IKA-54 TAONG ANIBERSARYO NG SSS, PATULOY SA PAGLILINGKOD SA TAUMBAYAN

THE SSS’ “AWESOME POWER” TO ASSESS AND TO COLLECT UNPAID SS CONTRIBUTIONS IN ORDER
TO DISPENSE SS BENEFITS AT THE TIME NEEDED
By – Juan Mariano Descalzo, Jr.*
SSS Public Information Officer, SSS 1st Seminar Officer and SSS National Coordinator-Designate on
Public Information, SSS Region-03 [NCR including provinces of Pampanga, Bulacan,
Cavite, Mindoro, Romblon, and Palawan] i.e., Supervising Coordinator, 1st Chief,
Assessment Division, Assistant Manager, OIC and Regional Manager.
Section 21 [b] of R.A. 1161 of 1954 provides: “The contributions payable under this Act in cases where an employer refuses or neglects to pay the same shall be collected by the SSS in the same manner as taxes are made collectible under the National Internal Revenue Code [NIRC], as amended. Failure or refusal of the employer to pay or remit the contributions herein prescribed shall not prejudice the right of the covered employee to the benefits of the coverage.” It took 3 years before the SSS started actual operations in 1957 because of the strong oppositions from management and labor sectors necessitating certain amendments of R.A. No. 1161. Sec. 21 of R.A. 1161 was redesigned as sec. 22 under R.A. 1792 of June 21, 1957 but its provisions remained exactly the same.
In the same manner means in the BIR manner. Sec 22 [b-1st #] of the SS Law refers to the National Internal Revenue Code [NIRC], among others i.e., sections 331 and 332 of the NIRC providing time limitations on assessment and collection of unpaid taxes and the exceptions thereto. In the same manner is governed by section 22 [b-1st #] of the SS Law and its related taxing provisions in the NIRC and not by other provisions of law. The so-called In another manner otherwise known as In the SSS manner is governed by the SS Law, except by its section 22 [b-1st #], Social Security Commission’s [SSC] Resolutions and other provisions of law, except by NIRC.
In the same manner: PH social security contributions are treated as taxes based on actual compensation/wages earned by the employees/workers [R.A. No. 2658 of June 1960]. At the purely administrative level, to raise revenues by assessment and collection of unpaid social security contributions in order to dispense social security benefits at the time needed in a summary administrative manner speedily and promptly i.e., without delay, without hindrance, without interference, judicial proceedings not required, non-litigious, cut-off technical defenses, etc. It appears that the so-called “awesome power”, among others, refer to the summary administrative manner/modes/methods in the assessment and collection of unpaid social security contributions but with limitations i.e., it can be stopped if the law is not observed; taxpayer to be informed of the law and the facts upon which it is based, power to tax is not unlimited, administrative or penal sanctions against erring personnel engaged in the conduct of assessment and collection of unpaid taxes. etc.
Persuasive jurisprudence on the matter such as those in the United States from where our tax law was derived. The PH SS Act is admittedly patterned after that of the United States. In the PH SS Act and in the US SS Act, similarities like – SS contributions are treated as taxes, SS taxes collected in the same manner as other taxes, assessment and collection, and recovery, as well as prescription governed by Tax Code and not by other provisions of law. In Assessment i.e., assessment is the precedent step to collection, assessment is based on best evidence obtainable, assessment is prima facie evidence of the correctness and sufficiency for all legal purposes, all presumptions in favor of assessments, assessment has administrative finality, subject to time limitation, based on law and facts otherwise void, government is stopped to assess, beyond statutory time limitation, etc. In collection, like levy and distraint, etc.
