I. Introduction

Theft committed by an employee against the employer or company property is one of the most unequivocally valid grounds for dismissal under Philippine labor law. It strikes at the heart of the employment relationship: trust, honesty, and fidelity. The Supreme Court has repeatedly held that dishonesty in any form, particularly theft, justifies termination even on the first offense and regardless of the monetary value involved. This article exhaustively discusses the legal bases, procedural and substantive requirements, jurisprudential development, evidentiary standards, interplay with criminal law, and practical implications of dismissing an employee for theft.

II. Legal Framework Governing Termination for Cause

The governing law is the Labor Code of the Philippines (Presidential Decree No. 442, as amended), particularly Article 297 (formerly Article 282), which enumerates the just causes for termination by the employer:

An employer may terminate an employment for any of the following causes:

(a) Serious misconduct or willful disobedience…
(b) Gross and habitual neglect…
(c) Fraud or willful breach of the trust reposed in him by his employer or duly authorized representative;
(d) Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representatives; and
(e) Other causes analogous to the foregoing.

Theft by an employee falls squarely under three (3) of these grounds, often simultaneously:

Serious misconduct
Willful breach of trust (loss of confidence)
Commission of a crime or offense against the employer

III. Theft as a Just Cause for Dismissal

A. Theft as Serious Misconduct

Serious misconduct requires:
(1) The misconduct must be serious or of grave character;
(2) It must relate to the performance of the employee’s duties;
(3) It must show that the employee has become unfit to continue working for the employer.

Theft of company property, cash, or goods — no matter how small the value — has been consistently ruled as serious misconduct because it involves moral depravity and dishonesty. The Supreme Court has explicitly held that the amount or value stolen is immaterial; what matters is the fact of taking without consent and the breach of trust it represents (Nagkakaisang Lakas ng Manggagawa ng Coca-Cola FEMSA Philippines v. Coca-Cola FEMSA Philippines, G.R. No. 243094, July 28, 2020; Reno Foods, Inc. v. Nagkakaisang Lakas ng Manggagawa (NLU)-Katipunan, G.R. No. 164174, March 28, 2008).

Even theft of scrap materials, leftover food, or items considered “abandoned” by the employee has been upheld as serious misconduct (Sagara Metro Plastics Industrial Corporation v. NLRC, G.R. No. 119060, August 10, 1995; Philippine Airlines, Inc. v. NLRC, G.R. No. 114765, July 24, 1998).

B. Theft as Willful Breach of Trust and Confidence

Loss of trust and confidence has two categories:

Managerial employees — mere existence of a basis for believing that the employee has breached the trust of the employer is sufficient, even if the breach is slight.
Rank-and-file employees occupying positions of trust (cashiers, warehouse personnel, drivers, security guards, etc.) — the breach must be willful and must involve some substantial evidence of dishonesty.

For fiduciary rank-and-file positions, theft is the classic example of willful breach of trust. The Court has ruled that once an employee occupies a position where trust and confidence is reposed (handling money, merchandise, or property), theft constitutes betrayal of that trust and justifies immediate dismissal (Bago v. NLRC, G.R. No. 170010, April 18, 2007; Bristol Myers Squibb (Phils.) Inc. v. Baban, G.R. No. 167449, December 17, 2008).

Even for ordinary rank-and-file employees not in positions of trust, theft can still be a ground under serious misconduct or commission of a crime.

C. Theft as Commission of a Crime or Offense Against the Employer

Article 297(d) explicitly allows dismissal when the employee commits a crime against the employer or its representatives. Theft (simple or qualified) under Articles 308–310 of the Revised Penal Code qualifies. Qualified theft applies when the offender abuses the confidence reposed by the employer (e.g., a cashier, stockman, or driver).

Importantly, conviction in the criminal case is not required for dismissal. The labor case is separate and proceeds on the basis of substantial evidence only.

IV. Procedural Due Process Requirements (The Twin-Notice Rule)

Even if theft is proven beyond doubt, failure to observe procedural due process renders the dismissal illegal.

