The High Cost of Neglecting Fiduciary Responsibilities: A Lesson for Court Personnel

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A.M. No. P-06-2179 (Formerly A.M. No. 06-5-169-MCTC), January 12, 2011

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Imagine a system where the safekeeping of funds relies heavily on the integrity and diligence of a few individuals. This is the reality within the Philippine judicial system, where Clerks of Court play a crucial role in managing fiduciary funds. When these individuals falter, the consequences can be severe, impacting public trust and the administration of justice itself.

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This case, Office of the Court Administrator vs. Merlinda T. Cuachon and Fe P. Alejano, serves as a stark reminder of the importance of accountability and adherence to regulations in handling court funds. It highlights the repercussions of neglecting these responsibilities, even in the absence of malicious intent. The central question revolves around the administrative liability of court personnel for irregularities in the management of Fiduciary Funds.

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Understanding Fiduciary Funds and Circular 50-95

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Fiduciary funds are monies held in trust by the court, such as bail bonds, rental deposits, and other collections intended for specific purposes. These funds are not government revenue; they are held temporarily until a court order dictates their disbursement. Because these funds are held in trust, strict rules govern their management to safeguard against misuse or loss.

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Supreme Court Circular No. 50-95 is the cornerstone of these regulations. It outlines the proper procedures for the collection, deposit, and withdrawal of fiduciary funds. Key provisions include:

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• Prompt Deposit: All collections must be deposited with the Land Bank of the Philippines (LBP) within twenty-four (24) hours of receipt.

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• Designated Depository: Only one depository bank (LBP) should be maintained.

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• Proper Documentation: Withdrawals from the Fiduciary Fund require a lawful court order.

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To illustrate, consider a scenario where a defendant posts bail. The cash bail is a fiduciary fund. Circular 50-95 dictates that the Clerk of Court must deposit this money in the LBP within 24 hours. If the defendant attends all court hearings, the bail is returned. The Clerk of Court can only release the money upon a court order.

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Failure to comply with Circular 50-95 can lead to administrative sanctions, ranging from fines to dismissal from service, depending on the severity of the infraction.

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The Case of MCTC, Ilog-Candoni: A Breakdown

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The case began with a financial audit triggered by the compulsory retirement of Merlinda T. Cuachon, the Clerk of Court of the Municipal Circuit Trial Court (MCTC) in Ilog-Candoni, Negros Occidental. The audit covered transactions from September 1, 2000, to September 30, 2005, and also included the period when Fe P. Alejano, the Court Stenographer, served as Officer-in-Charge (OIC)-Clerk of Court.

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The audit revealed several irregularities:

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• Cash Shortages: Both Cuachon and Alejano incurred shortages in their Fiduciary Fund collections.

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• Delayed Deposits: Collections were not deposited with the LBP within the required timeframe.

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• Unauthorized Withdrawals: Withdrawals were made without proper supporting documents.

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• Improper Depository: Funds were deposited with the Municipal Treasurer’s Office instead of the LBP.

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• Unreconciled Cashbooks: Actual cash on hand did not match the entries in the cashbooks.

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In her defense, Cuachon cited her unfamiliarity with accounting principles and the lack of updated court issuances. Alejano attributed the issues to a lack of proper turnover and termite infestation that destroyed key documents. However, the Supreme Court was not persuaded.

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The Supreme Court emphasized the importance of adhering to Circular 50-95, stating: