In the Philippine labor landscape, the Social Security System (SSS) serves as the primary safety net for private-sector employees. Under Republic Act No. 11199, otherwise known as the Social Security Act of 2018, the mandate for employers to remit contributions is absolute and compulsory. Failure to comply—whether through non-remittance or administrative negligence—exposes an employer to severe civil, administrative, and criminal liabilities.
I. The Duty to Remit and Deduct
The law creates a fiduciary relationship between the employer and the employee regarding SSS premiums.
- Compulsory Coverage: Coverage begins on the first day of employment.
- The "Trust Fund" Doctrine: The employee’s share, once deducted from their salary, is held in trust by the employer. Failure to remit these deducted amounts is considered Estafa under the Revised Penal Code, as the employer is essentially misappropriating funds that belong to the employee and the State.
II. Liabilities for Unpaid Contributions
When an employer fails to remit contributions, they face a "triple threat" of penalties:
1. Financial Penalties (Interest)
The law imposes a penalty of 2% per month on the total unpaid contributions, calculated from the date the remittance was due until the actual date of payment. This interest is mandatory and cannot be waived by the SSS without a formal condonation program authorized by the Social Security Commission.
2. Damages for Benefits (Section 24 Liability)
This is perhaps the most significant financial risk. If an employee (or their beneficiary) is denied SSS benefits (such as sickness, maternity, disability, or death benefits) because the employer failed to remit contributions or misreported the employee’s status, the employer is legally liable to pay the SSS the equivalent value of the benefit the employee would have received.
Example: If an employee passes away and their family is denied a death pension because of the employer's non-remittance, the employer may be ordered to pay the SSS the full value of that lifetime pension.
3. Criminal Prosecution
Non-remittance is a criminal offense. Responsible officers (Presidents, Managers, or Directors) can face:
- Imprisonment: Ranging from six (6) years and one (1) day to twelve (12) years.
- Fines: Generally ranging from ₱5,000 to ₱20,000, depending on the court's discretion.
III. Liabilities for Incorrect SSS Numbers and Misreporting
Administrative negligence—such as using an incorrect SSS number or failing to report an employee—is treated with the same severity as non-payment.
1. Misreporting and Non-Reporting
Under Section 24(d) of R.A. 11199, if an employer fails to report an employee within thirty (30) days from the date of employment, the employer shall be liable for the contributions and the 2% monthly penalty.
2. The Impact of Incorrect SSS Numbers
Using a "dummy" number, an incorrect number, or failing to verify an employee's existing SSS ID leads to "unposted contributions."
- Legal Consequence: Contributions under an incorrect number are treated as if they were never paid for the specific employee.
- Correction Liability: The employer bears the burden of filing a Member Contribution Correction (Sickness/Maternity/Contribution) request. If the error results in the loss of a loan eligibility or benefit, the employer may be sued for damages under the Civil Code (Art. 19, 20, and 21) regarding "Abuse of Rights" and negligence.
IV. The Doctrine of "Piercing the Corporate Veil"
In SSS cases, the "Corporate Veil" is thin. The law specifically holds the managing head, directors, or partners personally liable for the criminal aspects of non-remittance. You cannot hide behind a corporation's separate juridical personality to avoid imprisonment for SSS violations.
V. Summary Table of Liabilities
| Violation | Primary Penalty | Additional Risk |
|---|---|---|
| Non-Remittance | 2% monthly interest | Criminal charge (Estafa/Violation of RA 11199) |
| Late Remittance | 2% monthly interest | Administrative fines |
| Non-Reporting | Full payment of back-contributions | Payment of "Damages" equivalent to lost benefits |
| Incorrect SSS ID | Unposted contributions | Liability for employee's lost loan/benefit opportunities |
VI. Statutory Prescriptive Period
The SSS has a prescriptive period of twenty (20) years to collect unpaid contributions and penalties, counted from the time the contribution was due or from the discovery of the violation. This long window ensures that employers remain "on the hook" for nearly the entire duration of an employee’s career.