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THIRD DIVISION

[G.R. No. 163123. April 15, 2005]


PHILIPPINE HEALTH INSURANCE CORPORATION, petitioner,
vs. CHINESE GENERAL HOSPITAL AND EDICAL
CENTER, respondent.
D E C I S I O N
CORONA, J.!
Before us is a petition for review on certiorari under Rule 45 of the Rules of Court
assailing the ar!h "#$ "%%4 de!ision
&'(
of the Court of )ppeals$ the dispositive
portion of whi!h read*
FOR THE FOREGOING DISQUISITIONS, the petition is GRANTED, the
Philippine Health Insurance Corporation
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is hereby ordered to give due course to
petitioners, Chinese General Hospital and Medical Center, claims for the period
from 199 to 199!, amounting to "#$%&''( MI))I#( &*# H$(+%'+
(I('&, #(' &H#$-.(+ "I/' H$(+%'+ -I0&, 'IGH& P'-#- and
112133 P'-#- 4P15,!91,6781198
&+(
The fa!ts$ as !ulled ,- the Court of )ppeals$ follow.
#n "ebruary 15, 1996, %epublic .ct (o8 116, other:ise ;no:n as <.n .ct
Instituting a (ational Health Insurance Program for all "ilipinos and 'stablishing
the Philippine Health Insurance Corporation "or the Purpose,= :as approved and
signed into la:8 .s its guiding principle, it is provided in -ection ! thereof, thus>
<-ection !8 +eclaration of Principles and Policies8 ? -ection 11, .rticle 0III of the
Constitution of the %epublic of the Philippines declares that the state shall adopt an
integrated and comprehensive approach to health development :hich shall
endeavor to ma;e essential goods, health and other social services available to all
the people at affordable cost8 Priority for the needs of the underprivileged, sic;,
elderly, disabled, :omen, and children should be recogni@ed8 )i;e:ise, it shall be
the policy of the -tate to provide free medical care to paupers8
Prior to the enactment of %8.8 1168 CGH
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had been an accredited health care
provider under the Philippine Medical Care Commission 4PMCC9, more popularly
;no:n as Medicare8 .s defined by %8.8 116, a health care provider refers to a
health care institution, :hich is duly licensed and accredited devoted primarily to
the maintenance and operation of facilities for health promotion, prevention,
diagnosis, treatment and care of individuals suffering from illness, disease, inAury,
disability or deformity, or in need of obstetrical or other medical and nursing care8
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.s such, petitioner
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filed its Medicare claims :ith the -ocial -ecurity -ystem
4---9, :hich, together :ith the Government -ervice Insurance -ystem 4G-I-9,
administered the Health Insurance "und of the PMMC8 &hus, petitioner filed its
claim from 199 to 199! :ith the ---, amounting to 'IGH& MI))I#( #('
H$(+%'+ &*# &H#$-.(+ -'/'( H$(+%'+ 'IGH&,B&*# and 132133
4P,13!,1!81398 Its application for the payment of its claim :ith the --- :as
overta;en by the passage of %8.8 116, :hich in -ection 61 and 6!, provides>
-'C&I#( 618 Merger8 ? *ithin siCty 4739 days from the promulgation of the
implementing rules and regulations, all functions and assets of the Philippine
Medical Care Commission shall be merged :ith those of the Corporation
4PHI)H'.)&H9 :ithout need of conveyance, transfer or assignment8 &he PMCC
shall thereafter cease to eCist8
&he liabilities of the PMCC shall be treated in accordance :ith eCisting la:s and
pertinent rules and regulations8 CCC
-'C&I#( 6!8 &ransfer of Health Insurance "unds of the --- and G-I-8 ? &he
Health Insurance "unds being administered by the --- and G-I- shall be
transferred to the Corporation :ithin siCty 4739 days from the promulgation of the
implementing rules and regulations8 &he --- and G-I- shall, ho:ever, continue to
perform Medicare functions under contract :ith the Corporation until such time
that such functions are assumed by the Corporation CCC8
Deing the successor of the PMCC, PHI)H'.)&H, in compliance :ith the
mandate of %8.8 116,
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promulgated the rules and regulations implementing said
act, -ection 6! of :hich provides>
-'C&I#( 6!8 "ee for -ervice Guidelines on Claims Payment8 ? CCC b8 .ll claims
for payment of services rendered shall be filed :ithin siCty 4739 calendar days from
the date of discharge of the patient8 #ther:ise, the claim shall be barred from
