Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

SEVENTEENTH CONGRESS
First Regular Session
3550

HOUSE BILL NO.

Introduced by HON. RENE L. RELAMPAGOS
First District, Bohol

EXPLANATORY NOTE

This bill seeks to provide the Social Security Commission (Commission), the
governing board of the Social Security System (SSS), the authority to condone penalties on
delinquent contributions and loans, 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 san Presidential approval, thereby further
amending Republic Act No. 1161, as amended, otherwise known as the Social Security Law.

‘The Commission is authorized under Section 4, paragraph (6) of Republic Act No.
1161 as amended (SS Law) to compromise or release, in whole or in part, any interest,
penalty or any civil liability to SSS accruing from unpaid member loans. However, the
exercise of this authority is subject to approval by the President.

This new provision is patterned from the recently enacted GSIS Law, the
HDMF/Pag-Ibig Law and PhilHealth Law and the National Internal Revenue Code. Under
the said laws, the statutory powers which the governing boards of GSIS, PhilHealth and
HDMF can exercise in carrying out their mandates is not subjected to Presidential
approval. This proposal is based on the theory that operational details and accounts
management are the province of the Commission and the SSS, the ones entrusted with the
mandate of running the affairs of the country’s social security system including the
exercise of discretion and flexibility in managing its own affairs.

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 hi
collectible of P1,033 Billion as of 26 May 2014 from delinquent employers. P408 Mi
is accounted for by penalties and P625.9 Million is for contributions that are due.
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 $$ 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.

Further, the current $$ Law contains an outdated schedule of the social security
contributions which have failed to keep pace with the changing times. Amendments to the
$S Law, last introduced in 1997 (now 17 years old), are no longer reflective of current
socio-economic conditions.

‘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 liabilit

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

Under the present provisions of the $$ Law, the Commission cannot increase the
minimum and maximum monthly salary credits, the schedule and the rate of contributions
as well as the rate of benefits without securing the approval of the President of the Republic
of the Philippines. This process is usually tedious and takes a determinable time.

Corollary to these proposed amendments in the powers of the Commission 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.

Again, the proposed amendments are aligned with the GSIS Law, the PhilHealth
Charter, the Pag-Ibig Law and the NIRC. It is expected that the 30 million SSS members
here and around the world will id to benefit from these amendments.

It is in this context that the early passage of this bill is earnestly sought.

RENE —


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

SEVENTEENTH CONGRESS
First Regular Session

HOUSE BILL Ni 3 559

Introduced by HON. RENE L. RELAMPAGOS
First District, Bohol

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,
‘THEREBY FURTHER AMENDING 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 Philippines in
Congress assembled:

SECTION 1. Section 4, paragraph (a) of Republic Act No. 1161, as amended,
otherwise known as the “Social Security Law”, is hereby further amended to read as follows:

“SEC. 4. Powers and Duties of the Commission and SSS. ~ (a) The
Commission. — For the attainment of its main objectives as set forth in Section 2 hereof,
the Commission shall have the following powers and duties:
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(6) To compromise or release, in whole or in part, any interest, penalty or any civil
liability to SSS in connection with the investments authorized under Section 26, hereof,
under such terms and conditions as it may prescribe;

(7) NOTWITHSTANDING THE PROVISIONS OF ANY LAW TO THE CONTRARY,
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. THE IMPLEMENTING RULES AND REGULATIONS TO CARRY OUT
‘THIS PROVISION SHALL BE ADOPTED AND PROMULGATED BY THE COMMISSION
NOT LATER THAN NINETY (90) DAYS AFTER THE APPROVAL OF THIS ACT.

SOMMISSION SHALL SUBMIT TO BOTH THE SENATE AND HOUSE OF
¥ AN ANNUAL REPORT ON THE EXERCISE OF THE POWERS
UNDER THIS SECTION, STATING THEREIN THE FOLLOWING FACTS AND
INFORMATION, AMONG OTHE! IAMES 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.

