1) What a PhilHealth “demand letter” usually is

A PhilHealth demand letter (sometimes styled as a Notice of Delinquency, Billing/Demand, Notice of Assessment, Final Demand, or similar) is a written notice that PhilHealth believes a person or entity owes unpaid and/or underpaid premium contributions, often with interest, penalties, or surcharges, for specific periods. It is commonly sent to:

Employers (private companies, single proprietorships, cooperatives, foundations, schools, hospitals, etc.) for allegedly unremitted contributions of employees;
Government agencies/LGUs for agency remittances;
Self-employed professionals, sole proprietors, and other direct contributors for unpaid premiums, depending on the period and applicable rules;
Successor entities (e.g., surviving corporation after merger, buyer continuing business) where PhilHealth attributes liability to the continuing enterprise.

A demand letter is not automatically a court judgment. But it is a serious collection step that can escalate into audits, administrative enforcement, civil collection actions, and—depending on circumstances—possible criminal exposure for certain acts (especially withholding employee shares without remitting).

2) The governing legal framework in plain terms

PhilHealth operates under the National Health Insurance Program established by law (principally Republic Act No. 7875, as amended by later laws including RA 9241, RA 10606, and the Universal Health Care Act, RA 11223). The legal framework generally provides that:

Coverage is compulsory for covered persons and employees.
Premium contributions are required for “direct contributors” (including employed members, self-employed, and certain professionals), with rules on who pays and how much.
Employers have a distinct legal duty to:
- Register as an employer with PhilHealth;
- Deduct the employee share (where applicable) from compensation;
- Remit both employer and employee shares within prescribed deadlines;
- Submit remittance reports and maintain records.
PhilHealth has authority to assess and collect premiums, and to impose interest/penalties for late or non-remittance, subject to law and PhilHealth issuances.

Because contribution rates and mechanics have changed over time (and may change again), the safest approach in a demand-letter situation is to treat the numbers in the demand as a starting point for reconciliation, not as unquestionable truth.

3) Why PhilHealth sends demand letters (common triggers)

Demand letters often arise from one or more of these:

A. Non-remittance or late remittance

Employer did not remit for certain months/quarters, or remitted beyond deadlines.

B. Under-remittance

Employer remitted at an incorrect salary base, used outdated rates, misapplied salary ceiling/floor rules, or failed to update employee compensation changes.

C. Missing or rejected posting

Payment was made but not posted due to incorrect employer number, wrong period tagging, incomplete/incorrect remittance files, or bank/payment channel posting issues.

D. Unregistered or incorrectly registered workers

Workers treated as “contractors” but PhilHealth classifies them as employees under applicable tests; or workers moved between branches/entities and contributions were not properly aligned.

E. Audit findings

PhilHealth audit/review of payrolls, BIR records, SEC/DTI filings, or other information suggests the declared payroll and remittances do not match.

F. Business changes

Closure, merger, acquisition, change of business name, or transfer of employees leading to gaps in remittance continuity.

4) What to look for in the demand letter (checklist)

Before responding, identify and capture:

Issuer details: office, signatory, letterhead, contact numbers, reference/assessment number.
Coverage period: months/quarters/years being demanded.
Basis of computation:
- List of employees/members covered
- Salary base used
- Premium rate used
- Interest/penalty computation
Amount demanded: principal + interest/penalty + any other charges.
Deadline to respond/pay and consequences stated.
Attachments: statement of account, employee listing, audit findings, etc.

Do not ignore ambiguous or incomplete demands—lack of breakdown is itself a reason to request formal computation and ledger details.

5) First 48 hours: what to do immediately

Step 1: Calendar the deadline and stop the bleeding

Record the response/payment deadline.
Make sure current and future contributions are being remitted correctly while you resolve past periods. PhilHealth often treats continuing delinquency as aggravating.

Step 2: Verify authenticity (without escalating panic)

Confirm the issuing office and signatory through official channels.
Avoid sending sensitive personal data to unofficial emails or unknown messengers.

