SIXTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
Third Regular Session 
) 
) 
) 
SENATE 
S.No. 
2921 
Introduced by Senator FRANCIS G. ESCUDERO 
AN ACT 
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AUTHORIZING THE SOCIAL SECURITY COMMISSION TO CONDONE 
PENALTIES ON DELINQUENT CONTRIBUTIONS AND TO DETERMINE 
THE MONTHLY SALARY CREDITS, THE SCHEDULE AND RATE OF 
CONTRIBUTIONS AND THE RATE OF PENALTY ON DELINQUENT 
CONTRIBUTIONS AND UNPAID LOAN AMORTIZATIONS, AMENDING 
FOR THE PURPOSE REPUBLIC ACT NO. 1161, 
AS 
AMENDED, 
OTHERWISE KNOWN AS THE SOCIAL SECURITY LAW. 
This bill seeks to provide the Social Security Commission (Commission) the authority to 
condone penalties on delinquent contributions, to determine the monthly salary credits, the 
schedule and rate 'of contributions, benefit increases and the rate of penalty on delinquent 
contributions and unpaid loan amortizations, thereby further amending Republic Act No. 
1161, as amended, otherwise known as the Social Security Law. 
The Commission, guided by its fiduciary duty to protect the welfare of SSS members 
and the fortitude to exercise extraordinary diligence in the care of the SS Fund, is a collegial 
body where the government, the employers, the workers and the general public are well-
represented. 
All the nine (9) members of the Commission are appointed by the 
President of the Philippines for a term of one year and their performance are appraised and 
evaluated by the Office of the President through the Governance Commission on GOCCs 
every year. 
The Commission believes that a strong and vibrant social protection system fulfills an 
emerging country. This proposed measure will enable the Commission and the SSS to realize 
its mandate and reinforce their commitment for a better SSS in the years to come. 
Penalty condonation on delinquent contributions 
Under Section 22 (a) of the SS Law, a penalty of three percent (3%) a month is assessed 
on unremitted contributions. This penalty is burdensome as it continues to accrue from the 
date the contribution falls due until paid. 
As a result, the delinquency, if not quickly 
addressed, can really pile up. For troubled companies that, by and large, do not want to be 
delinquent in the first place but failed to remit what is due as their employees' contributions to 
SSS could easily find themselves in arrears. 


It is reported that for a big number of billing or demand letters issued against 
employers-members of the SSS, the amount of contribution-delinquency is computed based on 
presumptive delinquency under Section 22 (d) of the SS Law, and hence not yet final being 
subject to reconciliation of records. The Large Account Division of SSS has. a collectible of 
P1,033 Billion as of 26 May 2014 from delinquent employers. P408 Million is accounted for by 
penalties and P625.9 Million is for contributions that are due. By providing a breathing space, 
we are actually helping SSS to immediately collect about P625.9 Million overdue SS 
contributions which would otherwise be difficult to collect. It is not a secret that companies 
choose not to pay what SSS demands of them because of penalties slapped upon them that 
have accumulated through the years which, at times, are actually bigger than the principal that 
should have been paid. This measure provides a strong incentive for those that have been in 
arrears in the payment of their employees' contributions to immediately settle what is due and 
overdue, minus the huge burden of dealing with the delinquency penalties. 
Past SSS 
condonation experience shows the amount of P3.42 B that was condoned as penalties while 
enabling the SSS, at the same time, to collect P3.546B from 24,042 delinquent employers which 
availed of the program. This amount easily beefed up the SS Fund and contributed to its 
stability and viability. 
More importantly, this is a welcome development for the privately employed workers 
comprising SSS' general membership, the self-employed individuals, financially distressed 
companies, small and medium businesses, other social enterprises, the contributing members 
of the informal sector, the farmers and the fisherfolks, the kasambahays and their household 
employers. They can now avail of the privileges of SSS members of good standing, full 
benefits and loans, which would otherwise not be available had their delinquent payments 
remain unsettled. 
