Employee Theft Investigation in the Philippines: HR Due Process, Notice to Explain (NTE), and Criminal Complaints

Introduction

Employee theft, often classified as a form of serious misconduct under Philippine labor laws, poses significant challenges for employers in maintaining workplace integrity and operational efficiency. In the Philippines, handling such incidents requires strict adherence to legal frameworks to ensure fairness, protect employee rights, and avoid potential liabilities for wrongful dismissal. This article provides a comprehensive overview of the processes involved in investigating employee theft, including Human Resources (HR) due process, the issuance of a Notice to Explain (NTE), administrative hearings, potential dismissal, and the filing of criminal complaints. It draws from key provisions of the Labor Code of the Philippines (Presidential Decree No. 442, as amended), Department of Labor and Employment (DOLE) regulations, Supreme Court jurisprudence, and related criminal laws under the Revised Penal Code (Act No. 3815, as amended).

The Philippine legal system emphasizes the balance between an employer's management prerogative and an employee's constitutional right to security of tenure. Article 297 of the Labor Code outlines just causes for termination, including serious misconduct such as theft, which can lead to dismissal without entitlement to separation pay. However, any action must comply with procedural due process to prevent claims of illegal dismissal, which could result in reinstatement, backwages, and damages.

Understanding Employee Theft as a Ground for Discipline

Employee theft refers to the unauthorized taking of company property, resources, or funds with intent to deprive the employer permanently. Under Philippine law, it falls under "serious misconduct" as defined in Article 297(a) of the Labor Code, which includes willful acts that are improper or wrong by nature and detrimental to the employer's interests. Theft can range from petty pilferage (e.g., office supplies) to large-scale embezzlement (e.g., falsifying financial records).

Jurisprudence from the Supreme Court, such as in cases like Santos v. NLRC (G.R. No. 115795, 1998) and PLDT v. NLRC (G.R. No. 80609, 1988), establishes that theft must be proven by substantial evidence—the degree required in administrative proceedings. This is lower than the "proof beyond reasonable doubt" standard in criminal cases but higher than mere suspicion. Employers must demonstrate that the act was willful, involved company property, and caused actual or potential harm.

Theft may also intersect with other just causes, such as fraud or willful breach of trust under Article 297(c), particularly for employees in positions of confidence (e.g., cashiers or managers). In Cosep v. NLRC (G.R. No. 124965, 1998), the Court ruled that even small-value theft can justify dismissal if it erodes trust.

HR Due Process: The Twin Notice Rule

Philippine labor law mandates procedural due process for any disciplinary action leading to dismissal. This is enshrined in Article 292(b) of the Labor Code and DOLE Department Order No. 147-15 (Rules on Implementing Articles 106 to 109 of the Labor Code, as amended). Failure to observe due process can render a dismissal illegal, even if substantively justified, as seen in King of Kings Transport, Inc. v. Mamac (G.R. No. 166208, 2007).

The "Twin Notice Rule" is the cornerstone of HR due process:

First Notice: Notice to Explain (NTE)
The NTE is a written notice served to the employee, detailing the alleged misconduct (theft), the specific acts or omissions, and the evidence against them. It must:
- Be clear and concise, avoiding vague language.
- Cite the company policy violated (e.g., Code of Conduct prohibiting theft).
- Provide a reasonable period (typically 5 calendar days) for the employee to submit a written explanation.
- Be served personally or via registered mail to the employee's last known address.
The NTE ensures the employee is informed of the charges and given an opportunity to defend themselves, aligning with the constitutional right to due process under Section 1, Article III of the 1987 Philippine Constitution.
Opportunity to Be Heard: Administrative Investigation or Hearing
After the NTE, the employer must conduct an administrative investigation. This may involve:
- Reviewing the employee's written explanation.
- Holding a formal hearing or conference where the employee can present evidence, witnesses, and arguments.
- Allowing the employee to be assisted by a representative (e.g., union officer or counsel), though not mandatory unless specified in the collective bargaining agreement (CBA).
The hearing must be fair and impartial. In Perez v. Philippine Telegraph and Telephone Company (G.R. No. 152048, 2009), the Supreme Court emphasized that the essence of due process is the opportunity to explain one's side, not necessarily a full-blown trial.
Second Notice: Notice of Decision
If the investigation finds the employee guilty, a Notice of Decision is issued, stating:
- The findings and evidence supporting the decision.
- The penalty imposed (e.g., dismissal).
- The effective date of termination.
For theft, dismissal is common, but lesser penalties like suspension may apply for first offenses or mitigating circumstances (e.g., under DOLE guidelines on progressive discipline).