Step 3: Assign an internal “single source of truth”

Designate a responsible officer (HR/payroll, finance, compliance) to gather documents and coordinate with PhilHealth.

Step 4: Preserve and gather records

For employers, collect at minimum:

Payroll register per period;
Employment master list, hire dates, resignations, and compensation changes;
Proof of payments (official receipts, bank validation slips, online transaction confirmations);
Remittance reports and member contribution lists submitted to PhilHealth (e.g., RF-1/RF-2 or current equivalents);
Company registration documents and branch structure (DTI/SEC, BIR, business permits) if identity/coverage is disputed;
Any prior PhilHealth correspondence, reconciliations, or remittance advisories.

For self-employed/professionals:

Proof of payments and period coverage;
Membership category changes (employed → self-employed, etc.);
Any PhilHealth updates on status or income base you filed.

6) Reconcile before you argue (the practical heart of a good response)

Many demand letters are resolved by reconciliation, not litigation. The goal is to answer these questions precisely:

Is the liability real?
If real, is the amount correct?
If incorrect, what is the correct amount and why?

A. Request the ledger and detailed computation (if not provided)

A strong response often begins by requesting:

Employer/member ledger showing posted remittances and delinquencies;
Detailed computation per period and per employee;
Legal basis for interest/penalty applied;
Any audit working papers used.

This does two things:

Forces clarity and due process;
Prevents you from inadvertently admitting an incorrect figure.

B. Match PhilHealth’s list against your payroll reality

Common reconciliation findings include:

Employees included who were not yet hired / already separated;
Incorrect monthly salary base;
Duplicate entries from branch transfers;
Payments posted to wrong period or wrong employer number;
Remittance files rejected or partially posted.

C. Decide your posture: pay, dispute, or hybrid

A professional response can be:

Pay in full (when verified correct), or
Hybrid: pay the undisputed portion and contest the rest, or
Dispute: when the demand is materially wrong or unsupported.

Hybrid responses are often effective because they show good faith while preserving your position.

7) Your response options (and when each makes sense)

Option 1: “We already paid” (posting error / misapplication)

Use when you have proof of remittance.

Best evidence package:

Official receipt/validated deposit slip/online confirmation;
Remittance report file acknowledgement;
List of employees for the period;
Clear mapping: payment reference → period → amount → employees.

Requested action:

Posting correction/reconciliation;
Updated statement of account;
Withdrawal of demand or issuance of clearance for those periods.

Option 2: “We partially owe, partially dispute” (most common)

Use when there are real gaps but the computation is wrong.

Key points:

Identify exactly which periods/amounts are admitted;
Pay admitted amount if feasible;
Provide corrected computation for disputed items;
Request recomputation and conference.

Option 3: “We dispute the demand” (identity/coverage/legal basis issues)

Use when:

Workers are misclassified, or
The company is not the correct liable entity, or
Periods are outside coverage or are already settled, or
Demand lacks factual/legal basis.

Be careful: disputing coverage (employee vs contractor) can be complex and fact-driven. Your letter should be evidence-heavy and not purely argumentative.

Option 4: “We cannot pay in one go” (payment arrangement)

When liability is verified but cash flow is limited:

Request an installment/payment arrangement consistent with PhilHealth policies;
Offer proposed terms (down payment + monthly amounts);
Ask how penalties will be treated during compliance;
Keep proof of every installment and require updated ledgers.

Payment arrangements are typically documented and may include default consequences—treat them like binding commitments.

8) How to write a proper reply (structure that works)

A good response is formal, concise, evidence-led, and deadline-aware.

A. Essential elements

Caption/heading: company/member name, PhilHealth number(s), address, contact person.
Reference: demand letter date, reference/assessment number, covered periods.
Statement of purpose: response, request for reconciliation, dispute/payment plan, etc.
Factual narrative: what happened, in neutral tone.
Position:
- Admit and propose settlement; or
- Contest with specific reasons and corrected figures; or
- Request posting correction with proof.
Requests:
- Provide ledger and computation;
- Schedule reconciliation conference;
- Recompute/withdraw/adjust;
- Accept payment arrangement and confirm terms in writing.
Attachments list (itemized).
Signature: authorized signatory with designation.

