Introduction

Employee theft, particularly the misappropriation of funds, poses a significant threat to businesses in the Philippines. This act not only undermines financial stability but also erodes trust within the organization. Under Philippine law, such misconduct can be addressed through a combination of criminal, civil, and administrative remedies. The primary legal frameworks governing this issue include the Revised Penal Code (RPC), the Civil Code, and labor laws under the Labor Code of the Philippines. This article provides a comprehensive overview of the legal steps a business owner or employer should take when discovering that an employee has stolen money, ensuring compliance with due process while pursuing justice and recovery.

Key considerations include the nature of the theft—whether it involves simple theft, qualified theft, or estafa (swindling)—and the employer's obligations to avoid unlawful dismissal claims. Employers must act promptly, gather solid evidence, and navigate the judicial system effectively. While criminal prosecution punishes the offender, civil actions focus on restitution, and administrative proceedings handle employment termination.

Understanding the Legal Basis for Employee Theft

Criminal Liabilities

In the Philippines, employee theft of money is typically prosecuted under the RPC. The specific offenses depend on the circumstances:

Theft (Article 308, RPC): This occurs when an employee takes money belonging to the employer without consent, with intent to gain. The penalty is based on the value stolen, ranging from arresto menor (1-30 days) for amounts under PHP 5 to reclusion temporal (12-20 years) for larger sums.
Qualified Theft (Article 310, RPC): If the theft is committed by a domestic servant or with abuse of confidence (common in employee-employer relationships), it is elevated to qualified theft. Penalties are increased by two degrees, making it a more serious crime. For example, stealing PHP 12,000 could result in prision mayor (6-12 years).
Estafa (Article 315, RPC): This applies if the employee misappropriates funds entrusted to them, such as cashiers or accountants handling company money. Elements include fraud, damage, and abuse of confidence. Penalties vary by amount: for over PHP 22,000, it can lead to reclusion temporal. Subparagraph 1(b) specifically covers misappropriation of money received in trust.

The Supreme Court has ruled in cases like People v. Mejia (G.R. No. 212197, 2015) that the distinction between theft and estafa hinges on whether the money was juridically possessed by the employee (estafa) or merely physically held (theft).

Civil Liabilities

Beyond criminal penalties, the employer can seek civil damages under Article 2176 of the Civil Code for quasi-delict or under Article 100 of the RPC, which allows civil liability ex delicto (arising from the crime). This includes actual damages (the stolen amount), moral damages (for emotional distress), exemplary damages (to deter similar acts), and attorney's fees.

In Makati Stock Exchange v. Campos (G.R. No. 138814, 2009), the Court emphasized that civil recovery can proceed independently of the criminal case, though acquittal on reasonable doubt does not bar civil action if preponderance of evidence supports liability.

Labor and Administrative Aspects

Under the Labor Code (Presidential Decree No. 442), theft constitutes just cause for termination under Article 297 (formerly 282) for serious misconduct or loss of trust and confidence. However, employers must follow due process as outlined in Department of Labor and Employment (DOLE) regulations to avoid illegal dismissal claims, which could lead to reinstatement or backwages.

Step-by-Step Legal Process for Employers

When suspecting or discovering employee theft, employers should follow a structured approach to build a strong case while minimizing legal risks.

Step 1: Internal Investigation and Evidence Gathering

Conduct a Discrete Audit: Immediately review financial records, CCTV footage, transaction logs, and witness statements. Engage an internal auditor or forensic accountant if necessary to quantify the loss and trace the misappropriation.
Document Everything: Collect affidavits from witnesses, bank statements, receipts, and any admissions. Preserve digital evidence like emails or system logs in compliance with the Data Privacy Act (Republic Act No. 10173) to avoid privacy violations.
Avoid Confrontation Risks: Do not accuse the employee prematurely to prevent defamation claims under Article 353 of the RPC. Instead, suspend the employee preventively (up to 30 days under DOLE rules) if there's prima facie evidence, as per Philippine Airlines v. NLRC (G.R. No. 123294, 1998).

This phase is crucial, as weak evidence can lead to case dismissal. The burden of proof in criminal cases is beyond reasonable doubt, while civil and labor cases require preponderance of evidence and substantial evidence, respectively.