Employers must document all steps meticulously, as these records are crucial in defending against illegal dismissal complaints filed with the National Labor Relations Commission (NLRC).

Investigation Procedures

Before issuing an NTE, employers should conduct a preliminary investigation to gather substantial evidence. This may include:

Surveillance and Audits: Reviewing CCTV footage, inventory records, or financial audits. Evidence must be admissible and not obtained illegally (e.g., respecting privacy rights under Republic Act No. 10173, the Data Privacy Act of 2012).
Witness Statements: Collecting affidavits from co-workers or supervisors.
Incident Reports: Formal reports from security or HR personnel.
Polygraph or Lie Detector Tests: Permissible but not conclusive evidence, as per Supreme Court rulings like People v. Gambao (G.R. No. 172707, 2013), and must be voluntary.

During the investigation, employers should suspend the employee preventively (with pay) if their presence poses a threat, as allowed under Article 302 of the Labor Code, limited to 30 days.

If the theft involves multiple employees or complex schemes, employers may engage external investigators or forensic auditors, ensuring compliance with labor standards.

Criminal Complaints: Parallel Proceedings

While HR due process handles employment termination, theft is also a criminal offense under the Revised Penal Code (RPC):

Theft (Article 308, RPC): Punishable by arresto mayor (1-6 months imprisonment) to prision mayor (6 years and 1 day to 12 years), depending on the value stolen. If the value exceeds P50,000, it may qualify as qualified theft under Article 310, with higher penalties.
Estafa (Article 315, RPC): If theft involves abuse of confidence or deceit, such as embezzlement by a trusted employee.

Employers can file a criminal complaint independently of the administrative process. Key steps include:

Filing with the Prosecutor's Office: Submit a complaint-affidavit with evidence to the Office of the City or Provincial Prosecutor for preliminary investigation.
Preliminary Investigation: The prosecutor determines probable cause. The accused (employee) can file a counter-affidavit.
Information Filing: If probable cause is found, an information is filed in court, leading to trial.
Civil Liability: Criminal conviction may include restitution or damages, recoverable civilly.

Importantly, administrative and criminal proceedings are separate. Acquittal in criminal court (requiring proof beyond reasonable doubt) does not bar dismissal, as administrative cases use substantial evidence (Office of the Ombudsman v. De Sahagun, G.R. No. 167982, 2008). Conversely, dismissal does not preclude criminal prosecution.

Employers must avoid using criminal threats to coerce settlements, as this could violate anti-coercion laws.

Special Considerations

Unionized Employees: CBAs may impose additional due process requirements. Violations can lead to unfair labor practice charges under Article 258 of the Labor Code.
Probationary Employees: Easier to terminate but still require due process for misconduct.
Mitigating Factors: Courts consider length of service, first offense, or remorse in assessing penalties (Mitsubishi Motors Philippines Corp. v. Chrysler Philippines Labor Union, G.R. No. 148738, 2004).
Post-Dismissal Obligations: Issue Certificate of Employment and release final pay within 30 days, minus deductions for damages if proven.
Remedies for Employees: Aggrieved employees can file illegal dismissal complaints with DOLE or NLRC, potentially leading to reinstatement and backwages.
Preventive Measures: Employers should implement robust internal controls, like regular audits, clear policies, and employee training on ethics, to deter theft.

Conclusion

Handling employee theft in the Philippines demands a meticulous balance of swift action and legal compliance. By adhering to HR due process, including the proper issuance of NTE and conduct of hearings, employers safeguard against liabilities while upholding justice. Simultaneously, pursuing criminal complaints reinforces accountability under the law. Employers are advised to consult legal experts for case-specific guidance, as jurisprudence evolves and facts vary. This framework not only protects business interests but also fosters a fair workplace environment.