payment eCcept if the delay in the filing of thee claim is due to natural calamities
and other fortuitous events8 If the claim is sent through mail, the date of the
mailing as stamped by the post office of origin shall be considered as the date of
the filing8
If the delay in the filing is due to natural calamities or other fortuitous events, the
health care provider shall be accorded an eCtension period of siCty 4739 calendar
days8
If the delay in the filing of the claim is caused by the health care provider, and the
Medicare benefits had already been deducted, the claim :ill not be paid8 If the
claim is not yet deducted, it :ill be paid to the member chargeable to the future
claims of the health care provider8
Instead of giving due course to petitioners claims totaling to 'IGH& MI))I#(
#(' H$(+%'+ &*# &H#$-.(+ -'/'( H$(+%'+ 'IGH&,B&*# and
132133 4P,13!,1!8139, only #(' MI))I#( &H%'' H$(+%'+ -I0&,B"I/'
&H#$-.(+ "I/' H$(+%'+ "I"&,B-I0 and E!2133 Pesos 41,E76,6678E!9 :as
paid to petitioner, representing its claims from 199 to 199! 4sic98
Petitioner again filed its claims representing services rendered to its patients from
199 to 1999, amounting to -'/'( MI))I#( "I/' H$(+%'+ "I"&, "#$%
&H#$-.(+ &H%'' H$(+%'+ "#%&, &*# and 9E2133 Pesos
4P1,665,E5!89E98 "or being allegedly filed beyond the siCty 4739 day period
allo:ed by the implementing rules and regulations, -ection 6! thereof, petitioners
claims :ere denied by the Claims %evie: $nit of Philhealth in its letter dated
Fanuary 15, !33, thus>
<CCC
&his pertains to your three hundred seventy three Philhealth medicare claims 4E1E9
:hich :ere primarily denied by Claims Processing +epartment for late filing and
for :hich you made an appeal to this office8 *e regret to inform you that after
thorough evaluation of your claims, GyourH E71 medicare claims :ere DENIED,
due to the fact that the claims were filed 5 to 16 months after discharge8
Ho:ever, the remaining medicare claims have been for:arded to Claims
Processing +epartment 4CP+9 for payment8
-'C&I#( 6! 4D9 %ule 6! 4D9 %ule /III of the Implementing %ules and
%egulations of 116 provides that all claims for payment of services rendered shall
be filed within sixty (6! days from the day of discharge of the patient8 Ho:ever,
Philhealth Circular (o, E1B., series of 199, state that all claims pending with
"hilhealth as of #eptember 15$ 1%%& and claims with discharge dates from
#eptember to December '1$ 1%%& are given one h(ndred twenty (1)! days from
the date of discharge to file their claim8 In as much as :e :ould li;e to grant your
reIuest for reconsideration, the Corporation could no longer eCtend the period of
filing CCC8
Petitioners claim :as denied :ith finality by PHI)H'.)&H in its assailed
decision dated Fune 7, !3338
In a petition for review under Rule 4+ of the Rules of Court$ the Court of )ppeals
ordered herein petitioner 1hilippine Health Insuran!e Corporation 21hilhealth3 to pa-
the !lai4s in the a4ount of 5ourteen illion Two Hundred Ninet-6one Thousand
5ive Hundred Si7t-6eight 1esos and 0'8'%% 21'4$"#'$5/9.0'3$ prin!ipall- on the
ground of li,eral appli!ation of the /%6da- rule under Se!tion 5" of R) 0905:s
I4ple4enting Rules and Regulations. )!!ording to the Court of )ppeals*
&he avo:ed policy in the creation of a national health program is, as provided in
-ection 11, .rticle 0III of the 191 Constitution, to adopt an integrated and
comprehensive approach to health development :hich shall endeavor to ma;e
essential goods, health and other social services available to all people at
affordable cost8 &o assist the state in pursuing this policy, hospitals and medical
institutions such as herein petitioner are accredited to provide health care8 It is
true, as aptly stated by the #GCC, that petitioner :as not reIuired by the
government to ta;e part in its program, it did so voluntarily8 Dut the fact that the
government did not <t:ist= petitioners arm, so to spea;, to participate does not
ma;e petitioners participation in the program less commendable, considering that
at rate PHI)H'.)&H is denying claims of health care givers, it is more ris;y
rather than providential for health care givers to ta;e part in the governments
health program8
It is #ur firmly held vie: that the policy of the state in creating a national health
insurance program :ould be better served by granting the instant petition8 &hus, it
