In the Philippine corporate landscape, the relationship between an employer and an employee is founded on trust and confidence. When an employee taps into company funds without proper authorization—whether for personal gain or "temporary" use—they cross a legal line that triggers both labor and criminal liabilities.
Here is a comprehensive look at the legal repercussions of unauthorized fund usage under Philippine law.
1. Labor Law Consequences: Just Causes for Dismissal
Under the Labor Code of the Philippines, specifically Article 297 (formerly 282), an employer has the right to terminate an employee for several grounds related to the misuse of funds.
- Serious Misconduct: Unauthorized use of funds is often classified as serious misconduct because it involves a transgression of some established and definite rule of action, a forbidden act, or a dereliction of duty.
- Willful Breach of Trust (Loss of Confidence): This is the most common ground used for employees in fiduciary positions (e.g., accountants, cashiers, managers). To validly dismiss an employee on this ground:
- The employee must hold a position of trust and confidence.
- There must be a willful act that justifies the loss of trust.
- Commission of a Crime: If the employer can prove the elements of a crime (like theft or estafa) against the company, it serves as an independent ground for termination.
Important Note: Even if the employee eventually "returns" the money, the act of taking it without authorization already constitutes a breach of trust. In Philippine jurisprudence, restitution does not wipe out the cause for dismissal.
2. Criminal Consequences: Estafa vs. Qualified Theft
Misusing company funds is not just a "fireable" offense; it is a crime under the Revised Penal Code (RPC). The specific charge usually depends on the employee's access and relationship to the funds.
A. Estafa (Article 315, RPC)
This applies when an employee has juridical possession of the money. This means the employee was given the authority to hold the money and decide its use (e.g., a manager with a discretionary fund), but they misappropriated or converted it for their own benefit.
B. Qualified Theft (Article 310, RPC)
This is a much more severe charge. It occurs when an employee takes company property (money) with intent to gain and without consent, but with a grave abuse of confidence.
- Why "Qualified"? Because the theft is committed by a domestic servant or with abuse of confidence.
- Penalty: The penalty for Qualified Theft is two degrees higher than ordinary theft, often resulting in decades of imprisonment without the possibility of bail in certain high-value cases.
C. Falsification of Commercial Documents
If the employee covered up the unauthorized use of funds by altering receipts, ledgers, or bank statements, they may also be charged with Falsification under Article 172 of the RPC.
3. The Due Process Requirement
Even if an employee is caught "red-handed," an employer cannot terminate them instantly. The "Twin-Notice Rule" must be observed to avoid a case of illegal dismissal:
- First Written Notice (Show Cause Memo): The employer must inform the employee of the specific charges and give them at least five (5) calendar days to explain their side.
- Administrative Hearing: The employee must be given a chance to defend themselves, often through a formal hearing where they can be assisted by counsel.
- Second Written Notice (Notice of Decision): After considering the evidence, the employer issues a notice stating whether the employee is being terminated.
4. Civil Liability
Aside from losing their job and facing jail time, the employee is civilly liable. This means the court can order the:
- Restitution: Returning the exact amount taken.
- Reparation: Paying for any damage caused to the company property.
- Indemnification: Paying for consequential damages (e.g., lost interest or business opportunities).
5. Summary Table of Consequences
| Category | Consequence |
|---|---|
| Employment Status | Immediate termination for cause; forfeiture of separation pay. |
| Criminal Record | Potential conviction for Qualified Theft or Estafa; imprisonment. |
| Financial | Civil obligation to repay the full amount plus interest and damages. |
| Future Employment | Difficulty securing "Clearance" and a permanent "hit" on background checks. |
Misusing company funds is a high-stakes gamble where the "house" almost always wins. The Philippine legal system provides robust protections for employers to safeguard their assets, making unauthorized fund usage one of the quickest ways to end a professional career and face significant loss of liberty.
Would you like me to draft a sample "Show Cause Memo" for an incident involving unauthorized fund usage?