10/06/2026
SUPREME COURT: EMPLOYERS MUST REMIT SSS CONTRIBUTIONS DURING PERIOD OF ILLEGAL DISMISSAL
The Supreme Court (SC) held that an employer's statutory duty to deduct and remit Social Security System (SSS) contributions does not cease during the period of an employee's illegal dismissal, as the employee is deemed to have never left employment and remains entitled to all rights, salaries, and benefits they would have received had they not been unjustly terminated.
In a 13-page decision penned by Associate Justice Maria Filomena Singh, the SC's Third Division affirmed the ruling of the Court of Appeals ordering Lopez Sugar Corporation (LSC) to pay the SSS contributions of former employees Romeo Perrin Jr., Eduardo Candelario, Leonito Franco, and Rogelio Pabalan.
Perrin, Jr., et al. were employees of Lopez Sugar Corporation (LSC) who were illegally dismissed in September 1995. After a prolonged legal battle, the National Labor Relations Commission (NLRC) ruled the dismissal illegal and ordered LSC to pay them backwages and separation pay.
After receiving their back wages and signing a standard "Satisfaction of Judgment" releasing LSC from future labor claims, Perrin et al. demanded that LSC remit their mandatory Social Security System (SSS) contributions for the 10-year period or from October 1995 to November 2005, when they were illegally dismissed so they could claim their retirement benefits.
LSC refused, arguing that under the law, the obligation to remit SSS contributions ceases upon separation from employment, whether legal or illegal. It added that the Social Security Commission (SSC) had no jurisdiction and the claim should have been filed with the labor arbiter.
The employer also contended that the claim was barred by res judicata and the signed quitclaim/satisfaction of judgment. The Social Security Commission (SSC) ruled in favor of Perrin et al. and ordered LSC to pay their SSS social security contributions amounting to PHP 248,174 and the 3% per month penalty imposed thereon amounting to PHP 1,302,702 computed as of July 31, 2015.
The Court of Appeals subsequently upheld the said ruling, noting that in contemplation of the law, an illegally dismissed employee is deemed to have never left his office, making the employer obligated to remit the employee's social security contributions. This prompted LSC to elevate the case before the Supreme Court.
In ruling in favor of Perrin et al., the high court emphasized that LSC is legally obligated to pay the unremitted SSS contributions. It explained that under Sections 18, 19, and 22 of the Social Security Act of 1997, an employer has an obligation to deduct and withhold from its employees' wages and salaries the employees' share of the social security contributions and remit them, together with the employer's share, to the SSS.
In ruling that the herein employees are entitled to SSS benefits, the highest bench underscored that under Article 294 of the Labor Code, an employee who is illegally dismissed from employment is entitled to full backwages and other benefits.
As to the matter of jurisdiction, it cited the Social Security Act, which vested in the SSC the explicit and exclusive jurisdiction over disputes involving SSS coverage, benefits, and unremitted contributions, not the Labor Arbiter.
The prior illegal dismissal case dealt with employment termination, whereas the SSC case dealt with a statutory obligation to remit state insurance premiums.
LSC was ordered to pay PHP 248,174.00 in unremitted contributions, plus a mandatory 3% per month penalty for late payment amounting to PHP 1,302,702.75 (computed as of July 2015), without prejudice to further accruing penalties.
