Yes. An employee can be charged with estafa in the Philippines when the evidence establishes that the employee received money, goods, or personal property under a legal obligation to deliver, return, account for, or administer it, and subsequently misappropriated or converted the property to another person’s prejudice.

But employment alone does not make an employee criminally liable for estafa.

The critical question is often what kind of possession the employee acquired. Philippine jurisprudence distinguishes between juridical possession and mere material or physical possession. If the employee had only custody of the employer’s property, the alleged taking may constitute theft rather than estafa, depending on the circumstances.

This distinction can be decisive in an employee estafa case in the Philippines.

Can an Employee Be Charged With Estafa

What Is Estafa by Misappropriation?

Estafa by misappropriation is punished under Article 315(1)(b) of the Revised Penal Code, as amended by subsequent legislation including Republic Act No. 10951.

The provision covers money, goods, or personal property received:

• in trust;
• on commission;
• for administration; or
• under another obligation involving the duty to deliver or return the property.

The prosecution generally has to establish the following:

1. The accused received money, goods, or personal property in trust, on commission, for administration, or under an obligation to deliver or return it;
2. The accused misappropriated or converted the property, or denied having received it;
3. The misappropriation or conversion caused prejudice to another person; and
4. The circumstances concerning demand are established where relevant.

These principles are discussed in Resideytan v. People of the Philippines, G.R. No. 210318, July 28, 2020, and Manila Electric Company v. Atilano, G.R. No. 166758 June 27, 2012

The important point is that the prosecution must prove a criminal misappropriation or conversion, not simply that an employee failed to return money or failed to account for company property.

Is an Employee Automatically Liable for Estafa?

No.

An employee’s position, title, or employment relationship does not automatically establish estafa.

The prosecution must prove:

1. what property the employee received;
2. how the employee received it;
3. the legal nature of the employee’s possession;
4. the employee’s obligation concerning the property;
5. the alleged act of misappropriation or conversion;
6. the resulting prejudice; and
7. the employee’s participation in the alleged criminal act.

A particularly important distinction is between material possession and juridical possession.

Material or physical possession

Material possession generally refers to mere custody or physical control over property.

For example, an employee may physically hold company money because the employee is:

1. a cashier;
2. teller;
3. collector;
4. bookkeeper;
5. custodian; or
6. other employee entrusted merely with handling company property.

Physical custody does not automatically mean that the employee acquired juridical possession.

Juridical possession

Juridical possession exists when the person possesses the property in an independent capacity, such that the person has a right of possession that may be asserted even against the owner under the circumstances recognized by law.

This distinction is emphasized in Homol v. People of the Philippines, G.R. No. 191039. August 22, 2022, Resideytan v. People of the Philippines, G.R. No. 210318, July 28, 2020, and Benabaye v. People of the Philippines, G.R. No. 203466, February 25, 2015.

Thus, before concluding that an employee committed estafa, the first question should be:

Did the employee receive juridical possession of the property, or merely physical custody?

When Can an Employee Be Charged With Estafa?

An employee may face an estafa charge when the evidence establishes that the employee received property under a fiduciary or similar obligation and subsequently misappropriated or converted it.

Examples may include an employee who:

• receives company funds for a specific project and is required to liquidate or return unused funds;
• receives goods on commission and must return the goods or remit the proceeds;
• receives money for administration under circumstances giving the employee juridical possession;
• receives funds for a particular purpose but allegedly diverts them for personal use; or
• receives property under an express obligation to deliver or return it to the employer, principal, or another person.

In Personal Collection Direct Selling, Inc. v. Carandang, G.R. No. 206958, November 8, 2017, the Supreme Court considered allegations involving cash advances received by an employee for company expenses under an obligation to liquidate the amounts or return the balance.

The Court’s discussion underscores that an estafa prosecution requires proof of the necessary fiduciary relationship and the statutory elements of the offense.

Estafa vs. Qualified Theft by an Employee: What Is the Difference?

This is one of the most important issues in an employee-related criminal case.

The distinction generally turns on the nature of possession transferred to the employee.

An employee who merely receives company money for safekeeping or collection may have material possession only.

If the employee later takes that money, the proper offense may be theft or qualified theft, rather than estafa, depending on the facts and statutory requirements.