is note:orthy to mention that health care givers are threatening to <boycott=
PHI)H'.)&H, reasoning that the claims approved by PHI)H'.)&H are not
commensurate to the services rendered by them to its members8 &hus, ho: can
these accredited health care givers be encouraged to serve an increasing number of
members :hen they end up on the losing end of this venture8 *e must admit that
the costs of operating these medical institutions cannot be ta;en lightly8 &hey must
also earn a modicum amount of profit in order to operate properly8
.gain, it is trite to emphasi@e that essentially, the purpose of the national health
insurance program is to provide members immediate medical care :ith the least
amount of cash eCpended8 &hus, :ith PHI)H'.)&H, members2patients need only
to present their card to prove their membership and the accredited health care giver
is mandated by la: to provide the necessary medical assistance, said health care
giver shouldering the PHI)H'.)&H part of the bill8 Ho:ever, it is the
members2patients :ho bear the brunt8 &hus, they are made to shoulder the
PHI)H'.)&H part of the bill, and the refund thereof is subAect to :hether or not
the claims of the health care providers are approved by PHI)H'.)&H8 &his is
blatantly contrary to the very purpose for :hich the (ational Health Insurance
Program :as created8
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C C C C C C C C C
;e agree.
The state poli!- in !reating a national health insuran!e progra4 is to grant
dis!ounted 4edi!al !overage to all !iti<ens$ with priorit- to the needs of the
underprivileged$ si!=$ elderl-$ disa,led$ wo4en and !hildren$ and free 4edi!al !are
to paupers
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.
The ver- sa4e poli!- was adopted in R) 0905
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whi!h sought to*
a9 provide all citi@ens of the Philippines :ith the mechanism to gain
financial access to health servicesJ
b9 create the (ational Health Insurance Program to serve as the means
to help the people pay for the health servicesJ
c9 prioriti@e and accelerate the provision of health services to all
"ilipinos, especially that segment of the population :ho cannot afford
such servicesJ and
d9 establish the Philippine Health Insurance Corporation that :ill
administer the program at central and local levels8
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To assist the state in pursuing the afore4entioned poli!-$ health institutions were
granted the privilege of appl-ing for a!!reditation as health !are providers.
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Respondent Chinese >eneral Hospital and edi!al Center 2C>H3 was one of
those whi!h re!eived su!h a!!reditation.
?nder the rules pro4ulgated ,- the 1hilhealth Board pursuant to R) 0905$ an-
!lai4 for pa-4ent of servi!es rendered 2to a patient3 shall ,e filed within si7t- 2/%3
!alendar da-s fro4 the date of dis!harge of the patient. Otherwise$ the !lai4 is
,arred.
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But ,efore a !lai4 is filed with petitioner 1hilhealth for servi!es alread- rendered$
an a!!redited health !are provider li=e respondent C>H is re@uired to*
a8 accomplish a Philhealth claim formJ
b8 accomplish an itemi@ed list of the medicines administered to and
medical supplies used by the patient concerned, indicating therein the
Iuality, unit, price and total price corresponding theretoJ
c8 reIuire the patient concerned and his2her employer to accomplish and
submit a Philhealth member2employer certificationJ
d8 in case the patient gave birth, reIuire her to submit a certified true
copy of the childs birth certificateJ
e8 in case the patient died, reIuire the immediate relatives to submit a
certified true copy of the deceaseds death certificateJ and
f8 in case a members dependent is hospitali@ed for :hich the member
see;s coverage, reIuire the member to submit proof of relationship to
the patient and to eCecute an affidavit of support8
&'4(
)part fro4 the foregoing re@uire4ents whi!h often ne!essitate se!uring
do!u4ents fro4 other govern4ent offi!es$ and the fa!t that 4ost patients are
una,le to i44ediatel- a!!o4plish and su,4it the re@uired do!u4ents$ an a!!redited
health !are provider li=e C>H has to !ontend with an average of a,out a thousand
4e4,ers and8or dependents see=ing 4edi!al treat4ent for various illnesses per
4onth.