The requirements under DOLE Department Order No. 147-15 and jurisprudence (King of Kings Transport, Inc. v. Mamac, G.R. No. 166208, June 29, 2007) are:

First Written Notice (Notice to Explain or NTE)
- Must specify the specific act of theft (date, time, item stolen, value, witnesses, CCTV footage if any)
- Must cite the particular company rule violated and the possible penalty (dismissal)
- Must give the employee at least five (5) calendar days to submit a written explanation
- Must be served properly (personal delivery with acknowledgment or registered mail)
Ample Opportunity to be Heard
- Formal hearing/conference is mandatory only if the employee requests it in writing or if the explanation is inadequate
- The hearing need not be trial-type; a chance to present evidence or witnesses is sufficient
- The employer must genuinely consider the employee’s explanation
Second Written Notice (Notice of Termination)
- Must state that after due consideration, the employer has decided to terminate for the specific ground of theft
- Must state the facts found and the law/company rule violated
- Must be issued within a reasonable time (no strict 30-day rule anymore after Unilever Philippines v. Rivera, G.R. No. 201701, June 3, 2019)

Failure in any of these steps results in illegal dismissal, entitling the employee to full backwages, reinstatement (or separation pay in lieu if strained relations), moral/exemplary damages, and 10% attorney’s fees.

V. Substantive Due Process: Evidentiary Standards

The employer bears the burden of proving just cause by substantial evidence — “that amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion.”

Acceptable evidence includes:

CCTV footage (widely accepted even without audio)
Security guard blotter or incident report
Inventory discrepancies coupled with opportunity
Witness testimonies
Confession or admission
Recovery of stolen items
Photographs or videos from mobile phones

Mere suspicion or circumstantial evidence that does not reach substantial evidence is insufficient (Bukidnon Doctors’ Hospital v. NLRC, G.R. No. 169563, March 28, 2008).

VI. Key Supreme Court Decisions on Theft Dismissals

Coca-Cola FEMSA Philippines v. Villanueva (G.R. No. 243094, July 28, 2020) — Theft of two bottles of soft drinks worth ₱60 justified dismissal.
Reno Foods, Inc. v. Nagkakaisang Lakas ng Manggagawa (G.R. No. 164174, March 28, 2008) — Theft of company property worth ₱200 upheld.
Philippine Long Distance Telephone Co. v. Tiamson (G.R. No. 164684, November 11, 2005) — Even a single act of dishonesty justifies loss of confidence.
Fujitsu Computer Products Corp. of the Phils. v. CA (G.R. No. 158232, March 31, 2005) — Theft of scrap materials dismissed as valid.
Concepcion v. Minex Import Corporation (G.R. No. 153569, January 24, 2012) — Employee caught on CCTV stealing company property; dismissal upheld.
Challenge Socks Corporation v. CA (G.R. No. 165268, November 8, 2006) — Theft of socks worth ₱300 justified termination.

The Court has never overturned a dismissal for theft when procedural and substantive due process were both observed.

VII. Interplay Between Criminal and Labor Cases

Acquittal in the criminal case (requiring proof beyond reasonable doubt) does not automatically mean illegal dismissal. The labor tribunal applies only substantial evidence (Mendoza v. HMS Credit Corporation, G.R. No. 187232, April 17, 2013).
Conviction in the criminal case conclusively establishes just cause for dismissal.
The employer may file the criminal case separately; it is not required for dismissal.
If the employee is preventively suspended and later acquitted criminally but found guilty in the labor case, the dismissal stands.

VIII. Consequences of Valid vs Invalid Dismissal

Valid dismissal for theft:

No separation pay (no financial assistance, even on equity grounds, because of dishonesty)
No backwages
Forfeiture of retirement benefits if company policy or CBA so provides
Possible blacklisting in the industry

Invalid dismissal (procedural or substantive lapse):

Reinstatement without loss of seniority rights
Full backwages from date of dismissal until actual reinstatement or finality of decision
Separation pay in lieu of reinstatement if strained relations exist (usually 1 month per year of service)
Moral and exemplary damages if bad faith is proven
10% attorney’s fees on the monetary award

IX. Best Practices for Employers

Maintain clear company rules on theft and dishonesty with explicit penalty of dismissal.
Install CCTV in strategic areas (with proper notice to employees under Data Privacy Act).
Conduct immediate investigation upon discovery.
Place the employee under preventive suspension (maximum 30 days) with notice.
Document everything meticulously.
Serve notices properly and keep proof of service.
Conduct a genuine hearing even if not requested.

X. Rights and Remedies of the Accused Employee

The employee has the right to:

Receive a detailed NTE
Submit a written explanation and evidence
Request a formal hearing
Be assisted by counsel or union representative
File an illegal dismissal case within 4 years from dismissal
Claim monetary awards if dismissal is declared illegal

XI. Conclusion

Under Philippine law, theft by an employee is the clearest and most indefensible ground for dismissal. The Supreme Court has been consistent for decades: no amount is too small, no explanation excuses dishonesty, and no employer is required to retain a thief in its employ. When procedural due process is scrupulously followed and substantial evidence exists, dismissal for theft is virtually unassailable before the NLRC, Court of Appeals, and Supreme Court. Employers who observe the law protect themselves fully; those who cut corners do so at their extreme peril.