LEGAL OPINION RE PHILHEALTH PREMIUM CONTRIBUTION

Republic of the Philippines
Province of South Cotabato
City of Koronadal
OFFICE OF THE CITY LEGAL OFFICER


LEGAL OPINION NO. __________
DATE : 15 January 2013

TO : JULIETA R. GASTALA, MPA
City Budget Officer
This City

RE : PHILHEALTH PREMIUM CONTRIBUTION


Madam:
The issue being presented in your query is: Which should be followed as regards the premium contributions to be remitted by the LGU to PhilHealth, the PhilHealth Circular No. 011- S-2012 (as superseded by PhilHealth Circular No. 057, s-2012) or the DBM Circular Letter No. 2012-12, dated 29 June 2012?

This issue boils down into the question as to who has the authority to fix the Philhealth premium contribution. Pertinent provisions of Republic Act No. 7875, as amended by Republic Act No. 9241, state:

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“Section 14. Creation and Nature of the Corporation. – There is hereby created a Philippine Health Insurance Corporation, which shall have the status of a tax-exempt government corporation attached to the Department of Health for policy coordination and guidance.”

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“Section 16. Powers and Functions. – The Corporation shall have the following powers and functions:

a) to administer the National Health Insurance Program;

b) to formulate and promulgate policies for the sound administration of the Program;

c) to set standards, rules, and regulations necessary to ensure quality of care, appropriate utilization of services, fund viability, member satisfaction, and overall accomplishment of Program objectives;

d) to formulate and implement guidelines on contributions and benefits, cost containment and quality assurance; and health care provider arrangements, payment methods; and referral systems;”

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"SEC. 4. Definition of Terms.-For the purpose of this Act, the following terms shall be defined as follows:

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d) Contribution - The amount paid by or in behalf of a member to the Program for coverage, based on salaries or wages in the case of formal sector employees, and on household earnings and assets, in the case of self-employed, or on other criteria as may be defined by the Corporation in accordance with the guiding principles set forth in Article 1 of this Act.

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ARTICLE VII
FINANCING

“Section 28. Contributions. – All members of the Program shall contribute to the Fund, in accordance with a reasonable, equitable and progressive contribution schedule to be determined by the Corporation on the basis of applicable actuarial studies and in accordance with the following guidelines:

a) Formal sector employees and current medicare members and their employers shall continue paying the same monthly contributions as provided for by law until such time that the Corporation shall have determined the contribution schedule mentioned herein: provided, that their monthly contribution shall not exceed three percent (3%) of their respective monthly salaries.

b) Contributions from self-employed members shall be based primarily on household earnings and assets; their total contributions for one year shall not, however, exceed three percent (3%) of their estimated actual net income for the preceding year.

c) Contributions made in behalf of indigent members shall not exceed the minimum contributions set for employed members.

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It cannot be denied that based on the foregoing provisions of the law, the PhilHealth Corporation has the authority to fix the premium contribution that must be remitted by the employers, including the LGU. The Department of Budget and Management (DBM), without any statutory fiat, cannot arrogate unto itself such authority.

The following are the general functions of the DBM:

1. Formulates the overall resource application strategy to match the government’s macro-economic policy;

2. Prepares the medium-term expenditure plan, indicating the programming, prioritization, and financing of capital investment and current operating expenditure requirements of medium-term sectoral development plans;

3. Undertakes the formulation of the annual national budget in a way that ensures the appropriate prioritization and allocation of funds to support the annual program of government;

4. Develops and administers a national accounting system essential to fiscal management and control;

5. Conducts a continuing study of the bureaucracy and assesses as well as makes policy recommendation on its role, size, composition, structure and functions to establish a government bureaucracy imbued with a spirit of public service;

6. Establishes the rules and procedures for the management of government organization resources i.e., physical, manpower and other resources, formulates standards of organizational program performance; and undertakes or provides services in work simplification or streamlining of systems and procedures to improve efficiency and effectiveness in government operations;

7. Conceptualizes and administers the government’s compensation and position classification plan; and

8. Monitors and assesses the physical as well as the financial operations of local government units and government-owned and/or – controlled corporations.

While DBM is mandated under Executive Order No. 25, dated April 25, 1936, and subsequent issuances to promote the sound, efficient and effective management and utilization of government resources (i.e., technological, manpower, physical and financial) as instrument in the achievement of national socioeconomic and political development goals, this cannot be construed as to include the power or authority to alter or modify the acts of the PhilHealth Corporation. There is nothing in the law that empowers the DBM to review the decisions of the Corporation. Neither is there any provision of law which requires the prior approval by DBM before any increase in premium can be implemented by PhilHealth. It is worthy to note that even the DBM Circular letters make reference to the PhilHealth Circulars.

One cannot simply brush aside the possible repercussions to the Philhealth members and to the employer LGU should their benefits be withheld in the future due to under-remittance.

Based on the foregoing, the undersigned is of the opinion that the PhiliHealth Circular should prevail.

I hope this opinion could be of help to the LGU’s endeavors.



Yours truly,




ATTY. EUFEMIO A. SIMTIM, JR.
City Legal Officer
cc:
CMO