?nder these !ir!u4stan!es$ it is unreasona,le to e7pe!t respondent C>H to
!o4pl- '%%A of the ti4e with the pres!ri,ed /%6da- rule of 1hilhealth. Despite the
pres!ri,ed standard pro!edures$ respondent has no assuran!e of the 4e4,ers:
pro4pt su,4ission of the re@uired do!u4ents. This fa!tor is !o4pletel- ,e-ond its
!ontrol. There will alwa-s ,e dela- not attri,uta,le to respondent.
The unreasona,l- stri!t i4ple4entation of the /%6da- rule$ without regard to the
!auses of dela- ,e-ond respondent:s !ontrol$ will ,e !ounter6produ!tive to the long6
ter4 effe!tiveness of the NHI1. Instead of pla!ing a pre4iu4 on parti!ipation in the
1rogra4$ 1hilhealth punishes an a!!redited health provider li=e C>H ,- refusing to
pa- its !lai4s for servi!es alread- rendered. ?nder these !ir!u4stan!es$ no
a!!redited provider will ga4,le on honoring !lai4s with dela-ed supporting papers
B no 4atter how 4eritorious B =nowing that rei4,urse4ent fro4 1hilhealth will not
,e forth!o4ing.
This Court will not hesitate$ whenever ne!essar-$ to allow a li,eral
i4ple4entation of the rules and regulations of an ad4inistrative agen!- in !ases
where their unCustifia,l- rigid enfor!e4ent will result in a deprivation of legal rights. In
this !ase$ respondent had alread- rendered the servi!es for whi!h it was filing its
!lai4s. Te!hni!alities should not ,e allowed to defeat respondent:s right to ,e
rei4,ursed$ spe!iall- sin!e petitioner:s !harter itself guarantees su!h
rei4,urse4ent.
) !areful reading of R) 0905 shows that the law itself does not provide for any
specific period within which to file claims. ;e !an safel- presu4e therefore that the
period for filing was notper se the prin!ipal !on!ern of the legislature. ore
i4portant than 4ere te!hni!alities is the reali<ation of the state poli!- to provide
1hilhealth 4e4,ers with the re@uisite 4edi!al !are at the least possi,le !ost. Trul-$
nothing !an ,e 4ore disheartening than to see the )!t:s no,le o,Ce!tive frustrated ,-
the overl- stringent appli!ation of te!hni!al rules.
The fact is that it was not RA 7875 itself but Section 52 of its Implementing
Rules and Regulations which established the !"day cut"off for the filing of claims.
;hile it is do!trinal in ad4inistrative law that the rules and regulations of
ad4inistrative ,odies interpreting the law the- are entrusted to enfor!e have the
for!e of law
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$ these issuan!es are ,- no 4eans iron6!lad nor4s. )d4inistrative
,odies the4selves !an and have in fa!t D,ent the rulesE for reasons of pu,li!
