1) What the schemes are (and why the law treats them seriously)

“Ghost employees” and “no-show salary” arrangements are payroll fraud schemes where salaries, wages, or honoraria are released without corresponding, lawful service rendered—often through fabricated employment records, falsified attendance, or “appointed but absent” arrangements. In Philippine practice, these schemes typically involve the public sector (national agencies, GOCCs, LGUs, SUCs), but similar patterns also appear in private workplaces.

Common variants include:

Fictitious personnel (pure “ghosts”)
- Names appear on payroll but the “employee” does not exist, or identity documents are fabricated.
Real person used as a ghost
- A real individual’s name is used without them actually working (sometimes with their consent, sometimes without).
“Appointed but never reported”
- A person is appointed/engaged (plantilla, casual, contractual, job order) but never performs duties; salary is still paid.
Proxy attendance / fabricated DTRs
- Daily time records (DTRs) or biometrics are manipulated; proxies sign, swipe, or certify attendance.
Payroll padding
- Extra names, inflated hours/days, or duplicate entries; or “terminated” workers left on payroll.
ATM/Payroll card control
- Someone other than the payee controls payroll cards/ATM and withdraws salary.
Salary-sharing / kickback
- The no-show receives a cut while the rest is divided among insiders (HR/payroll/accounting/approvers).
“Consultant” or “job order” no-deliverable
- Contracts exist on paper but deliverables are nonexistent, plagiarized, or rubber-stamped.

These schemes are treated harshly because they involve public funds (in government) and strike at the integrity of public service and fiscal accountability. Even in private settings, they are classic fraud and theft patterns.

2) The Philippine legal framework you have to map

A. Public sector: the core bodies of law

Ghost/no-show payroll fraud in government typically triggers three overlapping tracks:

Administrative liability (discipline of public officers/employees)
- Civil Service rules (merit system; discipline; appointments; attendance; HR/accounting duties)
- Agency rules, HR manuals, and internal control policies
Criminal liability
- Revised Penal Code (RPC): malversation, estafa, falsification, frauds against the public treasury, illegal use of public funds, etc.
- Anti-Graft and Corrupt Practices Act (R.A. 3019): especially Sec. 3(e), often Sec. 3(f), and related provisions
- Potentially Plunder (R.A. 7080) if thresholds and patterns are met
Civil/financial liability
- COA disallowances (refund and accountability rules)
- Civil actions for restitution/damages; forfeiture mechanisms in egregious cases

B. Private sector: parallel but different labels

In private workplaces, the “administrative” side is internal discipline under company rules and labor law, and the criminal side is typically:

Estafa (RPC) and/or Qualified Theft (RPC) (depending on the facts),
Falsification where documents are forged,
Plus civil recovery and employment termination for just cause.

3) Who gets exposed: the typical liability map

In payroll fraud, liability rarely rests on one person. The usual exposure chain includes:

Appointing/engaging authority (mayor, governor, head of agency, chief of office, board officials)
HR officers (appointments, service records, certifications, staffing)
Immediate supervisors (attendance verification, certification of services rendered)
Payroll preparers (payroll clerk, admin officer)
Accountants/bookkeepers (obligation and disbursement certification)
Budget officers (availability/appropriation checks)
Cashiers/treasurers (actual release of funds)
Disbursing officers
Approving officers (who approve payrolls/vouchers)
The “employee/ghost/no-show” payee (including private individuals, if complicit)
Intermediaries (ATM custody, proxies, fixers)

A frequent legal theme in Philippine cases is conspiracy—where multiple actors’ coordinated steps make each criminally responsible for the whole scheme.

4) Administrative liability in government (Civil Service / Ombudsman discipline)

A. Typical administrative offenses implicated

Depending on proof and the actor’s role, charges often include:

Dishonesty (fabricating attendance, credentials, employment status; submitting false claims)
Grave Misconduct (corruption, intent to violate the law, unlawful conduct in office)
Conduct Prejudicial to the Best Interest of the Service
Gross Neglect of Duty (approving payroll without verification; ignoring obvious red flags)
Falsification / Use of Falsified Documents (as an administrative charge, separate from criminal)
Simple Misconduct / Neglect (for lower participation but still culpable)
Habitual Absenteeism / Unauthorized Absences (for a “no-show” who is actually appointed)
Violation of reasonable office rules (attendance, DTR, performance reporting)

Under current Civil Service disciplinary rules (and for many categories of personnel), the gravest of these—especially Dishonesty and Grave Misconduct—commonly carry dismissal from the service.

