The Supreme Court upheld the authority of the Philippine Health Insurance Corporation (PhilHealth) to increase premium contributions, emphasizing the necessity of maintaining the financial viability of the National Health Insurance Program (NHIP). This decision underscores the government’s commitment to providing universal healthcare access while recognizing the need for sustainable funding mechanisms. The court dismissed petitions questioning the reasonableness and equity of the increased rates, affirming that PhilHealth acted within its mandate to ensure the program’s long-term stability and effectiveness. The ruling supports PhilHealth’s ability to adjust contribution schedules to meet the evolving needs of the healthcare system and the Filipino populace.

Can PhilHealth Adjust Contributions to Ensure Universal Health Care?

This case arose from petitions filed by Kilusang Mayo Uno (KMU) and Migrante International, questioning the validity of PhilHealth Circulars 0027, 0025, and 0024, all series of 2013. These circulars adjusted the premium contribution rates for the National Health Insurance Program. The petitioners argued that the rate increases were unreasonable, oppressive, and not based on an actuarial study, thus constituting grave abuse of discretion. They further contended that PhilHealth should have addressed alleged internal inefficiencies and misuse of funds instead of increasing contributions. Migrante International also claimed that the increases violated the Migrant Workers and Overseas Filipinos Act, which prohibits increasing fees charged to Overseas Filipino Workers (OFWs).

PhilHealth countered that the increases were necessary to enhance benefit packages and support the Universal Health Care program. The corporation claimed the rate adjustments were based on actuarial studies and consultations with stakeholders. They also emphasized that the new rates were designed to ensure the program’s financial sustainability, allowing it to cover a broader range of medical services and reach more Filipinos, especially the poor. According to PhilHealth, the minimum annual contribution was set at Php2,400.00 to match the cost of providing coverage to the poorest citizens, ensuring equitable contributions across all sectors.

The Supreme Court addressed several procedural and substantive issues. Firstly, the Court affirmed the President’s immunity from suit during their term, dropping President Aquino as a party-respondent. Secondly, the Court acknowledged the petitioners’ legal standing, given the universal and compulsory nature of PhilHealth coverage. However, the Court emphasized that the petitioners had availed of the wrong remedy, as an ordinary action for injunction before the Regional Trial Court (RTC) was the appropriate avenue for questioning the administrative agency’s quasi-legislative powers. This procedural lapse alone warranted the dismissal of the petition.

Even addressing the substantive issues, the Supreme Court found no grave abuse of discretion on PhilHealth’s part. The Court highlighted that PhilHealth had postponed the rate increase several times to alleviate the financial burden on the public. It further noted that the agency had consulted stakeholders and made adjustments to the contribution schedule to accommodate concerns. The term “grave abuse of discretion” was specifically defined by the Court, explaining:

Grave abuse of discretion is present when there is such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction, or where power is exercised arbitrarily or in a despotic manner by reason of passion, prejudice, or personal hostility amounting to an evasion of positive duty, or to a virtual refusal to perform a legal duty or act at all in contemplation of law.

The Court determined that PhilHealth’s actions did not meet this high threshold. It emphasized that PhilHealth has the mandate to realize the State’s vision of affordable and accessible health services for all Filipinos. To achieve this, PhilHealth is empowered to formulate policies and contribution schedules that can realistically support its programs. The increase in premium rates was justified by the enhanced benefits and expanded coverage of medical conditions, a decision the Court deemed a reasonable business judgment beyond its purview to interfere with.

Regarding the claim that the new schedule did not conform to the NHIA’s standard of a reasonable, equitable, and progressive schedule, the Court disagreed. The Court noted that the salary base and premium contributions increased as a member’s actual salary increased. For example, as shown in the table below, a member who earns Php9,000.00 is required to contribute much less than a member who earns Php31,000.00, yet both enjoy the same coverage. This satisfies the standard of a reasonable, equitable, and progressive contribution schedule.