This is a three-pronged stimulus package that will benefit all stakeholders of the SSS in 
the light of the recent calamities and economic debacles besieging our country. It is important 
that the loan privileges of SSS members such as calamity, housing and other loan packages 
remain available. This can only happen if contribution payments are up to date. The law will 
help the SSS, the employers and workers. 
To foster public accountability, transparency and good governance, Congress is not 
deprived of its oversight functions because an annual report on the exercise of the proposed 
power shall be required to be submitted to both Houses, stating therein the following facts and 
information, among others: names and addresses of employers whose penalty delinquencies 
have been the subject of compromise or condonation; amount involved; amount compromised 
or condoned; and the reason/s for the exercise of power to determine that said powers are 
reasonably exercised and that the SSS is not unduly deprived of revenues. 
This new provision is patterned from the GSIS Law (Section 43 of RA No. 8291), the 
HDMF/Pag-Ibig Law (Section 9 of RA No. 9679) and PhilHealth Law (Section 16 of RA No. 
10606) and the National Internal Revenue Code (Section 204, Chapter I, Title VIII of RA No. 
8424). 
Under the said laws, the statutory powers which the governing boards of GSIS, 
PhilHealth and HDMF can exercise includes the authority to waive, compromise or release, in 
whole or in part, any claim, interest or surcharges imposed upon employers regardless of the 
amount involved, under such valid terms and conditions. The aim is to replicate and/or align 
the SS Law with the Legislative will of Congress as contained and expressed in its more recent 
Legislative enactments 
2 


· 
I· 
Operational details and accounts ~anagement are the province of the Commission and 
the SSS, the ones entrusted with the Il1andate of running the affairs of the country's social 
security system including the exercise of' discretion and flexibility in managing its own affairs. 
Fixing the monthly salary credits, the schedule and rate of contributions and the rate of penalty on 
delinquent contributions and unpaid loan ar11ortizations 
, 
What is embodied in Section 18 ',of the SS Law is an outdated schedule of the social 
security contributions and the monthly I salary credits that have failed to keep pace with the 
changing times. Amendments to the SS Law last introduced in 1997 (now 17 years old) are no 
longer reflective of current sOcio-econoFic conditions. The minimum monthly salary credit 
still pegged at P1,000.00 per month is yvay below the minimum salary/wage in the private 
sector while the maximum salary credit at P16,000.00 per month is a far cry from existing 
realities in compensation administration! and labor developments. 
The SS contribution rate is an altogether different story. Since 1980, the contribution rate 
was pegged at 8.4 percent for 23 years, until it was increased by one-percent to 9.4 percent in 
2003, to 10.4 percent in 2007 and 11 percent in 2014 to avoid fund depletion. The contribution 
rate of the GSIS stands at 21 per cent. Given this, it is timely that Congress revisit the SS Law 
and ensure that this provision is responsive to the present-day realities. 
Upon the other hand, across-the-board pension increases of eight to fifty percent were 
granted 24 times (the last one in 2007); and the minimum monthly pension was also increased 
under the 1997 SS Law Amendment to ~1,200 if with at least 10 Credited Year of Service (CYS) 
and to ~2,400 if with at least 20 CYS. These pension increases averaged 15.12 percent per year 
for the period 1972 to 2007 and were often announced on "special occasions" such as Labor 
Day in May and the SSS anniversary in September. 
It is just unfortunate that while these pension increases averaged 15.12 percent per year 
for the period 1972 to 2007 the SS contributions was increased only six times from 1960 to 
2014. The heavy strain on the SS Fund being exacted by the increasing benefit obligations of 
the SSS to be paid to its members and their beneficiaries has a dire effect on the fund's long-
term viability. To lighten this load, the SSS, at the same time, carefully manage benefit 
payouts and operating expenses to minimize SSS' unfunded liability. 
Prudent fiscal 
management coupled with solid investment strategies are continuously being undertaken as 
the key drivers toward strengthening the viability of the SS Fund. 