B. Tone and admissions: avoid accidental self-incrimination

Especially for employers, avoid language that can be read as admitting wrongdoing (e.g., “we failed to remit employee deductions”) unless you have already confirmed and chosen that stance. Use neutral phrasing while you verify:

“Based on initial review, there appear to be posting discrepancies…”
“We are validating the periods indicated and request the detailed computation…”

C. Delivery and proof

Send through channels that produce proof of receipt:

Personal filing with receiving copy;
Registered mail/courier with tracking;
Official PhilHealth email channels if instructed, with acknowledgment.

Keep a complete “demand letter file” (soft + hard copy) with a dated index.

9) What happens if you ignore it (realistic escalation path)

Ignoring demand letters risks escalation such as:

Follow-up/final demands with shortened deadlines;
Audit/investigation requests and conferences;
Administrative enforcement actions (collection steps, coordination with other agencies where allowed);
Civil collection for unpaid contributions and charges;
Potential criminal complaints in cases involving unlawful withholding/misappropriation or other statutory violations tied to non-remittance.

Even when a demand is wrong, silence makes it easier for the other side to treat their computation as uncontested.

10) Employer-specific legal risk points (what decision-makers must understand)

A. Employee-share withholding is a high-risk fact pattern

Where the employer deducted the employee share from salaries but did not remit it, the issue becomes more than a simple billing dispute. Treat these cases with heightened seriousness, preserve payroll proof, and move quickly toward a documented resolution strategy.

B. Officers may be implicated depending on facts

In some regulatory regimes, responsible officers can be named where there is willful failure to remit. Company decision-makers should avoid casual emails or memos that could be misread later.

C. Recordkeeping failures amplify exposure

If payroll and remittance records are incomplete, PhilHealth may rely on best-available information (e.g., external records, averages, declared payroll) and the employer’s ability to rebut becomes weaker.

11) Self-employed and direct contributors: special considerations

For individuals and self-employed contributors, demand issues commonly arise from:

Change in category (employed → self-employed) not timely updated;
Payments applied to wrong periods;
Confusion on whether back payments are required/allowed for certain timeframes;
Periods where the person may have been covered as an employee already.

Practical approach:

Obtain your PhilHealth contribution history/ledger.
Identify overlapping periods (employed coverage) to avoid double counting.
Provide proof of payments and employment status for those periods.
Ask PhilHealth to correct posting and issue an updated statement reflecting the accurate member category per period.

12) Business closure, sale, merger, and “wrong entity” defenses

Demand letters often hit companies that have changed structure. Key points:

Closure does not automatically erase arrears incurred while operating.
Sale of business/assets may not automatically transfer liabilities unless structured that way; but PhilHealth may still pursue the registered employer entity and/or a continuing enterprise depending on facts.
Mergers can shift liabilities to the surviving corporation as a matter of corporate law.
Branches may have separate reporting realities but may share a single employer number or linked accounts—misposting is common.

Your reply should include: corporate documents, timelines, and a clear mapping of which entity employed which workers during which periods.

13) Installment/payment arrangement: protect yourself in the paperwork

If you negotiate installments, insist on clarity on:

Total principal due per period;
Interest/penalty treatment while paying;
Due dates and acceptable payment channels;
Posting rules (how each payment is applied to specific periods);
Consequences of late installment;
Whether a clearance/certification is available after compliance.

Avoid informal “verbal only” arrangements.

14) Template response letter (adapt to your facts)

[Company Letterhead] Date: ________

Philippine Health Insurance Corporation (PhilHealth) [Regional/Branch Office] Attn: [Name/Unit, if indicated] [Address]

Re: Response to Demand Letter for Alleged Unpaid/Underpaid Premium Contributions PhilHealth Employer No.: ________ Demand Letter Date/Ref. No.: ________ Covered Period(s): ________

Dear [Sir/Madam]:

We acknowledge receipt of your Demand Letter dated ________ regarding alleged unpaid/underpaid premium contributions for the period(s) ________.

