[ G.R. No. 214485, January 11, 2021 ]




This Petition1 for Review on Certiorari assails the March 21, 2014 Decision2 and September 17, 2014 Resolution3 of the Court of Appeals (CA) in CA-G.R. CV No. 100477, which affirmed in toto the January 22, 2013 Decision4 of the Regional Trial Court (RTC) of Pasig, Branch 67, in Civil Case No. 72535, granting the reimbursement claims of respondent Urdaneta Sacred Heart Hospital (USHH).

The Facts:

USHH is a health care institution duly accredited by the Philippine Health Insurance Corporation (Philhealth or PHIC). USHH has been providing Philhealth members the necessary treatments and procedures which are deemed compensable under Philhealth rules. From December 2008 to April 2010, the hospital filed 374 reimbursement claims for cataract treatments or surgeries underwent by its patients, 199 of which were reimbursed by Philhealth,5 15 were denied, while 160 claims remained unacted upon.6

USHH thus filed before the RTC a Complaint7 against Philhealth for its failure to pay or act upon its remaining 160 reimbursement claims, in violation of the rule mandating that it should act on the claims within 60 calendar days from its receipt. Purportedly, in its July 30, 2009 Resolution,8 the PHIC Board refused to act on some claims, and denied 60 of it9 for being not compensable because the treatments or surgeries were conducted during medical missions from December 2008 to March 2009.10 Notably, PHIC Circular Nos. 1711 and 19,12 series of 2007, prohibit claims for services conducted during medical missions or derived through recruitment schemes.

Allegedly, the hospital was informed of the rejection of its claims three months after their denial.13 Hence, it wrote PHIC a letter14 dated October 15, 2009 citing PHIC's own Fact-Finding Verification Report15 dated March 25, 2009 showing that the claims that were rejected by the PHIC Board in its July 30, 2009 Resolution were actually not found to be part of any medical mission and thus, said claims should be processed.16

In the course of the proceedings, Philhealth paid some of the claims such that at the termination of the trial, the hospital's outstanding claims against Philhealth stood only at P1,475,988.42.

Ruling of the Regional Trial Court:

In a Decision17 dated January 22, 2013, the RTC noted that USHH did not comply with the procedural rules in pursuing its claim. Pursuant to Republic Act (RA) No. 7875 or the National Health Insurance Act of 1995 (NHI Act), and PHIC's Circular No. 3, series of 2008,18 the hospital's recourse was to file a claim before the PHIC Regional Office (RO) where the health care provider operates. If the RO denies or reduces the claim, the claimant can file a motion for reconsideration (MR). If the MR is denied, the claimant can file an appeal with the Protest and Appeals Review Department (PARD) under the PHIC Office of the President and Chief Executive Officer (OP-CEO). The decision of the PARD will be considered final and executory, subject to a judicial appeal under Rule 43 of the Rules of Court.19

In line with this, Rule XXXV, Section 184 of the Implementing Rules and Regulations (IRR) of the NHI Act states that the decision of the Grievance and Appeals Review Committee (GARC) shall become final and executory 15 calendar days after notice to the parties, unless an appeal is lodged before the PHIC Board within the same period. In addition, Rule XXXV, Section 189 of the IRR provides that the final decision of the PHIC Board shall be reviewed by the CA in accordance with RA No. 7902 and Revised Administrative Circular 1-95 issued by the Court on May 17, 1995.20

The trial court noted that USHH did not comply with the foregoing procedure when it filed a Complaint before the RTC instead.21 However, there being strong public interest involved in this case, which is an exception to the doctrine on exhaustion of administrative remedies, the trial court opted to take cognizance of the case and resolved as follows, viz.:

Wherefore, in the interest of greater justice, the Court renders judgment ordering the defendant Philippine Health Insurance Corporation to pay the plaintiff, as follows:

1. The total amount of its claims for reimbursement in the amount of One Million Four Hundred Seventy-Five Thousand Nine Hundred Eighty-Eight And Forty-Two Centavos [P1,475,988.42 plus legal interest thereon from May 2010 as and by way of actual damages;

2. One Hundred Thousand Pesos (P100,000.00) as and by way of attorney's fees and Three Thousand Five Hundred Pesos (P3,500.00) per hearing, as and by way of appearance fees.


Aggrieved, PHIC appealed23 to the CA.