In the same manner – Assessment is the precedent step to collection or there can be no collection without a valid assessment. The only requisite before the collector can collect the taxes there must be an assessment within the time prescribed by law. There can be no civil action to enforce collection before the assessment procedure provided in the Tax Code have been followed. As a rule, warrant of levy and distraint is proof of the finality of assessment and renders a request for reconsideration, being tantamount to an outright denial thereof and makes the said request deemed rejected. An assessment is a step preliminary but essential to warrant distraint, if still feasible, and, also, to establish a cause for judicial action. While there can be no civil to enforce collection before the assessment procedures provided in the Code have been followed, there is no requirement for the precise computation and assessment of the tax before there can be a criminal prosecution under this Code. In another manner or In the SSS manner, the SSC interpreted section 22 [b-1st #] of the SS Law and its related taxing provisions to mean “Collection and Nothing More,” but In another manner or In the SSS manner i.e., section 22 [b-2nd #, SS Law] mentions, assessment is made and section 22 [d] of the SS Law on imprescriptible assessment.
In the same manner, with a National Assessment Office and a National Collection Office – similar to the BIR Organizational Chart under EO 127 – An Assessment Service to set up standards, guidelines and procedures relative to assessment activities, to review audit performance and tax credit/refund performance, etc. and a Collection Service to set up standards, guidelines and procedures relative to collection activities, to review accounts receivable performance, etc. In another manner, with a National Coverage and Collection Office with unclear mandate, specifically, on the conduct of national assessment of unpaid social security contributions.
The summary administrative procedural operations to assess unpaid social security contributions: 1] Under the “pay-as-you file” system [particularly true with respect to individual and corporate income taxes], the taxpayer himself, in the first instance, computes the tax in the manner indicated in the return and pays the amount of tax due at the time of filing the return. Since the rates or amounts of tax are fixed by law, the role of tax official is purely to determine the accuracy of the taxpayer’s assessment of his tax liability [The Fundamentals of Taxation, 1993 Ed., pps. 161-162, Hector S. De Leon]. In other words, taxpayer’s self-assessed or self-computed taxes, although paid on the dates fixed by law, are considered by BIR as “accounts receivables” to be subjected to either office-based or bureau-based audit/assessment or filed audit/assessment and 2] SSS office-based operations to audit, assess, examine, investigate to discover or detect inaccuracies, errors, mistakes falsifies, omissions, etc. in the required information supplied in the SSS Monthly and Quarterly Returns, and by inspection of books of accounts. In another manner or In the SSS manner, the last complete record of monthly contributions paid by the employer or the average of the monthly contributions paid during the past three (3) years as of the date of filing the action for collection shall be presumed to be the monthly contributions payable and due from the employer to the SSS for each of the unpaid month, unless contradicted and overcome by other evidence.
The summary administrative manner/modes/methods in the assessment of unpaid social security contributions: 1] SSS assessment can be based on best evidence/information or copies from all sources available when basis for assessment is false, incomplete or erroneous or any information from 3rd person. In another manner or In the SSS manner, presumptive/legal theoretical assessments have to be based on best/preferred/primary/original evidence as in judicial proceedings, i.e., payrolls as prescribed by DOLE, compensation vouchers/books of accounts as prescribed by BIR, SSS records/R-1-A and as to amount of compensation based on minimum wage or affidavit as prescribed by SSC’s resolutions, etc. [See, last payment or average in last 3 years [Dec. 22 [2#] of the SS Law], 2] SSS assessment is prima facie correct and sufficient for all legal purposes on assessments of false and fraudulent returns. In another manner or In the SSS manner: prima facie evidence as required in judicial proceedings. 3] All presumptions are in favor of SSS assessment i.e. assessor’s good faith, validity of actions, all facts taken into account, etc. In another manner or In the SSS manner: Application of appropriate presumptions as required in judicial proceedings, 3] SSS assessment with administrative finality and conclusiveness. Reconsideration within 30 days or in absence of appeal in 30 days, the assessment is final and executory and failure of the taxpayer to appeal within reglementary period makes tax, assessment final, executory and demandable. In another manner or In the SSS manner: SSS assessments, subject of “turn-around” collection demand notices/letters, without administrative finality and conclusiveness, 4] Obligation of employer to submit all relevant evidence, otherwise the assessment shall become final. Burden rests with the taxpayer. In another manner or In the SSS manner: Burden is on the SSS i.e., To have actual accesses to employer’s premises, workers and employment records, responsibility to look/gather primary/secondary evidence to support its assessments, etc. and SSS to file criminal action for non-production of demanded records.
