PHILIPPINE HEALTH INSURANCE CORPORATION, PETITIONER, VS. OUR LADY OF LOURDES HOSPITAL, RESPONDENT.

Philippine Health Insurance Corporation versus Our Lady of Lourdes Hospital

The Case

This is a petition for review on certiorari under Rule 45 of the Rules of Court, brought by the Philippine Health Insurance Corporation, or PHIC, against Our Lady of Lourdes Hospital, an accredited institutional health care provider. PHIC had charged the hospital before its own Arbitration Department with the administrative offense of filing multiple claims. When the hospital resorted to written interrogatories and to the production and inspection of documents, the Arbiter refused to allow them, and the Court of Appeals annulled that refusal. The case matters because it fixes the boundary between the summary procedure of a quasi-judicial administrative body and the modes of discovery under the Rules of Court, and because it shows how a defective certification against forum shopping may be cured by substantial compliance.

Procedural History

PHIC filed a complaint with its Legal Sector, Prosecution Department, docketed as an administrative case and assigned to a Senior Arbiter. After the hospital filed its Verified Answer, the parties were directed to submit position papers. The hospital moved to defer its position paper pending answers to written interrogatories and the inspection of documents. The Arbitration Department denied the motion in a Resolution dated August 11, 2009, and denied reconsideration in an Order dated September 4, 2009. The hospital then went to the Court of Appeals by petition for certiorari. In a Decision dated July 27, 2010, the Court of Appeals found grave abuse of discretion and annulled both rulings. PHIC elevated the matter to the Supreme Court by petition for review on certiorari under Rule 45.

Facts

PHIC is a government corporation created under Republic Act Number 7875, as amended, to administer the National Health Insurance Program. The hospital is an institutional health care provider accredited with PHIC. On May 14, 2009, PHIC filed a complaint against the hospital for filing multiple claims, an offense penalized under the implementing rules. The charge was that the hospital filed two claims for the same amount of benefits, involving the same patient, the same diagnosis, and the same period of confinement.

After the hospital filed its Verified Answer, the parties were ordered to submit position papers. The hospital asked that its submission be deferred while it pursued written interrogatories addressed to the PHIC President and Chief Executive Officer, and the inspection and copying of the original transmittal letter and the claims that accompanied the annex to the complaint. The hospital claimed that its representatives had been denied access to documents and had not been allowed to talk to PHIC personnel.

The Arbiter denied the motion, holding that the proceedings were summary in nature and that allowing discovery would defeat the objective of speedy resolution. He found the hospital's allegations self-serving and viewed the pleadings as designed to delay. He added that the interrogatories were addressed to the wrong officer, since the President was not the most competent to answer questions on claims processing, and that the matters raised could be taken up in a hearing after the position papers were submitted. The Court of Appeals disagreed and annulled the rulings, prompting PHIC's petition to the Supreme Court.

Issues

• Whether or not the petition should be dismissed outright for the defect in PHIC's certification against forum shopping, the signatory not being expressly authorized by board resolution.
• Whether or not the Court of Appeals erred in annulling the rulings of the PHIC Arbitration Department denying the hospital's resort to written interrogatories and to the production and inspection of documents.

Applicable Provisions

Section 5 of Rule 7 of the Rules of Court, on the certification against forum shopping, provides:

Section 5. Certification against forum shopping. The plaintiff or principal party shall certify under oath in the complaint or other initiatory pleading asserting a claim for relief, or in a sworn certification annexed thereto and simultaneously filed therewith: (a) that he has not theretofore commenced any action or filed any claim involving the same issues in any court, tribunal or quasi-judicial agency and, to the best of his knowledge, no such other action or claim is pending therein; (b) if there is such other pending action or claim, a complete statement of the present status thereof; and (c) if he should thereafter learn that the same or similar action or claim has been filed or is pending, he shall report that fact within five (5) days therefrom to the court wherein his aforesaid complaint or initiatory pleading has been filed.

This is the provision invoked by the hospital to seek dismissal of the petition, and the Court measures PHIC's compliance against it.

The same Section continues on the consequences of non-compliance:

Failure to comply with the foregoing requirements shall not be curable by mere amendment of the complaint or other initiatory pleading but shall be cause for the dismissal of the case without prejudice, unless otherwise provided, upon motion and after hearing.

The Court treats this rule not as a rigid trap but as one satisfied by substantial compliance where the signatory is shown to be authorized and competent to verify the pleading.

Ruling

On the first issue, the Court held that there was substantial compliance. Although the board resolution first cited did not expressly name the officer who signed the verification and certification, PHIC later submitted resolutions designating the Vice-President for the Legal Services Group to sign verifications and certificates of non-forum shopping, and authorizing the Senior Vice-President for the Legal Services Sector to represent the corporation in legal proceedings and to sign pleadings. Following Shipside, Incorporated versus Court of Appeals, the Court ruled that the belated submission sufficed, and that the signatory, by virtue of his office, was in a position to verify the truthfulness of the allegations.

On the second issue, the Court ruled in the affirmative, holding that the Court of Appeals erred. Written interrogatories may elicit from the adverse party any facts that are not privileged and are material and relevant to the subject of the action; production and inspection enable the parties and the tribunal to discover relevant and material facts, but the documents sought must be shown to be material or to contain evidence relevant to an issue. Here, the questions sought facts already apparent from the complaint, the answer, and their attachments. The entries in the validation reports were immaterial or self-explanatory, so the interrogatories were frivolous. The interrogatories were also mistakenly addressed to the President and Chief Executive Officer, who could not competently answer matters arising from claims processing. The claim of denial of access was self-serving and unsubstantiated.

The Court stressed that the Arbiter could address the hospital's queries in a hearing after the position papers were submitted, where he may issue subpoena ad testificandum, compelling attendance and testimony, and subpoena duces tecum, compelling production of documents. These serve the same purposes as the modes of discovery. The Arbiter therefore did not commit grave abuse of discretion, and his rulings were consistent with the summary nature of the administrative proceedings.

Doctrine

First, the modes of discovery under the Rules of Court are not available as a matter of right in summary administrative proceedings before a quasi-judicial body such as the PHIC Arbitration Department; the Arbiter may deny them in the sound exercise of discretion, consistent with the summary character of the proceedings and the demand for speedy resolution. Second, a party seeking production and inspection of documents must show that they are material or contain evidence relevant to an issue, and interrogatories that seek facts already apparent from the pleadings and their attachments, or that are addressed to an officer who cannot competently answer them, are frivolous and need not be answered. Third, the power to issue subpoena ad testificandum and subpoena duces tecum supplies the same purposes as discovery. Fourth, a defective certification against forum shopping may be cured by substantial compliance, especially where the signatory is subsequently shown by board resolution to be authorized and is, by virtue of his office, competent to verify the pleading.

Disposition

The petition was granted; the Court annulled and set aside the Decision of the Court of Appeals and sustained the rulings of the PHIC Arbitration Department denying the hospital's resort to the modes of discovery.

Remember This

Memorize this line: discovery is not a matter of right in summary administrative proceedings, and the Arbiter's subpoena powers serve the same purpose. Examiners use this case to test the limits of the modes of discovery before quasi-judicial bodies and the doctrine of substantial compliance with the certification against forum shopping.