017 KILUSANG MAYO UNO v. AQUINO coordination and guidance.

June 28, 2016 | Brion, J. | Separation of Powers a. The President and CEO is directly appointed by the PH President while
the Board of Directors (BOD) is composed of several cabinet
PETITIONERS: Kilusang Mayo Uno, represented by its Chairperson, Elmor Labog; secretaries (or their permanent representatives) and representatives of
National Federation of Labor Unions-Kilusang Mayo Uno, represented by its Vice- different stakeholders.
Presidents, Reden Alcantara and Arnold Dela Cruz; Center for Trade Union and Human b. At the start of Aquino’s admin, DOH launched the Aquino Health
Rights (CTUHR), represented by its Executive Director Daisy Arago; Virginia Flores; Agenda (AHA) the objective of which is to implement comprehensive
and Violeta Espiritu reform in the health sector, ultimately to provide health care for all
RESPONDENTS: Hon. Benigno Simeon C. Aquino III and Philippine Health Insurance Filipinos.
Corporation (PHIC) 3. PhilHealth adopted a new mission to ensure adequate financial access of
PETITIONERS-IN-INTERVENTION: Migrante International, represented by its
every Filipino to quality health care services through the effective and
Chairperson Garry Martinez; Connie-Bragas-Regalado; Paraluman Catuira; United
Filipinos in Hong Kong (UNIFIL-HK); and Soledad Pillas efficient administration of the National Health Insurance Program.
4. The Board, through Resolution No. 1571, s. of 2011, approved increases in
SUMMARY: PhilHealth adopted a new mission to ensure adequate financial access of annual premium contributions for calendar year 2012 (CY 2012) to enhance
every Filipino to quality health care services through the effective and efficient the NHIP benefit packages and to support the implementation of the
administration of the NHIP. So the Board, through a Resolution, approved increases in Universal Health Care Program.1
the annual premium contributions for CY 2012 to enhance the NHIP benefit packages and 5. Feb. 21, 2012, PhilHealth moved the effectivity date of the new rates for the
to support the implementation of the Universal Health Care Program. PhilHealth moved OWP Program to January 1, 2013. The deferral was made because of the
the effectivity dates several times, but in 2014, it issued 3 circulars (PhilHealth Circular request of civil society groups and NGOs in light of the global crises that
Nos. 0027, 0025, and 0024) where it adjusted the minimum rates for members to ensure
financial sustainability of the program. The petitioners filed a petition for certiorari with
affected a number of OFWs.
application for TRO and/or preliminary injunction against the implementation of new 6. June 27, 2012: PhilHealth also deferred the effectivity date of the new rates
rates and impleaded Pres. Aquino and PhilHealth. The petitioners, among other things, for the IPP Program to October 1, 2012. The move was made to allow
alleged that based on COA, PhilHealth awarded P1.5 billion in bonuses to its top officials further consultation in response to various sectors’ opposition to the
and employees in 2012 and that it gave hefty bonuses to its contrctors and failed to increase.
prosecute fraudulent claims. The increasing contribution rates would be completely 7. Sept. 25, 2012: PhilHealth further postponed the premium increase to Jan.
unnecessary if PhilHealth used its funds more judiciously. The respondents, to counter, 1, 2013 after a series of dialogues with informal sector groups.
said that the claim of outrageously unconscionable bonuses have no logical relation to the 8. Nov. 22, 2012: PhilHealth made a partial deferral of the premium rate
increase in premiums. Hence, this petition. The issue relevant is whether or not the SC
increase until the end of CY 2013. From Jan. to Dec. 2013, the minimum
can audit the expenditures of the government or any of its agencies or instrumentalities.
The SC held in the negative. SC does not have the power to audit the expenditures of the annual premium contribution rate for IPP and OWP members was pegged at
government or any of its agencies and instrumentalities. The Constitution saw fit to vest P1,800 instead of the full P2,400.
this power on an independent Constitutional body, the Commission on Audit or COA. a. For members enrolled in the Employed Sector, the premium rate was
COA alone has the power to disallow unnecessary and extravagant government spending. computed at 2.5% of the salary base. Because the lowest salary base
Separation of Powers doctrine, so fundamental in our system of government, precludes was pegged at P7,000, the minimum annual premium contribution was
the SC from encroaching on the powers and functions of an independent constitutional computed at P2,100. Finally, the monthly salary bracket ceiling was
body. SC’s participation in the audit process is limited to determining whether the COA pegged at a salary base of P35,000.
committed grave abuse of discretion in rendering its audit decisions. SC refuses to 9. Sept. 2013: PhilHealth issued 3 assailed circulars fully implementing the
overstep the bounds of its jurisdiction.
new premium rates for 2014.2 It adjusted the minimum rates for members to
DOCTRINE: Separation of Powers doctrine precludes the SC from encroaching on the P2,400 to ensure financial sustainability of the program.
powers and functions of an independent constitutional body.