In Resideytan v. People of the Philippines, G.R. No. 210318, July 28, 2020, the Supreme Court stressed that merely receiving money or property does not automatically establish estafa because the prosecution must establish juridical possession.

Likewise, Benabaye v. People of the Philippines, G.R. No. 203466, February 25, 2015.explains the significance of determining whether an employee was merely a temporary holder or custodian of the property.

Can a Cashier or Collector Be Charged With Estafa?

Not automatically.

The employee’s job description is important, but it is not conclusive.

A cashier, collector, teller, or similar employee may have only physical or material possession of company funds. If so, the prosecution must consider whether the alleged taking is legally characterized as theft rather than estafa.

The analysis should examine:

1. Who legally possessed the money before it was allegedly taken?
2. Why was the employee given the money?
3. Did the employee have authority to exercise independent possession?
4. Was the employee required merely to safeguard or transmit the funds?
5. Was there an obligation to return or deliver the property?
6. What exactly did the employee allegedly do with the money?
7. Is there evidence of actual conversion or taking?

The possession analysis should come before simply labeling the transaction as estafa.

Can Failure to Liquidate a Cash Advance Be Estafa?

It may be, but an unliquidated cash advance is not automatically estafa.

A cash advance may support an estafa prosecution when the evidence establishes that the employee:

1. received the money under a clear obligation to use it for a specified purpose, liquidate it, or return it;
2. acquired the legally required juridical possession;
3. subsequently misappropriated or converted the funds;
4. caused prejudice to the employer or another person; and
5. engaged in conduct showing criminal conversion rather than merely an unpaid or unresolved obligation.

In Personal Collection Direct Selling, Inc. v. Carandang, G.R. No. 206958, November 8, 2017,), the alleged cash advances were connected with an obligation to liquidate or return the amounts.

However, the mere existence of an unliquidated cash advance does not establish criminal liability.

There is an important distinction between:

“The employee has not yet accounted for the money.”

and:

“The employee criminally misappropriated or converted the money.”

The second proposition requires proof.

A simple accounting dispute, unpaid obligation, or employment disagreement should not automatically be transformed into a criminal estafa case without evidence satisfying the elements of the offense.

Is Demand Required Before an Employee Can Be Charged With Estafa?

Not always.

Demand is often highly important evidence, particularly where an employee was required to account for or return company money.

However, demand is not an indispensable element in every estafa prosecution.

In Personal Collection Direct Selling, Inc. v. Carandang, G.R. No. 206958, November 8, 2017,, the Supreme Court recognized that misappropriation or conversion may be established even without a prior demand when the evidence otherwise proves the offense.

At the same time, failure to account or return property after a demand may provide circumstantial evidence of misappropriation.

Why a demand letter is still important

Even if demand is not always legally indispensable, an employer should generally consider sending a properly documented demand when appropriate.

A demand can establish:

• the amount being claimed;
• the property allegedly received;
• the employee’s obligation to account or return it;
• the date the employee was required to comply;
• the employee’s response or refusal; and
• circumstances supporting the allegation of conversion.

However, a demand letter should not be treated as a substitute for proof of the other elements of estafa.

What Must an Employer Prove in an Employee Estafa Case?

A strong employee charged with estafa Philippines case requires evidence addressing the specific elements of the offense.

Depending on the circumstances, relevant evidence may include:

• employment records;
• job descriptions;
• written undertakings;
• cash advance documents;
• official receipts;
• collection reports;
• inventory records;
• turnover documents;
• accounting records;
• bank records;
• proof of the amount received;
• communications concerning the property;
• evidence of personal use or diversion;
• demand letters;
• proof of service of demand;
• admissions or statements of the employee;
• evidence of the resulting shortage; and
• evidence linking the particular employee to the alleged conversion.

But an important limitation must be remembered:

A shortage does not automatically prove estafa.

In Cruzvale, Inc. v. Eduque, G.R. Nos. 172785-86 June 18, 2009, the Supreme Court emphasized that the existence of a fiduciary relationship and an alleged failure to return property do not automatically establish criminal estafa without sufficient proof of misappropriation or conversion and the accused’s participation.

Corporate position alone is likewise insufficient.

The prosecution must establish the personal participation of the employee accused.

