Legality of Charging Security Guards for Company Losses in the Philippines
An Overview of Relevant Laws, Rules, and Jurisprudence

Security guards play a vital role in protecting personnel, property, and other assets in the Philippines. They are often the frontline of defense against theft, pilferage, and other security-related risks. In cases where a company incurs losses—whether due to theft, damage to property, or other security breaches—a recurrent question arises: Can security guards be held financially liable for these losses? Below is a comprehensive discussion of the legal framework, relevant regulations, and jurisprudence governing the practice of charging security guards for company losses.

1. Governing Laws and Regulations

1.1. Republic Act No. 5487 (The Private Security Agency Law)

Republic Act No. 5487, also known as the “Private Security Agency Law,” regulates the organization and operation of private security agencies in the Philippines. It sets out the standards and licensing requirements for agencies, the training requirements for security personnel, and the guidelines for the conduct of security work. Although it details the responsibilities of security agencies toward their clients and vice versa, RA 5487 does not explicitly address the imposition of financial liability on security guards for company losses. Instead, it provides the basic framework that security agencies must follow.

1.2. Labor Code of the Philippines (Presidential Decree No. 442)

The Labor Code covers a wide array of labor-related matters, including wage deductions and employee discipline. Two important sections of the Labor Code relevant to this issue are:

Article 113 (formerly Article 113 under prior codifications): Prohibitions on wage deductions. It states that no employer shall make any deduction from the wages of its employees except:
- For insurance premiums advanced by the employer;
- For union dues, when authorized by the employee;
- When the deduction is authorized by law, regulations, or a collective bargaining agreement.
  Additionally, an employer may deduct from the employee’s wages if there is a written authorization from the employee for a valid purpose.
Article 114 (formerly Article 114): Wage deductions for loss or damage. This provision typically requires that, if any loss or damage occurs and the employer seeks reimbursement, there must be proof of the employee’s deliberate or willful act or gross negligence before any wage deduction can occur. Due process must be observed, meaning the employee should be given an opportunity to be heard and present their side.

1.3. Department of Labor and Employment (DOLE) Orders

DOLE has also issued various Department Orders (DOs) addressing wage and wage-related benefits and clarifying permissible deductions. Generally, DOLE underscores the principle that no deductions may be made from an employee’s salary except in cases explicitly allowed by law, or when there is a court or arbitration order, or a documented agreement under specific circumstances.

2. Relationship Among Security Agency, Client Company, and Security Guards

In the Philippines, security guards are usually employed by security agencies, not by the client companies where they are posted. The client company signs a contract with the security agency, and the agency, in turn, hires, trains, and deploys the guards. This three-way arrangement complicates the issue of charging guards for losses, because:

Employment Relationship: The guard’s direct employer is the security agency, not the client company. Thus, any wage deductions or disciplinary measures must generally be administered by the agency (the employer), following proper procedures under labor law.
Contractual Provisions: Some agency-client contracts include provisions regarding liability for losses. Often, clients expect that in case of proven negligence by a guard, the agency may be held liable to the client for damages. The security agency may then try to pass on that liability to the guard. However, such pass-through of liability must still comply with the Labor Code’s rules on wage deductions and due process.
Liability vs. Negligence: To charge a guard personally, an employer (the security agency) must demonstrate that the guard was either willfully or grossly negligent or committed an intentional act that caused the loss.

3. When Can a Security Guard Be Charged or Held Financially Liable?

As a rule, charging a security guard for a company’s loss is only lawful if the guard’s responsibility for the loss has been clearly established and if the procedures laid down by Philippine law on wage deductions and employee discipline are followed. Here are the key points:

Proof of Willful Misconduct or Gross Negligence:
- Under Article 114 of the Labor Code, wage deductions may be allowed if the employee (the guard) committed a willful or grossly negligent act that resulted in the loss.
- Simple negligence or a mere mistake is generally insufficient to justify charging the guard. The standard for proof in disciplinary cases typically includes written notice, an opportunity to respond, and a hearing or conference, if necessary.
Due Process Requirements:
- Two-Notice Rule: The guard must receive a first notice detailing the allegations and the facts supporting them, followed by the opportunity to respond. If the employer finds sufficient cause, a second notice imposing the penalty is issued.
- Opportunity to Defend: The guard must be given a reasonable chance to explain, present evidence, or refute claims of negligence or wrongdoing.
Written Authorization for Deductions (If Applicable):
- Apart from proving negligence or wrongdoing, the employer typically needs a specific, written authorization from the guard to impose any wage deduction. In many cases, employment contracts or separate agreements may include such provisions, but these must be in strict compliance with the law and must not violate minimum wage requirements or employee rights.
Observing Statutory Protections (e.g., Minimum Wage):
- Even if the guard is found to be at fault, the employer cannot reduce the guard’s pay below the statutory minimum wage or deprive the guard of mandatory benefits. DOLE is vigilant about unlawful wage deductions that jeopardize minimum wage entitlements.

