In the Philippines, it is extremely common for co-workers to lend money to each other. Salaries are often low, emergencies arise, and a culture of “utang na loob” makes borrowing from colleagues feel natural and low-risk. When the borrower fails or refuses to pay, the lender often feels betrayed twice — once financially and again emotionally, because the workplace becomes tense and awkward. Frustration leads to the question: “Pwede ko ba siyang ipa-terminate sa company dahil hindi niya binabayaran ang utang niya?”

The short and direct answer is: No. A purely personal debt between co-workers is not a valid ground to terminate employment under Philippine labor law. You cannot file a complaint — whether with HR, management, or the Department of Labor and Employment (DOLE) — that will result in the borrower being legally dismissed solely because of an unpaid personal loan.

Valid Grounds for Termination Under the Labor Code

The Labor Code (Presidential Decree No. 442, as amended) strictly limits the just causes for termination in Articles 297–299 (formerly 282–284):

Serious misconduct or willful disobedience
Gross and habitual neglect of duties
Fraud or willful breach of trust
Commission of a crime or offense against the employer or his family
Analogous causes

A personal loan between co-workers does not fall under any of these categories. The Supreme Court has repeatedly ruled that off-duty conduct or purely personal transactions that do not affect the company’s business or the employee’s work performance cannot be used as basis for dismissal (e.g., Fujitsu Computer Products Corp. of the Philippines v. CA, G.R. No. 158232, 2005; Challenge Socks Corp. v. CA, G.R. No. 165268, 2008).

Even “loss of trust and confidence” — often invoked by employers — applies only when the employee occupies a position of trust and responsibility or when the act directly prejudices the company. Borrowing money from a co-worker and failing to pay does not automatically constitute loss of trust against the employer.

When Personal Debt Can Indirectly Lead to Disciplinary Action or Termination

While the debt itself is not a ground, certain behaviors connected to the debt can become valid grounds:

Workplace harassment or threats
If the borrower (or the lender) harasses, threatens, shames, or spreads rumors about the other party inside the office, during working hours, or using company resources (e.g., company Group Chat, email, or bulletin board), this becomes serious misconduct or conduct unbecoming that creates a hostile work environment. The aggrieved party can file a formal complaint with HR, and the company may impose suspension or even dismissal after due process.
Habitual borrowing that affects work performance or company reputation
Some companies consider chronic borrowing from multiple co-workers as “notorious indebtedness” or behavior that brings disgrace to the company. The Supreme Court has upheld dismissal in rare cases where the employee’s habitual borrowing and non-payment became so notorious that it affected office morale and the company’s image (see Etcuban v. Sulpicio Lines, G.R. No. 148410, 2003, although the main issue there was insubordination). This is the exception, not the rule.
Use of company salary loan or payroll deduction scheme fraudulently
If the borrower used the company’s salary loan facility or forged a payroll deduction authorization, that is fraud/qualified theft and is a clear just cause for termination.
Debt collection done in a violent or criminal manner
If the lender resorts to violence, grave threats, grave coercion, or unjust vexation inside the workplace, the lender can be disciplined or dismissed.

Criminal Complaints and Their Effect on Employment

Many lenders file criminal cases hoping it will pressure the employer to fire the borrower. The common cases are:

Estafa (Art. 315, Revised Penal Code) – if there was deceit (e.g., false pretense of having money or intent to pay)
B.P. 22 (Bouncing Checks Law) – if payment was by post-dated check that bounced
Other light threats, grave coercion, unjust vexation – if collection became harassing

Filing these cases is your right, but conviction does not automatically mean termination. The Labor Code allows dismissal for commission of a crime only when it is against the employer, his family, or representatives. A crime against a co-worker does not qualify unless the company can prove it seriously affects business operations or office peace.

In practice, however, many companies terminate or force resignation of employees with pending serious criminal cases (especially estafa or theft) to avoid liability or bad publicity, even if technically not required by law.

Remedies Available to the Lender (Creditor)

Since termination is not possible, here are your real legal options:

File a civil case for collection of sum of money (with damages and interest) in the barangay (if ≤ ₱400,000 in Metro Manila or ≤ ₱200,000 outside) or small claims court (≤ ₱1,000,000 as of 2025). This is the fastest and cheapest way.
File criminal cases (estafa or B.P. 22) if elements are present. A conviction in B.P. 22 carries jail time and will appear in NBI/police clearance, making future employment difficult.
File a formal complaint with HR if the borrower is harassing you or spreading rumors at work.
Demand through a lawyer’s letter – often enough to make the borrower pay to avoid court.

What Will NOT Work

Filing a complaint with DOLE asking for the borrower’s termination → DOLE will dismiss it outright for lack of jurisdiction.
Telling management “Ipapa-terminate ko siya kung hindi niya ako binayaran” → This can backfire; you may be the one disciplined for grave threats or coercion.
Posting about the debt on social media and tagging the company → You can be sued for cyberlibel and dismissed for serious misconduct.

Conclusion

Under Philippine law, you cannot legally cause a co-worker to be terminated simply because he or she owes you money from a personal loan. The debt is a private civil matter between you and the borrower, not between the borrower and the company. Termination requires a direct, substantial, and work-related offense against the employer.

Your realistic remedies are civil collection, small claims, or criminal complaints (estafa/B.P. 22) if applicable — not using the employment relationship as leverage for debt collection. Attempting to weaponize HR or management to collect a personal debt often backfires and can make you the one facing disciplinary action.

Lend only what you can afford to lose, document everything (promissory note, text messages, witnesses), and treat workplace lending as a personal risk, not a company concern.