Employer Liability When an Employee's Crime Becomes the Company's Debt

The Supreme Court has long held that employers can be held liable for the wrongful acts of their employees. This principle, known as subsidiary liability, makes employers answerable for damages arising from crimes committed by their employees in the performance of their duties. The recent case of Ondevilla v. Colegio de San Juan de Letran (G.R. No. 278615, June 29, 2026) provides important guidance on when this liability attaches and what employers must do to protect themselves.

The Legal Basis for Subsidiary Liability

Under the Revised Penal Code, employers are subsidiarily liable for civil damages when their employees commit crimes in the discharge of their duties. This means that if an employee is insolvent and cannot pay the damages awarded to a victim, the employer may be required to step in and pay.

The rationale is simple: employers benefit from the labor of their employees, so they should also bear responsibility for harm caused by employees acting within the scope of their work. This principle encourages employers to exercise care in hiring, training, and supervising their workforce.

When Does Subsidiary Liability Apply?

For subsidiary liability to attach, three conditions must concur:

1. An employer-employee relationship exists at the time of the crime
2. The employee committed a crime for which he or she is criminally liable
3. The crime was committed in the performance of the employee's duties

The third element is often the most contested. Courts examine whether the employee's actions were so connected to their work that the employer should have foreseen and prevented the harm. If the employee acted purely for personal reasons or outside the scope of employment, the employer may escape liability.

The Nature of Subsidiary Liability

Subsidiary liability is, as the name suggests, secondary. The employer cannot be sued directly for the employee's crime. Instead, the victim must first establish the employee's criminal liability and prove that the employee is insolvent before the employer can be compelled to pay.

This distinction matters in practice. Employers are not co-principals in the crime, and their liability is limited to the civil damages arising from the offense. They cannot be held criminally liable for the employee's act, nor can they be required to pay beyond what the law prescribes.

Practical Takeaways

• Conduct thorough background checks before hiring to minimize the risk of employing individuals prone to criminal behavior
• Implement clear policies on acceptable conduct and provide regular training on legal compliance
• Document all employment relationships clearly, including job descriptions and scope of authority
• Maintain adequate insurance to cover potential liability for employee misconduct
• Seek legal counsel immediately if an employee is accused of a crime that may give rise to subsidiary liability

Conclusion

The doctrine of subsidiary liability serves as a reminder that employers cannot simply disclaim responsibility for their employees' actions. While the law provides safeguards against abusive claims, employers must remain vigilant in supervising their workforce and ensuring that employees act within the bounds of their authority.

The Ondevilla case, while primarily concerned with illegal dismissal, underscores the broader principle that employers must be accountable for their treatment of employees—both in terms of their rights and their conduct. A well-managed workplace with clear policies and proper supervision is the best defense against liability.

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.