Employer Liability for Non-Remittance of SSS, PhilHealth, and Pag-IBIG Contributions

Philippine Legal Framework, Penalties, Jurisprudence & Compliance Guide (Updated as of 16 June 2025)

Important: This article is an educational overview. For tailor-fit advice, consult Philippine counsel or the concerned government agency.

1. Why the State Treats Government-Mandated Contributions as Trust Funds

Employees’ premiums to the Social Security System (SSS), PhilHealth, and the Home Development Mutual Fund (Pag-IBIG) are compulsory social-insurance savings. Statutes expressly declare that once employers withhold the employee’s share, those amounts—and the counterpart employer share—“shall be held in trust” for the respective fund. Failure to remit is therefore more than a mere debt; it is a breach of fiduciary duty that carries civil, administrative, and criminal consequences.

2. Statutory Sources of the Duty to Remit

Program	Governing Law (latest major amendment)	Core Employer Duties
SSS	Republic Act (RA) 11199 – Social Security Act of 2018	(1) Register the business and all eligible employees; (2) deduct the employee share; (3) add the employer share; (4) remit on or before the last day of the month following the applicable month (SSS Circular 2019-012).
PhilHealth	RA 7875 (National Health Insurance Act) as amended by RA 11223 (Universal Health Care Act, 2019)	Similar four-step obligation; due date is every 11th, 15th or last working day of the month depending on PhilHealth schedule.
Pag-IBIG	RA 9679 – HDMF Law of 2009	Remit on or before the 10th day of the following month (Pag-IBIG Circular No. 433-A).

No deduction of the employer share is ever allowed—doing so is a separate offense under all three statutes.

3. Statutory Penalties for Late or Non-Remittance

Fund	Surcharge / Interest	Criminal Penalty	Who May Be Jailed / Fined
SSS (RA 11199, §28(e)–(h))	2 % interest per month on delinquent amount until paid	Fine ₱5,000-₱20,000 and imprisonment 6 yrs 1 day – 12 yrs	The employer and corporate officers “responsible for the violation” (incl. president, treasurer, general manager).
PhilHealth (RA 7875, §44)	At least 3 % per month of the amount due	Fine ₱5,000-₱10,000 per affected employee and/or imprisonment 6 mos 1 day – 6 yrs	Employer plus “officers and agents” who allowed the violation.
Pag-IBIG (RA 9679, §24)	2 % per month of the amount due	Fine up to ₱20,000 and/or imprisonment ≤ 6 yrs	Employer and “responsible officials, directors or partners.”

No minimum amount is required to trigger criminal liability; a single unremitted peso may suffice.

4. Administrative & Civil Enforcement Tools

Agency	Coercive Remedies
SSS	• Issue warrants of distraint/levy on personal and real property (RA 11199 §25). • Garnish bank accounts. • Refuse pension/benefit clearances to officers with pending liability.
PhilHealth	• Cease-and-desist or closure orders for unregistered employers. • Withhold issuance of clearance certificates needed for government bidding.
Pag-IBIG	• Administrative fines beyond interest. • Lien on business property. • Deny loan approvals or refund clearances.

Employees may also:

Sue before the National Labor Relations Commission (NLRC) for money claims equivalent to unpaid contributions, plus moral/exemplary damages.
File a criminal complaint directly with the prosecutor’s office (SSS and PhilHealth are “special laws” that follow the Rules on Summary Procedure).
Request agency intervention (inspection, issuance of show-cause orders, or compromise negotiations).

5. Jurisprudence Snapshot

Case	G.R. No.	Ruling & Takeaway
People v. Rodrigo Dizon (SSS)	L-42327, 30 Jan 1982	Corporate president convicted; the “responsible officer” doctrine still guides prosecution today.
People v. Borrero	190180, 24 Apr 2019	Good-faith defense rejected. Officer’s claim that accountant handled remittance was immaterial; duty is non-delegable.
Filora Foods v. SSS	230821, 10 Nov 2021	Supreme Court sustained 2 % monthly penalty as not excessive; interest is “compensatory, not punitive.”
Jose Jewelers Corp. v. Pag-IBIG	CA-G.R. SP 167189, 7 Sept 2023	Court of Appeals upheld distraint against corporate assets despite ongoing appeal, citing Pag-IBIG’s “collect-now, contest-later” mandate.

6. Prescription of Actions

Fund	Criminal Action	Civil / Collection Action
SSS	None. RA 11199 §28(h) abolished prescriptive periods for non-remittance offenses.	20 years from when the obligation became due (Civil Code Art. 1144, by analogy; agency policies use 10 years).
PhilHealth	3 years from discovery of violation (RA 11223 §34).	10 years for collection suits.
Pag-IBIG	Silent. Prosecutors apply the 3-year general rule for offenses penalized by ≤ 6 years (Revised Penal Code Art. 90).	HDMF pursues 10 years from accrual.

