The Securities and Exchange Commission (SEC) has penalized the company that currently operates The Medical City, saying the camp of current Chairman Jose Xavier Gonzales used a “surreptitious” takeover scheme to get control of the company.
The SEC’s special hearing panel found Viva Healthcare Ltd., Viva Holdings (Philippines) Pte. Ltd., Felicitas Antoinette Inc. (FAI) and Fountel Corp., now majority owners of Professional Services Inc. (PSI), liable for violating several sections of Securities Regulation Code (SRC), mainly on the disclosure of the beneficial ownership of the company and on tender offer rule.
The Medical City, operated by PSI, is a company led by its longtime chief executive officer, former Health Secretary Alfredo R.A. Bengzon, until he was booted out in September last year by its new chairman of the board, Jose Xavier Gonzales. Gonzales is Bengzon’s nephew.
Bengzon’s camp then filed a criminal complaint for estafa and other deceits against Gonzales and other directors representing Fountel and FAI, as well as those of Viva Holdings, Gonzales’s Singapore partner in The Medical City investment
The SEC on September 6, 2018, resolved to create the hearing panel after the complaint of Bengzon’s camp.
Viva Healthcare, Viva Holdings, FAI and Fountel managed to increase their collective shareholding to over 50 percent in PSI largely through subscriptions during the company’s capital stock increases in November 2013, July 2014, August 2017 and October 2017, from 1 million to 2 million shares, the SEC said.
They intended to acquire 35 percent or more of the equity shares in PSI as early as 2013. “However, the oneness of respondents, including their plan to acquire majority of the shares in PSI, was not communicated or could not be inferred during the BOD meetings, where increases in the company’s capital stock were discussed and approved,” the SEC said.
“The law and rules clearly impose upon the person intending to acquire more than 35 percent of equity shares, the obligation to disclose its purpose/intent/plan,” the SEC’s panel said. For the violation of SRC’s Section 18 on the disclosure of the acquisition of at least 5 percent of a company, the SEC imposed the penalty of P1 million plus P2,000 for each day of continuing violation from August 1, 2013, up to the time that SEC Form 18-A is filed.
While for Section 19 on tender offers, each respondent must pay P1 million plus P2,000 for each continuing violation, from July 31, 2013, to May 15, 2018, the SEC said.
Bengzon, a founding shareholder of Medical City, was responsible for rescuing the institution from near bankruptcy in the 1970s, and building it up into one of the biggest health-care institutions in the Philippines.