B. Standard penalties and collateral consequences

Depending on the offense and gravity, penalties can include:

Dismissal from the service
Suspension (often preventive and/or as penalty)
Forfeiture of benefits (subject to rules and exceptions)
Perpetual disqualification from reemployment in government
Cancellation of eligibility
Demotion/fine/reprimand in less severe findings

For elective officials, administrative discipline may proceed under different channels (including Ombudsman and Local Government Code mechanisms), but the practical reality is that many serious payroll-fraud cases against LGU officials are pursued through the Office of the Ombudsman (administrative + criminal).

C. Key point: administrative cases are independent of criminal cases

Administrative liability uses substantial evidence (lower than criminal proof).
Criminal liability requires proof beyond reasonable doubt.
An employee can be administratively dismissed even if the criminal case is pending (or even if criminal acquittal occurs), depending on the grounds and findings.

D. Preventive suspension and “hold” measures

In high-risk integrity cases, agencies (or the Ombudsman, in appropriate matters) may impose preventive suspension to prevent interference with evidence, witnesses, and records—especially relevant for payroll fraud where records can be altered quickly.

5) COA exposure: disallowances, refund, and “who pays back”

Payroll anomalies in government almost always trigger COA audit action. Common outcomes:

Notice of Disallowance (ND): payroll payments deemed irregular/illegal/unnecessary/excessive.
Persons liable often include:
- Approving and certifying officers (who certified legality and correctness)
- Payees (who received funds without lawful basis)
- Those who caused the disallowance (directly or through negligence), depending on rules and factual findings

Refund/restitution is a major practical consequence:

Even aside from criminal conviction, COA processes can require return of unlawfully paid amounts.
Liability can be solidary among responsible officers and recipients in many scenarios.

COA findings are not automatically criminal convictions, but they are powerful:

They can be used as leads and evidence in administrative and criminal complaints.
They frame the “public funds released without legal basis” narrative.

6) Criminal liability in government: the main charges and how they fit payroll fraud

A. Revised Penal Code (RPC)

1) Malversation of Public Funds or Property (Art. 217)

This is the classic charge where:

The accused is a public officer,
Who is accountable for public funds by reason of office,
And appropriates, takes, misappropriates, or consents/permits another to take them.

How it fits ghost/no-show schemes:

If an accountable officer (treasurer, cashier, disbursing officer, or anyone legally accountable) releases salary funds to ghosts/no-shows or permits it through the chain, malversation becomes a direct fit—especially where funds are diverted for personal use or shared among conspirators.

Key practical issue: “Accountable officer” status.

Malversation is easiest to anchor on those legally accountable for funds.
Others may still be charged as co-principals if conspiracy is proven.

2) Illegal Use of Public Funds or Property (Technical Malversation) (Art. 220)

Where public funds/property are applied to a public use other than that for which they were appropriated by law or ordinance.

Payroll angle:

Less common for ghost employees (because the “use” is not genuinely public), but it can appear where payroll funds are diverted to another “public” purpose. In ghost schemes, the more typical focus is malversation or graft.

3) Estafa (Art. 315) and Other Deceits

Estafa can apply when a public officer or private person defrauds another through abuse of confidence, deceit, or fraudulent acts—sometimes charged for participants who are not accountable officers, depending on the structure of the scheme.

4) Frauds Against the Public Treasury / Illegal Exactions (Arts. 213–214)

These provisions address fraud in public contracts and improper collection/exaction. They can surface when payroll fraud is linked to contracting devices, “services” billed to government, or manipulated claims.

5) Falsification of Documents (Arts. 171–172) and Use of Falsified Documents

Payroll fraud typically depends on documents:

Appointments, PDS, service records
DTRs, attendance logs, accomplishment reports
Payroll registers, payroll summaries, disbursement vouchers
Certifications by supervisors/HR/accounting

Falsification is a frequent companion charge:

Falsification by a public officer (when committed taking advantage of official position)
Falsification by a private individual (if a private person participates)
Use of falsified documents (even if the user didn’t forge it, but knowingly used it)

The “no-show” might be liable if they signed documents attesting they worked, submitted accomplishments they didn’t do, or caused falsified attendance to be used.

B. Anti-Graft and Corrupt Practices Act (R.A. 3019)

1) Section 3(e) (the most common)

This punishes a public officer who, in the discharge of official functions, causes undue injury to any party (including government) or gives any private party unwarranted benefits, advantage, or preference, through:

manifest partiality, evident bad faith, or gross inexcusable negligence.

Why it’s powerful in ghost/no-show cases:

Paying a ghost/no-show is an unwarranted benefit.
The government suffers financial loss (undue injury).
It captures both intentional corruption (bad faith) and reckless approvals (gross inexcusable negligence).

