HR Handling of Employees with Ongoing Estafa Cases (Philippine Context)

This article is a practical, HR-focused overview. It summarizes governing principles under Philippine labor law and common best practices for private employers.

1) What is estafa and why it matters at work

Legal backdrop. Estafa (swindling) is principally punished under Article 315 of the Revised Penal Code (RPC). It generally involves deceit or abuse of confidence causing damage. Related financial-dishonesty crimes may also be charged (e.g., qualified theft, falsification, BP 22 for checks).

Workplace relevance. Roles involving money, property, records, data, or customer trust (e.g., cashiers, accountants, buyers, salespeople, warehouse custodians, IT admins) are “positions of trust.” Allegations of dishonesty—on or off duty—can impact employment because trust is core to job fitness.

2) Independence of criminal and administrative cases

Different forums, different standards. A criminal case requires proof beyond reasonable doubt; an administrative labor case (internal discipline or before the NLRC/DOLE) needs only substantial evidence.
No need to wait. Employers need not await criminal conviction or acquittal before deciding an administrative case, provided due process is observed and there is a reasonable nexus to work.
Effect of acquittal/conviction.
- Conviction for an offense involving dishonesty almost always justifies dismissal.
- Acquittal does not automatically reinstate or exonerate administratively; HR may rely on independent substantial evidence. An acquittal on “reasonable doubt” is different from a finding that “the act did not happen.”

3) When can an employee be dismissed?

Just causes (Labor Code, Art. 297 [old 282]).

Serious misconduct (e.g., dishonesty, fraud at work).
Willful breach of trust or fraud (Loss of Trust and Confidence, “LOTAC”).
Other analogous causes (e.g., falsification of records, willful dishonesty).

LOTAC essentials.

The employee must occupy a position of trust (managerial; or fiduciary rank-and-file like cashiers, auditors, property custodians).
There must be substantial evidence of acts justifying loss of trust.
Nexus to the job is required. Off-duty conduct can qualify if it reasonably impairs the employer’s trust or the company’s legitimate business interests (e.g., estafa against a client or using company channels).

Incarceration / inability to report for work. Prolonged detention preventing performance of duties may be an analogous cause for termination. HR should document the inability to work (commitment order, jail certification) and consider alternatives (leave without pay, temporary substitution) before dismissal.

No separation pay for just causes. As a rule, dismissal for just cause does not entitle the employee to separation pay (except in narrow, equitable scenarios not involving serious misconduct or moral turpitude).

4) Due process: the “twin-notice” and hearing rule

Procedural due process in terminations for just cause requires:

First written notice (charge sheet).
- Specific facts: dates, amounts, counterparties, documents, company policies breached.
- State that dismissal is a possible penalty.
- Provide reasonable time to respond (commonly 5 calendar days).
Opportunity to be heard.
- Written explanation plus administrative conference/hearing if requested or if credibility is central.
- Allow counsel or a representative (especially in complex cases).
Second written notice (decision).
- Clearly state the findings, the evidence relied upon, the legal/policy grounds, the penalty, and the effectivity date.

Documentation tips. Maintain a case file: complaint, audit reports, CCTV logs, emails, inventory sheets, witness statements, minutes, notices (with proof of receipt), and the decision.

5) Preventive suspension (not a penalty)

Purpose. To remove the employee from the workplace while investigating when their presence poses a serious and imminent threat to company property or co-employees, or risks evidence tampering.

Key rules (private sector, DOLE guidelines).

Maximum 30 calendar days without pay while the investigation proceeds.
If more time is needed, the employer may extend but must pay wages and benefits during the extension.
Preventive suspension is not dismissal; investigate diligently and resolve promptly.

6) Evidence handling and internal investigation

Plan the scope. Define what you’re proving: misappropriation? falsified documents? client deception?
Preserve evidence. Secure records, devices, audit logs; suspend access rights as needed; maintain chain-of-custody notes.
Interview fairly. Use open-ended questions; avoid coercion; record dates/times; have a witness.
Coordinate (when necessary). If law enforcement is involved, cooperate but do not obstruct; route requests through Legal/Compliance.
Avoid sub judice pitfalls. Don’t publish prejudicial statements about a pending criminal case; keep communications “need-to-know.”

7) Handling off-duty estafa cases

General rule. Off-duty acts are not automatically punishable. HR must show legitimate business interest and reasonable connection to the employee’s fitness for the role.

Illustrative scenarios:

A treasury staff charged with estafa for duping a supplier of the same industry—strong LOTAC.
A warehouseman charged for a purely domestic dispute—weak nexus, unless facts show dishonesty affecting workplace trust.

Interim measures short of dismissal:

Reassignment away from cash/asset custody (without demotion or pay cut unless justified).
Access controls and enhanced supervision.
Performance improvement plans if job standards are implicated.
Administrative reprimand for related policy breaches.

8) Interaction with company policy and CBAs

Code of Conduct. Should define dishonesty, fraud, falsification, misappropriation, conflict of interest, and sanctions.
Investigation rules. Timelines, composition of the fact-finding panel, and rights of the employee.
CBA/handbook controls. Honor grievance procedures, union representation rights, and any agreed discipline matrix.

