PRACTICE COURT I - MIDTERMS

SENATE COMMITEE OF THE WHOLE HEARINGON ALLEGED PHILHEALTH

IRREGULARITIES
Aug 3, 2020
(Middle - 3 hours)
______________________________________________________________________________

3:03:12 - Sen. Ping Lacson and Sen. Franklin Drilon questioned a PhilHealth Executive
Officer Arnel De Jesus regarding the OCOO Memorandum Circular No. 2020-032, 15
July 2020

Sen. Lacson presented an excerpt of a Memorandum-Circular pertaining to "Deferment

of IRM Liquidation Activities", which provides that it allows the foregoing of
liquidation.

Sen. Lacson: (slightly raised tone) (cuts Arnel De Jesus) "Pinapayagan niyo na wag na
magliquidate? Is this true?"

Arnel De Jesus explained that it gives flexibility to the regions with regard to the giving
of money to the hospitals that are covered within their area.

Sen. Lacson: (slightly raised tone) "Thank you, Sen. Drilon. He did not answer my
question. Put this on the record."

Sen. Drilon: "What is the stated reason? What is the reason for the deferment of the
liquidation, which is as far as I know, contrary to COA rules?"

Sen. Drilon: "Sir, remember you are handling public funds, if you understand what that
means. And precisely to protect public funds, while advances are allowed, no further
advances can be made unless there is a liquidation. So apparently you are admitting
that you are disregarding these rules, unfortunately, and that is why we are in this
mess."
Sen. Drilon then mentioned the "Debit-Credit System" during the 1990's, and then
referred to his research the said system collapsed because of non-liquidation of the
recipient hospitals.

Sen. Drilon: "May we know what the legal basis is for advancing 15 billion, or
allocating 29 billion as advances? "

PhilHealth Officer: "The rationale of the PhilHealth Board in approving such payment
is anchored on the provisions of the PhilHealth charter which authorizes the board or
corporation to implement or craft policies in connection with provider payment
mechanisms."

Sen. Drilon: "So the basis of the Management to undertake the IRM is the authority of
the Board?"

PhilHealth Officer: "That's correct, Sen. Drilon."

Sen. Drilon: "Did you ask legal counsel whether this is valid? Because this is not 30
thousand, this is 30 billion. Was an opinion rendered that this could be done?"

PhilHealth Officer: "It has precedence dun sa Taal, Ondoy, lindol, at sa Marawi."

Sen. Drilon: "Simpleng tanong po no. Ano ba ang opinyon ng abugado niyo na ito ay
pwede gawin? Ngayon man o nung mga nakaraan, may basehan ba ito?"

PhilHealth Officer: "I'm not aware of any formal legal opinion submitted, there was no
request for any legal opinion. But this particular policy underwent extensive
deliberation at the level of the executive committee, which is composed of the corporate
counsel and chief legal counsel of PhilHealth. And when it went to the Board, we also
have lawyer who are members of the PhilHealth Board."
Sen. Drilon then asked whether PhilHealth extended the IRM to non-accredited
facilities or were the facilities have pending case of fraudulent practice with the
PhilHealth. He referred to what Sen. Lacson pointed out that dialysis centers and
maternity centers being given an advance.

Sen. Drilon: "Why are dialysis centers included as among the recipients of the IRM?
Explain to us, because as far as I know, we are not physicians, but I cannot understand
how a dialysis center be a CoVid-accredited health unit."

PhilHealth Officer: "There was an extensive discussion on this, your honor, whether to
include non-hospital in the disbursement of the IRM funds. As explained lengthily by
one of our Board Members, the Board agreed that to effectively respond to this
pandemic, the financning scheme, which is the IRM, should be available to all the
health care provider institution, not only the hospitals that are capable of handling
CoVid. If I may mention, the dialysis clinics and patients are one of the most vulnerable
sectors of the population druing this pandemic. Even those that are pregnant that are
being catered to by the maternity line of clinic are also vulnerable. So, we were taking
this as a whole solution, it should not be limited to those that are catering directly to
CoVid patients."

Sen. Drilon: (cuts PhilHealth Officer) "The IRM was designed because of the pandemic,
meaning CoVid patients. Now we are trying to justify why we are extending this to
health center which have nothing to do with CoVid cases. And on the other hand, there
are hospitals who are crying for reimbursement due to claims arising from CoVid
treatments. So it is all shot, the original good intention that this is to provide emergency
assistance because of the pandemic has been forgotten. So let's just leave it at that, it's a
matter for the committee to assess whether this is correct."

