A practitioner’s guide to duties, penalties, remedies, and defenses

1) Why this matters

The Social Security System (SSS) is a mandatory social insurance program. When employers withhold employee contributions and do not remit them—or deduct SSS salary-loan amortizations and fail to turn these over—employees can lose coverage, benefits may be delayed or reduced, and criminal and civil liabilities attach to the employer and its responsible officers. The law treats this as a serious breach of fiduciary duty: the employer acts as a withholding and remitting agent of funds that belong to the SSS and, ultimately, to the covered worker.

2) Core legal framework (high level)

Social Security Act (as amended, most recently by R.A. 11199)
- Mandates compulsory coverage, registration, reporting, and timely remittance of both employer and employee shares.
- Criminalizes failure or refusal to register employees, report new hires, deduct/remit contributions and loan amortizations, and intentional misrepresentation.
- Imposes interest, penalties, surcharges, and empowers SSS to assess and collect through administrative and judicial means.
Labor Code & labor standards rules
- Prohibit unlawful deductions and protect wages/benefits; failure to remit government-mandated contributions is a labor standards violation.
Revised Penal Code (RPC), estafa concepts
- In extreme cases, withholding and misappropriating employee deductions can overlap with estafa (abuse of confidence), apart from special-law offenses under the SSS law.
Data privacy & records-keeping
- Employers must keep payroll and remittance records; falsification or concealment triggers separate liabilities.

Practical point: Non-remittance is not a “private” dispute. It creates public-law exposure (criminal/administrative) and civil exposure (to SSS and to employees for damages).

3) Employer duties, at a glance

Register the company and all covered employees with SSS upon hiring.
Report new hires within the prescribed period.
Compute and withhold monthly contributions based on compensation brackets.
Remit both employer and employee shares on or before the due date assigned by SSS (often pegged to the employer’s SSS number range).
Deduct and remit salary-loan amortizations and other authorized SSS deductions when due.
Maintain records (payroll, proof of remittances, RF-1/ML-1 or electronic equivalents, collection lists) and make them available to SSS examiners.
Post contributions to employee accounts by ensuring accurate payment references and schedules.
Cooperate in SSS audits and comply with assessments, warrants, or collection remedies.

4) What counts as non-remittance (and related violations)

Not remitting any contributions for covered employees for one or more months.
Partial remittance (e.g., employer share only; employee share withheld but not turned over).
Late remittance beyond the prescribed due date.
Failure to deduct/remit SSS salary-loan amortizations already withheld from wages.
Under-declaration of compensation to reduce the bracket.
Non-registration or non-reporting of employees to avoid coverage.

Each is independently actionable; combined, they aggravate liability.

5) Financial exposure: interest, penalties, and surcharges

Contributions: Unpaid or late contributions accrue legal interest/penalties per the SSS law and rules from the date due until fully paid. (The statutory regime imposes stiff monthly penalties—commonly around 2% per month on unpaid contributions. Always compute using the prevailing SSS rates that apply to the delinquency period.)
Salary-loan amortizations: Unremitted deductions expose the employer to the same amortization amounts plus penalties (SSS typically imposes monthly surcharges—commonly 1% per month—on loan delinquencies, plus collection charges as applicable).
Service fees/collection costs: SSS may add collection and legal costs.
No set-off: Employers cannot offset other claims against amounts due to SSS.

Key idea: The meter runs until cleared with SSS—not merely until the employer “books” the amounts internally.

6) Criminal, administrative, and civil liabilities

A) Criminal liability (special law offenses)

Failure or refusal to register employees, report them for coverage, or deduct and remit contributions/loan payments may be punished by fine and/or imprisonment.
Responsible officers (president, managing head, treasurer, HR/payroll heads who decided or allowed non-remittance) can be held personally liable; the corporation does not shield them.
Each month and each employee can constitute a separate count, drastically increasing exposure.
Use of falsified records or willful misrepresentation aggravates penalties.

B) Administrative enforcement by SSS

Assessment after audit/examination (with right to contest within set periods).
Warrants of distraint, levy, and garnishment against bank accounts, receivables, or property, typically after demand and finality of assessment.
Closure/posting actions for persistent evaders (naming/shaming programs).
Cross-agency holds (e.g., during government bidding, business permit renewals, and clearances).

C) Civil liability

To SSS: Entire delinquency (principal + interest/penalties + costs).
To employees:
- Actual and moral damages for loss/delay of benefits (e.g., sickness, maternity, disability claims denied or reduced because of employer delinquency).
- Attorney’s fees and nominal damages for breach of statutory duty.
- Restitution of amounts illegally deducted but not remitted.
Solidary liability can attach to corporate officers who actively participated in or allowed the violation.

7) Effects on employee benefits (and how SSS treats them)

Eligibility windows (e.g., required number of posted contributions before semester of contingency) can be jeopardized by gaps.
Benefit delays: SSS may initially deny or defer a claim for unposted months, then pursue the delinquent employer. In practice, SSS often works to protect the worker while charging the employer the arrears, penalties, and costs.
Loan status: If amortizations were withheld but not remitted, the loan will still reflect as unpaid, accruing penalties; SSS can restate once the employer pays, but the employer bears the loss.
Employees are not at fault for employer non-remittance. They should not be made to “pay twice.”