interest. On Septe4,er '5$ '##9$ for instan!e$ petitioner issued 1hilhealth Cir!ular
No. +'6)*
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I( #%+'% to allo: members of the (ational Health Insurance Program 4(HIP9
sufficient time to complete all documents to support their medical care claims,
Philhealth is temporarily suspending the siCty 4739Bday reglementary period for
filing claims8
While Sectio !" #b$% R&le 'III of the I(ple(eti) R&les ad Re)&latios of
R*A* +,+! provides that all clai(s for pa-(et of services shall be filed .ithi
/0 caledar da-s fro( the da- of dischar)e of a patiet% there is a eed to
e1ted this period to (ii(i2e the icidece of late fili) d&e to (e(bers3
persoal diffic&lties ad circ&(staces be-od their cotrol8 4emphasis ours9
)nd then again$ on )pril "%$ '###$ 1hilhealth Cir!ular No. 5% was issued*
TO 4INI4I5E the icidece of late fili) of clai(s d&e to (e(bers3 persoal
diffic&lties i prepari) the eeded doc&(ets% 6hilhealth is e1tedi) the
period for fili) of clai(s CCC 4emphasis ours9
The a,ove !ir!ulars indu,ita,l- re!ogni<ed the ne!essit- of e7tending the /%6da-
period ,e!ause of the diffi!ulties en!ountered ,- 4e4,ers in !o4pleting the
re@uired do!u4ents$ often due to !ir!u4stan!es ,e-ond their !ontrol. 1etitioner
appeared to ,e well aware of the pro,le4s en!ountered ,- its 4e4,ers in
!o4pl-ing with the /%6da- rule. 5urther4ore$ i4pli!it in the wording of the !ir!ulars
was the !ognition of the fa!t that the fault was not alwa-s attri,uta,le to the health
!are providers li=e C>H ,ut to the 4e4,ers the4selves.
Dela- on the part of 4e4,ers is an ordinar- o!!urren!e. There is no need to
4a=e a 4ountain out of a 4olehill as far as this parti!ular point is !on!erned. To this
da-$ 4e4,ers !ontinue to en!ounter dela- in su,4itting their do!u4ents. There
was therefore no !o4pelling reason for the e7a!ting and 4eti!ulous enfor!e4ent of
the rule when$ in at least two instan!es$ petitioner itself i4ple4ented it li,erall- and
on the sa4e ground that it was using against respondent.
1etitioner li=ewise !ontends that respondent failed to e7haust ad4inistrative
re4edies ,efore resorting to Cudi!ial intervention. ;e disagree.
?nder the do!trine of e7haustion of ad4inistrative re4edies$ an ad4inistrative
de!ision 4ust first ,e appealed to the ad4inistrative superiors at the highest level
,efore it 4a- ,e elevated to a !ourt of Custi!e for review.
This do!trine$ however$ is a relative one and its fle7i,ilit- is !onditioned on the
pe!uliar !ir!u4stan!es of a !ase.
&'0(
There are a nu4,er of instan!es when the
do!trine has ,een held to ,e inappli!a,le. )4ong the esta,lished e7!eptions are*
19 :hen the Iuestion raised is purely legalJ
!9 :hen the administrative body is in estoppelJ
E9 :hen the act complained of is patently illegalJ
59 :hen there is urgent need for Audicial interventionJ
69 :hen the claim involved is smallJ
79 :hen irreparable damage :ill be sufferedJ
19 :hen there is no other plain, speedy and adeIuate remedyJ
9 .he stro) p&blic iterest is ivolved7
99 :hen the subAect of the controversy is private landJ
139 in *(o warranto proceedings8
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)s e7plained ,- the appellate !ourt*
It is #ur vie: that the instant case falls as one of the eCceptions, concerning as it
does public interest8 .s mentioned earlier, although they :ere not made parties to
the instant case, the rights of millions of "ilipinos :ho are members of
PHI)H'.)&H and :ho obviously rely on it for their health care, are considered,
nonetheless, parties to the present case8 &his Court is mandated herein to ta;e
conscious and detailed consideration of the interplay of the interests of the state,
the health care giver and the members8 *ith these in mind, *e hold that the
greater interest of the greater number of people, mostly members of
PHI)H'.)&H, is paramount8
"urthermore, :hen the representatives of herein petitioner met :ith +r8 'nriIue
Kalamea, PHI)H'.)&Hs President and Chief 'Cecutive #fficer, he informed
them that, in lieu of protest to be filed directly :ith him, the representatives could
ma;e representations :ith the #ffice of the President, :hich petitioner did to no
avail, considering that the formal protest filed :as referred bac; by the #ffice of
the President to +r8 Kalamea8 Deing then the head of PHI)H'.)&H, and eCpected
to have an intimate ;no:ledge of the la: and the rules creating the (ational
Health Insurance Program, under :hich PHI)H'.)&H :as created, he instructed
herein petitioner to pursue a remedy not sanctioned by the rules and not in accord
:ith the rule of eChaustion of administrative remedies8 In so doing,
PHI)H'.)&H is deemed estopped from assailing the instant petition for failure to
eChaust administrative remedies :hen PHI)H'.)&H itself, through its president,
does not subscribe to it8
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There is no need to ,ela,or the fa!t that the ,aseless denial of respondent:s
!lai4s will ,e gravel- distur,ing to the health !are industr-$ spe!iall- the providers
whose !lai4s will ,e unpaid. The unfortunate realit- is that there are toda- so4e
health !are providers who ad4it nu4,ers for treat4ent and8or !onfine4ent -et
re@uire the4 to pa- the portion whi!h ought to ,e shouldered ,- 1hilhealth. ) refund
is 4ade onl- if their !lai4 is first paid$ due to the apprehension of not ,eing
rei4,ursed. Si4pl- stated$ a 4e4,er !annot avail of his ,enefits under the NHI1 at
the ti4e he needs it 4ost.
