In the Philippine labor landscape, the Social Security System (SSS) serves as a vital safety net for private-sector employees. While the system is designed to provide relief through various loan programs—such as salary, calamity, or educational loans—its efficacy relies heavily on the employer’s role as the collecting and remitting agent.
When a discrepancy arises between the amount deducted from an employee’s salary and the amount actually remitted to the SSS, the legal consequences for the employer are stringent, involving civil, administrative, and even criminal liabilities.
The Statutory Mandate
Under Republic Act No. 11199, otherwise known as the Social Security Act of 2018, the employer is legally obligated to facilitate the repayment of an employee's SSS loan.
- Duty to Deduct: Once an employee has an outstanding SSS loan, the employer must deduct the monthly installments from the employee’s salary.
- Duty to Remit: The employer must remit these deductions to the SSS within the first ten (10) days of the month following the month when the deduction was made (or according to the prescribed schedule based on the employer's SSS ID number).
- Trust Fund Doctrine: Premised on the law, these deductions are considered "trust funds." The employer does not own this money; they merely hold it in trust for the employee and the SSS.
Consequences of Discrepancies and Non-Remittance
Failure to remit the correct amount, or a delay in doing so, triggers a chain of liabilities.
1. Civil Liability and Penalties
The law imposes a penalty of 2% per month on the unremitted amount from the date the remittance should have been made until the date it is actually paid. This penalty is mandatory and cannot be waived by the SSS without a condonation program sanctioned by the Social Security Commission.
2. Criminal Liability
The most severe deterrent is the criminal aspect. Under Section 28 of R.A. 11199, the failure or refusal of an employer to remit deductions is considered a criminal offense.
- Penalty: Imprisonment for not less than six (6) years and one (1) day to twelve (12) years.
- Fine: A fine of not less than ₱5,000.00 but not more than ₱20,000.00.
- Who is Liable? If the employer is a corporation or partnership, the liability falls on the Managing Head, Directors, or Partners. This is a malum prohibitum offense, meaning the mere failure to remit is sufficient for conviction; "good faith" or "lack of intent" is generally not a valid defense.
3. Presumption of Employee Prejudice
When a discrepancy occurs, the employee often loses their eligibility for future benefits or loans because their account appears "delinquent" in the SSS records.
- Liability for Damages: If an employee is denied a benefit (e.g., Sickness or Maternity benefit) or a new loan because the employer failed to remit previous deductions, the employer can be held liable to pay the employee the equivalent amount of the benefit/loan they were deprived of.
The "Settle First, Deduct Later" Rule
It is a common misconception that an employer can stop remitting if the company is experiencing financial distress. The law is clear: as long as the deduction was made from the employee's wages, the obligation to remit is absolute. If an employer fails to deduct but the loan is active, they are still liable for the non-remittance penalties because the law mandates them to monitor the loan status of their employees via the SSS Employer Portal.
Legal Remedies for Employees
Employees who discover a discrepancy (often through the SSS Mobile App or Member Portal) have several avenues for redress:
- Administrative Complaint: Filing a formal complaint with the SSS Branch Office. The SSS has a Legal Department dedicated to investigating and prosecuting delinquent employers.
- Labor Complaint: Filing a case for "Underpayment of Wages" or "Illegal Deductions" with the National Labor Relations Commission (NLRC). Since the money was deducted but not applied to its purpose, it constitutes a violation of labor standards.
- Criminal Prosecution: Filing a complaint for Estafa (under the Revised Penal Code) or a violation of the Social Security Act before the Prosecutor’s Office.
Summary of Employer Obligations
| Feature | Legal Requirement |
|---|---|
| Deduction Basis | Based on the SSS-issued Billing Statement/Collection List. |
| Remittance Deadline | Monthly, following the SSS prescribed schedule. |
| Record Keeping | Employers must keep accurate records of deductions for at least 10 years. |
| Portal Compliance | Employers must regularly check the SSS Linear System/Portal for updated loan balances. |
In conclusion, the Philippine legal system treats SSS loan remittances with high priority. Employers are cautioned that discrepancies are not merely accounting errors but are treated as breaches of trust and statutory violations that can lead to significant financial loss and imprisonment. Ownership of the error—whether intentional or through negligence—rests solely on the employer once the deduction is made from the employee's pay.