(8) 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, THE RATE OF PENALTY ON DUE
BUT UNREMITTED CONTRIBUTIONS AND UNPAID LOAN AMORTIZATIONS TAKING
INTO CONSIDERATION ACTUARIAL CALCULATIONS, RATE OF BENEFITS, INFLATION
AND OTHER RELEVANT SOCIO-ECONOMIC DATA, AND;

s of the SSS in the
ted.”

(9) To approve, confirm, pass upon or review any and all action
proper and necessary exercise of its powers and duties hereinafter enume

SECTION 2. Section 4, paragraph (b), sub-paragraph (2) of the Social Security Law
is hereby further amended to read as follows:

“SE

xxx

. 4. Powers and Duties of the Commission and SSS .~ xxx xxx

(b) The Social Security System — Subject to the provision of Section four (4),
paragraph (a), SUB-PARAGRAPH NINE (9) hereof, the SSS shall have the following
powers and duties

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(2) To require the actuary to submit a valuation report on the SSS benefit program
every four (4) y ‘or more frequently as may be necessary, and to undertake the
necessary actuarial studies and calculations concerning increases in benefits taking into
account inflation and the financial stability of the SSS and to provide feasible increases in
benefits every four (4) years, including the addition of new ones, under such rules and
regulations as the Commission may adopt, Provided, ‘That the actuarial soundness of the
reserve fund shall be guaranteed;

SECTION 3. Section 18, paragraph (a) of the Social Security Law is hereby further
amended to read as follows:

“SEC. 18. Employee's Contribution. — (a) Beginning as of the last day of the
calendar month when an employee's compulsory coverage takes effect and every month
thereafter during his employment, the employer shall deduct and withhold from such
employee's monthly salary, wage, compensation or earnings, the employec'
contribution in an amount corresponding to his salary, wage, compensation or earnings
during the month in accordance with the MONTHLY SALARY CREDITS, THE
SCHEDULE AND THE RATE OF CONTRIBUTIONS AS MAYBE DETERMINED AND
FIXED BY THE COMMISSION.

the foregoing MONTHLY SALARY CREDITS, schedul
contributions shail also apply to self-employed and voluntary member:

AND RATE of

SECTION 4. Section 22, paragraph (a) of the Social Security Law is hereby further
amended to read as follows:

“SEC. 22. Remittance of Contributions. - (a) The contribution imposed in the
preceding section shall be remitted to the SSS within the first ten (10) days of each
calendar month following the month for which they are applicable or within such time as
the commission may prescribe. Every employer required to deduct and to remit such



contributions shall be liable for their payment and if any contribution is not paid to the
SSS as herein prescribed, he shall pay besides the contribution a penalty thereon from the
date the contribution falls due until paid. THE RATE OF THE PENALTY ON
DELINQUENT CONTRIBUTIONS PER MONTH SHALL BE. DETERMINED AND FIXED
BY THE COMMISSION THROUGH RULES AND REGULATIONS TAKING INTO
CONSIDERATION THE CURRENT INFLATION RATE AND OTHER RELEVANT SOCIO-
ECONOMIC DATA. If deemed expedient and advisable by the Commission, the collection
and remittance of contributions shall be made quarterly or semi-annually in advance, the
contributions payable by the employees to be advanced by their respective employers:
Provided, That upon separation of an employee, any contribution so paid in advance but
not due shall be credited or refunded to his employer.”

SECTION 5. __ Separability Clause. If any provis
invalid, the other provisions not affected thereby shall remain valid.

mn of this Act is declared

SECTION 6. Repealing Clause. All laws, decrees, orders, rules and regulations
and other issuances or parts thereof which are inconsistent with the provisions of this Act are
hereby repealed or modified accordingly.

SECTION 7. Effectivity. — This Act shall take effect fifteen (15) days following its
complete publication in the Official Gazette or in at least (2) national newspapers of general
circulation whichever comes earlier.

Approved,