SSS initiatives to enlighten more workers on the value of SSS and the importance of the 
active membership has helped boost contributions collections, which is the lifeblood of the SSS 
Fund. However, the existing contribution set-up does not ensure that SSS can continuously 
cover its ballooning unfunded liabilities in the future. To address such concern and be able to 
cope with this predicament, something must be done about the SSS contribution rates and 
align the same with industry standards and sound international' practices taking into 
consideration actuarial calculations, rate of benefits, inflation and, other relevant socio-
economic indicators. 
To live up to the Commission's full representative capacity where all the stakeholders 
and the sectors of the government, the workers, the management and the general public are 
well represented, the authority to determine and fix from time to time through rules and 
regulations, the minimum and maximum monthly salary credits, the schedule and the rate of 
contributions as well as the rate of increase in benefits, without the Presidential approval 
requirement, is now being proposed. 
3 


Corollary to such power is the authority to review and periodically adjust the rate of 
penalty on due but unremitted contributions and unpaid loan amortizations taking into 
consideration inflation and other pertinent socio-economic data. This is the logical 
consequence as this harmonizes the power to condone, compromise or release, in whole or in 
part, such penalties imposed upon delinquent social security contributions regardless of the 
amount involved under such valid terms and conditions it may prescribe when the financial 
position of the employer demonstrates a clear inability to pay the assessed delinquency. 
As earlier discussed, the proposed bill is aligned with the GSIS Law, the PhilHealth 
Charter, the Pag-Ibig Law and the NIRC. The GSIS Law (in Section 43 thereof) expressly vests 
upon the GSIS Board of Trustees without need of Presidential approval, the power i) to fix and 
periodically review and adjust the rates of interest and other terms and conditions for loans 
and credits extended to its members or other persons, ii) to determine, fix and impose interest 
upon unpaid or unremitted premiums and/ or contributions, and iii) to do and perform any 
and all acts necessary, proper or incidental to the attainment of the purposes and objectives of 
the GSIS Law. 
Also, the PhilHealth Corporation has authority pursuant to Section 16 of its Charter to i) 
impose interest and/ or surcharges not exceeding three percent (3%) per month, in case of 
delay by a public or private employer in the remittance of contributions and ii) to compromise, 
waive or release, in whole or in part, such interest or surcharges imposed upon employers 
regardless of the amount involved without Presidential approval, notwithstanding the 
provisions of any law to the contrary. 
The Board of Trustees of the HDMF, in the same vein, may waive or suspend the 
coverage and/ or payment of monthly Pag-Ibig contributions pursuant to Section 9 of the Pag-
Ibig Law without securing approval from the President by reasons of nature of employment, 
condition of business, ability to make contributions and other reasonable considerations. 
Similarly, the same statutory powers are also found in the provisions of the RA 8424 
granting the BIR Commissioner the authority i) to abate and refund or credit taxes and ii) to 
compromise the payment of any internal revenue tax, when (1) a reasonable doubt as to the 
validity of the claim against the taxpayer exists; or (2) the financial position of the taxpayer 
demonstrates a clear inability to pay the assessed tax and the BIR Evaluation Board in certain 
instances .. 
Based on the foregoing, therefore, the proposed SSS Charter Amendments are being put 
forward for the cause of the 32 million SSS members here and around the world. These 
reforms were never conceived to be a panacea, but rather a movement towards strengthening 
this institution. 
It is in this context that the early passage of this bill is earnestly sought. 
4 


" 
SIXTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
Third Regular Session 
) 
) 
) 
~"t{ttr. t,f I~e:~~('{'rrbr~ 
'15 SEP -1 P3:.4' 
SENATE 
S.No. 
2921 
Introduced by Senator FRANCIS G. ESCUDERO . 
AN ACT 
AUTHORIZING THE SOCIAL SECURITY COMMISSION TO CONDONE 
PENALTIES ON DELINQUENT CONTRIBUTIONS AND TO DETERMINE THE 
MONTHLY 
SALARY 
CREDITS, 
THE 
SCHEDULE 
AND 
RATE 
OF 
CONTRIBUTIONS 
AND THE RATE 
OF PENALTY ON DELINQUENT 
CONTRIBUTIONS AND UNPAID LOAN AMORTIZATIONS, AMENDING FOR 
THE PURPOSE REPUBLIC ACT NO. 1161, AS AMENDED, OTHERWISE KNOWN 
AS THE SOCIAL SECURITY LAW. 