This is often charged against:

Approving/certifying officials who signed payrolls/vouchers
Supervisors who certified attendance/service
HR who processed sham appointments
Disbursing/accounting staff who enabled payment despite red flags

2) Section 3(f) (neglect/refusal to act on benefits)

This provision deals with neglect or refusal to act on certain matters to obtain benefit or discriminate; it appears less often in straightforward ghost payroll fraud, but may be considered depending on the fact pattern.

3) Private individuals can be liable

R.A. 3019 is not limited to public officers in every scenario:

Private persons who cooperate or are co-principals/co-conspirators can be charged where the provision and facts allow.

C. Plunder (R.A. 7080) and related “big-ticket” exposure

If the scheme involves:

A public officer,
Accumulating ill-gotten wealth through a combination or series of overt criminal acts (which can include malversation, fraud, bribery, etc.),
And the aggregate amount reaches the statutory threshold (commonly discussed as ₱50 million),

then plunder may be considered. This is fact-intensive and depends on proof of a pattern/series and the qualifying status of the accused.

D. Other laws that may come into play (fact-dependent)

Code of Conduct and Ethical Standards (R.A. 6713): typically administrative/ethical breaches, also supports Ombudsman actions.
Forfeiture of unlawfully acquired property (R.A. 1379): civil forfeiture, especially if assets appear disproportionate.
Anti-Money Laundering (R.A. 9160, as amended): possible where proceeds are layered/hidden, though this is usually pursued in larger, traceable laundering patterns.

7) Private sector liability (and how it differs)

In private payroll fraud or “no-show” salary arrangements, the state-law labels typically shift:

A. Criminal exposure

Qualified Theft (if the offender is an employee/household helper and takes property with grave abuse of confidence)
Estafa (fraud through deceit/abuse of confidence)
Falsification (for forged timecards, payroll records, certifications, IDs)
Plus possible liability under special laws depending on the method (e.g., cyber-related offenses if systems are hacked—fact-dependent).

B. Employment consequences

Termination for just cause (serious misconduct, fraud, willful breach of trust, commission of a crime against the employer, analogous causes)
Restitution/civil recovery (salary paid without work, damages, return of company funds)

C. Government contributions and tax consequences

Payroll fraud can also contaminate:

Withholding tax computations
SSS/PhilHealth/Pag-IBIG remittances
Audit trails and statutory reporting These are usually consequences and evidentiary trails rather than the primary criminal charge.

8) Proof and evidence: what typically makes or breaks a case

Ghost/no-show cases are document-heavy and control-heavy. Common evidence clusters:

A. Employment and engagement records

Appointments, contracts, position descriptions, plantilla items
Oath of office, assumption-to-duty, service records
Personal Data Sheet (PDS), IDs, signatures, specimen cards

B. Attendance and performance proof

DTRs, biometrics logs, logbooks, gate passes
Accomplishment reports, outputs, deliverables
Witness statements from co-workers, supervisors, building security

C. Payroll and disbursement trail

Payroll registers, payroll summaries
Obligation requests, disbursement vouchers, certifications
Checks/ADA, bank records, payroll card issuance logs
ATM custody evidence (who held the cards/PINs), withdrawals, CCTV where available

D. COA audit findings

Audit observations, ND, supporting papers
Reconciliation reports, headcount results
Internal audit reports, spot-check memoranda

E. Behavioral and control red flags (often used to infer participation)

Same address/contact number for multiple employees
Identical handwriting/signatures across multiple payees
Attendance patterns that are too uniform
Payroll cards kept by one person or stored in office drawers
Approvals done in bulk with no verification
Rehiring/appointments timed to maximize payouts (midyear, year-end)

9) “Who is liable?”—role-by-role exposure (public sector)

A. The “ghost/no-show” payee

If complicit (knowingly receiving salary without working), exposure includes:

Administrative: dishonesty, misconduct (if they are a government employee)
Criminal: estafa and/or participation in falsification; possible graft as private party if linked with public officers; possible malversation as co-principal if conspiracy is shown
Civil: refund/restitution (COA and civil recovery)

If identity was used without consent, the real person may be a victim; investigators will look for:

Whether the person actually received funds or benefited
Whether they signed documents or authorized withdrawals

B. Immediate supervisors / certifying officers

They are often the “linchpin” for attendance/service certifications.