Another PhilHealth Officer explained that this was done in the past, but Sen. Drilon
countered that the situation before presupposed pending claims, unlike now which
contemplates "advances".

Sen. Drilon: "It is wholistic, but it is unfortunate that hospitals with pending claims
because of the pandemic has been waiting for some time. In Iloilo City and Bacolod City
there are claims for CoVid-realted packages, and up to now they have not been
reimbursed. That is why you cannot avoid the perception that favoritism is prevalent in
this particular instance. Now, may we know if there is a second trance of the IRM?
There is an allocation of 27 billion for this program. 14.9 billion has been disbursed, 1
billion has been liquidated. May we know if there will be a second trance of the IRM?"
______________________________________________________________________________
3:32:41
Sen. Tito Sotto recognized Sen. Ralph Recto.

Sen. Ralph Recto presented statistics and figures with regard to interest income, losses,
net income, and other assets of PhilHealth and asked about the arrangement of the
Department of Health and PhilHealth with regard to the procurement of the test kits.

Sen. Sotto: "Mr. De Jesus would like to respond."

Arnel De Jesus highlighted that some factors influence the PhilHealth Board and Key
Departments' projections.

Sen. Recto: (cuts Arnel De Jesus) "I'm just asking on the testing. I have limited time so
please answer directly."

Arnel De Jesus: "Kami po ang naka-linya sa protocal na dine-define ng DOH."

Sen. Recto: (calm voice) "Teka teka, tapusin na muna natin yan. Ang maliwanag ay hindi
niyo ito (arrangements) pinag-uusapan sa Board. Okay? Yun ang tanong ko, yung sa
testing. Hindi po ba may plano tayo to test 10 million?"

Sen. Recto: "Kung sampung milyon ang itetest, ilang sa tancha niyo ang magkaka-
sakit?"

Arnel De Jesus: "Kasama po yan sa pag-aaral namin."

Sen. Recto: "Okay, pwede po ba mabilis na sagot sana?"

Arnel De Jesus came up with no response.

Sen. Sotto recognized Dr. Israel Pargas, who answered the inquiry of Sen. Recto in
part.

Sen. Sotto recognized Ms. Nerissa Santiago, who gave additional statistics on
projected number of additional positive cases.

Sen. Sotto: "I will give an extension of two minutes, Sen. Recto."

(after discussions with Ms. Nerissa Santiago)

Sen. Recto: "I know my time is up no, so I' ll take my second round later. But let me put
on the record why we put all those people as principal authors of the University Health
Care Law..."

Sen. Recto: (calm disposition) "Let me end there, Senate President. Thank you for the
opportunity, I will take my second round later on, and I also thank the resource persons
for answering my questions. Thank you very much."
______________________________________________________________________________
3:55:50
Sen. Tito Sotto recognized Sen. Imee Marcos.

Sen. Marcos: "Thank you very much, Mr. President. Apologies to those who are
missing lunch. Pwede po ba magtanong kay SVP. Jovita Aragona at yung kasama niyo
na si Alex Gabuya."

Sen. Sotto: "Yes, Ms. Aragona is ready."

Sen. Marcos: "Ms. Aragona, mukhang matagal na din kayo sa DOH at PhilHealth, at
napaka-rami pa po ninyong awards, pati na din po yung Lingkod Bayan. Ano po talaga
ang problema sa IT ng PhilHealth? Bakit ba pagka-tagal tagal? Hindi naman po yata
nagkulang ang Congress sa pagbibigay ng budget. Bakit hindi mabuo buo yung IT na
yan?"

SVP Aragona: "Ang problema po talaga natin ay ang procurement. Kasi nagtatagal po
tayo sa procurement stage."

Sen. Marcos: (slightly raised voice) (cuts SVP Aragona) "Ang sinasabi po ba ninyo na ang
2018 na 2 billion ay natengga sa procurement?"

SVP Aragona: "Mayroon po tayo nyan, ang nagiging problema po ay yung Information
Systems."

(after discussion with SVP Aragona)

Sen. Marcos: "SVP Limsiaco, totoo ba na nagkaroon ng manipulasyon sa financial
statements?"