Ruling of the Court of Appeals:

The CA, in its assailed March 21, 2014 Decision,24 affirmed the RTC's Decision in toto. It held that USHH, as an accredited member of the PHIC, should abide by PHIC's rules and regulations as regards the filing of claims and appeals.25 Yet, the doctrine on exhaustion of administrative remedies admits of exceptions, as when strong public interest is involved. Technicalities should not be allowed to defeat the right of the health care provider to be reimbursed, since it will result in a deprivation of legal rights.26

The appellate court noted that contrary to Philhealth's contention, USHH's claims which involved surgeries or treatments done in December 2008 up to March 2009, were not performed during medical missions, as declared by PHilhealth's own Fact-Finding Verification Report.27

PHIC asked for a reconsideration28 which the CA denied in a Resolution29 dated September 17, 2014. PHIC then filed this instant Petition for Review on Certiorari30 raising the following –








As condensed, the issue here is whether or not the reimbursement claims of USHH should be granted.

Arguments of PHIC:

PHIC maintains that since USHH's claim is administrative in nature, it is reviewable by the courts only after exhaustion of administrative remedies.32 RA No. 7875, as amended, vests PHIC with the sole jurisdiction over claims for reimbursement.

PHIC Circular No. 3 requires that a claim for reimbursement under the NHI Act shall be filed with the PHIC RO where the accredited health care provider is conducting business. If the RO denies or reduces the claim, the claimant shall file an MR with the Office of the Regional Vice President of the same RO within 15 calendar days from notification. Upon denial of the MR, the claimant shall file an appeal with the PARD under the PHIC OP-CEO, whose decision shall be final and executory, subject only to a judicial appeal under Rule 43 of the Rules of Court.33 In any case, PHIC emphasizes that it has yet to decide on a large portion of USHH's claims, and thus, any court intervention at this time is premature and improper.

PHIC argues that USHH failed to exhaust administrative remedies34 and that the case should not be considered as an exception to the doctrine on the exhaustion of administrative remedies since (a) PHIC has not decided on some of USHH's claims and (b) USHH did not allege extraordinary circumstances which would warrant its exemption.35

PHIC contends that USHH has no cause of action since its reimbursement claims under the NHIP is not an established right but a statutory privilege to which it is not entitled to.36 It adds that the PHIC Board's decision with respect to USHH's non-compensable claims is already final and executory since USHH did not file an MR or appeal.37 Also, it avers that USHH clearly violated applicable NHI laws, rules and regulations, as the treatments and surgeries were actually performed in the course of medical missions.38

With regard to the claims for 160 cataract operations, the PHIC asserts that some of these cases are subject for review, investigation and processing, and are therefore covered by the exception in Section 47, paragraph (o) of the IRR of RA No. 7875 which states that "[a]ll claims, except under investigation, shall be acted upon within sixty (60) calendar days from receipt of the Corporation."39

It additionally states that "[a]t the time of the filing of the complaint, out of the alleged 160 unpaid claims, 42 claims had been paid, 15 were denied for being non-compensable [while] USHH has not filed claims for 3 cataract operations. PHIC already paid PhP453,591.02... USHH has not filed claims for the alleged cataract operation[s] of Felomina Lapitan and Clarita Abogadie."40

PHIC emphasizes that administrative cases had been filed against the health care provider itself and several of its affiliated ophthalmologists for violation of RA No. 7875 and its IRR, particularly for breach of warranties of accreditation, which involve the same issues in the instant case.41

In addition, PHIC avers that USHH failed to overcome the presumption that PHIC regularly performed its functions.42 It stresses that "a claim under the NHI involves a prospective benefit which should first be validated, and not an automatic right which guarantees entitlement. It is not an ordinary money claim but one clearly imbued with public interest as [it] involves disbursements from the government's health care fund. An unwarranted claim against the fund clearly violates the law and public policy and is detrimental to public welfare."43

Additionally, since the claims were under investigation, these should be considered as exceptions to the 60-day requirement. PHIC states that it duly informed USHH of its verdict to deny the claims and gave it the opportunity to refute the ruling, as stated in USHH's October 15, 2009 letter. The said letter indicated that Dr. Cardona, the Regional Vice President PhRO1, informed USHH of the denial of the claims. In the same letter, USHH even asked for a reconsideration.44

PHIC emphasizes that the PHIC Board is mandated to diligently validate the Fact-Finding Verification Report as the said report is merely recommendatory in nature. It adds that the free cataract screenings and subsequent operations were conducted under suspicious conditions as to constitute as medical missions given that these procedures were performed pursuant to USHH's Sagip Tanaw Project.45

Arguments of USHH:

On the other hand, USHH contends that it filed its reimbursement claims properly and seasonably.46 It maintains that it had no other option but to institute the Complaint before the RTC because the matter had already been decided by the PHIC's Board, rendering any MR before the PARD useless.ℒαwρhi৷ Additionally, it asserts that there is no law which vests exclusive jurisdiction upon PHIC over USHH's claims.47

It argues that the directive of PHIC's Board to deny USHH's claims was unlawful, as it was made without prior notice to USHH and was not consistent with the finding of PHIC's own Fact-Finding and Investigation Department.48 It maintains that the case is an exception to the application of the doctrine on exhaustion of administrative remedies, as the case involves public interest.49

Our Ruling

The Petition is meritorious.