Administrative: neglect, misconduct, dishonesty
Criminal: falsification (if certification is knowingly false), graft (3(e)) for enabling unwarranted benefits

C. HR/personnel staff

If they processed sham appointments or tolerated non-reporting:

Administrative: dishonesty, grave misconduct, neglect
Criminal: falsification (appointments, service records), graft (3(e))

D. Payroll preparers, accountants, budget officers

Exposure depends on knowledge and red flags:

Administrative: neglect (failure to verify), misconduct (if complicit)
Criminal: graft (3(e)) for gross inexcusable negligence or bad faith; falsification if documents were falsified; participation in malversation if conspiracy is proven

E. Approving authorities (heads of office; local chief executives)

Liability hinges on:

Actual knowledge
Participation in design or cover-up
Whether approvals were ministerial or involved discretion with clear red flags

Approving officials can face:

Administrative: grave misconduct, dishonesty, conduct prejudicial
Criminal: graft (3(e)); malversation if accountable status or conspiracy; falsification if they authored/caused falsified documents

F. Disbursing officers/cashiers/treasurers

When they are the accountable officers or the final release point:

Malversation risk is high if they released funds knowing the payees were ghosts/no-shows or if they permitted improper releases.
They also face administrative dismissal-level exposure.

10) Common defenses (and their limits)

A. “Good faith” / “I relied on my staff”

Good faith can matter, especially in administrative and COA refund contexts, but its strength depends on:

Whether duties required verification
Whether red flags existed (e.g., repeated absences, identical signatures, missing documents)
Whether reliance was reasonable or amounted to gross negligence

B. “I only signed; it was routine”

Routine signing is not a universal shield. In payroll systems, the law expects particular officers to certify legality, correctness, and availability of funds. Repeated, systemic irregularities can be used to show bad faith or gross negligence.

C. “The employee did some work informally”

Courts and auditors generally look for credible, documented evidence of services rendered and lawful engagement. Vague claims without outputs, attendance records, or corroboration are weak—especially when the appointment/contract requires formal reporting.

D. “No personal benefit”

For some charges (notably graft under 3(e)), personal enrichment is not always required if the act caused undue injury or gave unwarranted benefits. For malversation, conversion/appropriation is central, but “permitting another to take” can suffice when accountability elements are met.

11) Where cases are filed and who investigates (public sector)

Depending on the respondent and nature of the case, proceedings may involve:

Office of the Ombudsman
- Administrative cases against public officers
- Criminal complaints (R.A. 3019, RPC offenses related to office)
Civil Service Commission / agency discipline
- Particularly for rank-and-file career personnel, though Ombudsman may still assert jurisdiction in many contexts
Commission on Audit
- Audit investigations, ND issuance, settlement of accounts
DOJ / prosecutors
- For criminal prosecutions within their jurisdiction, subject to rules and the proper forum
Courts
- Sandiganbayan for many graft-related cases and cases involving qualifying public officials/positions, and related offenses in appropriate circumstances
- Regional Trial Courts for others, depending on jurisdictional rules and the accused’s position/offense

12) Practical prevention and compliance controls (the “how not to end up here” section)

Organizations that successfully prevent ghost/no-show schemes typically implement layered controls:

Segregation of duties
- HR appointment ≠ payroll preparation ≠ certification of attendance ≠ approval ≠ disbursement
Strong identity and attendance systems
- Biometrics with anti-proxy controls; periodic revalidation of employees
Headcount and spot audits
- Surprise inspections, desk audits, workplace rosters
Appointment and contract integrity checks
- Verify eligibility, authority, plantilla, assumption-to-duty, and actual deployment
Output-based validation for non-time-based roles
- For job orders/consultants: clear TORs, deliverables, acceptance protocols
Payroll card governance
- Strict rules against third-party custody of cards/PINs; direct payee verification
Exception reporting
- Alerts for repeated absences with continued pay, duplicate IDs, repeated bank accounts, unusual patterns
Whistleblower-safe reporting
- Confidential channels, anti-retaliation measures, rapid evidence preservation
Document integrity
- Audit trails, controlled templates, signature verification, tamper-evident logs
Prompt COA/IAS response

Early corrective action on audit observations prevents “systemic” narratives that worsen liability

13) Bottom line: how Philippine law “classifies” ghost/no-show payroll fraud

Administratively, it is typically framed as dishonesty, grave misconduct, and/or gross neglect—often dismissal-level offenses.
Criminally (public sector), it commonly clusters into:
- R.A. 3019 Sec. 3(e) (unwarranted benefits/undue injury through bad faith or gross negligence),
- Malversation (when accountable funds are misappropriated or releases are knowingly allowed),
- Falsification (the documentary engine of the scheme),
- Sometimes estafa and related fraud provisions for certain actors and structures,
- And in extreme, aggregated, patterned cases, possible plunder exposure.
Financially, COA action can compel refund/restitution and attach accountability to approving/certifying officers and recipients.

In short: ghost employees and no-show salary schemes are not merely “HR violations.” In the Philippine setting, they are typically treated as multi-track integrity offenses—disciplinary, criminal, and audit/accountability cases moving in parallel, with liability extending beyond the payee to everyone who built, certified, approved, and paid the payroll fiction.