In the Philippine labor landscape, the Social Security System (SSS) serves as a vital 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 deduct and remit contributions is not merely an administrative task—it is a mandatory legal obligation.
When an employer fails to remit these contributions, they move from a state of non-compliance to a state of criminal and civil liability.
I. Statutory Mandate of the Employer
The law is explicit: every employer is required to register its employees with the SSS and to deduct the employee's share of contributions from their salaries. This amount, combined with the employer's share, must be remitted to the SSS within the prescribed period.
Crucially, the law views these deducted amounts as trust funds. The moment an employer deducts the SSS contribution from an employee’s paycheck, that money no longer belongs to the company; the employer merely holds it in trust for the employee and the SSS.
II. Criminal Liabilities and Penalties
The Social Security Act of 2018 imposes heavy criminal sanctions on defaulting employers.
1. Criminal Prosecution
Failure or refusal to register employees or to remit contributions is a criminal offense. If the employer is a corporation, the penalty is imposed upon the managing head, directors, or officers responsible for the violation.
2. Imprisonment and Fines
Under Section 28 of R.A. 11199, the penalties for non-remittance include:
- Imprisonment: A minimum of six (6) years and one (1) day to a maximum of twelve (12) years.
- Fines: A fine ranging from Php 5,000 to Php 20,000.
3. Presumption of Estafa
The law creates a powerful legal presumption: if an employer deducts the contribution from the employee’s salary but fails to remit it to the SSS within 30 days from the date it fell due, such failure is considered prima facie evidence of Estafa (criminal deceit or swindling). This allows for prosecution under the Revised Penal Code in addition to the Social Security Act.
III. Civil Liabilities and Monetary Obligations
Beyond criminal charges, the employer is financially liable for the following:
1. Delinquency Interest
Employers who fail to remit on time are liable to pay a penalty of 2% per month from the date the contribution fell due until it is paid in full. This interest is mandatory and cannot be waived by the SSS without a specific condonation law passed by Congress or a program authorized by the Social Security Commission.
2. Liability for Unpaid Benefits (Damages)
If an employee (or their beneficiaries) becomes entitled to a benefit (such as sickness, maternity, disability, retirement, or death benefits) but is denied that benefit because the employer failed to remit contributions, the employer is legally bound to pay the SSS the full value of the benefit that the employee would have received.
Furthermore, the employer must still pay all the delinquent contributions and the accumulated penalties.
IV. Legal Remedies for Employees
Employees are protected by the law even if their employer is delinquent.
- Non-Prejudice to Benefits: The law states that the failure of the employer to remit contributions shall not prejudice the right of the covered employee to the benefits of the SSS. However, in practice, a lack of posted contributions often leads to the initial rejection of loan or benefit applications, forcing the employee to initiate a complaint.
- SSS Special Legal Team: The SSS has the authority to conduct field audits and inspections. They can issue "Letters of Authority" to examine payrolls and financial records.
- Social Security Commission (SSC): Disputes regarding SSS coverage, benefits, and contributions are filed with the SSC, which exercises quasi-judicial powers.
V. Governance and Corporate Responsibility
For corporate entities, it is important to note that the "piercing the corporate veil" doctrine is reinforced by the SSS law. The officers of the corporation (President, Manager, etc.) are held personally and criminally liable for the non-remittance. They cannot hide behind the separate legal personality of the corporation to avoid imprisonment.
VI. Summary Table of Consequences
| Category | Specific Consequence |
|---|---|
| Criminal | Imprisonment (6–12 years) and fines. |
| Civil/Financial | 2% monthly penalty on all delinquent amounts. |
| Damages | Payment of the equivalent value of benefits denied to the employee. |
| Legal Presumption | Failure to remit is automatically considered prima facie Estafa. |
| Officer Liability | Managing heads and directors are personally liable. |
In conclusion, the failure to remit SSS contributions is a grave offense in the Philippines. The legal framework is designed to ensure that the employer acts as a faithful fiduciary of the employee’s social security funds, with severe deprivation of liberty and significant financial loss serving as the primary deterrents for non-compliance.