Legal Remedies for Unpaid SSS and PhilHealth Contributions (Philippine Context)
Disclaimer: This article is provided for general informational purposes only and does not constitute legal advice. For specific concerns and questions, it is best to consult a qualified lawyer or the relevant government agencies.

I. Introduction

In the Philippines, employers are legally mandated to remit Social Security System (SSS) and Philippine Health Insurance Corporation (PhilHealth) contributions on behalf of their employees. These mandatory contributions are intended to provide employees with social security and health coverage. Failure or refusal of employers to remit these contributions may subject them to various legal liabilities.

The principal legal framework for these obligations are:

Republic Act (R.A.) No. 11199 (Social Security Act of 2018), which amended the earlier Social Security Act of 1997 (R.A. No. 8282), for SSS.
R.A. No. 11223 (Universal Health Care Act) and its predecessor laws, such as R.A. No. 10606 (the National Health Insurance Act of 2013), for PhilHealth.

Below is an overview of the rights, obligations, and legal remedies connected with unpaid SSS and PhilHealth contributions.

II. Legal Basis for Mandatory Contributions

Social Security System (SSS)
- Scope: All private sector employees, including domestic helpers (kasambahay) and Overseas Filipino Workers (OFWs), are covered by SSS. Employers are required to register their business with SSS and ensure that all eligible employees are also registered.
- Legal Obligation: Under R.A. No. 11199, both employers and employees must share in paying the monthly contribution. Employers have the responsibility to deduct the employee’s share from his or her salary and to remit this plus the employer’s share to the SSS on or before the scheduled due date.
Philippine Health Insurance Corporation (PhilHealth)
- Scope: All employees in the private and government sector, as well as those self-employed and OFWs, are required to be members of PhilHealth.
- Legal Obligation: Under R.A. No. 11223 (Universal Health Care Act), employers must deduct the employee’s share from his or her salary and add the employer’s corresponding share. The total must be remitted to PhilHealth monthly, on or before the due date set by PhilHealth.

Failing to do so is a violation of law that exposes an employer to various sanctions, including civil, criminal, and administrative liabilities.

III. Common Reasons for Non-Remittance of Contributions

Employers may fail to remit employees’ contributions for several reasons:

Misappropriation of company funds
Financial difficulties or insolvency
Ignorance or misunderstanding of legal requirements
Administrative oversight or negligence

Regardless of the cause, non-remittance is considered an offense under the respective laws governing SSS and PhilHealth.

IV. Consequences of Non-Remittance of Contributions

A. Penalties and Fines

Under the SSS Law (R.A. No. 11199)
- An employer who fails to register or fails to report employees for coverage is subject to penalties.
- If the employer fails to remit contributions within the prescribed time, a penalty of 2% per month of the amount due may be imposed.
- This penalty continues to accrue until the overdue contributions and penalties are fully settled.
Under the PhilHealth Law (R.A. No. 11223)
- Employers who fail or refuse to remit contributions on time are liable to pay interest and penalties as determined by PhilHealth’s implementing rules.
- The law provides for an interest or surcharge on late or unremitted contributions.

B. Criminal Liabilities

Failure to remit SSS and PhilHealth contributions may be prosecuted criminally. In serious cases or upon repeated violations, responsible officers (e.g., directors, presidents, treasurers, or managing heads) may face:

Fines
Imprisonment of up to twelve (12) years (depending on the law violated and the gravity of the offense)

For example, under Section 28(e) of the Social Security Act (R.A. No. 11199), any employer who fails to deduct or remit contributions may face imprisonment ranging from six (6) years and one (1) day up to twelve (12) years, or a fine of five thousand pesos ($5,000) to twenty thousand pesos ($20,000), or both, depending on the court’s determination.

C. Civil Liabilities

Apart from administrative and criminal penalties, employers are obligated to pay the full amount of the unremitted contributions, plus penalties, interest, and other charges (as prescribed by the relevant laws). If the employer’s failure to remit causes an employee to be unable to claim SSS or PhilHealth benefits, the employer may also face additional civil liability for damages or reimbursement of medical or related costs.