Non-exhaustion of administrative remedies was justified.

USHH's filing of the complaint with the RTC without first exhausting available administrative remedies is justifiable in light of the denial of its claims by the PHIC's Board itself, the body superior to the RO or the PARD where USHH was supposed to file an MR or appeal.50 To put it into perspective, "[PHIC's] President and Chief Executive Officer (CEO) is directly appointed by the President of the Republic while its Board of Directors (the Board) is composed of several cabinet secretaries (or their permanent representatives) and representatives of different stakeholders."51 Thus, it is reasonable to conclude that the PHIC Board exercises a higher authority than the ROs or the PARD, and that to file an MR or appeal to it would be futile since the PHIC Board already directed its denial.

The trial court and the appellate court also correctly considered USHH's Complaint as an exception to the application of the doctrine on exhaustion of administrative remedies on the basis of strong public interest.52 Alternatively, the instant case may also fall under the following exceptions: (a) "when to require exhaustion of administrative remedies would be unreasonable" and (b) "when there are circumstances indicating the urgency of judicial intervention."53

Notwithstanding the foregoing pronouncement, We are constrained to reverse the rulings of the CA and the RTC. The "public interest" angle would only excuse USHH's failure to avail of administrative remedies which would in turn merit the trial court's review of its case, so as not to dismiss it outright due to procedural infirmities or lack of jurisdiction.

However, a judicious review of the merits of the case reveals that the hospital and its personnel involved in the cataract screenings and subsequent operations or treatments had indirectly violated the PHIC's rules prohibiting the conduct of cataract operations during medical missions or other means analogous therein.

Notably, USHH admitted in its letter to PHIC having conducted free "cataract screenings" during the period in question.54 While a cataract screening is different from an operation, reason dictates that there would have been no surge in the number of cataract operations in USHH had there been no "free screening" in the first place. The Fact-Finding Verification Report which USHH itself relied on stated that "[i]t appears that the sudden increase [in] cataract operation claims was due to the influx of cataract patients that were screened during the 'free cataract screening' implemented by the USHH."55

Relevantly, PHIC alleged that "[a]fter careful investigation and verification, PHIC discovered that from December 2008 to March 2009 – the period covered by the claim, USHH and several of its doctors conducted the screening of patients from several municipalities in Pangasinan. USHH and its doctors employed seekers who went from one barangay to another, recruiting patients with cataract problems."56

In fact, PHIC filed an administrative complaint57 against USHH and its doctors for Breach of the Warranties of Accreditation, alleging that the patients were enticed to participate in the free screening and that only Philhealth members or beneficiaries were included. PHIC alleged that:

7. The alleged cataract screening was only a ploy to circumvent the law as it was actually a recruitment scheme in the guise of community service for the sole purpose of soliciting Philhealth patients as shown by the fact that those who were actually offered free eye operation were either Philhealth members or beneficiaries only, without said scheme [USHH] would not have gathered that number of Philhealth patients;

8. Another proof of its being a medical mission was the fact that some of the activities were in cooperation with the local government as part of the latter's outreach programs as shown by the streamers that say so;

9. Respondent [cannot] still validly claim benefits for the operations performed during medical missions despite teaming up with a local government unit (LGU) because only national or local government unit sponsored missions conducted in a government hospital or facility are compensable but [USHH] is a private hospital and despite being so had unduly claimed benefits accruing from operations performed during medical missions conducted either in cooperation with an LGU or on its own;

10. The indubitable reason for such acts mentioned in the preceding paragraphs was to circumvent and ultimately evade Philhealth Circulars No. 17 and 19, s. 2007 which discontinued payments of cataract surgery performed during medical missions and through other recruitment schemes and to thereafter unjustly claim for and [USHH] had in fact claimed Philhealth benefits.58

These findings are too significant to ignore. USHH did not specifically dispute these claims or even attempt to clarify why it suddenly had several cataract patients. USHH's silence on this matter is highly suspect, which suggests that it indeed devised ways to circumvent the directives of the PHIC, specifically Circular Nos. 17 and 19, series of 2007.