4. Common Pitfalls and Practical Considerations

Unilateral Deductions are Unlawful:
- A company or security agency cannot simply deduct from the guard’s paycheck without following the proper procedure. Doing so risks administrative, civil, or even criminal complaints for illegal deductions.
Vicarious Liability vs. Personal Liability:
- A security agency may be held responsible for acts of its security guards under principles of vicarious liability. However, holding the guard personally liable (financially) requires demonstrating the guard’s direct fault or culpability.
Burden of Proof:
- In labor disputes, the employer usually carries the burden of proof. The agency (and/or the client company) must establish the guard’s wrongdoing or gross negligence before any financial liability is imposed.
Potential Administrative Penalties:
- If the guard or the union (if there is one) files a complaint with the DOLE, the security agency or client company may face penalties for violating wage and labor laws.
Case-by-Case Basis:
- Ultimately, liability will depend on the specific facts of each case, including evidence of the guard’s participation (active or negligent) in an incident leading to the loss.

5. Relevant Philippine Jurisprudence

Over the years, the Philippine Supreme Court has issued decisions reinforcing the principle that employees can be made liable for losses only when there is clear proof of intentional or grossly negligent conduct. While there is no single, well-cited decision solely about security guards paying for losses, various rulings on wage deduction, employer liability, and due process have established these doctrinal rules:

Due Process in Disciplinary Actions:
- Employers must observe procedural due process when imposing sanctions (including monetary sanctions). Noncompliance may render the employer’s action illegal and result in an award of back wages or damages to the employee.
Strict Construction of Authorized Deductions:
- Courts generally construe provisions authorizing deductions strictly against the employer. Any ambiguity or lack of proof of consent typically favors the employee.
Good Faith and Fair Dealing:
- Employers, including security agencies, must deal with their employees fairly and in good faith. Any bad-faith or arbitrary impositions of liability may be struck down by the courts.

6. Practical Guidance for Security Guards and Employers

6.1. For Security Guards

Understand Your Employment Contract:
- Review any clauses related to losses, liabilities, and wage deductions. If you have questions, seek clarification from your employer or a labor lawyer.
Document Everything:
- If a loss occurs, keep records (e.g., incident reports, shift logs) that can demonstrate your performance and diligence on duty.
Assert Your Rights:
- If you believe an unlawful deduction has been made or threatened, you may file a complaint with the DOLE or consult a lawyer to discuss possible remedies.

6.2. For Security Agencies and Client Companies

Implement Clear Policies and Procedures:
- Develop written protocols for investigating losses, imposing discipline, and determining guard negligence. Ensure compliance with Labor Code provisions and DOLE regulations.
Conduct Proper Investigations:
- Gather evidence meticulously and provide ample opportunity for the guard to defend themselves.
Avoid Unlawful Deductions:
- Before imposing any wage deduction, obtain a written authorization (if required by law) and confirm that the deduction does not violate minimum wage or other mandatory labor standards.
Consult Legal Counsel:
- In complex cases or those involving substantial losses, it is prudent to seek legal advice to avoid potential labor cases or other legal repercussions.

7. Conclusion

Charging security guards for company losses in the Philippines is not a straightforward matter. Under the Labor Code and related jurisprudence, any form of wage deduction or financial liability must be clearly justified by evidence of the guard’s willful misconduct or gross negligence, and must follow statutory due process. Security agencies and client companies must exercise caution when attempting to pass on liability to individual guards, as wrongful deductions and violations of due process can lead to administrative penalties and legal disputes.

Moreover, because security guards are generally employed by security agencies rather than the client companies, any financial charge typically must come from their direct employer—and only under strictly regulated conditions. It is therefore critical for both security personnel and employers to understand the bounds of the law, observe all procedural safeguards, and ensure compliance with the Labor Code and DOLE regulations.

Disclaimer: This article is intended for general informational purposes only and does not constitute legal advice. For specific concerns, consult a qualified attorney or approach the Department of Labor and Employment (DOLE) for further guidance.