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CA junks Bengzon’s bid to nullify ouster as Medical City CEO

The Court of Appeals has denied the appeal of former Health Secretary Alfredo Bengzon to nullify the results of The Medical City’s board elections that ousted him as chief executive officer.

In a resolution, the CA denied Bengzon’s motion for reconsideration of the appellate court’s June 2019 decision, which rejected his petition for a preliminary injunction because he other officers have no “vested right” to remain in their positions.

This appellate court ruling was another legal setback for Bengzon, who has lost several cases in the Regional Trial Court, the CA, and the Securities and Exchange Commission in the past year alone.

The CA upheld its previous ruling, calling Bengzon’s arguments misplaced.

According to the appellate court, Bengzon and his co-petitioners were not prevented from casting their votes during the Sept. 13, 2018 meeting and their term as directors and officers expired after a year in office, with the election of the new board.

“Petitioners do not have any vested right to remain in their positions indefinitely beyond the term for which they are elected, against the will of PSI’s majority stockholders, as evidently, they have already been replaced. No such rights to be protected therefore exists on behalf of Petitioners,” the resolution stated.

The CA also dismissed Bengzon’s claim that shares issued to investors whom he had asked for cash infusions during his time as CEO were illegal and invalid.

Bengzon’s camp had argued that shares given to get funds for TMC’s expansion were illegal and invalid, despite he was being president and CEO during that time.

A group of investors, led by his nephew Jose Xavier Gonzales came to the aid of TMC by pouring in millions of dollars to help TMC expand its Philippine network and set up a hospital in Guam. 

To press his claim, Bengzon had gone to the SEC to rule on TMC’s on-going intra-corporate dispute, claiming that only the SEC, and not the RTC, could rule on the validity of the ownership of voting shares.

However, the CA ruled that the controversies are ‘within the original and exclusive jurisdiction of the trial courts by virtue of Section 5.2 of the Securities and Regulation Code in relation to Section 5c of Presidential Decree No. 902-A.’

Dr. Eugenio Jose F. Ramos, the CEO appointed to replace Bengzon in The Medical City, has since engineered a turn-around of hospital operations by focusing on quality of service, increasing revenue, and managing costs.

Ramos led the successful re-accreditation of TMC as a JCI-accredited hospital in 2018. In 2019, TMC’s main hospital in Pasig was estimated to have a record-breaking P6B in revenue, growing four times faster than the previous administration.

Meanwhile, Roderico Puno, Bengzon’s lawyer, sought to downplay the effect of the CA ruling.

“The Resolution dated Jan. 21, 2020 of the Court Appeals relates to the 2018 election of PSI 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,” he said.

Topics: Court of Appeals , Roderico Puno , Alfredo Bengzon , The Medical City , Securities and Exchange Commission , Jose Xavier Gonzales
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