PHIC Circular No. 17, series of 2007 expressly provides that "Philhealth shall thereby discontinue the compensability of claims for cataract operations performed during medical missions and other recruitment schemes for cataract surgery."59 In relation to this, PHIC Circular No. 19, series of 200760 states that pursuant to Circular No. 17, series of 2007, all claims for cataract surgeries shall not be compensated if performed under any of the following conditions:

2.1 The health care provider/s (professional and/or institution) solicit/s patients through any means or form or through any medium that violates the code of ethics of the Philippine Academy of Ophthalmology, i.e., he/she offers to or receives from a fellow physician, allied health professional or independent solicitor any fee(s) or favor(s) for the purpose of obtaining patients.

2.2 Medical missions in which a health care provider has linked up with a non-government organization or an institution in the guise of charity or community service for the sole purpose of soliciting PhilHealth patients.


2.5 The health care provider/s (professional and/or institution) solicit/s patients through other recruitment schemes for the purpose of enrollment to PhilHealth.


5. Any indication/s or report/s of pattern/s, indicative that such claims were done through the use of recruitment schemes, or during the conduct of a medical mission, unless herein specified, shall cause suspension of processing of claims pending legal investigation.61

Thus, PHIC's denial of USHH's claims was justified since the hospital actively employed means or methods to recruit cataract patients under conditions which are prohibited in Circular No. 19, series of 2007. Even if the surgeries or treatments were strictly not performed during a medical mission, it appeared that the cataract patients were actively recruited by USHH.

PHIC clearly demonstrated that USHH indeed violated Circular Nos. 17 and 19, series of 2007 which would justify the denial of its reimbursement claims. USHH and its personnel/affiliates actively recruited cataract patients in violation of the said circulars. The hospital failed to disprove that it employed "seekers" in order to gather patients for the free cataract screening who in turn sought treatments in USHH by using their Philhealth benefits, whether as members or beneficiaries.

PHIC pointed out that "out of the 160 allegedly unpaid claims, 42 claims had already been paid, 3 claims had not been filed with PHIC and 15 claims were denied payment by PHIC for being non-compensable and [violative of] PHIC Circulars 17 and 19, series of 2007 which prohibit claims for services conducted during medical missions or derived through recruitment schemes. The rest of the claims are pending PHIC investigation which is still unresolved."62 Indeed, further investigation should be conducted by the PHIC regarding this matter in order to shed light on how USHH was able to gather quite a number of patients at a given period. PHIC should therefore assess and investigate USHH's pending and unresolved reimbursement claims subject of this case.

The existence of PHIC is of utmost importance to public health programs. In fact, one of PHIC's principles is: "n) Professional Responsibility of Health Care Providers – The program shall assure that all participating health care providers are responsible and accountable in all their dealings with the Corporation and its members."63

The present pandemic already highlighted the anomalies, flaws, and limitations of our public health system. Philhealth's financial resources, and that of our nation as a whole, is already stretched to its limit. The present situation should inspire us to rise above ourselves and focus on our nation's survival as a whole. The hardships brought about by the pandemic should not strip us of our humanity, or destroy or defeat our core values, but rather serve as a stimulus for positive changes within ourselves and in our nation. This should be a platform to better ourselves and an opportunity to craft and implement needed reforms in our public health care system. Indeed, this is what our policy makers envisioned in the first place.

At this juncture, it !s well to remind accredited healthcare institutions to deal with Philhealth responsibly, honestly, and with integrity and refrain from employing unscrupulous methods like actively recruiting patients just so they could avail of Philhealth benefits. Likewise, Philhealth members and its officials are similarly exhorted to act with prudence and without any corrupt motives. Medical practitioners should not also allow themselves to be drawn into this unethical practice.

WHEREFORE, the instant Petition for Review on Certiorari is hereby GRANTED. The assailed Decision dated March 21, 2014 and Resolution dated September 17, 2014 rendered by the Court of Appeals in CA-GR. CV No. 100477 are hereby REVERSED and SET ASIDE. The Complaint of Urdaneta Sacred Heart Hospital is DISMISSED for lack of merit. Costs on respondent.


Leonen, (Chairperson), Inting, Delos Santos, and Rosario, JJ., concur.


1 Rollo, pp. 12-39.

2 Id. at 41-51; penned by Associate Justice Marlene B. Gonzales-Sison and concurred in by Associate Justices Michael P. Elbinias and Edwin D. Sorongon.