Sen. Marcos: (raised tone) (cuts SVP Limsiaco) "If I may po? Pero maliwanag sa papeles
na nag-umpisa yung Net Income ng 2018 sa 21 billion na, from 11 billion naging 21
billion na, lumobo na. Pano nangyari iyon? Ano ba yung mahiwagang prior rear
adjustment. Parang nakaka-sindak naman yata?"

SVP Limsiaco: "Hindi naman po ganon ang motibo dito. Ang motibo lang po dito is
mapakita sa financial report po kung magkano ang pumasok na expenses sa taon na
ito."

Sen. Marcos: "Kung maari, kung mayroon pa kayong mga datos, maaring ibigay sa
Chairman at sa aming Senate President. Kasi ang tingin ko paiba iba mga numbers dito
sa ating reserve fund. Kinatatakutan namin na talagang bangkarote na ang PhilHealth."
______________________________________________________________________________
 4:11:50
Sen. Ping Lacson intervened

Sen. Lacson: "Are you not concerned na ang COA laging may disclaimer dahil sa mga
restated niyo, dun sa mga financial statements?"

Sen. Lacson: "Anyway, sige. Thank you, Sen. Marcos. We don't seem to get answers
that we expect, Mr. President."
______________________________________________________________________________
4:13:21
Sen. Marcos is recognized again
Both Sen. Marcos and SVP Limsiaco spoke native dialect (no corresponding translation)

Sen. Marcos: "So your family members, are incorporators of the beneficiaries of the
facilities mentioned regardless of the fact that they had no accrediation, and they were
in-fact in the violators list, at higit sa lahat wala naman CoVid-19 pero nakatanggap sila
ng milyons. Totoo po ba yan?"

Both Sen. Marcos and SVP Limsiaco spoke native dialects (no corresponding translation)
(with raised tones).

Sen. Sotto: "Sen. Marcos, your time is up, you can wrap up."

Sen. Marcos: "Medyo suko na kami. Nagugulat nga ako kay Ric Morales, ang tapang
tapang nyan, matagal ko nang kilala, biglang malamya at napaka-bait sumagot.
Nakaka-hina naman ng tuhod talaga."
______________________________________________________________________________
4:24:17
Sen. Tito Sotto introduced a copy of an interview of Gen. Morales with regard to
criminal cases filed against PhilHealth Officials.
Sen. Sotto: "The announcer just sent me a copy of the transcript. I also have a copy of
the video itself. I can be authorized to put it out, but susulat pa eh. So ito nalang
transcript."
______________________________________________________________________________
4:24:58
Sen. Tito Sotto reads the transcript of the interview of Gen. Morales with Arnold
Clavio. Sen. Sotto recognized the announcer, Alejandro Cabading.

Alejandro Cabading: "To be honest, I raised my voice out of frustration. In that meeting
I said that Mr. Morales you are lawyering these people because of the series of events
that you try to submit. Yung budget dumaan sainyo, dapat kasi tinignan niyo yon bago
niyo isubmit sa amin. Otherwise, kami yung mabibitay don. Tsaka you consistently
endorse it, and then you wrote us a letter that we are the one embarassing like Jovita
Aragona. It was not our intention to embarass. We were just saying why do you keep
on doing this when in fact its not even approved yung mga figure na pinapa-approve
niyo sa amin. That's the truth there, Ms. President."
______________________________________________________________________________
4:31:12
Sen. Grace Poe is recognized.
Sen. Grace Poe asked about that anti-corruption efforts made by Gen. Morales since the
time he was appointed as head of PhilHealth.

Gen. Morales: "We have conducted a review of all the cases. May I refer you to our
Senior Vice President of our Legal Sector to elucidate on this matter?"

Sen. Poe: (calm tone) "No, I'm sorry, General. But I would like you to answer it. Because
these are not just all legal cases, I would like to know your particular efforts that you
are familiar with."

