Negligence in Handling Public Funds: A Cashier’s Liability

TLDR: This case clarifies that even in cases of robbery, a public official entrusted with funds can be held liable for negligence if they fail to exercise the required diligence in safeguarding those funds. Simply put, being a victim of a crime doesn’t automatically absolve you of responsibility if your own carelessness contributed to the loss.

G.R. No. 130057, December 22, 1998

INTRODUCTION

Imagine entrusting your life savings to a bank cashier, only to learn it was stolen because the cashier left it in an unlocked drawer overnight. Outrageous, right? Public funds are held to an even higher standard of care. The Supreme Court case of Bulilan v. Commission on Audit tackles this very issue: when is a government cashier liable for the loss of public funds due to robbery? This case arose when Hermogina Bulilan, a college cashier, was held accountable by the Commission on Audit (COA) for funds stolen from her office. The core question: Did Ms. Bulilan’s actions constitute negligence, making her liable despite the robbery?

LEGAL CONTEXT: ACCOUNTABILITY AND NEGLIGENCE IN PUBLIC OFFICE

Philippine law emphasizes the stringent accountability of public officers, particularly when handling government funds. Presidential Decree No. 1445, also known as the Government Auditing Code of the Philippines, is central to this. Section 105 of P.D. 1445 explicitly states: “Every accountable officer shall be properly bonded in accordance with law and regulations to answer for the faithful performance of his duties and obligations and proper accounting for all public funds and property committed to his custody.” This underscores that public officials are not just custodians, but are personally responsible for the funds entrusted to them.

Furthermore, Section 73 of the same decree addresses losses due to unforeseen events. It allows for credit for losses due to “fire, theft, or other casualty or force majeure,” but crucially, this relief is contingent upon the accountable officer demonstrating they were not negligent. Force majeure, often translated as “superior force,” refers to events beyond human control, like natural disasters or, in some contexts, robbery. However, the law doesn’t automatically excuse losses simply because a crime occurred. Negligence plays a pivotal role. Negligence, in legal terms, is defined as the failure to exercise the standard of care that a reasonable person would exercise in a similar situation. The Supreme Court, in this case and others, often cites a classic definition: “Negligence is the omission to do something which a reasonable man, guided upon those considerations which ordinarily regulate the conduct of human affairs, would do, or the doing of something which a prudent man and reasonable man could not do.” The degree of care required is not absolute but relative, depending on the circumstances and the nature of the responsibility.

CASE BREAKDOWN: BULILAN’S BREACH OF DUTY

Hermogina Bulilan was the cashier at Visayas State College of Agriculture (VISCA). Her responsibilities included preparing payroll and handling significant amounts of cash. Leading up to a payday in March 1990, Ms. Bulilan withdrew a substantial sum of money from the bank. Instead of immediately disbursing the payroll, she and her staff worked overtime over the weekend to prepare pay envelopes. Here’s where the critical decisions were made:

• Unsecured Storage: Despite VISCA having a concrete vault with double steel doors and Yale padlocks (used for storing forms and supplies), Ms. Bulilan chose to store the pay envelopes, totaling over half a million pesos, in an unlocked steel cabinet within the Cashier’s Office.
• Weekend Storage: The funds remained in this unsecured cabinet throughout Saturday and Sunday, as Ms. Bulilan was scheduled to leave for Baguio City on Monday, the payday.
• Robbery Incident: On Sunday night, a robbery occurred. The culprit, familiar with the building, bypassed security and targeted the Cashier’s Office, specifically stealing the pay envelopes from the unlocked cabinet.

Ms. Bulilan reported the robbery and sought relief from accountability from the COA, arguing that the robbery was a force majeure event. However, the COA denied her request, finding her negligent. The COA report highlighted several key points:

• The existence of a more secure vault that was not used for the cash.
• The unlocked steel cabinet offered minimal security.
• The location of the cabinet, while arguably visible to a guard, was not as secure as the vault.
• Ms. Bulilan’s failure to deposit the funds as frequently as required by regulations (Joint COA-MOF Circular No. 1-81), which increased the amount of cash on hand and the potential loss.

The Supreme Court upheld the COA’s decision. The Court emphasized that while robbery can be considered a fortuitous event, it does not automatically absolve an accountable officer of liability. The crucial factor is whether negligence on the part of the officer contributed to the loss. The Court stated, “Applying the above contemplation of negligence to the case at bar, the irresistible finding and conclusion is that the herein petitioner was negligent in the performance of her duties as Cashier. She did not do her best, as dictated by the attendant circumstances, to safeguard the public funds entrusted to her, as such Cashier.”