Be it enacted by the Senate and the House of Representatives of the Republic of the 
Philippines in Congress assembled: 
1 
SECTION 1. Section 4 of Republic Act No. 1161, as amended, otherwise known as 
2 
the "Social Security Law", is hereby further amended to read as follows: 
3 
"SEC. 4. Powers and Duties of the Commission and SSS. - (a) The Commission. For 
4 
the attainment of its main objectives as set forth in Section 2 hereof, the Commission 
5 
shall have the following powers and duties: 
6 
"(1) 
To adopt, amend and rescind, subject to the approval of the President of the 
7 
Philippines, such rules and regulations as may be necessary to carry out the 
8 
provisions and purposes of this Act; 
9 
"(2) 
To establish a provident fund for the members which will consist of 
1 0 
voluntary contributions of employers and/or employees, seljDemployed and 
11 
voluntary members and their earnings, for the payment of benefits to such members 
12 
or their beneficiaries, subject to such rules and regulations as it may promulgate 
13 
and approved by the President of the Philippines; 
14 
"(3) 
To maintain a Provident Fund which consists of contributions made by both 
15 
the SSS and its officials and employees and their earnings, for the payment of 
16 
benefits to such officials and employees or their heirs under such terms and 
17 
conditions as it may prescribe; 
18 
"(4) 
To approve restructuring proposals for the payment of due but unremitted 
19 
contributions and unpaid loan amortizations under such terms and conditions as it 
20 
may prescribe; 
21 
"(5) 
To authorize cooperatives registered with the cooperative development 
22 
authority or associations registered with the appropriate government agency to act 
23 
as collecting agents of the SSS with respect to their members: Provided, That the 
1 


1 
SSS shall accredit the cooperative or association: Provided, further, That the persons 
2 
authorized to collect are bonded; 
, 
3 
"(6) 
To compromise or release, in whole or in part, any interest, penalty or any 
4 
civil liability to SSS in connection with the investments authorized under Section 
5 
26, hereof, under such terms and conditions as it may prescribe and approved by the 
6 
President of the Philippines;[and] 
7 
(7) 
ANY 
PROVISIONS 
OF 
LAW 
TO 
THE 
CONTRARY 
8 
NOTWITHSTANDING, TO CONDONE, COMPROMISE OR RELEASE, 
9 
IN WHOLE OR IN PART, SUCH PENALTIES IMPOSED UPON 
10 
DELINQUENT SOCIAL SECURITY CONTRIBUTIONS REGARDLESS 
11 
OF: THE AMOUNT INVOLVED UNDER SUCH VALID TERMS AND 
12 
CONDITIONS IT MAY PRESCRIBE SUCH AS WHEN THE FINANCIAL 
13 
POSITION OF THE EMPLOYER DEMONSTRATES, BY CLEAR AND 
14 
CONVINCING EVIDENCE, INABILITY TO PAY THE ASSESSED 
15 
DELINQUENCY AND THERE IS INDISPUTABLE GOOD FAITH ON 
16 
THE PART OF THE EMPLOYER OF SUCH INABILITY TO PAY.THE 
17 
IMPLEMENTING RULES AND REGULATIONS TO CARRY OUT THIS 
18 
PROVISION SHALL BE ADOPTED AND PROMULGATED BY THE 
19 
COMMISSION NOT LATER THAN NINETY (90) DAYS AFTER THE 
20 
APPROVAL OF THIS ACT. 