Salary Bracket	Monthly Salary Range	Salary Base	Monthly Premium
1	8,999.99 and below	8000	200
2	9,000 – 9,999.99	9000	225
3	10,000-10,999.99	10,000	250
4	11,000-11,999.99	11,000	275

Moreover, the Court clarified that Section 36 of the Migrant Workers and Overseas Filipinos Act does not apply to premium contributions under the National Health Insurance Program. The NHIP is a social insurance program, not a fee or expense, but an enforced contribution to the common insurance fund. Therefore, OFWs could not invoke the non-increase clause under the Migrant Workers Act to justify a lower premium rate. Such a distinction would unduly burden other PhilHealth contributors and create an unreasonable classification, violating the equal protection clause.

Finally, the Court addressed allegations of unconscionable bonuses to PhilHealth executives and unethical expenditure of funds. The Court emphasized that it lacks the power to audit government expenditures, a power vested exclusively in the Commission on Audit (COA). It reiterated the doctrine of Separation of Powers, precluding it from encroaching on the functions of another independent constitutional body. The Court stated it will not overstep the bounds of its jurisdiction.

Therefore, the Supreme Court dismissed the petition, upholding PhilHealth’s authority to implement the premium rate increases.

FAQs

What was the key issue in this case?	The central issue was whether PhilHealth gravely abused its discretion in issuing circulars that increased the premium contribution rates for the National Health Insurance Program (NHIP). Petitioners argued the increases were unreasonable, oppressive, and not based on proper actuarial studies.
Who were the petitioners in this case?	The petitioners included Kilusang Mayo Uno (KMU), National Federation of Labor Unions-KMU (NAFLU-KMU), and Migrante International, representing various labor and overseas workers’ groups. They challenged the PhilHealth circulars on behalf of their members.
What did PhilHealth argue in its defense?	PhilHealth argued that the premium increases were necessary to ensure the financial sustainability of the NHIP and to enhance its benefit packages. They claimed the increases were based on actuarial studies and consultations with stakeholders.
What is the meaning of “grave abuse of discretion” in this context?	The Supreme Court defined grave abuse of discretion as a capricious and whimsical exercise of judgment equivalent to a lack of jurisdiction. It involves acting arbitrarily or despotically due to passion, prejudice, or personal hostility, amounting to an evasion of duty.
Why did the Supreme Court dismiss the petition?	The Court dismissed the petition primarily because the petitioners availed of the wrong remedy by directly filing a petition for certiorari. It also found no grave abuse of discretion on PhilHealth’s part in issuing the challenged circulars.
How does the Migrant Workers Act relate to this case?	Migrante International argued that the premium increase violated the Migrant Workers and Overseas Filipinos Act, which prohibits increasing fees charged to OFWs. The Court ruled that the Act did not apply to PhilHealth contributions, as they are considered social insurance contributions rather than fees.
What was the Court’s stance on allegations of improper spending by PhilHealth?	The Court stated that it lacked the power to audit the expenditures of government agencies, a function reserved for the Commission on Audit (COA). It also noted that allegations of improper spending were separate from the issue of increasing premium rates.
What is the significance of this ruling for Overseas Filipino Workers (OFWs)?	The ruling means that OFWs are subject to the same PhilHealth premium rates as other members, without special exemptions under the Migrant Workers Act. This ensures equitable contributions to the NHIP across all sectors.
What impact does this decision have on the Universal Health Care program?	The decision supports the financial sustainability of the Universal Health Care program by allowing PhilHealth to adjust premium rates as needed to cover expanding benefits and increasing healthcare costs. This ensures broader access to quality healthcare services for all Filipinos.

In conclusion, the Supreme Court’s decision reinforces the authority of PhilHealth to manage and sustain the National Health Insurance Program through necessary adjustments in premium contributions. This ruling ensures the continued viability of universal healthcare in the Philippines. By upholding PhilHealth’s mandate, the Court has affirmed the importance of balancing financial sustainability with the goal of providing accessible and affordable healthcare for all Filipinos.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: KILUSANG MAYO UNO vs. AQUINO III, G.R. No. 210761, June 28, 2016