Can an Employee Be Charged With Estafa if the Money Was Received for the Employer?

The answer depends on the nature of possession.

An employee who receives collections merely on behalf of an employer may have only material possession.

If the employer or principal retains juridical possession, the employee’s subsequent taking of the money may potentially constitute theft, including qualified theft where the legal requirements are established.

On the other hand, if the employee received the property in circumstances that transferred juridical possession to the employee, subsequent misappropriation may constitute estafa.

This distinction was addressed in Homol v. People of the Philippines, G.R. No. 191039. August 22, 2022 and Resideytan v. People of the Philippines, G.R. No. 210318, July 28, 2020.

The label attached to the employee’s position is therefore less important than the legal character of the possession.

Can an Employee Be Charged With Estafa Even If the Employer Is Not the Owner?

Yes.

The person prejudiced by the fraud does not necessarily have to be the ultimate owner of the property.

In Salazar v. People, G.R. No. 151931, September 23, 2003, the Supreme Court recognized that the person immediately prejudiced by the fraudulent act need not necessarily be the owner of the property involved.

Consequently, depending on the circumstances, an estafa complaint may involve property belonging to or entrusted to:

1. an employer;
2. a corporation;
3. a principal;
4. an investor;
5. a business entity; or
6. another person or entity legally prejudiced by the alleged conversion.

The specific relationship between the accused, property owner, complainant, and person prejudiced must nevertheless be established by evidence.

What If an Employee Allegedly Misappropriated Money Several Times?

Separate acts of misappropriation may result in separate criminal offenses, depending on the facts.

In Gamboa, et al. v. Court of Appeals, et al., G.R. No. L-41054 November 28, 1975, the Supreme Court recognized that a series of misappropriations committed on different occasions does not automatically become one continuous offense.

Accordingly, investigators and prosecutors may need to examine:

1. the date of each transaction;
2. the amount involved;
3. the property received;
4. the separate receipts or collections;
5. the circumstances of each alleged conversion; and
6. whether the acts were independently consummated.

This can have significant consequences for the number of charges and the applicable penalties.

Can a Corporation File an Estafa Case Against an Employee?

Yes.

A corporation may initiate a criminal complaint through an authorized representative when company funds or property are allegedly misappropriated.

Corporate authority can become relevant where the accused challenges the authority of the person filing the complaint or making the demand.

In Omictin v. Court of Appeals, G.R. No.148004 January 22, 2007, and People of the Philippines v. Arambulo,G.R. No. 186597 June 17, 2015, the Court discussed circumstances in which corporate or authority-related issues may become relevant to criminal proceedings.

However, the existence of a corporate, civil, or intra-corporate dispute does not automatically prevent criminal prosecution.

In Fabia v. Court of Appeals, G.R. No. 132684, August 20, 2001, the Court recognized that criminal proceedings may proceed independently from civil or intra-corporate proceedings where the alleged acts sufficiently constitute a criminal offense.

Can an Employee Be Charged With Estafa for a Trust Receipt Transaction?

Potentially, yes.

Trust receipt transactions are governed by Presidential Decree No. 115, or the Trust Receipts Law.

Under Section 13, failure to turn over the proceeds of the sale or return the goods, documents, or instruments in accordance with the trust receipt may give rise to liability under the law, with the offense treated in relation to Article 315(1)(b) of the Revised Penal Code.

Where a corporation or juridical entity is involved, the law may impose liability upon the responsible directors, officers, employees, or other persons responsible for the violation, subject to proof of their actual participation and responsibility.

A person’s corporate title alone does not automatically establish criminal liability.

The prosecution must still prove the accused’s specific participation and responsibility.

What Penalty Applies to Employee Estafa?

The penalty depends upon the specific form of estafa, amount involved, circumstances of the offense, and applicable law.

Article 315 of the Revised Penal Code establishes the penalties for estafa, while Republic Act No. 10951 modified the monetary thresholds and fines applicable to various property offenses.

Special laws can also apply.

For example, Presidential Decree No. 1689 imposes a substantially heavier penalty for syndicated estafa when its statutory requirements are satisfied, including circumstances involving a syndicate of five or more persons and funds covered by the decree.

Therefore, it is not enough to ask:

“How much money was allegedly taken?”