;e !annot turn a deaf ear to respondent:s plea for fairness whi!h essentiall-
de4ands that its !lai4s for servi!es alread- rendered ,e honored as the National
Health Insuran!e 1rogra4 law intended.
"HERE#ORE$ the assailed de!ision of the Court of )ppeals is here,-
)55IRFD. 1etitioner is here,- ordered to pa- respondent:s !lai4s representing
servi!es rendered to its 4e4,ers fro4 '#9# to '##".
No !osts.
SO ORDERED.
#anganiban$ %&hairman'$ Sandoval"(utierre)$ and &arpio"*orales$ ++,$ !on!ur,
(arcia$ +,$ no part.
&'(
1enned ,- )sso!iate Gusti!e Danilo B. 1ine$ and !on!urred in ,- then 1residing Gusti!e Can!io C.
>ar!ia 2now Gusti!e of the Supre4e Court3 and )sso!iate Gusti!e Renato C. Da!udao.
&"(
Herein petitioner 1hilippine Health Insuran!e Corporation.
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Rollo$ p. "'.
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Chinese >eneral Hospital and edi!al Center.
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Se!tion 4 2o3 2'3$ Repu,li! )!t No. 0905.
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Herein respondent Chinese >eneral Hospital and edi!al Center.
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Se!tion 4#. I4ple4enting Rules and Regulations. H ;ithin thirt- 2+%3 da-s fro4 the !o4pletion of
su!h appoint4ents$ the Board shall !onvene to for4ulate the rules and regulations ne!essar-
for the i4ple4entation of this )!t.
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C) De!ision$ Rollo$ pp. '96'#.
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Se!tion ''$ )rti!le IIII of the '#90 Constitution.
&'%(
)n )!t Instituting a National Health Insuran!e 1rogra4 for all 5ilipinos and Fsta,lishing the
1hilippine Health Insuran!e Corporation for the 1urpose.
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Se!tion +$ R) 0905.
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Defined as a health institution dul- li!ensed and a!!redited devoted pri4aril- to the 4aintenan!e
and operation of fa!ilities for health pro4otion$ prevention$ diagnosis$ treat4ent and !are of
individuals suffering fro4 illness$ disease$ inCur-$ disa,ilit- or defor4it-$ or in need of
o,stetri!al or other 4edi!al and nursing !are.
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Se!tion 5"$ I4ple4enting Rules and Regulations of R) 0905.
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C) De!ision$ Rollo$ p.'0.
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1hilippine )d4inistrative Jaw ,- Cru<$ '##' Fdition$ pp. '06'9.
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Rollo$ p. '%4.
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-eonardo #aat v, &ourt of Appeals$ ++4 1hil. '4/ 2'##03.
&'9(
Na!hura$ Outline8Reviewer in 1oliti!al Jaw 2"%%"3$ pp. +4/6+4#K &orsiga v, .efensor $ >.R. No.
'+#+%"$ "9 O!to,er "%%"$ +#' SCR) "/0K Aurillo$ +r, v, Rabi $ >.R. '"%%'4 $ "/ Nove4,er
"%%"$ +#" SCR) 5#5.
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C) De!ision$ Rollo$ p. "%.