9) Pay, benefits, and records during a pending case

Wages during preventive suspension: unpaid up to 30 days; paid if extended.
13th-month, leaves, benefits: accrue according to company policy and law while employed; benefits cease upon lawful dismissal.
Withholding final pay: Only after termination; release within 30 days from separation per DOLE advisories, subject to clearance.
Bonds/guarantees. If a fidelity bond exists, give prompt notice to the surety per the bond terms.

10) Data Privacy considerations (DPA 2012)

Criminal history = Sensitive Personal Information (SPI). Process on a lawful basis: legal obligation, establishment/defense of legal claims, or legitimate interests that do not override the employee’s rights.
Minimize and secure. Limit access to HR/Legal/Investigation teams; use need-to-know sharing; keep audit trails; encrypt digital evidence.
Disclosures. Avoid company-wide blasts. External disclosures should be legally required (e.g., to regulators, courts, law enforcement) or consent-backed where appropriate.
Retention. Keep only as long as necessary for the case, legal defense, or statutory periods; then securely dispose.

11) Government and court processes intersecting work

Subpoenas / court attendance. Allow reasonable time off to comply; require official notices; record absences as official business where appropriate.
Search warrants. Route through Legal/Compliance immediately; cooperate within scope of the warrant.
Garnishments/attachments. If served on wages or property, follow legal procedures and inform the employee.

12) Special situations

Resignation during investigation. You may allow it, but the company can continue fact-finding and pursue recovery (civil/criminal) and record the resignation as “pending case” per policy.
Settlement/Restitution. Restitution may mitigate penalty but does not automatically erase liability for serious misconduct.
Whistleblowers and retaliation. Protect complainants and witnesses; discipline retaliation separately.
Remote work. Secure digital forensics; suspend credentials; capture logs from SaaS/ERP; follow Bring-Your-Own-Device policies.

13) Practical HR playbook (checklist)

At first report of alleged estafa:

Acknowledge complaint; assign a case owner (HR/Legal).
Risk-assess: asset exposure, evidence integrity, safety, client impact.
Implement preventive measures (access holds, reassignment, preventive suspension if warranted).
Issue Notice to Explain with specific facts and policies breached.
Conduct hearing/conference; document everything.

Decision phase: 6. Evaluate under serious misconduct / fraud / LOTAC / analogous cause; ensure nexus to job. 7. Prepare a reasoned decision (facts, evidence, rule violated, legal basis, penalty). 8. If dismissal: observe last-pay protocols, return of property, revocation of accesses, exit records. 9. If lesser penalty: written warning/suspension/reassignment; set monitoring plan.

Aftercare: 10. Notify affected clients/regulators on a need-to-know basis; recover assets; claim on bonds if any. 11. Strengthen controls (segregation of duties, dual custody, reconciliations). 12. Close the loop: file retention, privacy compliance, lessons learned.

14) Hiring and ongoing screening

Pre-employment checks. NBI/Police clearances are common and lawful; use job-related criteria and avoid blanket denials untethered to the role.
Ongoing checks. Where contractually allowed and proportionate, periodic re-vetting for high-trust roles can be justified.
Fairness. Consider the nature of the charge, recency, rehabilitation, and the actual job risks.

15) Common pitfalls to avoid

Waiting for a criminal verdict before acting administratively despite clear internal evidence.
Issuing vague notices (“You committed estafa”) without specifics.
Using preventive suspension as a penalty or letting it run past 30 days unpaid.
Terminating for off-duty conduct without proving job nexus.
Oversharing case details (privacy breach) or defaming the employee.
Failing to preserve electronic evidence (email, logs, CCTV).

16) Model policy clauses (short samples)

Dishonesty & Fraud. “Any act of fraud, misappropriation, falsification, or deception—whether on duty or off duty—that reasonably undermines the Company’s trust in an employee occupying a position of trust constitutes serious misconduct and is punishable by dismissal, after due process.”

Preventive Suspension. “When the employee’s continued presence poses a serious and imminent threat to persons or property, the Company may impose preventive suspension for up to 30 calendar days pending investigation. Any extension shall be with pay.”

Data Privacy. “The Company processes sensitive personal information (including criminal records) strictly for legitimate HR, security, or legal purposes, on a need-to-know basis, with appropriate safeguards and retention limits.”

17) Quick decision tree

Is there credible evidence of dishonesty? → Yes: Consider LOTAC/serious misconduct route; start due process. → No/unclear: Secure evidence, consider reassignment; do not rush to dismiss.
Is the role one of trust? → Yes: Lower tolerance for risk; LOTAC may apply on substantial evidence. → No: Prove direct job nexus; consider proportionate sanctions.
Is the employee detained or unable to work? → Yes: Explore leave/LWOP; prolonged inability may be an analogous cause. → No: Proceed with investigation; consider preventive suspension if needed.

18) Key takeaways

You can resolve the administrative case independently of the criminal case.
Twin-notice + hearing is non-negotiable.
Preventive suspension is temporary and mostly unpaid (first 30 days).
For off-duty charges, always prove nexus to the job or business interests.
Handle information as Sensitive Personal Information under the DPA; restrict and secure it.

Final word

Every case turns on facts. Apply these principles consistently, document thoroughly, and calibrate actions to the employee’s role, the evidence strength, and the company’s risk. For high-stakes decisions (e.g., termination in a unionized setting, cases involving major clients, or cross-border implications), consult counsel to tailor the approach to your specific facts.