7. Interaction with the Labor Code and BIR Rules

Labor Code, Art. 116 & 118: Unremitted deductions may constitute illegal withholding of wages or unfair labor practice, entitling workers to full restitution plus damages.
Tax Deductibility: The Bureau of Internal Revenue disallows the employer portion of unpaid contributions as a deductible expense; surcharges and interest are likewise non-deductible.
Final Pay Clearance: DOLE Department Order 195-18 requires employers to secure SSS/PhilHealth/Pag-IBIG clearance before releasing a resigning employee’s final pay.

8. Personal Liability of Directors, Officers & Partners

Statutory Text: All three laws make “responsible officers” criminally and civilly liable.
Piercing the Corporate Veil: Even without a criminal conviction, courts may pierce the veil to hold controlling persons liable when the corporation is a mere alter ego (e.g., Nakpil v. OMNI Ship, G.R. 232063, 16 Feb 2021).
Stock Transfer or Closure: Selling the company does not extinguish obligations that became due prior to transfer. Buyers should demand clearance certificates.

9. Condonation & Amnesty Programs (as of 2025)

Fund	Latest Program	Key Features
SSS	Circular 2022-033 (Contribution Penalty Condonation Program)	100 % waiver of 2 % monthly penalty if full principal + 10 % service fee is paid or restructured within the program period.
PhilHealth	Advisory 2023-0012	50 % penalty reduction and staggered payment up to 24 months for micro-enterprises.
Pag-IBIG	Circular 2024-010 (HDMF Amnesty)	100 % waiver of interest/surcharge for employers in “crisis-hit” industries (tourism, MSMEs) subject to a promissory note.

Tip: Avail of condonation early; pending criminal complaints are frozen during approved settlement, but revive upon default.

10. Best-Practice Compliance Checklist for Employers

Automate Cut-Offs: Align payroll calendar with agency due dates; enable auto-debit arrangements.
Internal Controls: Separation of duties—HR computes, Finance remits, CEO reviews electronic receipts.
Monthly Reconciliation: Match agency electronic contribution files (ECFs) against payroll totals.
Record Retention: Keep official receipts, electronic payment confirmation, and employer collection lists for at least 11 years.
Audit & Clearance: Secure an annual Statement of Remittances from each fund; include it in the external auditor’s checklist.
Officer Training: Orient new directors and officers on personal liability during onboarding.
Exit Strategy: When closing or selling the business, obtain a Certificate of Full Compliance from all three funds; buyers should require it.

11. Remedies If You Discover Past Non-Remittance

Step	What to Do	Rationale
1. Quantify the Gap	Generate electronic audit trail; identify months and employee IDs without contributions.	Accurate disclosure speeds up condonation.
2. Approach the Agency Early	Write a request for statement of account (SOA) and avail of any amnesty; propose a reasonable installment plan.	Shows good faith and may reduce penalties.
3. Book the Liability	Recognize the expense and interest in financial statements; update tax returns if necessary.	Avoids future BIR penalties for misstatement.
4. Secure Employee Buy-In	Explain timeline for posting of retro contributions; issuing HR advisories preserves morale and may stave off complaints.	Transparency mitigates reputational risk.
5. Monitor Posting	Use SSS/PhilHealth/Pag-IBIG online portals to verify actual posting of back payments.	Liability is extinguished only upon posting, not mere payment.

12. Key Takeaways

Non-remittance is punishable by heavy interest (2 %–3 % per month) and jail time of up to 12 years.
Corporate officers, not just the entity, face personal exposure. Delegating payroll is no defense.
There is effectively no criminal prescription for SSS violations after RA 11199.
Government agencies wield aggressive collection tools—distraint, levy, and business closure.
Condonation programs are the cheapest exit—use them before they lapse.
Robust internal controls and regular reconciliation are the surest prophylaxis.

13. Frequently Asked Questions

Q 1: Can an employer offset future contributions against over-remitted amounts?

Yes, but only upon written approval of the agency after audit. Un-posted offsets remain delinquent.

Q 2: If only the employee share was deducted but the employer failed to add its share, is the offense still criminal?

Absolutely. The law views both shares as trust funds once the employer withholds any part of the salary.

Q 3: Does a pending NLRC case suspend an SSS criminal prosecution?

No. Labor claims are separate. The Supreme Court treats SSS prosecution as a public offense independent of private settlement.

Conclusion

The Philippine social-insurance regime imposes strict, multi-layered liability on employers—civil, administrative, and criminal—for any failure to remit SSS, PhilHealth, or Pag-IBIG contributions. Boards of directors, HR managers, and finance officers must therefore treat payroll deductions not as business cash flow but as inviolable trust funds. Prompt, documented remittance coupled with periodic compliance audits is the employer’s best—and cheapest—insurance against crippling penalties and possible imprisonment.