1
(a) Minimum annual contribution of members in the Individual Paying Program (IPP) and Overseas Workers Programs
FACTS: (OWP) was increased to P2,400.00. But members who already paid their contributions within the 1 st semester of CY 2012
or signed a policy contract within the 1 st semester of 2012 and committed to pay their contributions for 2 consecutive
1. Congress passed RA 7875, the National Health Insurance Act (NHIA), years would have their annual premium contribution computed at only P1,200.00; scheduled to take effect on July 1,
establishing the National Health Insurance Program (NHIP/the Program) 2012.
(b) Employed sector: premium rate to be computed 3% of the salary base with the lowest salary bracket pegged at a
and creating the Philippine Health Insurance Corporation (Philhealth) to monthly salary base of P7,000. Thus, minimum annual contribution was computed at P2,520 and the monthly salary
administer the program, which covered all citizens in the PH. ceiling was pegged at P50,000; scheduled to take effect on January 1, 2013.
(c) Annual contribution of all National Household Targeting System for Poverty Reduction (NHTS-PR) poor families
2. Philhealth is a government corporation attached to the DOH for policy identified by the DSWD under the Sponsored Program was set at P2,400 effective Jan. 1, 2012.
 10. Jan. 30, 2014: KMU, NAFLU-KMU, Violeta Espiritu, Virginia Flores (will presently under appeal and sub-judice.
collectively be called as ‘petitioners’), filed the petition for certiorari with g. Petition was filed out of time, failed to state the material dates as required by
an application for TRO and/or preliminary injunction against the the ROC, no legal standing, disregarded the hierarchy of courts because the
issue was not of transcendental importance, petition does not have basis or
implementation of the new rates and they impleaded Pres. Aquino and
merit.
PhilHealth as respondents. The intervenors also filed their petition-in-
intervention.
ISSUE/s:
11. Petitioners: alleged that the circulars were issued with grave abuse of
1. WON the SC can audit the expenditures of the government or any of its
discretion, arguing:
agencies and instrumentalites. – NO, SC does not have the power to audit
a. PhilHealth breached the limits to its delegated rule-making power because the
new contribution schedule is neither reasonable, equitable, nor progressive as the expenditures of the government or any of its agencies and
prescribed by the NHIA; instrumentalities. The Constitution saw fit to vest this power on an
b. Rate increase is unduly oppressive and not reasonably necessary to attain the independent Constitutional body, the Commission on Audit or COA.
purpose sought; Separation of Powers doctrine, so fundamental in our system of
c. New rates were determined without an actuarial study as required by the NHIA. government, precludes the SC from encroaching on the powers and
d. Based on COA, PhilHealth awarded P1.5 billion in bonuses to its top functions of an independent constitutional body.
officials and employees in 2012 and that it gave hefty bonuses to its
contractors and failed to prosecute fraudulent claims. The increasing
RULING: WHEREFORE, we DISMISS the petition for lack of merit.
contribution rates would be completely unnecessary if PhilHealth used its
funds more judiciously.
12. Petitioners-in-intervention: adopt all the petitioners’ arguments and add that RATIO:
Circular No. 0025, s. 2013 violated the Migrant Workers and Overseas On the issue of separation of powers
Filipinos Act which prescribed the non-increase of fees charged by any 1. The allegation of the petitioners of the unconscionable bonuses to
government office on OFWs. PhilHealth executives and the unethical expenditure of funds are
13. Respondents: reprehensible if true.
a. President, through the OSG, invokes immunity from suit and moved that he be a. However, it is equally objectionable for the petitioners to make
dropped as party-respondent. such allegations without substantiating them. They also didn’t even
b. PhilHealth through OGCC claims that the increase in premium contributions bother to annex any documents to support their claims.
were supported by 3 actuarial studies conducted in 2010, 2011, 2012 and that it 2. Even if the allegations were true, the SC does not have the power to
consulted World Bank representatives and the affected stakeholders before audit the expenditures of the government or any of its agencies and
implementing the increase. instrumentalities. The Constitution saw fit to vest this power on an
c. The P2,400 minimum annual contribution for all members is equivalent to the independent Constitutional body, the Commission on Audit or COA.
amount that the government annually incurs to maintain coverage for the
a. The COA alone has the power to disallow unnecessary and
poorest of the poor. P1k is allotted for drugs and medicine, P300 for admin
costs, P500 for consultation, and P600 for in-patient services. extravagant government spending.
