The Supreme Court (SC) has reminded employers that employees who are illegally dismissed are entitled not only to full backwages but also to the remittance of their Social Security System (SSS) contributions from the time they were dismissed until they are reinstated.

In a decision written by Associate Justice Maria Filomena D. Singh, the SC pointed out that illegally dismissed employees are considered to have remained employed during the period covered by their backwages and are therefore entitled to the rights and benefits that would have accrued during that period.

The SC cited Article 294 of the Labor Code which mandates that an employee who is illegally dismissed from employment is entitled to full backwages and other benefits.

Citing its previous decisions, the SC said that illegally dismissed employees are deemed to have not left their employment, and, thus, they are entitled to all rights and privileges that accrue to them from the said employment.

The reminder was made in its decision that denied the petition of Lopez Sugar Corporation (LSC).

Four LSC employees – Romeo Perrin Jr., Eduardo Candelario, Leonito Franco and Rogelio Pabalan – were ordered reinstated to their former positions and paid their full backwages.

After the ruling became final, Perrin and his group asked LSC to remit their SSS contributions for the period covered by their backwages so they could qualify for retirement benefits.

However, LSC refused as it argued that under the SSS Act of 1997, its obligation to pay SSS contributions ended upon the employees’ separation from employment, regardless of whether their dismissal was legal or illegal.

The Social Security Commission (SSC) rejected LSC’s position and ordered it to pay the contributions.

The SSC ruled that because the employees were illegally dismissed, the employer-employee relationship was deemed to have continued during the period they were prevented from working.

The Court of Appeals affirmed the SSC ruling. LSC elevated the case to the SC.

In denying the petition, the SC ruled that LSC remained obligated to remit the employees’ SSS contributions for the period covered by their backwages.

The SC said:

“Here, there is no dispute that Perrin et al. were illegally dismissed, as ruled by the NLRC (National Labor Relations Commission) and affirmed by the CA and the Court (SC). Thus, they are deemed to have never left their employment.

“Consequently, LSC's obligation to remit Perrin et al.' s social security contributions did not cease with respect to the period during which Perrin et al. were illegally dismissed.

“Since LSC failed to remit Perin et al.'s social security contributions, LSC is liable to pay a penalty thereon of three percent (3%) per month from the date the contribution falls due until paid, pursuant to Section 22 of the Social Security Act of 1997.

“Accordingly, the Petition for Review on Certiorari is denied. The Decision, dated Oct. 14, 2020, and the Resolution, dated April 26, 2022, of the Court of Appeals in CA-G.R. SP No. 158759 are affirmed.”