In a significant decision, the Supreme Court of the Philippines addressed the legality of regulations governing medical examinations for Overseas Filipino Workers (OFWs). The Court tackled the Department of Health’s (DOH) directive to stop a practice known as the “referral decking system,” where OFWs are required to go through specific medical centers chosen by certain associations. Ultimately, the Supreme Court ruled that the DOH has the authority to regulate medical clinics that serve OFWs, ensuring they have the freedom to choose their healthcare providers and that no monopolies exist in the OFW medical examination process. This decision upholds the state’s police power to protect the health and welfare of its citizens, especially those working abroad.

The Crossroads of Healthcare and Sovereignty: Can the Philippines Regulate OFW Medical Exams?

The case began when the Association of Medical Clinics for Overseas Workers, Inc. (AMCOW) and the Department of Health (DOH) challenged a lower court’s decision regarding the “referral decking system” implemented by the GCC Approved Medical Centers Association, Inc. (GAMCA). GAMCA, representing medical centers accredited by Gulf Cooperation Council (GCC) states, required OFWs seeking employment in those countries to undergo medical examinations at GAMCA-approved clinics. The DOH, aiming to eliminate monopolies and ensure OFWs’ freedom to choose their medical providers, issued orders to cease and desist from this referral decking system. GAMCA then questioned the DOH’s authority, arguing that the referral system was part of the GCC states’ sovereign prerogative to protect their citizens from health hazards. The central legal question was whether the DOH’s regulatory actions infringed upon the principle of sovereign equality and independence of states.

The Supreme Court, in its analysis, first addressed the procedural issues. It determined that the Regional Trial Court (RTC) erred in giving due course to GAMCA’s petition for certiorari and prohibition, as GAMCA should have exhausted all available administrative remedies before seeking judicial intervention. This means GAMCA should have first appealed to higher authorities within the executive branch, such as the Office of the President. By immediately filing a petition with the RTC, GAMCA presented a premature challenge against the administrative act. Additionally, the Court clarified the distinction between the traditional use of certiorari under the Rules of Court and its expanded use under Article VIII, Section 1 of the Constitution, particularly regarding grave abuse of discretion.

Building on this principle, the Supreme Court emphasized that the DOH’s cease and desist orders (CDOs) were issued in the exercise of its quasi-judicial functions, applying legislative policy to a specific group, GAMCA. These orders, therefore, could be challenged through a Rule 65 petition for certiorari and prohibition. However, the Court pointed out that the petitions against the DOH’s CDOs should have been filed with the Court of Appeals, not the Regional Trial Court, further undermining the RTC’s jurisdiction in the matter. The failure to exhaust administrative remedies also affected the ripeness of the case for judicial review, which in turn affected the existence of the need for an actual case or controversy for the courts to exercise their power of judicial review. Therefore, the constitutional issues GAMCA posed before the RTC were not ripe for adjudication.

Turning to the substantive issues, the Court upheld the constitutionality of Section 16 of Republic Act (RA) No. 10022, which prohibits the referral decking system. This prohibition, according to the Court, is a valid exercise of the State’s police power, which allows the government to regulate liberty and property for the sake of public welfare. The State’s police power is vast and plenary, and the operation of a business, especially one imbued with public interest such as healthcare services, falls within the scope of governmental exercise of police power through regulation. Public interest justifies the State’s interference in health matters, since the welfare of migrant workers is a legitimate public concern.

The State’s police power is vast and plenary and the operation of a business, especially one that is imbued with public interest (such as healthcare services), falls within the scope of governmental exercise of police power through regulation.

The Court explained that the prohibition satisfied the requirements of reasonableness: it served the public interest and the means employed were reasonably necessary to achieve the objective. RA No. 10022 expressly aims to uphold the dignity and protect the welfare of Filipino migrant workers, which aligns with the State’s police power. Section 16 of RA No. 10022 guarantees OFWs the option to choose quality healthcare services, ensures that there is prohibition against the decking practice and against monopoly practices in OFW health examinations. This guarantee is part of the larger legal framework to ensure the Overseas Filipino Workers’ (OFW) access to quality healthcare services, and to curb existing practices that limit their choices to specific clinics and facilities.

The Court also addressed GAMCA’s argument that the prohibition against the referral decking system violated the principle of sovereign equality and independence of states. The RTC had reasoned that the referral system was part of the GCC states’ sovereign power to protect their nationals from health hazards, and thus, the Philippines could not interfere. However, the Supreme Court rejected this argument, stating that the principle of sovereign equality and independence does not exempt agents of foreign governments from compliance with Philippine regulatory laws. The Court acknowledged the principle of sovereign independence and equality as part of the law of the land, as part of the law of the land under Article II, Section 2 of the 1987 Constitution.

What did the Department of Health (DOH) do that led to the case?	The DOH issued cease and desist orders to GAMCA, directing them to stop implementing the referral decking system for OFW medical exams. This was based on RA 10022.
What is the “referral decking system” for OFWs?	It’s a system where OFWs are required to go to a specific office first, then are directed to particular medical clinics for their required examinations. This was deemed to limit OFWs’ freedom of choice and foster monopolies.
Why did GAMCA argue the DOH orders were invalid?	GAMCA argued that the referral system was part of the GCC states’ sovereign right to protect their citizens from health hazards. They claimed the DOH orders infringed on that right.
What was the main legal basis for the Supreme Court’s decision?	The Court based its decision on the State’s police power, which allows the government to regulate activities for public health, safety, and welfare. This power can be used to regulate medical exams for OFWs.
What is the “doctrine of exhaustion of administrative remedies”?	It requires that parties first pursue all available remedies within an administrative agency before seeking court intervention. GAMCA failed to do this by going straight to the RTC.
Why did the Court say the RTC did not have jurisdiction?	The Court said the case should have been filed with the Court of Appeals, as it involves a quasi-judicial act of a government agency. The RTC overstepped its jurisdictional boundaries.
Does the ruling affect the GCC states’ visa requirements?	The Court clarified that the ruling does not interfere with the GCC states’ right to impose visa requirements. It only regulates the activities of medical clinics within the Philippines.
What if a GCC state doesn’t recognize medical exams from non-GAMCA clinics?	The Court stated the wisdom of the law is for Congress to decide, not the courts. OFWs may risk visa denial, but that is not a factor for the law’s constitutionality.
What happens if a clinic violates the rule against referral decking system?	Such violations fall under Republic Act No. 4226 (Hospital Licensure Act), which authorizes the DOH to suspend, revoke, or refuse to renew the license of hospitals and clinics violating the law.

The Supreme Court’s decision ensures that OFWs have the freedom to choose DOH-accredited clinics for their medical examinations, free from monopolistic practices that may compromise their health and welfare. The ruling reinforces the Philippine government’s commitment to protecting its citizens working abroad and promoting fair labor practices. It clarifies that the exercise of police power can extend to regulating healthcare services related to overseas employment, even if it indirectly affects the visa requirements of foreign countries.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: ASSOCIATION OF MEDICAL CLINICS FOR OVERSEAS WORKERS, INC., (AMCOW) VS. GCC APPROVED MEDICAL CENTERS ASSOCIATION, INC., G.R. No. 207132, December 06, 2016