.
In denying Varquez’s petition, the Court reiterated that for an employee’s dismissal to be valid, it is incumbent upon the employer to satisfy the basic requirements of substantive and procedural due process. The former requires that the dismissal must be for just or authorized causes while the latter requires the employer to comply with the notice and hearing requirements.
Failure to observe substantive due process renders the dismissal invalid, entitling the employee to reinstatement and full back wages. Failure to observe procedural due process, however, does not invalidate the dismissal but obligates the erring employer to pay nominal damages to the employee as penalty.
Among the grounds for dismissal under Article 297 of the Labor Code is fraud or willful breach of trust bestowed by the employer as the employer’s representative.
To justify a dismissal based on loss of trust and confidence, the Court held that two conditions must be met: (1) the employee concerned must be holding a position of trust and confidence; and (2) there must be an act that would justify the loss of trust and confidence.
In the present case, the Court found that both conditions were met. As RLBPI Chief Accountant and Finance Manager, Varquez enjoyed a substantial degree of trust and confidence reposed in her by RLBPI, which were lost due to various acts done by Varquez, including maintaining her personal account in the payroll.
“The payroll registry should strictly reflect only the identities of the authorized employees and their corresponding salaries for a specific period,” stressed the Court, finding it highly unusual for Varquez’s personal account to be incorporated into the payroll listing, as it is being used as the deposit account for the PYF or the “paluwagan funds.” The inclusion of such account in the payroll is thus not justified, said the Court.
This, among other acts, strongly indicate that Varquez breached the trust and confidence bestowed upon her by RLBPI, justifying her dismissal.
However, while there were just causes for Varquez’s dismissal, the procedural due process requirements were not fully met by RLBPI for failing to fully apprise Varquez regarding the “unreconciled differences” cited in the audit report. RLBPI was consequently ordered to pay Varquez PhP30,000 in nominal damages. (Courtesy of the Supreme Court Public Information Office)
Full text of G.R. No. 259776 (Varquez v. Rider Levett Buknall, Phils. Inc., April 24, 2023) at: https://sc.judiciary.gov.ph/259776-claudia-clemena-varquez-vs-rider-levett-bucknall-phils-inc-represented-by-corazon-c-ballard/