Employers in the Philippines are mandated by law to deduct employees’ shares and remit both employee and employer contributions to the Social Security System (SSS), Philippine Health Insurance Corporation (PhilHealth), and Home Development Mutual Fund (Pag-IBIG). Failure to remit these contributions—whether the employer deducted the employee’s share but kept it, or simply failed to pay the employer’s share—constitutes a serious violation with administrative, civil, and criminal consequences.
This article comprehensively discusses the legal framework, specific violations, penalties, available remedies, criminal liabilities (including estafa), prescription periods, relevant jurisprudence, and practical steps employees and government agencies can take.
I. Legal Obligations of Employers
SSS – Republic Act No. 11199 (Social Security Act of 2018)
- Section 8: Coverage is compulsory for all employees.
- Section 18: Employer must deduct employee share and pay employer share.
- Section 19: Contributions must be remitted not later than the 10th day following the month when due (or the deadline set by SSS).
PhilHealth – Republic Act No. 11223 (Universal Health Care Act) and IRR
- Section 10: Compulsory coverage.
- Employers must deduct and remit premium contributions monthly, within the prescribed deadlines (usually 10th or 15th of the following month depending on employer type).
Pag-IBIG – Republic Act No. 9679 (Home Development Mutual Fund Law of 2009)
- Section 4: Compulsory coverage for all employees earning at least ₱1,000 monthly.
- Contributions (2% employee, 2% employer, maximum ₱100 each as of latest schedule) must be remitted on or before the 10th day following the applicable month.
Failure to deduct, report, or remit on time violates all three laws.
II. Administrative Penalties and Liabilities
| Agency | Interest/Penalty for Late or Non-Remittance | Additional Sanctions |
|---|---|---|
| SSS | 3% per month penalty from due date until fully paid (Section 22, RA 11199) | Possible revocation of authority to deduct |
| PhilHealth | 3% per month or the prevailing legal rate (PhilHealth Circulars) | Blacklisting, denial of employer accreditation |
| Pag-IBIG | 1/10 of 1% per day of delay (up to 3% per month) | Blacklisting, cancellation of employer ID |
The employer remains fully liable for both shares plus penalties even if the employee has already separated or the company has closed.
III. Criminal Penalties Under Special Laws
| Agency | Violation | Penalty (RA 11199, RA 11223, RA 9679) |
|---|---|---|
| SSS | Failure or refusal to deduct/remit contributions (Section 28[a]) | Fine ₱5,000–₱20,000 and/or imprisonment 6 years & 1 day to 12 years for every violation |
| SSS | Failure to register employees or submit reports (Section 28[e]) | Same penalties as above |
| PhilHealth | Failure to deduct/remit premiums (Section 44, RA 11223) | Fine ₱50,000–₱500,000 and/or imprisonment 6 months to 6 years (depending on amount and recidivism) |
| Pag-IBIG | Failure to remit contributions (Section 22, RA 9679) | Fine up to ₱20,000 and/or imprisonment up to 6 years per violation |
These are public crimes. The State (through SSS, PhilHealth, or Pag-IBIG prosecutors) can file the case even without employee complaint, though employee complaints usually trigger prosecution.
IV. Criminal Liability for Estafa (Article 315[1][b], Revised Penal Code)
When the employer deducts the employee’s share but does not remit it to the agency, the money is received in trust (agency relationship). Misappropriation or conversion of that money constitutes estafa with abuse of confidence.
Key Supreme Court rulings:
- Wong v. Carpio (G.R. No. 202796, 2015) – Explicitly ruled that failure to remit deducted SSS contributions constitutes estafa.
- Tan v. People (G.R. No. 223909, 2018) – Reaffirmed that non-remittance of deducted SSS, PhilHealth, and Pag-IBIG contributions is estafa.
- Lim v. People (G.R. No. 225496, 2019) – Same principle applied even if the employer eventually paid part of the contributions.
- Acierto v. People (G.R. No. 237974, 2020) – Non-remittance of Pag-IBIG contributions is estafa.
Penalty for estafa depends on amount:
- Up to ₱400,000 → prisión correccional maximum to prisión mayor minimum
- Higher amounts → reclusion temporal and higher
Corporate officers (President, Treasurer, HR Manager) who had direct participation or indispensable cooperation are criminally liable even if the corporation is separately charged.
V. Civil Liability
The employer is solidarily liable to pay:
- Unremitted contributions (both shares)
- Penalties and interest
- Damages (moral, exemplary) in proper cases
- Attorney’s fees (usually 10% of amount recovered)
Employees may file a civil action for collection of sums due or join it with the criminal case (estafa or special law violation).
VI. Remedies Available to Aggrieved Employees
File complaint with the agency
- SSS: Online via My.SSS or branch complaint desk → leads to demand letter, then collection case or criminal complaint
- PhilHealth: File at nearest LHIO → assessment and demand
- Pag-IBIG: File complaint online or at branch → assessment and possible criminal action
File labor money claims at NLRC (within 3 years from accrual)
- For recovery of unremitted contributions treated as unpaid wages/benefits
- NLRC can award the amounts plus 10% attorney’s fees
File criminal complaint for estafa at Prosecutor’s Office (prescription: 15–20 years depending on penalty)
- Criminal complaints under special laws prescribe in 12 years (Act No. 3326)
File complaint with DOLE Regional Office for violation of labor standards → may result in compliance order and penalties
VII. Rights of Employees Despite Employer Default
- SSS (Section 22[c], RA 11199): Benefits shall be paid notwithstanding non-remittance. SSS will advance the benefit and collect from employer.
- PhilHealth: Members remain entitled to benefits. PhilHealth may advance payment and pursue employer.
- Pag-IBIG: Members can still avail of housing loans, multi-purpose loans, etc., based on their actual contributions paid; however, non-remitted amounts are credited once employer pays.
VIII. Practical Notes and Recent Developments
- As of 2024–2025, the SSS, PhilHealth, and Pag-IBIG have intensified joint operations with DOLE and BIR against delinquent employers.
- Online filing of complaints is now standard and very responsive (SSS and Pag-IBIG usually act within 30–60 days).
- The “no employer remittance, no penalty to employee” policy is strictly enforced.
- Corporate veil piercing is applied when employers hide behind defunct corporations (SSS v. Hon. Judge Alcazar, G.R. No. 240692, 2021).
- The 2023–2025 contribution rate increases (SSS 14% → 15%, PhilHealth income-based) have made non-remittance even more financially damaging to employers due to higher penalties.
Conclusion
Failure to remit SSS, PhilHealth, and Pag-IBIG contributions exposes employers and responsible officers to heavy administrative penalties, civil liability for the full amount plus interest, and serious criminal prosecution under both special laws and the Revised Penal Code for estafa. Employees are fully protected: they retain all benefits, and multiple venues exist for speedy recovery and prosecution. Delinquent employers face not only financial ruin through compounding penalties but also imprisonment and permanent blacklisting that effectively prevents future business operations.
Employees who discover non-remittance should immediately file complaints with the concerned agencies and, if the employee share was deducted but not remitted, file estafa charges. Prompt action almost always results in full recovery and criminal conviction of the erring employer.