The Medical City operator told to revert to 2013 board

The Securities and Exchange Commission (SEC) told The Medical City operator to restore its board composition going back several years, paving the way for the return of directors including former Health Secretary and longtime CEO Alfredo Bengzon. This followed a landmark decision last week where the SEC said a 2018 board takeover led by Bengzon’s nephew Jose Xavier Gonzales and foreign partners was based on illegal transactions.

The SEC on Aug. 20 voided the acquisition by Gonzales’ group—allied with Singapore-based Viva Holdings (Philippines) Pte. Ltd. and Viva Healthcare Ltd.—of a controlling stake in The Medical City operator Professional Services Inc. (PSI).The SEC said Gonzales and Viva concealed a cooperation and shareholders agreement signed on Aug. 1, 2013, to take control of the health care group with over 40 hospitals and clinics in the Philippines and Guam.

The board of directors (BOD) and shareholders had been unaware of the agreement for years until Gonzales and Viva secured a controlling stake in PSI in 2017. This amounted to fraud and a violation of the Securities Regulation Code, the corporate regulator ruled.

On Aug. 24, the SEC followed up with a decision saying the board composition of PSI will revert to the period before the questioned transactions started.The SEC referred to the signing of the shareholders’ agreement on Aug. 1, 2013.

“Such being the case, the members of the BOD of PSI as of 31 July 2013 are deemed to be the duly constituted BOD, sitting and functioning in a holdover capacity,” the SEC said.

PSI had 15 board directors filed with the SEC as of July 5, 2013.These were Augusto Sarmiento (chair), Bengzon (president and CEO), Gonzales (treasurer), Sis. Maria Rosalia Nacionales, Mona Lisa de la Cruz, Eugenio Jose Ramos, Rosalinda Hortaleza, Rev. Fr. Roberto Yap, Mediadora Saniel, Venancio Gloria, Rafael Reyes, Pote Videt, Blesidla Conception, Alberto Buenviaje and Foreign Affairs Secretary Teodoro Locsin Jr.Bengzon’s camp lauded the SEC decision while suggesting a buyer might be lined up to acquire the shares from the voided transactions.

“The significant cash windfall that PSI will earn through the sale of the nullified shares to a qualified third party, expected to be in the billions of pesos, is much needed to sustain operations at this time,” Eric Puno, Bengzon’s lawyer, said in a statement. INQ