CA junks Bengzon's Medical City bid, but ruling hit as 'moot'
DISPUTE. The Court of Appeals junks former health secretary Alfredo Bengzon's bid to regain control of his medical empire. Photo from The Medical City's website
MANILA, Philippines (3rd UPDATE) – Former health secretary Alfredo Bengzon once again lost a bid to take back from his once most trusted nephew the seat of power in the medical empire he built for decades, though he maintains that his claim remains valid as the new ruling in question involves a "moot" case.
A Court of Appeals (CA) decision released on January 21 denied Bengzon's motion to overturn the results of the elections that ousted him as chief executive officer (CEO) and voted in a new board for The Medical City (TMC).
Bengzon was TMC's CEO until he was ousted through a special stockholders' meeting in 2018 led by his nephew, Jose Xavier Gonzales. In that meeting where Gonzales was chairman of the board, Eugenio Jose Ramos was appointed as the new CEO.
Bengzon refused to recognize the new officers. He insisted that the boardroom coup circumvented procedures, including proper disclosures and provisions on tender offers.
However, Gonzales asserted that Bengzon's term had expired. He also insisted that Bengzon held less than 1% of shares in the company.
Bengzon attempted to block the appointments of Gonzales and Ramos, but they were later reelected in another meeting in 2019.
"He had been insistent that he and the directors he had appointed could stay beyond their term of one year, contrary to established rules of corporate governance," Gonzales said in an emailed statement.
Gonzales considers the controversy "closed."
"Since we started work at TMC, revenues have gone up, and costs have been managed. The net result is that all our shareholders – including ex-CEO Dr. Alfredo Bengzon – will see the value of their shares increase. At the end of the day, our job is to make sure that all stakeholders – from our patients all the way to our shareholders – enjoy the benefits of better corporate governance," he said.
But Bengzon told Rappler the CA's ruling was "moot and academic."
His camp explained: "The resolution dated January 21, 2020, of the Court [of] Appeals relates to the 2018 election of PSI (Professional Services Incorporated) directors, who have since been replaced by directors elected in 2019. Thus the resolution is of no consequence since it deals with a board that no longer exists. It has nothing to do with the current PSI board. The claim of Gonzales that this resolution somehow affirms the legality of the current board is therefore patently false."
Bengzon's lawyers also reiterated that the Securities and Exchange Commission (SEC) ruled in favor of him and even slapped a P50-million penalty on TMC's majority shareholders for the coup.
"The CA case of the 2018 board was litigated before the SEC decision was issued recognizing Gonzales' illegal takeover. The legal context has since changed with this SEC decision and is now in our favor," Bengzon said.
However, the SEC's decision only imposes administrative fines and does not overturn the current board. – Rappler.com
