PhilHealth’s proposed ICT budget bloated by P734 million, says official

JC Gotinga

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Senators are disappointed at PhilHealth chief Ricardo Morales' refusal to acknowledge irregularities in the state insurer's proposed ICT budget

“Too blatant, too brazen,” was how Senator Panfilo Lacson described apparently overpriced budget proposals for the Philippine Health Insurance Corporation’s (PhilHealth) information and communications technology (ICT) projects.

Among questionable items unearthed during the first hearing of the Senate’s probe into the corruption scandal on Tuesday, August 4, were an unspecified number of laptops worth more than P119 million, 43 unspecified “ICT resources” worth P40 million, and 3 unnamed projects for P98 million.

PhilHealth board member Alejandro Cabading, an accountant, revealed these and other irregularities to the Senate, which convened as the
“Committee of the Whole” to investigate allegations of “widespread corruption” in the state health insurer.

Cabading said the proposed 2020 budget of PhilHealth’s ICT sector was bloated by at least P734 million. (READ: PhilHealth execs stole P15 billion in fraud schemes, says resigned official)

“I discovered that there were items in the IT budget and financial reports that do not add up. I tried my best to find solutions to the concerns internally by bringing it up with the board and the management,” Cabading told the Senate panel.

“The most frustrating part is that the management seems to be tolerating these fraudulent acts by their inaction against these executive officers of PhilHealth who are obviously compromised,” he added.

Bloated figures

Cabading compared the PhilHealth ICT sector’s proposed 2020 budget with the Information Systems Strategic Plan (ISSP) approved by the Department of Information and Communications Technology. He found the prices of items in the proposed budget were much higher than in the ISSP:

  • Adobe Master collection software: P21 million (ISSP: P168,000)
  • Application servers and licenses: P40 million (ISSP: P25 million)
  • Structured cabling: P5 million (ISSP: P500,000)
  • Identity management software: P42 million (ISSP: P20 million)
  • Office productivity software: P21 million (P5 million)
  • Application server, visualization licenses, support maintenance: P25 million (ISSP: P14.8 million)

Some items in the 2020 proposed ICT budget were not even in the approved ISSP:

  • Fraud analytic tool: P132 million
  • Portable wifi hotspot for satellite phones: P840,000
  • Queuing machine: P302,000
  • 43 units of “ICT resources” (not itemized): P40.7 million

Cabading also found the following “anomalous proposals”:

  • Laptops (no number indicated): P115 million and P4 million
  • 3 unspecified projects: P98 million

The difference between the proposed 2020 budget and the approved ISSP, which should have been the basis of the budget, was P734 million.

According to Cabading’s narration of events, PhilHealth senior vice president and chief information officer Jovita Aragona and senior ICT officer Calixto Gabuya Jr submitted an ICT budget proposal for P2.1 billion in December 2019, but the board rejected it because it lacked “specific details.”

The following January, the ICT sector reduced their proposal to P1.9 billion, claiming typographical errors, Cabading said. He was only inclined to approve P25 million, following the advice of PhilHealth fund management senior vice president Renato Limsiaco Jr.

In March, Aragona proposed a supplemental ICT budget of P302 million. The board of directors approved it, Cabading said, because Aragona claimed PhilHealth’s ICT system would “collapse” without it.

Then in April, PhilHealth president and CEO Ricardo Morales “supported” Aragona in proposing another ICT budget of P750 million. Cabading said he blocked the proposal because the rules required that the earlier P302 million be audited first.

When the audit report came out in May, Morales kept trying to push back its presentation to the PhilHealth board of directors, Cabading said. (READ: Resigned officer says PhilHealth chief ordered him to ‘massage’ overpriced testing kits issue)

In the end, the proposal was cut down to P1.156 billion, Cabading added.

Confronted by the senators during Tuesday’s probe, Morales insisted there was nothing wrong with the ICT budget proposal. Information technology is complicated, he said, and it was just a matter of explaining the items properly to the board of directors.

“I don’t think there was any irregularity,” Morales said.

Overpriced network switchers

Lacson then presented findings by the Commission on Audit (COA) from 2019. Auditors flagged PhilHealth’s plan to buy 15 network switchers at around P320,000 each, for a total procurement worth P4.8 million.

The COA questioned the need for the 15 units of CISCO Catalyst Switches, or network switches, when PhilHealth had 24 brand new ones, unused and still in their boxes, at the time of the audit. The plan was “disadvantageous for the government,” the COA said in its audit report.

Moreover, the market price of the CISCO network switches was only P62,424 each. With that price, the procurement package should have only cost P939,360. 

This means the government stands to lose more than P3.8 million if the purchase proceeds, Lacson pointed out.

Masyadong (too) blatant. Masyadong (too brazen)…hindi na natatakot na mabubuko (no more fear of being found out),” the senator said of the apparent attempt to subvert government funds.

Morales was appointed to head PhilHealth in June 2019. A retired military general, he was expected to rid the government-owned and controlled corporation of corruption. At the time of his appointment, PhilHealth was also riddled with different accusations of irregularity.

Several senators pressed Morales on whether he sensed there was anything amiss with the ICT budget proposal – especially since his marching orders were to weed out corruption.

“Yes, it bothers me because it’s inaccurate,” Morales said, insisting he did not find the proposal anomalous.

The prices in the proposal just needed to be “rectified,” and he assumed his staff had done their “due diligence” to vet the items before having him sign the document, he added.

“It grieves my heart that that’s how he thinks because I was expecting an answer na, ‘Ah! Hindi puwede ‘yan (Oh! That won’t do)!'” said Senate President Vicente Sotto III. –

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JC Gotinga

JC Gotinga often reports about the West Philippine Sea, the communist insurgency, and terrorism as he covers national defense and security for Rappler. He enjoys telling stories about his hometown, Pasig City. JC has worked with Al Jazeera, CNN Philippines, News5, and CBN Asia.