Medical City shareholders prepare for another showdown in court
An ownership row over The Medical City, one of the country’s largest private health care groups, may be heading to the courts anew.
The board of directors of Professional Services Inc. (PSI), the company that operates The Medical City, questioned the recent Securities and Exchange Commission (SEC) decision voiding the takeover of now chair Jose Xavier Gonzales and foreign partners due to fraudulent and illegal transactions. The SEC also told the company to restore its 2013 board composition—before the transactions began.
“Clearly, our affected shareholders will seek legal assistance to address the SEC decision,” the board said in a statement on Friday.
The board cited rulings from the Court of Appeals and Pasig Regional Trial Court “recognizing the legitimacy of our existing board.”
It added the decision could impact the operations of The Medical City during the COVID-19 pandemic.
Moreover, the board said the SEC decision is not enforceable against PSI because it was not a party to the recent ruling.
Article continues after this advertisement“Our legal counsel indicates that the SEC decision may not be enforceable against PSI as the company was not impleaded as a party in the SEC cases. Hence, the proceedings and findings of the SEC may not prejudice PSI or The Medical City,” the board said.
Article continues after this advertisement“Also, we are advised that the SEC has no jurisdiction to resolve the issues of validity of contracts and of the presence or absence of fraud in contracts, as these issues pertain to the original and exclusive jurisdiction of the commercial courts,” it added.
The board also insisted there was no fraud in the acquisition of the voided shares.
On Aug. 20, the SEC issued its decision on the long-running dispute, stating that Gonzales’ group allied with Singapore-based Viva Holdings (Philippines) Pte. Ltd. and Viva Healthcare Ltd. to secure control of PSI through fraudulent and illegal means.
It said transactions violated rules on disclosures and those covering the mandatory buyout offer to other shareholders.
It cited a shareholders agreement that Gonzales and Viva signed on Aug. 1, 2013, and hid from the board until 2017, when they had already accumulated a majority stake. A board coup the following year led to the ouster of Gonzales’ uncle, the company’s longtime CEO and former Health Secretary Alfredo Bengzon.