8) Personal exposure of officers and owners

The law pierces the veil to reach “responsible officers”—those who had control or supervision over the duty to remit (board members who approved withholding remittances to fund operations, finance heads who sat on assessments, HR/payroll heads who executed the decision).
Dissolution or closure of the company does not extinguish liabilities; officers may still be prosecuted and assets pursued.

9) Prescription (time limits)

Civil collection of contributions has a long prescriptive period (the law gives SSS a multi-year horizon, commonly up to 20 years from when the contribution fell due).
Criminal actions under the SSS law generally prescribe later than ordinary penal actions (commonly cited 10-year periods for special-law offenses).
Interruption occurs upon demand, assessment, or filing. Conservative practice assumes ample time remains for SSS to act—do not expect stale claims to simply die.

(Always apply the exact statutory periods that match the accrual dates.)

10) Defenses and mitigating arguments (what might help—and what won’t)

Won’t help: Cash-flow problems, business losses, or “we intended to pay later.” The funds belong to SSS; good intentions don’t negate liability.
May mitigate:
- Prompt self-correction before audit, full payment of assessed amounts, and cooperation.
- Documented payroll system errors fixed immediately and credibly (not willful).
- Compromise/condonation windows or penalty relief programs when officially offered by SSS (apply strictly within program terms).
Strict compliance evidence (OR numbers, bank proofs, electronic confirmations) defeats erroneous assessments.

11) Enforcement toolkit SSS can use against employers

Payroll and books examination (with subpoena power).
Assessment (detailing periods, employees, and amounts).
Finality of assessment if not protested on time.
Collection: demand, warrants of distraint/levy/garnishment, filing of civil suits, and criminal complaints with prosecutors.
Third-party levy: receivables from clients and banks can be garnished.
Public listing of delinquent employers (compliance pressure).

12) Employee playbook (how to protect yourself)

Check your SSS contributions via online/member portals or branch inquiry; download Contribution Printout and Loan Statement.
If gaps appear but deductions were taken from your payslip:
- Document everything (payslips, employment contract, clear deduction lines).
- Write HR/payroll demanding immediate posting and official receipt details.
- File a complaint with SSS (bring evidence of deductions).
For urgent benefits (e.g., maternity/sickness), ask SSS about provisional processing while they go after the employer.
Consider labor complaints for wage law violations and damages if you suffered loss due to non-remittance.
Resigning? Do not sign a quitclaim that purports to waive SSS claims—statutory entitlements cannot be bargained away.

13) Employer compliance checklist (printable)

SSS registration (ER number), R-1A/e-R1 reporting for all hires.
Cut-off calendar mapping SSS due dates; dual sign-off for remittances.
Monthly reconciliation: payroll vs. SSS payment confirmation; handle rejects promptly.
Loan deduction matrix: who has SSS loans, due amortization per month, and turnover proof.
Secure OR/electronic confirmation and archive by month and employee; keep for audit horizon.
Exception log (late postings, corrections) with target dates to cure.
Officer attestation quarterly that SSS is current (board governance).
Contingency fund to avoid using SSS withholdings as working capital (strictly prohibited).
Immediate self-report and settlement if slippage occurs; explore any official penalty relief program lawfully available.

14) Typical scenarios (and outcomes)

Employer withheld EE share but remitted only ER share for six months.
- Liability: unpaid EE share + penalties/interest + potential criminal charge for failure to remit. Officers at risk.
- Cure: full payment, request for penalty recomputation; still exposed to administrative/criminal action.
Company deducted SSS salary-loan payments but never turned them over.
- Employee’s loan shows delinquent; penalties accrue.
- Employer liable for amortizations + penalties + damages; criminal exposure is aggravated because the money came directly from the employee’s wages.
Unregistered casuals not reported to SSS for a year.
- SSS treats them as covered; assesses full contributions retroactively plus penalties.
- Separate violation for failure to register/report, with criminal and administrative consequences.

15) Frequently asked questions

Q: Can an employer offset SSS arrears with employee receivables or damages claims? A: No. SSS dues are statutory obligations; set-off against private claims is not allowed.

Q: If the employer later pays, is the criminal case automatically dropped? A: Payment may mitigate or be a ground for discretionary dismissal in some instances, but the offense is public; prosecutors/SSS can still proceed.

Q: Our company is closing. Do SSS delinquencies die with the corporation? A: No. SSS can pursue corporate assets and responsible officers personally.

Q: Employees signed quitclaims upon separation. Are SSS claims waived? A: No. Statutory contributions and coverage cannot be waived by private agreement.

Q: We paid on time but postings don’t appear. Are we liable? A: Keep proof of payment and payment reference numbers; coordinate with SSS to correct postings. Liability generally follows actual remittance, not portal lag.

16) Key takeaways

Non-remittance of SSS contributions or loan deductions is a criminal offense and a civil/administrative violation.
Responsible officers face personal exposure; each month/employee can be a separate count.
Financial exposure includes principal + interest/penalties + costs; payment later does not erase the offense.
Employees should monitor postings, document payroll deductions, and report gaps early.
Employers must treat SSS withholdings as trust funds, never as working capital, and install tight remittance controls.

This guide offers general information on Philippine law and practice. Specific outcomes depend on the exact delinquency period, records, assessments, and current SSS circulars. For active cases, consult counsel or a compliance professional to audit exposure, compute liabilities accurately, and coordinate with SSS on settlement or enforcement.