`PhilHealth leaders ignored irregularities’

    Alejandro Cabading at the Senate hearing on the PhilHealth. (Screencap from YouTube)

    A MEMBER of the board op the Philippine Health Insurance Corp. (PhilHealth) on Tuesday accused the agency’s management, led by president and chief executive officer Ricardo Morales, of turning a blind eye to alleged questionable transactions flagged by “vigilant” officers of the corporation.

    Board member Alejandro Cabading issued the statement during a Senate hearing on irregularities hounding PhilHealth as alleged by Cabading, former PhilHealth anti-fraud legal officer Thorrson Montes Keith, and former head executive assistant Estrobal Laborte.

    Morales said fraud problems have long been in existence in PhilHealth, even before he was appointed as president last year. He said the problems can be solved only through a “robust, integrated and harmonized information management ecosystem running a clean, complete, and updated membership database” which can keep track of the transactions of PhilHealth’s 109 million members.

    Morales cited a study conducted by the Foundation for the Advancement of Clinical Epidemiology in December last year which said that PhilHealth’s fraud index was at 7.5 percent.

    “In other words, of the P136 billion PhilHealth spent last year on benefit payments, P10.2 billion was potentially lost to fraud. Next year, if the right thing is not done, of the P240 billion planned benefit expenditure, this potential loss will balloon to P18 billion. Global average if 10 percent to 20 percent,” Morales said.

    Cabading, an accountant by profession, said he was appointed PhilHealth board member in July 2019 with the specific order from President Duterte to “make sure that there are no thieves in PhilHealth.”

    Cabading said among the alleged irregularities in the PhilHealth IT sector were:

    * Overpricing of the Adobe Software collection for P21 million, when the actual purchase will only be for three items worth P168,000 each or a total of P504,000, which he said was more than P20 million overpriced.

    * Purchase of application server license at a cost of P40 million when the approved cost by the Department of Information and Communications Technology, based on the information system plan, was P35 million.

    * Procurement of identity management software for P42 million but the DICT-approved budget was P20 million; productivity software at P20 million, approved budget was P5 million; application server virtualization license and support for P25 million, approved budget was P14.8 million budget.

    “These were my first observations, among others, which resulted in the lowering of the proposed IT budget to P1.556 billion (from P2.1 billion),” Cabading said.

    “The internal audit report contained the discovery of major discrepancies in the sector’s representation. There were items in the submitted budget that were not included in the ISSP (information system plan) approved by the DICT. As indicated in the report, the ICT resources included in the 2020 budget proposal but does not appear in the ISSP, have a total amount of P734M,” he added.

    He said the IT sector also made additional budget proposals in its 2020 budget which were not included in the DICT-approved information system plan, including P132 million for the purchase of portable wifi, satellite phones for P840,000; purchase of P40,717,500 worth of ICT resources which he said were not itemized; purchase of laptops “with no indicated number of units” twice, with the first purchase at P4.1 million and the second purchase at P115 million; and “three projects not specified” totaling P98,075,000.


    Cabading said he also discovered that PhilHealth’s financial statements were manipulated allegedly by Renato Limsiaco, senior vice president for fund management sector, with the help of his staff.

    “The 2019 income was overstated by P14.3 billion… The COA also issued a disclaimer against the 2018 financial statement due to questionable deduction of benefit expenses,” Cabading said.

    He said last year, PhilHealth’s actual debt to equity ratio was 160 is to 1, but in a report submitted to the board the debt equity ratio is 57 is to 1.

    “(But) If you will look at it, ang totoong (the real) debt-to-equity ratio as of June 30, 2020 is 170 is to 1, this is including the P14B advance binayad na hindi pa chinarge ni Limsiaco sa (already paid but not yet charged by Limsiaco in the) income statement.

    He said all these were contained in an audit report of the Commission on Audit in PhilHealth’s 28 financial statements covered by Audit Query Memorandum 2020-003 dated Jan. 31, 2020 “involving short deliveries.”


    Cabading said that he, Keith and Laborte, being all officials of PhilHealth tried to warn PhilHealth president and chief executive officer Ricardo Morales of the irregular transactions but nothing seemed to happen.

    “The most frustrating part of my work in PhilHealth is management seems to be tolerating these fraudulent acts by their inaction against these executive officers of PhilHealth. There are good people in PhilHealth who tried to warn the board and present CEO of these discrepancies. Among them are the head of executive assistant Lt Col. Bal Laborte, and Atty Thorrson Keith who were vigilant and tried to prevent the approval of some of questionable transactions, in vain. They have since resigned,” Cabading said.

    He said that their vigilance could have earned the ire of Morales whom he said continued to defend the acts of his officers.

    This, he said, led to the exchange of unpleasant words among Morales, him, and some board Members.

    “In this matter, I mentioned that instead of questioning the board, you should be thankful that we are vigilant. I also questioned why he is repeatedly endorsing the IT proposal without waiting for the internal audit report,” he added.

    Keith said Morales ordered him to talk with the Greco Belgica of the Presidential Anti-Corruption Commission on its investigation on the overpriced COVIF-19 test kits.

    “May pagkakataon na inutusan pa ako ni Brig. Gen. Ricardo Morales na puntahan ko si Commissioner Greco Belgica para hilutin ang kaso ng PhilHealth sa overpriced testing kits… Inayawan ko po ang kaso at sinabi ko na ano na lang po ang tingin sa sakin ni Greco Belgica kapag papakiusapan ko siya hinggil sa kaso. Namula si Brig. Gen Morales nung sinabi ko iyon (There was a time when Brig. Gen. Ricardo Morales ordered me to see Commissioner Greco Belgica to manipulate the investigation on PhilHealth’s overpriced testing kits… I declined, saying what will Greco Belgica think of me if I intercede in the investigation? Brig. Gen Morales turned red when I told him that),” Keith said.

    He said the overpriced COVID-19 test kits was the “crime of the year” as some PhilHealth officials could have easily pocketed an estimated P15 billion.


    Sen. Panfilo Lacson said three PhilHealth officials were implicated earlier in irregularities.

    He named one of them as Rodolfo “Jojo” del Rosario, now senior vice president of legal sector, whom he said was a signatory in the “conflict of interest” case involving a building lease contract between Educational and Medical Development Corp. owned by the family of Health Secretary Francisco Duque, and PhilHealth’s building in Region 1.

    Lacson said Dennis Mas, SVP for management services sector, was charged before the Ombudsman for his involvement in the POEA fake receipt scam.

    He said another PhilHealth official was Dr. Isreal “Ish” Fargas, the SVP for health finance policy sector, and corporate secretary Jonathan Mangaoang, who “stirred allegations” of PhilHealth Board’s grave abuse of discretion by reversing the Court of Appeals’ final and executor judgment of Perpetual Succor Hospital’s three-month suspension and P10,000 fine.

    Lacson said the names of these PhilHealth officials were mentioned by the whistleblowers as having involvement in past and recent anomalies.

    “If we look closely enough, the story only revolves around the same cast of characters – a circle of high-ranking officials who manage to hog their seats despite the change of leadership and detailed anomalies that we already unearthed in the past,” Lacson said.