The proper penalty analysis may also require examining:

1. the form of estafa;
2. the amount involved;
3. the method allegedly used;
4. the number of participants;
5. whether a special law applies; and
6. whether the statutory requirements for a qualified form of estafa are present.

What Are the Possible Defenses in an Employee Estafa Case?

An accused employee should not assume that the existence of a company shortage automatically establishes criminal liability.

Depending on the evidence, potential defenses may include:

1. No juridical possession

The employee may have had only material or physical possession of the property.

If juridical possession was never transferred, the prosecution’s characterization of the conduct as estafa may be legally defective.

2. No misappropriation or conversion

A shortage or failure to account does not necessarily prove that the employee personally converted the property.

3. Lack of personal participation

The prosecution must connect the particular employee to the alleged criminal act.

A job title or managerial position is not automatically proof of participation.

4. Civil or accounting dispute

The controversy may involve an unresolved accounting, reimbursement, employment, or contractual dispute rather than criminal misappropriation.

The existence of a debt or unpaid obligation should not automatically be equated with estafa.

5. Amount or property not sufficiently established

The prosecution must prove what was actually received and allegedly converted.

6. Lack of evidence of criminal intent

The surrounding circumstances may show an accounting error, unauthorized transaction that was not personally committed by the accused, misunderstanding, or other circumstances inconsistent with criminal conversion.

7. Incorrect characterization of the offense

The evidence may support a different legal characterization, such as theft, or may fail to establish any criminal offense at all.

The precise defense depends heavily on the documents, testimony, accounting records, employment arrangement, and manner in which possession was transferred.

What Should an Employer Do Before Filing an Estafa Case Against an Employee?

Employers should carefully investigate the transaction before immediately filing a criminal complaint.

A proper review should identify:

1. What property was given to the employee?
2. Who owned the property?
3. Who had juridical possession?
4. Why was the employee given the property?
5. Was there a written obligation to account, deliver, or return it?
6. What amount or property was actually received?
7. When was it received?
8. What evidence shows conversion or misappropriation?
9. Who personally committed the alleged act?
10. What prejudice resulted?

This prevents a common mistake: treating every company shortage as automatically constituting estafa.

What Should an Employee Do if Accused of Estafa?

If an employee learns that an employer intends to file or has already filed an estafa complaint, the employee should immediately preserve relevant records.

These may include:

1. employment contracts;
2. job descriptions;
3. company policies;
4. receipts;
5. turnover documents;
6. accounting records;
7. bank records;
8. emails;
9. text messages;
10. chat messages;
11. liquidation reports;
12. proof of reimbursement;
13. instructions from supervisors; and
14. documents showing who actually controlled the money or property.

The employee should also avoid destroying, altering, or concealing records.

If a criminal complaint has already been filed, counsel should evaluate the allegations and determine whether the evidence establishes juridical possession, conversion, prejudice, and the accused’s personal participation.

Frequently Asked Questions About Employee Estafa in the Philippines (FAQs)

Key Takeaway: When Is an Employee Criminally Liable for Estafa?

An employee charged with estafa in the Philippines is not automatically guilty simply because money or company property is missing.

The decisive questions are:

1. What property did the employee receive?
2. Under what authority or agreement was it received?
3. Did the employee acquire juridical possession or merely physical custody?
4. Was there actual misappropriation or conversion?
5. Was another person or entity prejudiced?
6. Is there evidence of the employee’s personal participation?
7. Does the evidence establish a criminal offense rather than merely a civil, employment, or accounting dispute?

If an employee received property in trust, on commission, for administration, or under a similar obligation and thereafter misappropriated or converted it to another’s prejudice, an estafa prosecution may be proper.

But if the employee merely had material possession or custody, the alleged taking may instead fall under theft or qualified theft—or the evidence may establish only a civil or employment-related dispute.

The distinction between juridical possession and material possession is therefore one of the most important issues in defending or evaluating an employee estafa case.

Related Readings:

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• Rights During a Warrantless Arrest in the Philippines: 11 Powerful Legal Rights
• Estafa by Misappropriation vs False Pretenses: 7 Key Differences in Philippine Law
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This article was prepared by Romualdez Law Offices, a Philippine law firm providing legal services in criminal law, family law, corporate law, civil, property, and dispute resolution.