Salary loan deductions: SSS clarifies rules, but...

If an employee with an SSS salary loan resigns, the employer must deduct the balance and remit it to SSS. Employer must also file a report. SSS confirmed that in reaction to my piece, "SSS penalizing member for its and employer's faults" (Gotcha, 27 Apr. 2020). With such rule, employee's loan would then be over, right?

No it's not. Employee must beware. SSS may stick him up years or decades later with a collection notice to pay the outstanding amount, plus many times more in interest and penalties, or else. That's what happened to member Leo Querubin and to other "victims" who shared their sad experience. That's because SSS decades ago – hopefully no longer today – had lousy record encoding and keeping. It also was poor in tracking down chiseling employers. And, as shown in SSS' reply, it presently has another rule that contradicts the above-stated employer's duty. It also has two file systems that seem to not interoperate.

At issue is Querubin's supposed past due principal of P11,000 since 2001, plus interest and penalties of P49,000 today. Here is the clarification from SSS public affairs and special events head Fernando F. Nicolas. Followed by a rejoinder from Querubin. Perhaps from this SSS can refine its policies.

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From SSS:

"First of all, it is the employer's responsibility to deduct the outstanding loan balance of his resigning employee. Employer must remit the amount and inform SSS of employee's departure. If amount was deducted from employee's separation pay, any proof that the remitted amount was equivalent to the employee's outstanding loan balance will mean he has fully paid his SSS loan. Employer must present the loan transaction receipt (SSS ML2 Payment Form) and corresponding Loans Collection List (LCL), with employee name, as proof of payment. Otherwise, the loan will continue to incur interest and penalties.

"In cases where employer failed to remit the deducted amount to SSS, employee may complain at any SSS branch. SSS will investigate. If the claim is valid and employer is still operational, SSS will bill employer and collect the deducted amount in favor of member-borrower. Employee must present proof that the amount was deducted from him to help establish his complaint where employer may be at fault.

"Computation of a member's outstanding loan obligation depends on payor's (member or employer) compliance with payment schedule. Any payment made after due date incurs interest and penalties. Our loan system calculates remaining loan balance based on posted payments, date of payments, and amount paid at time of inquiry. Therefore, non-payment of loans will incur corresponding interest and penalties until loan has been fully settled.

"Two separate programs handle SSS contributions and SSS loans with different billing systems. SSS regularly bills employees their outstanding loan obligations through current employer – whether the loan was certified by current employer or acquired from previous employer, or as self-employed/voluntary member. This is why Mr. Querubin's current employer found out that he still has existing loan.

"It is employee's responsibility to inform his new employer about his existing loan balance as he may allow his new employer to deduct loan payments from his salary, including any interest or penalty incurred due to late remittances from his previous employer.

"It is the responsibility of SSS member to regularly check and monitor his records so he can immediately call the attention of employer or report discrepancies to SSS. SSS sends SMS notification to members whenever a loan payment is posted in their accounts."

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Querubin's rejoinder:

"(1) SSS said it is the 'responsibility of employer to deduct outstanding loan balance from resigning employee.' Yet 'it is the responsibility of any employee to inform his new employer about his existing loan....'

"In effect, for SSS, employer has duty to deduct outstanding loan – but employee is accountable if employer reneged on its duty and makes employee pay for 'any interest or penalty incurred due to late remittances by his previous employer'. It seems SSS is more protective of employers than employees – the members of SSS.

"(2) SSS said 'two separate programs handle SSS contributions and SSS loans with different billing systems. SSS regularly bills employees their outstanding loan obligations through current employer whether the loan was certified by current employer or acquired from previous employer or as self-employed/voluntary member. This is why Mr. Querubin's current employer found out he still has existing loan.'

"I have been employed by at least five companies before my current employer. Five companies since I left (now inexistent) Sun Microsystems Philippines in 2001. In all those years, 2001-2019, I never received any notice from my employers then that I had any outstanding balance with SSS.

"To repeat, I presumed regularity that SSS was doing its function because: (a) As it confirmed, it is the 'employer's responsibility to deduct ... from resigning employee.' (b) SSS stated it 'regularly bills employees their outstanding loan obligations through current employer....'

"Any ordinary human being would conclude that the employer deducted the outstanding loan, and that there were no balances because for 18 years SSS did not bill any of my five employers any outstanding loan."

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Gotcha archives: www.philstar.com/columns/134276/gotcha