Summary administrative manner/modes/methods in the collection of unpaid social security contributions: At the purely administrative level of the SSS, to issue levy and distraint without hearing and judgment and execution thereof by its own sheriffs and 2] With other summary administrative remedies i.e., garnishment of bank accounts, enforcement of forfeiture, enforcement of tax lien, tax clearance before issuance of license to start business and responsibility of dissolving juridical entities. In the summary administrative collection of unpaid social security contributions, with prescribed letter Forms i.e., to the register of deeds and assessor’s office requesting for certification as property holdings of taxpayer, to SEC requesting for xerox copy of corporate taxpayer/s articles of incorporation, to NBI requesting assistance in locating taxpayers with unpaid taxes, to stockholders with unpaid subscription from capital stocks of defunct corporation, etc. In another manner or In the SSS manner: levy and distraint to be issued by the SSC only after hearing and judgment and execution by sheriffs governed by the rules of court and in 1997 execution by SSS’ sheriffs appointed by the SSC governed by the 1997 SSC’s rules of procedures. [Note – Its’ Sec. 2 [2nd #] provides: “rules of evidence prevailing in courts of law or equity shall not be controlling, and it is the spirit and intention of the Act [these rules] x x x shall use every and all reasonable means to ascertain the facts in each case speedily and objectively and without regard to technicalities of law and [or] procedure “lifted from Industrial Peace Act, a labor legislation. The SS Law is a social legislation and it is not a labor legislation. In another manner or In the SSS manner: absent of other remedies i.e., internal revenue agents are peace officers authorized to make arrests and seizures for violation of internal revenue agents are peace officers authorized to make arrests and seizures for violation of internal revenue laws or regulations administered by the BIR, informer’s reward, any alien who [a] knowingly and fraudulently evades the payment of any internal revenue tax or [b] willfully refuses to pay such tax and its accessory penalties after the decision on his tax liability, rendered by the Commissioner of Internal Revenue or the Court of Tax Appeals or any competent judicial tribunal shall have become final and executory, is subject to deportation, to padlock establishments and to file criminal complaint before Dept. of Justice, etc.
The summary administrative manner/modes/methods in the assessment and collection of unpaid social security contributions: 1] As provided in the NIRC, based on prescribed statutory grounds/conditions, SSS to enter into i.e., compromise, abatement or cancellation of unjust or excessive tax liabilities or credit or refund erroneously or illegally paid taxes. Criminal violations may be compromised except [a] those already filed in court and [b] those involving the commission of fraud. In another manner or In the SSS manner: Absence of prescribed statutory grounds/conditions – to enter into compromise or amicable settlement resulting in reduced assessment, to credit or refund erroneously or illegally received social security contributions, to abate or cancel unjust or excessive contribution liabilities and to file motions to withdraw or dismiss criminal violations upon civil satisfaction. 2] Cannot be restrained or enjoined, except by the Court of Tax Appeals [CTA]. In another manner or In the SSS manner – Absence of statutory provisions that assessment and collection cannot be enjoined or restrained and 3] Subject to time limitations. To assess within 5 years from filing of returns and to assess within 3 years from filing of returns, to assess within 10 years from discovery of falsity, fraud or omission. To collect within 5 years from assessment. “False” implies deviation from the truth, whether intentional or not “fraudulent” implies intentional or deceitful entry with intent to evade the taxes due. Government is stopped to assess and to collect beyond prescriptive period in spite errors and mistakes of its agents and officials. In another manner or In the SSS manner i.e., imprescriptible assessment provided of the SS Law to collect with a 10pyear prescriptive period provide of the Civil Code and necessary action to collect within 20 years from the time delinquency is known, assessment is made or benefit accrues of the SS Law. The 20-year period is extended by 10 years provided the 10-year period under the Civil Code has not yet expired.