Upon initial verification, we respectfully request the following to facilitate prompt reconciliation and appropriate action:

The detailed statement of account/ledger showing posted remittances and the periods assessed as delinquent;
The detailed computation and basis of premiums, including the employee listing, salary base used, applicable rate(s), and the legal basis for interest/penalty computation; and
Copies of any audit findings or working papers relied upon, if any.

Subject to receipt of the above, our preliminary findings are as follows:

Periods with payment/remittance already made: [list periods] (see attached proof of payment and remittance records).
Periods requiring reconciliation due to apparent posting discrepancies: [list periods].
Periods under validation / disputed computation: [list periods] with brief reasons (e.g., separated employees included; duplication; incorrect salary base; remitted under different reference; etc.).
Undisputed amount (if applicable): PHP ________ for period(s) ________. [State if you are paying now / propose schedule.]

In view of the foregoing, we request a reconciliation conference at your earliest available schedule within ______ days from receipt of this letter, and the issuance of an updated statement of account after corrections/recomputation.

Attached are copies of supporting documents:

Proof of payments (ORs/validated slips/online confirmations) for ________;
Remittance reports and employee contribution lists for ________;
Payroll registers and employee movement records for ________;
[Other relevant documents].

Please acknowledge receipt of this response and attachments.

Respectfully,

[Name] [Position/Designation] [Company] [Contact details]

15) Attachments checklist (use as a compliance bundle)

For employers:

Receiving copy of demand letter and envelope/courier proof (for timeline tracking)
Employer registration details and employer number(s)
Payroll registers (by period)
Employee masterlist with hire/separation dates
Proof of remittance payments (ORs, bank validations, online confirmations)
Remittance reports / contribution lists submitted
Any prior PhilHealth reconciliations or advisories
Corporate documents if identity/liability is disputed (SEC/DTI, BIR, branch list)

For individuals:

Proof of payments
Employment certificates or payslips showing coverage as employee for overlapping periods
Membership category update records (if any)

16) Practical FAQs

“Do we have to pay immediately?”

You should respond within the stated period, but “respond” does not always mean “pay in full immediately.” It can mean: requesting computation, presenting proof of payments, disputing errors, proposing settlement terms, or paying the undisputed portion.

“Can PhilHealth demand penalties/interest?”

PhilHealth generally asserts authority to impose charges for late or non-remittance pursuant to law and its implementing issuances. The correct approach is to request the computation basis and verify whether the correct rates and periods were used.

“What if the demand includes employees who already resigned?”

Provide separation dates, final payroll, and contribution records; request recomputation excluding periods after separation (or correcting postings where applicable).

“What if we used the wrong employer number or paid under a different reference?”

This is a classic posting issue. Provide proof and request transfer/posting correction with a clear mapping of payment reference to correct periods.

“What if we truly missed years of remittances?”

Move quickly to (1) stop ongoing delinquency, (2) validate the total exposure with a detailed ledger, and (3) negotiate a documented settlement/payment arrangement while protecting record accuracy.

17) Preventing future demand letters (controls that actually work)

Monthly reconciliation: payroll vs remittance vs PhilHealth posting.
Single ownership of employer numbers and branch mapping.
Change-management: promotions, salary adjustments, new hires, separations reflected immediately in remittance preparation.
Dual control: one prepares remittance files, another verifies totals and periods.
Keep a “proof of posting” archive per period (not just proof of payment).
Schedule periodic account ledger requests/checks to catch posting errors early.

18) Bottom line

A PhilHealth demand letter is best handled as a time-bound reconciliation and documentation exercise with legal consequences if mishandled. The strongest responses are prompt, evidence-backed, specific per period, and framed to obtain (or correct) the official ledger and computation—then either settle accurately or dispute precisely.