Disciplinary Action for Accidental Consumption of Inventory

(Philippine Employment-Law Perspective)

1. Why this matters

Inventory losses—whether a box of chocolates in a supermarket, a bottle of solvent in a factory, or a mobile phone from a telco stockroom—are a perennial problem. When a worker “accidentally” consumes or uses company stock, employers must decide what discipline (if any) is legally permissible. In the Philippines, the answer is not found in a single statute but in the Labor Code, the Civil Code, company policy, and Supreme Court case law read together.

2. Governing legal sources

Source	Key provisions
Labor Code of the Philippines (Pres. Decree 442, as amended)	Art. 297 [formerly 282] (c) – “Gross and habitual neglect of duties” Art. 297 (e) – “Other causes analogous to the foregoing”
Implementing Rules (Book VI, Rule I, Sec. 2-4)	Confirms twin-notice requirement before dismissal
DOLE Handbook on Workers’ Statutory Monetary Benefits	Gives examples of progressive discipline, salary-deduction limits
Civil Code of the Philippines	Art. 1170 – negligence gives rise to damages Art. 2187 – manufacturers/sellers liable for food/drink causing damage
Company Code of Conduct / CBA	Specific penalties; usually part of employment contract
SC Jurisprudence	Toyota Phils. (GR 101768, 1997) – “loss of trust” test Starlite Ferries (GR 250828, 2022) – proportionality doctrine

3. Accidental vs Intentional: Why the distinction is crucial

Element	Accidental (simple negligence)	Intentional (willful breach / theft)
Mindset (mens rea)	Lack of intent; mistake, forgetfulness, ignorance	Deliberate misappropriation or dishonest act
Ground for dismissal	Usually Art. 297(c) gross & habitual neglect; must be both serious and repeated	Art. 297(c) loss of trust or serious misconduct
Burden of proof	Employer must show negligence was gross and habitual or caused substantial loss	Employer must show willful intent
Usual penalty	Reprimand → suspension → dismissal (only if gross/habitual)	Dismissal for first offense; possible criminal case

4. The twin tests in discipline

Substantive test (just cause)
Was the employee’s act a legal ground under Art. 297?
- Simple/isolated accident → rarely dismissal.
- Gross AND habitual neglect → possible dismissal if loss is substantial or safety-related.
Procedural test (due process)
Did the employer observe the “twin-notice and hearing” rule?
1. First written notice (charge notice) – state facts, rule violated, give ≥ 5 calendar days to explain.
2. Opportunity to be heard – formal hearing or written position paper.
3. Second written notice (decision) – state facts, rule, evidence, penalty.
  Failure = illegal dismissal even if cause is valid; employer owes nominal damages (₱30 000 benchmark, Jaka GR 151378, 2005).

5. Progressive-discipline template (typical)

1st incident	2nd	3rd	4th
Written reprimand + restitution or charge to leave credits	1-3 day suspension	5-10 day suspension	Dismissal (if gross &/or habitual)

Mitigating factors: length of service, small value, immediate self-report, lack of damage, demonstrable accident.
Aggravating factors: safety hazard, high-value item, supervisory rank, concealment, previous record.

6. Salary-deduction rules for restitution

Art. 113-114, Labor Code & DOLE Labor Advisory 17-21:
- Written employee authorization or CBA provision required.
- Deductions must not reduce wage below statutory minimum (RA 6727).
- If value is disputed, employer must file civil action; cannot “set off” unilaterally.

7. Selected Supreme Court cases (analogous)

Case	Facts	Ruling
JR Hauling (GR 193337, 2016)	Driver left fuel cap open, 150 L diesel lost	Reinstated; negligence not gross/habitual
Nissan North Edsa (GR 195113, 2018)	Partsman issued wrong-size turbo; engine damaged	Valid dismissal; multiple prior errors = gross & habitual neglect
Cebu Mitsumi (GR 191194, 2021)	Worker ate a client-sample chocolate (unit value < ₱50)	Suspension ONLY; value trivial, first offense

Take-away: Courts examine value, frequency, intent, damage, and position of trust.

8. Criminal & civil exposure

If the act proves intentional (estafa/theft):

Revised Penal Code, Art. 308-315 (qualified theft/estafa)
Employer may simultaneously pursue labor dismissal and file a criminal complaint; acquittal in crim-case does not bar dismissal if substantial evidence exists (Buesa, GR 155173, 2006).

9. Special contexts

Context	Added notes
Food/ beverage companies	FSRA (Food Safety Act 2013) imposes strict hygiene controls; “accidental tasting” may violate food-safety SOP, raising penalty.
Bonded warehouses / PEZA	PEZA audit rules treat missing or consumed inventory as “variance”; may trigger penalties against the locator itself, increasing gravity.
Pharmaceuticals / hazardous chemicals	OSH Law (RA 11058) & IRR: accidental use may create safety breach → disciplinary gravity rises even if value small.

10. Best-practice checklist for employers

Codify – List “unauthorized use or consumption of company property” in the Code of Conduct; define accidental vs willful.
Train – Include inventory-control induction; show what to do if a worker accidentally opens stock.
Document immediately – Incident report, photos, inventory log, employee’s written explanation.
Calculate actual loss – Net of VAT, supplier credit, salvage value.
Apply progressive discipline – Anchor to matrix; keep consistency.
Ensure due process – Two notices, hearing minutes, witnesses.
Offer restitution options – Replacement in kind, payroll deduction (with consent), or charge to leave credits.
Keep investigative file – For NLRC defense.

11. Remedies for employees

If punished without due process → file illegal dismissal or constructive-dismissal complaint within 4 years (Art. 306).
Claimable reliefs: reinstatement w/o loss of seniority, full backwages, moral/exemplary damages, attorney’s fees.
Nominal damages if dismissal substantively valid but procedurally flawed.
Quitclaims: valid only if voluntary, with full disclosure, and notarized (EQUITEC, GR 192266, 2016).

12. Union/CBA layer

A CBA may supersede company code: e.g., “first inadvertent consumption of goods ≤ ₱1 000 punished by verbal warning”.
Grievance machinery must be exhausted before NLRC.

13. COVID-19 / hybrid-work note

Where inventory is delivered to a worker’s home (e.g., telecom modems for installation crews), inadvertent personal use may occur. Employers should update telework addenda to address home custody of stock and clarify sanctions for accidental consumption.

14. Key take-aways

Accident does not automatically equal immunity; discipline is allowed but must be proportionate.
Dismissal is legally sustainable only where the negligence is both gross and habitual or causes substantial loss/safety risk.
Procedural due process (twin notices + hearing) is non-negotiable.
Restitution requires the worker’s written consent or a court ruling.
Consistent application of the code, supported by documentation, is the employer’s best defense; mitigating factors may spare an otherwise good employee from dismissal.

15. Suggested policy clause (sample language)

“Accidental Consumption of Inventory – The unintended use, loss, or consumption of company goods or materials without prior authorization.
• First offense: Written reprimand and restitution.
• Second offense: 3-day suspension.
• Third offense: 10-day suspension or dismissal if loss exceeds ₱5 000 or compromises safety.
The company shall observe the notice-and-hearing procedure under Art. 297 and relevant jurisprudence.”

In sum, Philippine law gives employers the right to discipline—and in egregious cases dismiss—employees who accidentally deplete inventory. But that right is hedged with stringent substantive and procedural safeguards designed to balance property rights with the worker’s constitutional guarantee of security of tenure. Handle each incident with careful fact-finding, measured sanctions, and full due process, and both sides can avoid the costliest outcome: an illegal-dismissal case.