Step 2: Administrative Action – Termination of Employment

Issue a Notice to Explain (NTE): Send a written notice detailing the allegations, giving the employee at least 5 days to respond, as mandated by DOLE Department Order No. 147-15. Specify the acts constituting theft and request an explanation.
Hold a Hearing or Conference: Allow the employee to defend themselves with union representation if applicable. Document the proceedings.
Render a Decision: If guilt is established, issue a termination notice citing the grounds. Pay final wages but withhold amounts related to the theft, subject to legal offset rules under Article 1278 of the Civil Code.
File with DOLE: Report the termination to the regional DOLE office within 30 days.

Failure to follow twin-notice rule can result in illegal dismissal, as seen in King of Kings Transport v. Mamac (G.R. No. 166208, 2007), leading to full backwages and reinstatement.

Step 3: Filing a Criminal Complaint

Report to the Police: File a blotter report or complaint-affidavit at the nearest police station. Provide all evidence for the issuance of a warrant if needed.
Preliminary Investigation at the Prosecutor's Office: The case goes to the city or provincial prosecutor under the National Prosecution Service (Department of Justice). Submit a complaint-affidavit swearing to the facts. The employee (respondent) can file a counter-affidavit.
Resolution and Information: If probable cause is found, the prosecutor files an Information in court. Otherwise, the complaint is dismissed, appealable to the DOJ Secretary.
Court Proceedings: The case proceeds to arraignment, pre-trial, trial, and judgment at the Municipal Trial Court (for penalties under 6 years) or Regional Trial Court (higher penalties). The employer acts as private complainant.

Timelines vary: Preliminary investigations should conclude within 60 days, but trials can take 1-3 years. Bail is available unless the penalty is reclusion perpetua.

Step 4: Pursuing Civil Recovery

Independent Civil Action: File a complaint for damages at the Regional Trial Court, regardless of the criminal outcome. Jurisdiction depends on the amount: MTC for under PHP 400,000 (outside Metro Manila) or PHP 500,000 (within).
Reservation in Criminal Case: During the criminal trial, reserve the right to file a separate civil action to avoid consolidation.
Execution of Judgment: If successful, enforce via writ of execution, garnishing the employee's assets or wages.

Interest on the stolen amount accrues at 6% per annum from judicial demand under Article 2209 of the Civil Code.

Step 5: Post-Incident Measures and Prevention

Insurance Claims: If the business has fidelity insurance (covering employee dishonesty), file a claim with supporting documents from the investigation.
Report to Regulatory Bodies: For regulated industries (e.g., banking under Bangko Sentral ng Pilipinas), report the incident as required.
Preventive Strategies: Implement internal controls like segregation of duties, regular audits, and background checks. Train employees on ethics and install surveillance systems compliant with Republic Act No. 10175 (Cybercrime Prevention Act) for digital theft.
Alternative Dispute Resolution: Consider mediation under Republic Act No. 9285 if the employee agrees to restitution, potentially avoiding lengthy litigation.

Special Considerations

Small vs. Large Amounts: For petty theft (under PHP 5), alternative penalties like community service may apply under the Indigent Persons Act or probation for first-time offenders (Presidential Decree No. 968).
Corporate Employees: If the thief is an officer, additional charges under the Revised Corporation Code (Republic Act No. 11232) for ultra vires acts may apply.
Foreign Employees: Involve the Bureau of Immigration if deportation is warranted post-conviction.
Tax Implications: Stolen funds may affect tax deductions; consult the Bureau of Internal Revenue.
Prescription Periods: Criminal actions prescribe in 1-20 years depending on penalty (Article 90, RPC); civil actions in 4-10 years (Article 1144-1146, Civil Code).

Conclusion

Addressing employee theft in the Philippines requires a multifaceted approach balancing punitive measures with recovery and prevention. By meticulously following these steps, employers can protect their interests, deter future incidents, and uphold the rule of law. Consulting a licensed attorney early is advisable to tailor actions to specific circumstances and navigate procedural nuances effectively. Through vigilant enforcement, businesses contribute to a more accountable workforce and a stronger economic environment.