Gen. Morales: "I have reviewed all the cases. By the way, Ma'am, earlier I requested
that I would be requesting for an executive session so that I would be able to discuss the
anti-fraud effort that I tried to initiate as President of this organization."
Sen. Poe: (slight raised tone) "There is a really strong allegation that, apparently, you are
the coddler of smugglers there. Anong masasabi niyo don? Isang taon ka na, pero hindi
klaro sa'yo ano ba talaga yung anti-corruption effort mo, pano kami maniniwala na
seryoso ka talaga na linisin ang sistema sa PhilHealth? Kayo na nga nagsabi diba, 'the
world index is about 10-20% corruption in every health institution'. But we should not
be using that as a standard, we should have our own. We should try to strive for
something better, not lower the bar, but actually increase it. So wala eh, kanina pag
kausap kita na tinatanong kita, nirerefer mo ko agad sa Legal. Kung talagang seryoso
ka, sasabihin mo: 'this is step number 1, this is step number 2', but it seems it's not at the
top of your head. Gen. Morales."
______________________________________________________________________________
5:09:00
Sen. Risa Hontiveros is recognized.
Sen. Hontiveros: (calm tone) "Was the Board, during the time period na lumabas itong
mga allegation, fully constituted? Tinatanong ko po ito kasi kung hindi fully
constituted, that would put into question the legitimacy and authority of the Board to
fully exercise its powers. So full Board po ba ang na-constitute po at the time these
allegations were emerging?"

Gen. Morales: "May I defer to the corporate secretary, he can give us an update about
the composition of the Board during such time."

Corporate Secretary: "Except for 1 member, 7 Board Members signed the resolution.
There were 8 Board members sitting at the time. Right now, there are only 10 Board
Members, because there are no Board members appointed yet by the President."

Sen. Hontiveros: "Would you agree, at the time, that hindi pa siya full strength para
harapin at lutasin itong ang mga allegation?"

Corporate Secretary: "I would agree that wala pang full strength ang Board at that time
because at that time we wer only having difficulty constituting a quorum. In fact, there
was quorum during the meeting, so Board agreed instead to route via ad referendum
that particular resolution, requiring senior officers to submit their courtesy resignation,
and allow the President to have the free to choose who to retain, who to replace, and
who to reassign."

Sen. Risa Hontiveros turned to PhilHealth Board Member Alejandro Cabading

Alejandro Cabading: (slightly raised tone) "Sa Board kasi importante ang financial
statements, ang pinaka-importante dun yung analysis mo, so that could actual measure
our movement in the subsequent year. One of the worst things here though is yung
2018 financial statement, addressed to the Board always yan, eh hindi niya pinakita
yung copy non. Tsaka ang dami dun audit reports and findings na hindi na-calendar or
part of the agenda of the Board, not unless, like what I did, telling the corporate
secretary to put it in the agenda. Itong mga to, pumapasok sa Board discussion, only if I
will ask and request the corporate secretary to put it there. These are things na hindi ko
nagustuhan sa style ng management dyan. Why is it that we don't have this
transparency. Yan po ang aking observation."

Alejandro Cabading: (raised tone) "Hindi niyo pine-present yung COA Audit if you're
being asked to? Tapos hindi kayo nagbibigay ng financial analysis, pagkatapos nung
nagbigay na ako ng financial analysis, sasabihin na ako daw ay nagpapasikat lang?
Aba'y tinamaan ng lintek, ano ba yan."

Sen. Hontiveros: (calm tone) "Alright, salamat Board Member Cabading, I'll give you a
little time to cool down, pero na-appreciate ko yung inputs niyo."
______________________________________________________________________________
5:30:31
Sen. Ping Lacson presented a copy of an audit observation memorandum AOOM,
dated July 9, 2019, which pertains to the calendar year of 2018.

Sen. Lacson: "I just want to re-clarify that there is an observation here, page 6, non-
disclosure of key management personnel compensation as required by Philippine
Accounting Standard. Have you complied with this, have you clarified this with COA?"

SVP Limsiaco: "I'm sorry, Sir. May I have a copy po?"

(after discussion of Sen. Hontiveros)
Sen. Sotto: "Just to add a levity to the discussion, I somehow have already realized
which came first, the chicken or the egg. The answer is it depends whether you're
having breakfast or dinner."
______________________________________________________________________________
5:55:12
Sen. Tito Sotto recognized Sen. Cynthia Villar.
______________________________________________________________________________
6:22:30
(after discussion of Sen. Villar and Dr. Pargas of PhilHealth)
Sen. Sotto: “Mr. Pargas, do you need subpoena duces tecum for that or are you ready to
submit?