V. Legal Remedies Available

Employees and government agencies have several legal pathways to enforce the payment of unpaid contributions:

Administrative Enforcement by SSS or PhilHealth
- Demand Letters: SSS or PhilHealth typically begins enforcement by sending written notices or demand letters to the employer, requiring them to settle the unpaid contributions plus accrued penalties.
- Inspection and Audit: Both SSS and PhilHealth have the power to inspect employer records to ensure compliance. If they discover irregularities, they can issue a billing statement or assessment for the unpaid contributions.
Administrative Complaints
- An employee can file an administrative complaint with the SSS or PhilHealth (or both) to report the employer’s non-compliance.
- The agency may then take administrative actions, such as imposing administrative penalties or suspending certain business privileges.
Civil Action for Collection
- SSS and PhilHealth may institute a civil lawsuit against the erring employer to collect unpaid contributions plus penalties.
- The employee, in some instances (often alongside the agency), may also file a civil claim for damages if benefits were disapproved or withheld because of the employer’s non-remittance.
Criminal Complaint
- If the employer continues to ignore administrative orders or commits repeated violations, a criminal case may be filed in court against the employer or its responsible officers.
- The outcome can be fines or imprisonment, depending on the gravity of the offense and the specific statutory provisions violated.
Warrants of Distraint or Levy on Assets
- SSS and PhilHealth have quasi-judicial powers allowing them to issue warrants of distraint, garnishment, or levy on the employer’s assets if they repeatedly fail to pay.
- These actions aim to enforce payment by seizing or freezing the employer’s property or bank accounts.
Settlement and Payment Arrangements
- Installment Payment Plans: Employers with substantial arrears may approach SSS or PhilHealth to negotiate an installment plan.
- Compromise Settlements: In limited and justifiable situations, the agency may agree to a compromise settlement to facilitate payment, subject to strict guidelines.

VI. Role of Employees and Practical Steps

Verify Remittances
- Employees should regularly check their contribution records with SSS and PhilHealth. Each agency has a system or online portal where members can verify if payments have been credited.
Notify and Follow Up
- If an employee notices missing or late contributions, he or she should immediately raise the issue with the employer (e.g., HR Department or finance team).
- If no action is taken, the employee may file a complaint with the SSS or PhilHealth.
Gather Evidence
- Employees should keep payslips, payroll statements, employment contracts, and any correspondences with the employer. These records are crucial when lodging a complaint or filing a legal action.
Seek Guidance from Government Agencies
- SSS Branches: Inquire about the process for filing non-remittance complaints.
- PhilHealth Local Health Insurance Offices: They can provide the necessary forms, advice, and procedural steps to enforce the payment of contributions.
Consult an Attorney or the Public Attorney’s Office (PAO)
- For employees who cannot afford private counsel, the Public Attorney’s Office may offer free legal assistance if they meet certain eligibility requirements.

VII. Preventive Measures for Employers

To avoid legal complications and penalties, employers should:

Maintain Accurate Payroll Records
- Keep updated records of all contributions deducted and remitted each month.
Set Up Automated Systems
- Utilize digital platforms or online banking to ensure timely remittance.
Conduct Regular Audits
- Periodically check with SSS and PhilHealth to ensure that all payments have been properly credited.
Train Staff and Develop Internal Compliance Policies
- Assign a dedicated officer or manager to oversee compliance with mandatory benefit contributions.
Act Promptly if in Arrears
- If an employer faces cash-flow issues, they should immediately contact the SSS or PhilHealth to explore payment plans or other remedies.

VIII. Conclusion

Under Philippine law, the non-remittance of SSS and PhilHealth contributions is a serious offense. Employers are strictly required to pay the mandated contributions on time and face steep penalties, fines, and even imprisonment if found non-compliant. On the other hand, employees have a right to ensure that their social security and health benefits are safeguarded. They can pursue administrative, civil, or criminal remedies through the SSS, PhilHealth, or the courts.

Should you, as an employee, notice any discrepancies in your contributions, it is crucial to act promptly: verify your records and report the issue. Employers are encouraged to maintain robust compliance practices to avoid legal pitfalls and ensure that their workforce enjoys the full protection intended by Philippine social security and health laws.

This article provides a general overview and should not be taken as a substitute for personalized legal advice. Consult with qualified professionals or reach out directly to the SSS and PhilHealth for guidance specific to your situation.