MANILA - The Philippine Health Insurance Corp's (PhilHealth) memorandum of agreement with the Philippine Red Cross (PRC) for the provision of COVID-19 testing services is "irregular if not outright illegal," according to the agency's internal review.

This was part of the findings received by PhilHealth President and Chief Executive Officer Dante Gierran from the team that reviewed the agency’s MOA with the PRC, which has resulted to the state insurer's reported debt to the non-government organization of nearly P1 billion.

The report was submitted by the PhilHealth's Office of the Legal Counsel, agency sources told ABS-CBN News on Monday.

• PhilHealth to pay P930-million debt to PH Red Cross for COVID-19 testing Oct. 26

Last week, the agency said it was ready to pay the PRC with its P930-million debt after receiving the legal opinion of the Department of Justice on how to proceed with the settlement.

“Having been in receipt today of the DOJ legal opinion saying that the PhilHealth-PRC MOA is not subject to Procurement Law, PhilHealth will release payment on Monday, October 26, 2020, subject to completeness of billing requirements submitted by the PRC,” PhilHealth said in a statement last Friday.

In the 9-page "executive briefer" dated Oct. 13, 2020 and addressed to Gierran, a copy of which was obtained by ABS-CBN News, the fast approval of the PhilHealth-PRC MOA was underscored despite the absence of any "Contact Review" or "Contract Certificate."

"Contrary to existing policies and standard operating procedures in entering into contractual obligations by the Corporation, it appears from the official records and documentation so far provided, that the Legal Sector through the Internal Legal Department (ILD) neither conducted any Contract Review nor issued the required Contract Certification prior to the execution of the subject MOA between the PhilHealth and PNRC," the report stated.

PhilHealth and PRC entered into an agreement in May this year where the latter was to conduct a massive COVID-19 testing program, charging PhilHealth P3,500 for each test.

Those who took part in the negotiations and the drafting of the MOA were then-PhilHealth Senior Vice President for Legal Sector Rodolfo del Rosario, Vice President Oscar Abadu and Vice President Shirley Domingo.

"Further notable is that the MOA was finalized, signed and executed and precious public funds were disbursed to the PRC absent the mandatory prior approval of the PhilHealth Board of Directors," the report said.

The Internal Legal Department only issued its Legal Opinion on September 25, 2020, after it was heavily questioned by Board Member Alejandro Cabading.

PhilHealth Board Resolution 2521 was later on ratified but without the signatures of then-Chairperson Ricardo Morales who did not sign the document, while Health Secretary Francisco Duque III, who sits as the Chairman of the Board, was absent.

Prior to this, PhilHealth has already advanced P100 million to the PRC, using the MOA signed on May 5, 2020, as well as Republic Act 11469 or the "Bayanihan to Heal as One Act," as bases. This was followed by series of additional advance payments to the Red Cross.

"Based on the Legal Opinion dated September 25, 2020 issued by Atty Rogelio A Pocallan, Jr., to date, the Corporation has already paid and released to the PRC the amount of P1.6 billion," the report said.

"This means that out of the supposed P910-million limit provided in the PhilHealth Board-ratified MOA, the Corporation again, issued the amount of P690 million without prior Board approval and hence, yet another act of malversation of public funds," it added.

The payments were in contrast to what is stated in RA 11469, which emphasizes that PhilHealth’s engagement with PRC "shall be subject to reimbursement," the report said.

Advance payments that will no longer be used will remain with the PRC, the report stated.

"The MOA between PhilHealth and PRC is highly irregular as there was no clear legal justification within the specific provisions of the PhilHealth Charter to enter into the MOA and grant PRC with advance payments," it said.

"The MOA is grossly disadvantageous to the Corporation… Even assuming for the sake of argument that PhilHealth may legally enter into the questioned MOA with the PRC, a perusal of the specific provisions of the MOA would readily show that the following provisions of the MOA was crafted to be highly favorable to the PNRC."

To end what it views as a lopsided agreement with the PRC, PhilHealth’s legal office recommends the following:

• temporarily suspend the provisions and further implementation of the MOA
• direct the executive committee, specifically the legal sector along with all the concerned offices earlier involved in the negotiations with the PRC on the crafting of the MOA, to revisit the specific provisions of the MOA
• constitute a renegotiating team from PhilHealth and the DOH to be approved by the PhilHealth Board to amend specific provisions in the MOA
• refer the MOA, including the PBR 2521, before the office of the Solicitor General
• present the matter before the PhilHealth board on the findings and recommendations of the OSG and/or the DOJ

The PRC has suspended its COVID-19 testing services earlier this month, saying the PhilHealth should first settle its debt.

Sought for reaction on the report, Sen. Richard Gordon, who chairs the PRC, insisted there is nothing illegal in the deal, noting that it even approved by President Rodrigo Duterte, Executive Secretary Salvador Medialdea, the Cabinet, and the Inter-Agency Task Force on the Management of Emerging Infectious Diseases.

On the recommended renegotiation, he said, "I don't want to deal with them anymore. They're crooks. They are liars. They're perfidious."

• PhilHealth to pay P930-million debt to PH Red Cross for COVID-19 testing Oct. 26

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