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*Resource Speaker – October 13, 2005 Corporate Planning Workshop, SSS, East Avenue, Quezon City [Formulation of Rules and Regulations for the Implementation of Sec. 22 [b] of R.A. 8282; December 8, 2005, National Convention of SSS Accounts Officers, Development Academy of the Philippines, Tagaytay City [On Formulation of Rules and Regulations for the Implementation of Sec. 22 [b] of R.A. 8282 with particular reference on Assessment [Legal vs. Actual] and on June 28, 2007, Nipa Hut, Currimao, Ilocos Norte [Insights on the SSS Field Operations, Luzon North Branch Heads, Performance Review, etc].
By Juan M. Descalzo, Jr., i.e., The Definition of Agricultural Labor, The Philippine Social Security Law and the Supreme Court [1960-2004], Pointers on the 1954 SS Act and Its Related Taxing Provisions, SSS Compulsory and Voluntary Coverage.
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Juan Mariano Descalzo Jr. The summary administrative manner/modes/methods in the assessment and collection of unpaid social security contributions: 1] As provided in the NIRC, based on prescribed statutory grounds/conditions, SSS to enter into i.e., compromise, abatement or cancellation of unjust or excessive tax liabilities or credit or refund erroneously or illegally paid taxes. Criminal violations may be compromised except [a] those already filed in court and [b] those involving the commission of fraud. In another manner or In the SSS manner: Absence of prescribed statutory grounds/conditions – to enter into compromise or amicable settlement resulting in reduced assessment, to credit or refund erroneously or illegally received social security contributions, to abate or cancel unjust or excessive contribution liabilities and to file motions to withdraw or dismiss criminal violations upon civil satisfaction. 2] Cannot be restrained or enjoined, except by the Court of Tax Appeals [CTA]. In another manner or In the SSS manner – Absence of statutory provisions that assessment and collection cannot be enjoined or restrained and 3] Subject to time limitations. To assess within 5 years from filing of returns and to assess within 3 years from filing of returns, to assess within 10 years from discovery of falsity, fraud or omission. To collect within 5 years from assessment. “False” implies deviation from the truth, whether intentional or not “fraudulent” implies intentional or deceitful entry with intent to evade the taxes due. Government is stopped to assess and to collect beyond prescriptive period in spite errors and mistakes of its agents and officials. In another manner or In the SSS manner i.e., imprescriptible assessment provided of the SS Law to collect with a 10pyear prescriptive period provide of the Civil Code and necessary action to collect within 20 years from the time delinquency is known, assessment is made or benefit accrues of the SS Law. The 20-year period is extended by 10 years provided the 10-year period under the Civil Code has not yet expired.
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*Resource Speaker – October 13, 2005 Corporate Planning Workshop, SSS, East Avenue, Quezon City [Formulation of Rules and Regulations for the Implementation of Sec. 22 [b] of R.A. 8282; December 8, 2005, National Convention of SSS Accounts Officers, Development Academy of the Philippines, Tagaytay City [On Formulation of Rules and Regulations for the Implementation of Sec. 22 [b] of R.A. 8282 with particular reference on Assessment [Legal vs. Actual] and on June 28, 2007, Nipa Hut, Currimao, Ilocos Norte [Insights on the SSS Field Operations, Luzon North Branch Heads, Performance Review, etc].
By Juan M. Descalzo, Jr., i.e., The Definition of Agricultural Labor, The Philippine Social Security Law and the Supreme Court [1960-2004], Pointers on the 1954 SS Act and Its Related Taxing Provisions, SSS Compulsory and Voluntary Coverage