3 Id. at 53-54.

4 Id. at 55-64; penned by Judge Amorfina Cerrado-Cezar.

5 Id. at 57.

6 Id. at 57-58.

7 Id. at 128-137.

8 Id. at 112, 114.

9 Id. at. 113.

10 Id. at 59.

11 Id. at 109; "Discontinuance of Compensability of Claims for Cataract Surgery Performed During Medical Missions and Thru Other Recruitment Schemes and Further Limiting the Number of Compensable Claims for Cataract Surgery."

12 Id. at 110-111; "The Implementing Guidelines for PHIC Circular 17, Series of 2007."

13 Id. at 112.

14 Id. at 118-124.

15 Id. at 159-162.

16 Id. at 60.

17 Id. at 55-64.

18 Id. at 125-127.

19 Id. at 60-61.

20 Id. at 61-62.

21 Id. at 62-63.

22 Id. at 63- 64.

23 CA rollo, pp. 21-24.

24 Rollo, pp. 41-51.

25 Id. at 48-49.

26 Id. at 49.

27 Id. at 49-50.

28 Id. at 104-107.

29 Id. at 53-54.

30 Id. at 12-39.

31 Id. at 16-17.

32 Id. at 17-18.

33 Id. at 19.

34 Id. at 20-22.

35 Id. at 22-25.

36 Id. at 25-26.

37 Id. at 26-27.

38 Id. at 27-28.

39 Id. at 28.

40 Id. at 28-29.

41 Id. at 29.

42 Id. at 32-33.

43 Id.

44 Id. at 317-318.

45 Id. at 318-319.

46 Id. at 292.

47 Id. at 292-293.

48 Id. at 294-295.

49 Id. at 295-300.

50 See: Section 41 (d) (Grievance and Appeal Procedures) of RA No. 7875 which states: "All decisions by the Board as to entitlement to benefits of members or to payments of health care providers shall be considered final and executory."

51 Kilusang Mayo Uno v. Aquino III, 788 Phil. 415, 421 (2016) citing Sections 18 and 19, National Health Insurance Act of 1995, Republic Act No. 7875.

52 International Container Terminal Services, Inc. v. City of Manila, GR. No. 185622, October 17, 2018 citing Sunville Timber Products, Inc. v. Abad, 283 Phil. 400, 407 (1992).

... [T]here are a number of instances when the doctrine may be dispensed with and judicial action validly resorted to immediately. Among these exceptional cases are: 1) when the question raised is purely legal; 2) when the administrative body is in estoppel; 3) when the act complained of is patently illegal; 4) when there is urgent need for judicial intervention; 5) when the claim involved is small; 6) when irreparable damage will be suffered; 7) when there is [no] other plain, speedy and adequate remedy; 8) when strong public interest is involved; 9) when the subject of the controversy is private land; and 10) in quo warranto proceedings. (Emphasis Supplied).

53 Kilusang Mayo Uno v. Aquino III, G.R. No. 210500, April 2, 2019 citing Social Security Commission v. Court of Appeals, 482 Phil. 449, 465-466 (2004).

[The principle of exhaustion of administrative remedies] may be disregarded (1) when there is a violation of due process, (2) when the issue involved is purely a legal question, (3) when the administrative action is patently illegal amounting to lack or excess of jurisdiction, (4) when there is estoppel on the part of the administrative agency concerned, (5) when there is irreparable injury, (6) when the respondent is a department secretary whose acts as an alter ego of the President bears the implied and assumed approval of the latter, (7) when to require exhaustion of administrative remedies would be unreasonable, (8) when it would amount to a nullification of a claim, (9) when the subject matter is a private land in land case proceedings, (10) when the rule does not provide a plain, speedy and adequate remedy, (11) when there are circumstances indicating the urgency of judicial intervention, (12) when no administrative review is provided by law, (13) where the rule of qualified political agency applies, and (14) when the issue of non-exhaustion of administrative remedies has been rendered moot. (Emphasis Supplied).

54 Rollo, p. 120.

55 Id. at 161.

56 Id. at 14, 206.

57 Records, pp. 279-283.

58 Id. at 281-282.

59 Rollo, p. 109.

60 Id. at 110-111.

61 Id. at 111.

62 Id. at 14.

63 Article I, Section 2, National Health Insurance Act of 1995, Republic Act No. 7875 as amended by RA No. 9241 and RA No. 10606.

The Lawphil Project - Arellano Law Foundation