d. As the premium rate for “the poorest of the poor” was set at P2,400, the rates 3. Separation of Powers doctrine, so fundamental in our system of
for the Employed Sector, OWP, and IPP were likewise increased to avoid a government, precludes the SC from encroaching on the powers and
situation where the poorest would contribute a premium higher than that functions of an independent constitutional body.
contributed by an employed member, OFW, or an individually paying member. a. The SC’s participation in the audit process is limited to
e. Not only did they defer the rate increase to relieve the public of the determining whether the COA committed grave abuse of discretion
simultaneous burden of increases in fees, tolls, taxes, and social security in rendering its audit decisions.
contributions, but it even introduced the corresponding enhancements in the b. SC refuses to overstep the bounds of its jurisdiction.
benefit packages in 2012 before the premium rates were increased.
f. As to outrageously unconscionable bonuses, they argue that these have no
4. Moreover, the alleged improprieties pertain to PhilHealth’s manner of
logical relation to the increase in premiums. COA’s disallowance are spending funds and not the assailed act of raising the premium rates.
a. While the alleged improprieties may constitute grave abuse of
2
1. PhilHealth Circular No. 0024, s. 2013 was issued on September 30, 2013, increasing the minimum annual premium discretion, it does not follow that PhilHealth gravely abused its
rate for the IPP to Php2,400.00 for members with a monthly income of Php25,000.00 and below. discretion in issuing the assailed circulars; the argument is non
2. PhilHealth Circular No. 0025, s. 2013 was issued on September 30, 2013, adjusting the annual premium rate for the
OWP to Php2,400.00 for all land-based OFWs, whether documented or undocumented. sequitur.
3. PhilHealth Circular No. 0027, s. 2013 was also issued on September 30, 2013, for the Employed Sector. It retained 5. There is no reason to consider the allegation that the premium rates
2.5% at the premium rate and the Php35,000.00 salary bracket ceiling. However, it consolidated the two lowest salary
brackets resulting in a minimum annual rate of Php2,400.00.
were increased without conducting an actuarial study. The petitioners
 made bare allegations and didn’t bother to cite their bases, while satisfies the standard of reasonable, equitable, and progressive contribution
PhilHealth produced the actuarial studies they used. schedule.
7. Sec. 36 of the Migrant Workers and Overseas Filipinos Act does not apply
Other issues to premium contributions under the NHIP: Premium is neither a fee not an
1. Immunity from suit: The SC said that it is only proper to drop Pres. Aquino expense but an enforced contribution to the common insurance fund.
from the case because the events that gave rise to the present case occurred Petitioners-in-intervention cannot invoke the non-increase clause in Sec. 36;
during his incumbency as president and also, that there were no allegations there is no valid distinction between migrant workers and the rest of the
as to the specific presidential act or omission which amounts to grave abuse population that would justify a lower premium rate for the former. A non-
of discretion. increase in the minimum premium contribution of OFWs would create a
2. Locus Standi: The petitioners have legal standing since all citizens are ridiculous situation where the poorest of the poor are required to contribute
required to enroll in the program (membership is mandatory), thus they more than a member employed abroad. This violates the standard of a
have legal standing. progressive and equitable contribution scheme.
3. Remedy availed of: Wrong remedy because certiorari is a remedy of last
resort (where there is no appeal or any plain, speedy, and adequate remedy).
Questioning the exercise of quasi-legislative powers may be questioned
through an ordinary action for injunction in the RTC; but they failed to
explain why they resorted to certiorari in the SC and disregarded hierarchy
of courts.
4. Grave abuse of discretion: Failed to show that PhilHealth committed GAD
in issuing the assailed circulars; it postponed the rate increase several times
and also accommodated stakeholders and heard them through consultation.
a. Grave abuse of discretion – not an amorphous concept that can be
shaped or manipulated to suit a litigant’s purpose; present when there is
such capricious and whimsical exercise of judgment as 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.
5. PhilHealth has a mandate of realizing the State’s vision of affordable
and accessible health services for all Filipinos, especially the poor.
PhilHealth justified the increase in annual premium rates with the
enhanced benefits and the expanded coverage of medical conditions.
The decision to widen the coverage of the program is a business
judgment that the Court can’t interfere with.
a. Court does not have admin supervision over admin agencies, nor is
it an entity engaged in making business decisions. It can’t interfere
in purely administrative matters nor substitute admin policies and
business decisions with their own because it would amount to
judicial overreach; its only concern is the legality and not the
wisdom of an agency’s actions. Policy matters should be left to
policy makers.
6. Schedule conforms to standard of reasonable, equitable, and progressive
schedule: As a whole, it remains equitable and progressive. The salary base
and premium contributions increase as a member’s actual salary increases.
A member who earns P9k is required to contribute much less than a
member who earns P31k but they both enjoy the same coverage; this