Imprisonment for non-remittance of SSS, Pag-IBIG and PhilHealth contributions

Published — August 17, 2017

The following post does not create a lawyer-client relationship between Alburo Alburo and Associates Law Offices (or any of its lawyers) and the reader. It is still best for you to engage the services of your own lawyer to address your legal concerns, if any.

Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.

Related Topic: Employer’s Guide to Minimum Terms and Conditions of Employment

According to former President Ramon Magsaysay, social justice means “[t]hose who have less in life should have more in law”. This is the very foundation of social legislation, which includes statutes intended to enhance the welfare of the people, particularly those which require payment of benefits by government agencies to the worker or his family when and while he cannot work by reason of sickness, disability, old age, death and similar hazards [See: Alcantara, 2008]. With this, the State established the Social Security System (“SSS”), the Home Development Mutual Fund (“Pag-IBIG”), and the Philippine Health Insurance Corporation (“PhilHealth”).

SSS, Pag-IBIG and PhilHealth

The Philippine Social Security System is a social insurance program for workers, which operates under two programs. They are: (1) the Social Security Program, where all enrolled employees may enjoy maternity, sickness, disability, retirement and death/funeral benefits; and (2) the Employees’ Compensation Program, which assist workers who suffer work-connected sickness or injury resulting in disability or death [R.A. No. 8282; See also: www.sss.gov.ph].

Through Pag-IBIG, the Home Development Mutual Fund was established to provide a national savings program and affordable shelter financing for Filipino workers, where provident claims, as well as short term loans and housing programs, may be availed of by its members [P.D. No. 1752; See also: www.pagibigfund.gov.ph].

PhilHealth, on the other hand, implements the National Health Insurance Program, which was established to provide all citizens with the mechanism to gain financial access to health services, in combination with other government health programs. This social insurance program serves as the means for the healthy to help pay for the care of the sick, and for those who can afford medical care to subsidize those who cannot [R.A. No. 7875; See also: www.philhealth.gov.ph].

In these programs, the employer and the employee jointly pay for the latter’s contributions, where the amount of the employee’s share, in accordance with the established table of contributions, will be deducted from his salary, to be remitted by the employer to the concerned agencies. The rest of the contributions shall be shouldered by the employer.

Imprisonment and penal fines

Unfortunately, despite deducting from their employees’ salary the amount of SSS, Pag-IBIG and PhilHealth contributions, some employers do not remit said amounts to the government. In order to ensure faithful compliance with the programs’ noble purposes, complaints may be filed before the SSS, Pag-IBIG and PhilHealth offices, as the case may be. Employers always have to bear in mind that aside from being ordered to pay for the unremitted contributions, criminal penalties may likewise be imposed upon finding of guilt for such violations.

For SSS, a criminal fine in the amount of Php 5,000.00 to Php 20,000.00, or imprisonment of 6 years and 1 day to 12 years, or both, at the discretion of the court, may be imposed where the violation consists in failure or refusal to register employees, or to deduct contributions from the employees’ compensation and remit the same to the SSS [R.A. 8282, Sec. 28(e)].

For Pag-IBIG, the employer who fails to remit contributions without lawful cause or with fraudulent intent may be penalized with imprisonment of up to 6 years, and/or a fine of not less than but not more than twice the amount of contributions involved [R.A. 9679, Sec. 25].

Lastly, for PhilHealth, a penalty of fine in the amount of Php 500.00 to Php 1,000.00, multiplied by the total number of employees employed by them, and imprisonment of 6 months to 1 year may be imposed upon employers who fail or refuse to deduct contributions from the employee’s compensation, or to remit the same to PhilHealth [R.A. 7875, Sec. 44].

Prescriptive period for filing of criminal complaint

Following the prescriptive periods provided under Act No. 3326, from the time of the commission of the violation, or from discovery thereof, criminal complaints shall be filed within 8 years for violations of the SSS and Pag-IBIG laws, and within 4 years for violations of the PhilHealth law.

The foregoing, however, is concerned only with the extinguishment of the criminal liability for the offense. The general rule is, of course, that extinction of the penal action does not carry with it the extinction of the civil action to enforce civil liability arising from the offense charged, unless the extinction proceeds from a declaration in a final judgment that the fact from which the civil liability might arise did not exist. Thus, our Supreme Court still allowed a complaint to enforce civil liability to continue even after 10 years had passed already since the commission of the social security violation [See: G.R. No. 74689].

Our government’s campaign in ensuring compliance with said social welfare benefits already led to the conviction and imprisonment of countless employers who were found guilty of violating their legal obligations to their employees. Therefore, religiously deducting from employee’s salaries and remitting their contributions to the concerned agencies is clearly not only the right thing to do, but also a sure way to avoid complications that could give them more headaches in the process. We must always remember that the several pesos intended for social welfare benefits, when unjustly saved, is not worth one’s liberty.

Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries regarding social security and other employee welfare benefits, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.

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