The Court further reasoned, “Upon verification and ocular inspection conducted by the Resident Auditor, and as confirmed by the COA Director for Regional Office VIII, it was found out that VISCA had a concrete vault/room with a steel door secured by a big Yale padlock, which was very much safer than the unlocked storage cabinet in which petitioner placed the government funds in question. It is irrefutable that a locked vault/room is safer than an unlocked storage cabinet.” The Court also pointed to Ms. Bulilan’s non-compliance with deposit regulations as another factor contributing to her negligence.

PRACTICAL IMPLICATIONS: LESSONS FOR PUBLIC OFFICERS AND BEYOND

The Bulilan case serves as a stark reminder to all public officials, especially those handling funds, about the high standard of care expected of them. It’s not enough to simply be a victim of a crime; you must demonstrate that you took all reasonable precautions to prevent the loss. This case has several practical implications:

• Strict Adherence to Security Protocols: Government agencies and instrumentalities must establish clear protocols for handling and securing public funds. These should include guidelines on storage, deposit frequency, and security measures.
• Utilizing Available Security Measures: If secure facilities like vaults are provided, they must be used for storing significant amounts of cash. Choosing less secure options, even for convenience, can be deemed negligent.
• Regular Deposits: Compliance with regulations on deposit frequency is not just procedural; it’s a crucial risk mitigation strategy. Reducing the amount of cash on hand reduces potential losses from theft or other incidents.
• Personal Accountability: Public officials are personally accountable for the funds in their custody. This accountability extends beyond intentional wrongdoing to include losses resulting from negligence.

Key Lessons from Bulilan v. COA:

• Negligence Undermines Fortuitous Event Defense: Even if a loss is due to an event like robbery, negligence in safeguarding funds can negate the defense of force majeure.
• Reasonable Care is Context-Dependent: The standard of care is not abstract but depends on the specific circumstances and the nature of the funds and responsibilities.
• Compliance with Regulations is Mandatory: Failure to follow established rules and regulations regarding fund handling can be strong evidence of negligence.
• Secure Storage is Paramount: Utilizing the most secure storage options available is a fundamental duty for custodians of public funds.

FREQUENTLY ASKED QUESTIONS (FAQs)

Q1: What is negligence in the context of handling public funds?

A: Negligence, in this context, is the failure of a public official to exercise the level of care and diligence that a reasonably prudent person would exercise in safeguarding public funds under similar circumstances. This includes following established procedures, using secure storage, and taking necessary precautions to prevent loss.

Q2: What is force majeure and how does it relate to liability for lost public funds?

A: Force majeure refers to unforeseen and uncontrollable events like natural disasters or, in some cases, robbery. While losses due to force majeure may be excusable, this defense is not absolute. If negligence on the part of the accountable officer contributed to the loss, the force majeure defense may not apply, and the officer can still be held liable.

Q3: What are the responsibilities of a government cashier in the Philippines?

A: Government cashiers are responsible for the safekeeping, proper accounting, and disbursement of public funds. This includes preparing payroll, receiving payments, making deposits, and ensuring the security of cash and related documents. They are accountable officers and are expected to adhere to strict regulations and internal controls.

Q4: How can public officials avoid being held liable for loss of funds due to robbery?

A: To minimize liability, public officials should:

• Strictly adhere to all relevant laws, regulations, and internal procedures for handling public funds.
• Utilize the most secure storage facilities available, such as vaults and safes.
• Make regular and timely deposits of collections.
• Avoid keeping large amounts of cash on hand unnecessarily.
• Ensure proper documentation and record-keeping for all transactions.
• Report any security breaches or incidents immediately to the appropriate authorities.

Q5: What should a public official do if public funds under their custody are stolen?

A: Immediately report the incident to the Commission on Audit (COA) and other relevant authorities (like the police). Cooperate fully with any investigations. Gather all available evidence and documentation related to the loss. Prepare a detailed report explaining the circumstances of the loss and the precautions taken to safeguard the funds. Seek legal advice if necessary.

Q6: Is it always the cashier who is liable when funds are lost?

A: Not necessarily. Liability depends on the specific circumstances and the established facts. If the loss was solely due to force majeure and the accountable officer exercised due diligence, they may be relieved of liability. However, as Bulilan shows, even in robbery cases, negligence can lead to liability.

ASG Law specializes in administrative law, government accountability, and litigation involving public funds. Contact us or email hello@asglawpartners.com to schedule a consultation.