21 
22 
THE COMMISSION SHALL SUBMIT TO BOTH THE SENATE AND 
23 
THE HOUSE OF REPRESENTATIVES, AN ANNUAL REPORT ON THE 
24 
EXERCISE OF THE POWERS UNDER THIS SECTION, STATING 
25 
THEREIN, AMONG OTHERS, THE FOLLOWING: 1) NAMES AND 
26 
ADDRESSES OF EMPLOYERS WHOSE PENALTY DELINQUENCIES 
27 
HAVE BEEN THE SUBJECT OF COMPROMISE OR CONDONATION; 
28 
2) 
AMOUNT 
INVOLVED; 
3) 
AMOUNT 
COMPROMISED 
OR 
29 
CONDONED; AND 4) THE REASONjS FOR THE EXERCISE OF POWER 
30 
TO 
DETERMINE 
THAT 
SAID 
POWERS 
ARE 
REASONABLY 
31 
EXERCISED AND THAT THE SSS IS NOT UNDULY DEPRIVED OF 
32 
REVENUES. 
33 
34 
(8) TO DETERMINE AND FIX FROM TIME TO TIME THROUGH 
35 
RULES AND REGULATIONS, THE MINIMUM AND MAXIMUM 
36 
MONTHLY SALARY CREDITS, THE SCHEDULE AND THE RATE OF 
37 
CONTRIBUTIONS, THE 
RATE 
OF PENALTY ON DUE 
BUT 
38 
UNREMITTED 
CONTRIBUTIONS 
AND 
UNPAID 
LOAN 
39 
AMORTIZATIONS TAKING INTO CONSIDERATION ACTUARIAL 
40 
CALCULATIONS, RATE OF BENEFITS, INFLATION AND OTHER 
41 
RELEVANT SOCIO-ECONOMIC DATA; AND 
42 
"[(7)](9)To approve, confirm, pass upon or review any and all actions of the SSS in 
43 
the proper and necessary exercise of its powers and duties hereinafter enumerated. 
44 
"(b) The Social SecurihJ System - Subject to the provision of Section four (4), 
45 
paragraph[seven (7) hereoJl(A), SUB-PARAGRAPH NINE (9) HEREOF, the 
46 
SSS shall have the following powers and duties: 
47 
/I (1) To submit annually not later than April 30, a public report to the President of 
48 
the Philippines and to the Congress of the Philippines covering its activities in the 
49 
administration and enforcement of this Act during the preceding year including 
2 


1 
information and recommendations on broad policies for the development and 
2 
perfection of the program of the SSS. 
3 
11 (2) To require the actuary to submit a valuation report on the SSS benefit program 
4 
every four (4) years, or more frequently as may be necessary, to undertake the 
5 
necessary actuaricd studies and calculations concerning increases in benefits taking 
6 
into account inflation and the financial stability of the SSS, and to provide for 
7 
feasible increases in benefits every four (4) years, including the addition of new 
8 
ones, under such rules and regulations as the Commission may adopt, subject to the 
9 
approval of the President of the Philippines: Provided, That the actuarial soundness 
10 
of the reserve fund shall be guaranteed: Provided, further, That such increases in 
11 
benefits shall not require any increase in the rate of contribution; 
12 
11 (3) To establish offices of the SSS to cover as many provinces, cities and 
13 
congressional districts, whenever and wherever it may be expedient, necessary and 
14 
feasible, and to inspect or cause to be inspected periodically such offices; 
15 
"(4) To enter into agreements or contracts for such service and aid, as may be 
16 
needed for the proper, efficient and stable administration of the SSS; 
17 
11 (5) To adopt, from time to time, a budget of expenditures including salaries of 
18 
personnel, against all funds available to the SSS under this Act; 
19 
11 (6) To set up its accounting system and provide the necessary personnel therefor; 
20 
11 (7) To require reports, compilations and analyses of statistical and economic data 
21 
and to make investigation as may be needed for the proper administration and 
22 
development of the SSS; 
23 
11 (8) To acquire and dispose of property, real or personal, which may be necessary or 
24 
expedient for the attainment of the purposes of this Act; 
25 
11 (9) To acquire, receive, or hold, by way of purchase, expropriation or otherwise, 
26 
public or private property for the purpose of undertaking housing projects 
27 
preferably for the benefit of 10wDincome members and for the maintenance of 
28 
hospitals and institutions for the sick, aged and disabled, as well as schools for the 
29 
members and their immediate families; 
30 
11 (10) To sue and be sued in court; and 
31 
11 (11) To perform such other corporate acts as it may deem appropriate for the 
32 
proper enforcement of this Act." 
