PhilHealth vs. Commission on Audit

A subsequently enacted curative statute expressly classifying certain government personnel as public health workers applies retroactively to a pending proceeding, thereby validating the grant of longevity pay and warranting the reversal of a final and executory Notice of Disallowance.

Philippine Health Insurance Corporation (PhilHealth) is a government-owned and controlled corporation attached to the Department of Health (DOH). On March 25, 1992, Republic Act (R.A.) No. 7305, the Magna Carta of Public Health Workers, was enacted, granting longevity pay to health workers. PhilHealth sought to classify its personnel as public health workers based on a DOH Certification and an Office of the Government Corporate Counsel (OGCC) Opinion, leading to the grant of longevity pay to its officers and employees for the period January to September 2011.

On March 25, 1992, R.A. No. 7305, the Magna Carta of Public Health Workers, was signed into law, granting longevity pay to health workers. Relying on a Certification from former DOH Secretary Alberto G. Romualdez, Jr. dated February 20, 2000, and OGCC Opinion No. 064, Series of 2001, which stated that "health-related work" includes the financing and regulation of health services, PhilHealth treated its officers and employees as public health workers. On August 1, 2011, former PhilHealth President Dr. Rey B. Aquino issued Office Order No. 0053, prescribing guidelines for the grant of longevity pay. The PhilHealth Board subsequently passed Resolution No. 1584 on January 31, 2012, confirming the grant of longevity pay for January to September 2011, totaling P5,575,294.70.

On April 30, 2012, COA Supervising Auditor Elena C. Agustin issued an Audit Observation Memorandum stating the grant lacked legal basis. This was followed by the issuance of ND No. H.O. 12-005 (11) on July 23, 2012, disallowing the payment and holding the approving officers and payees liable. PhilHealth received the ND on July 30, 2012. After 179 days, or on January 25, 2013, PhilHealth filed an appeal memorandum before the COA-CGS.

The COA-CGS affirmed the ND on March 13, 2014, reasoning that PhilHealth's function of paying for health services cannot be equated to rendering health-related services. PhilHealth received this decision on March 25, 2014. Having only one day left in the 180-day reglementary period, PhilHealth instead filed a motion for extension on March 31, 2014, and subsequently filed its petition for review with the COA on April 30, 2014. The COA dismissed the petition for being filed out of time. The Supreme Court initially denied PhilHealth's petition for certiorari in its July 24, 2018 Decision, agreeing that the petition was filed out of time and ruling on the merits that PhilHealth personnel were not public health workers.

While motions for reconsideration were pending, the President signed R.A. No. 11223, or the Universal Health Care Act, into law on February 20, 2019. Section 15 thereof expressly declared that all PhilHealth personnel shall be classified as public health workers in accordance with R.A. No. 7305. PhilHealth brought this to the Court's attention through a Supplemental Motion for Reconsideration, arguing that the new law confirmed their entitlement to longevity pay.

• Classification as Public Health Workers: PhilHealth argued that its personnel are health workers because PhilHealth is attached to the DOH, which is mandated to provide, finance, or regulate health services, and that its mandate includes setting standards and rules to ensure quality of care and fund viability.
• Good Faith: PhilHealth maintained that assuming arguendo its personnel are not public health workers, they should not be made to refund the disallowed amount because they received the benefit in good faith.
• Curative Effect of R.A. No. 11223: PhilHealth highlighted that the subsequently enacted Universal Health Care Act (R.A. No. 11223) expressly classified all PhilHealth personnel as public health workers under R.A. No. 7305, thereby confirming their entitlement to longevity pay.
• Relaxation of Procedural Rules: PhilHealth argued that exceptions to the doctrine of finality of judgment should be applied in the interest of substantive justice and the protection of labor's right to fair compensation.

• Not Public Health Workers: The COA argued that PhilHealth personnel are not public health workers because their functions do not principally involve rendering health or health-related services.
• Attachment to DOH is Not Enough: The COA countered that personnel should not be considered public health workers merely because their agency is attached to the DOH, as this would improperly extend benefits to personnel of other attached agencies not directly providing health services.
• Finality of Judgment: The COA asserted that PhilHealth personnel cannot claim good faith to escape liability because the ND had already become final and executory due to PhilHealth's belated filing of its appeal.

• Timeliness and Finality: Whether the Court may still review the Notice of Disallowance despite its having attained finality due to PhilHealth's failure to appeal within the reglementary period.
• Classification of Personnel: Whether PhilHealth personnel are public health workers entitled to longevity pay under R.A. No. 7305, in light of the enactment of R.A. No. 11223.
• Liability to Return: Whether PhilHealth personnel must refund the disallowed longevity pay.

• Timeliness and Finality: Yes. The Court may review the ND because the subsequent enactment of R.A. No. 11223 constitutes a circumstance transpiring after the finality of the decision that renders its execution unjust and inequitable, warranting a relaxation of the doctrine of immutability of judgment.
• Classification of Personnel: Yes. PhilHealth personnel are public health workers. R.A. No. 11223 operates as a curative statute that expressly declares all PhilHealth personnel as public health workers under R.A. No. 7305 and applies retroactively to pending proceedings.
• Liability to Return: No. Since PhilHealth personnel are validly classified as public health workers, the disallowance is reversed, making a discussion on good faith and refund unnecessary.

