Laws & Jurisprudence
When Encashment Of Crossed Check Is Improper
8:41 PM
Respondent Nowella Reyes was appointed
as University Treasurer of Wesleyan University of the Philippines (WUP).
The new WUP Board of Trustees engaged
the services of Nepomuceno Suner & Associates Accounting Firm (External
Auditor) to investigate circulating rumors on alleged anomalies in the
contracts entered into by petitioner and in its finances.
Discovered following an audit were
irregularities in the handling of petitioner’s finances, mainly, the encashment
by its Treasury Department of checks issued to WUP personnel, a practice
purportedly in violation of the imprest system of cash management, and the
encashment of various crossed checks payable to the University Treasurer by
Chinabank despite management’s intention to merely have the funds covered
thereby transferred from one of petitioner’s bank accounts to another.
She was terminated on the ground of
loss of trust. Upon receipt of her notice of
termination, respondent post-haste filed a complaint for illegal dismissal with
the Arbitration Branch of the National Labor Relations Commission. She
contended that the alleged crossed check issued by her payable to THE
TREASURER – WUP was done in the exercise of her duty and function as such, and
not with her name and not to herself and personal favor, and that said check
had been prepared passing through the usual system alleging that the University
heads were the beneficiaries of said amount who strongly requested that their
love gift be given, hence, the encashment;
ISSUE:
Is the encashment of
the crossed check proper warranting the dismissal of Reyes illegal?
RULING:
The encashment of the
crossed check by Reyes is NOT proper.
Jurisprudence has pronounced that the crossing of a check means that the
check may not be encashed but only deposited in the bank. As Treasurer,
respondent knew or is at least expected to be aware of and abide by this basic
banking practice and commercial custom. Clearly, the issuance of a crossed check reflects management’s intention to safeguard the funds covered thereby,
its special instruction to have the same deposited to another account and its
restriction on its encashment.
Here, respondent, as aptly detailed in
the auditor’s report, disregarded management’s intentions and ignored the
measures in place to secure the handling of WUP’s funds. By encashing the
crossed checks, respondent put the funds covered thereby under the risk of
being lost, stolen, co-mingled with other funds or spent for other purposes.
Furthermore, the accommodation and encashment by the Treasury Department of
checks issued to WUP personnel were highly irregular. First, WUP, not being a
bank, had no business encashing the checks of its personnel. More importantly,
in encashing the said checks, the Treasury Department made disbursements
contrary to the wishes of management because, in issuing said checks,
management has made clear its intention that monies therefor would be sourced
from petitioner’s deposit with Chinabank, under a specific account, and not
from the cash available in the Treasury Department.
That the encashment of crossed checks
and payment of checks directly to WUP personnel had been the practice of the
previous and present administration of petitioner is of no moment. This was
simply respondent’s convenient excuse, a poorly disguised afterthought, when
her unbecoming carelessness in managing WUP’s finances was exposed.
The
termination was therefore legal.
GR. No. 208321, July 30, 2014
WESLEYAN UNIVERSITY PHILIPPINES, Petitioner, vs. NOWELLA REYES, Respondent.
VELASCO, JR., J.:
The author takes no responsibility for the validity, correctness and result of this work. The information provided is not a legal advice and it should not be used as a substitute for a competent legal advice from a licensed lawyer. See the disclaimer
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