33 
34 
SECTION 2. Section 18, paragraph (a) of the Social Security Law is hereby further 
35 
amended to read as follows: 
36 
37 
"SEC 18. Employee's Contribution. - (a) Beginning as of the last day of the 
38 
calendar month when an employee's compulsory coverage takes effect and every 
39 
month thereafter during his employment, the employer shall deduct and withhold 
40 
from such employee's monthly 
salary, 
wage, 
compensation or earnings, the 
41 
employee's contribution in an amount corresponding to his salary, wage, 
42 
compensation or earnings during the month in accordance with therJollowing 
43 
schedule] MONTHLY SALARY CREDITS, THE SCHEDULE AND THE 
3 


1 
RATE OF CONTRIBUTIONS AS MAYBE DETERMINED AND FIXED 
2 
BY THE COMMISSION. 
3 
4 
[table of schedule deleted] 
5 
6 
The foregoing MONTHLY SALARY CREDITS, schedule AND RATE of 
7 
contribution shall also apply to self-employed and voluntary members. 
8 
[tiThe maximum monthly salary credit shall be Nine thousand pesos (P9,OOO.OO) 
9 
effective January Nineteen hundred and ninety six (1996): Provided, That it shall be 
10 
increased by One thousand pesos (Pl,OOO.OO) every year thereafter until it shall 
11 
have reached Twelve thousand pesos (P12,OOO.00) by Nineteen hundred and ninety 
12 
nine (1999): Provided, further, That the minimum and maximum monthly salary 
13 
credits as well as the rate of contributions may be fixed from time to time by the 
14 
Commission through rules and regulations taking into consideration actuarial 
15 
calculations and rate of benefits, subject to the approval of the President of the 
16 
Philippines.] 
17 
SECTION 3. Section 22, paragraph (a) of the Social Security Law is hereby further 
18 
amended to read as follows: 
19 
20 
"SEC. 22. Remittance of Contributions. - (a) The contribution imposed in the 
21 
preceding section shall be remitted to the 555 within the first ten (10): days of each 
22 
calendar month following the month for which they are applicable or, within such 
23 
time as the commission may prescribe. Every employer required to d,educt and to 
24 
remit such contributions shall be liable for their payment and if any cdntribution is 
25 
not paid to the 555 as herein prescribed, he shall pay besides the cqntribution a 
26 
penalty thereon [of three percent (3%) per monthlfrom the date the ,contribution 
27 
falls due until paid.THE RATE OF THE PENALTY ON DELINQUENT 
28 
CONTRIBUTIONS PER MONTH SHALL BE 
DETERMI~ED AND 
29 
FIXED 
BY 
THE 
COMMISSION 
THROUGH 
RUIjES 
AND 
30 
REGULATIONS TAKING INTO CONSIDERATION THE CURRENT 
31 
INFLATION RATE AND OTHER RELEVANT SOCIO-ECONOMIC 
, 
32 
DATA. If deemed expedient and advisable by the Commission, the collection and 
33 
remittance of contributions shall be made quarterly or semi-annuallY, in advance, 
34 
the contributions payable by the employees to be advanced by th~ir respective 
35 
employers: Provided, That upon separation of an employee, any cotztribution so 
, 
36 
paid in advance but not due shall be credited or refunded to his employ~r." 
37 
38 
SECTION 4. Separability Clause. If any provision or part hereof is held invalid 
39 
or unconstitutional, the remainder of the law or the provision not otherwise affected 
40 
shall remain valid and subsisting. 
41 
SECTION 5. Repealing Clause. All laws, decrees, orders, rules and regulations 
42 
and other issuances or parts thereof which are inconsistent with the provisions of this Act 
43 
are hereby repealed or modified accordingly. 
44 
45 
SECTION 6. Effectivity. - This Act shall take effect fifteen (15) days following its 
46 
complete publication in the Official Gazette or in at least (2) national newspapers of 
47 
general circulation whichever comes earlier. 
48 
49 
Approved, 
4