• Timeliness and Finality: The perfection of an appeal within the reglementary period is mandatory and jurisdictional. PhilHealth filed its petition beyond the 180-day period, rendering the ND final and executory. However, the doctrine of immutability of judgment admits of exceptions, including whenever circumstances transpire after the finality of the decision rendering its execution unjust and inequitable. The enactment of R.A. No. 11223 on February 20, 2019, while the motion for reconsideration was pending, constitutes such a circumstance, justifying a review of the merits.
• Classification of Personnel: Under R.A. No. 7305, an employee must be principally tasked to render health or health-related services to be considered a public health worker. The Court initially held that PhilHealth personnel did not qualify because their functions pertained to the administration of the National Health Insurance Program rather than the direct delivery of health services. However, R.A. No. 11223, Section 15, unequivocally declares that all PhilHealth personnel shall be classified as public health workers in accordance with R.A. No. 7305. The Court characterized R.A. No. 11223 as a curative statute intended to remedy the shortcomings of R.A. No. 7305 regarding PhilHealth personnel. Curative statutes are valid and may be given retroactive effect to pending proceedings, provided they do not violate the Constitution or impair vested rights. Because R.A. No. 11223 neither violates the Constitution nor impairs vested rights, and instead promotes the objective of R.A. No. 7305, it retroactively applies to the present case.
• Liability to Return: Because R.A. No. 11223 removes any legal impediment to the treatment of PhilHealth personnel as public health workers, the ND disallowing their longevity pay must be reversed. Consequently, the issue of whether the personnel must refund the disallowed amount based on good faith is rendered moot.

• Doctrine of Immutability of Judgment — A decision that has acquired finality becomes immutable and unalterable and may no longer be modified. However, exceptions exist, including the correction of clerical errors, nunc pro tunc entries, void judgments, and whenever circumstances transpire after the finality of the decision rendering its execution unjust and inequitable. The Court applied the last exception, holding that the enactment of R.A. No. 11223 after the ND became final constituted a circumstance warranting relaxation of the doctrine.
• Curative Statutes — Curative statutes are intended to correct defects and enable persons to carry into effect that which they have designed and intended but failed of expected legal consequence by reason of some statutory disability or irregularity. They make valid that which was previously invalid. Curative statutes are valid and may be given retroactive effect to pending proceedings, provided they are not against the Constitution and do not impair vested rights or the obligation of contracts. The Court held that R.A. No. 11223 is a curative statute that expressly classified PhilHealth personnel as public health workers, remedying the defect in R.A. No. 7305.

• "Curative statutes are intended to [correct] defects, abridge superfluities in existing laws and curb certain evils. 'They are intended to enable persons to carry into effect that which they have designed and intended, but has failed of expected legal consequence by reason of some statutory disability or irregularity in their own action. They make valid that which, before the enactment of the statute, was invalid.'" — This passage defines the nature and purpose of curative statutes, which the Court relied upon to justify the retroactive application of R.A. No. 11223.
• "As a curative statute, R.A. No. 11223 applies to the present case and to all pending cases involving the issue of whether PhilHealth personnel are public health workers under Section 3 of R.A. No. 7305." — This establishes the retroactive application of the Universal Health Care Act to pending proceedings, forming the ratio decidendi for reversing the Notice of Disallowance.

• Orlina vs. Ventura, G.R. No. 227033 — Cited to support the doctrines on the finality of judgment and the exceptions allowing the resort to certiorari despite the availability of an appeal.
• Briad Agro Development Corp. vs. Hon. Dela Serna, 256 Phil. 285 (1989) — Cited as controlling precedent on the validity and retroactive application of curative statutes to pending cases.
• Manuel L. Quezon University vs. National Labor Relations Commission, 419 Phil. 776 (2001) — Cited to illustrate the retroactive effect of curative social legislation, specifically regarding retirement benefits.

• Section 23, Republic Act No. 7305 (Magna Carta of Public Health Workers) — Grants longevity pay equivalent to 5% of monthly basic pay for every five years of continuous, efficient, and meritorious service to a health worker. The Court examined whether PhilHealth personnel qualified as "health workers" under this provision.
• Section 15, Republic Act No. 11223 (Universal Health Care Act) — Declares that all PhilHealth personnel shall be classified as public health workers in accordance with R.A. No. 7305. The Court held this provision to be a curative statute that retroactively applies to the pending case, validating PhilHealth personnel's entitlement to longevity pay.
• Section 48, Presidential Decree No. 1445 (Government Auditing Code of the Philippines) — Provides the reglementary period of six months to appeal a decision of an auditor. The Court noted that PhilHealth failed to file its appeal within this period.

Bersamin, C.J., Carpio, Peralta, Perlas-Bernabe, Leonen, Jardeleza, Caguioa, Reyes, Jr., A.B., Reyes, Jr., J.C., Carandang, Lazaro-Javier, Inting, and Zalameda, JJ., concur. Hernando, J., on official business.