The Court of Appeals has affirmed its decision to deny the camp of former Health secretary Alfredo Bengzon to regain control and management of The Medical City, which operates a network of hospitals and clinics.
The court’s Special 15th Division established that the management and control of TMC to the 2019 board led by Bengzon’s nephew, Xavier Gonzales, who was elected by institutional investors and doctor shareholders in an uncontested election in July 2019.
In his motion for reconsideration, Bengzon sought to invalidate the Special Stockholders’ Meeting held in 2018 that voted him and his allies out of TMC.
The court wrote that “our construction and application of corporate laws are geared toward ensuring stability and predictability…we veer away from uncertainty and unreliability and towards efficient corporate governance.
“By our lights, the holding of the election of PSI’s (Profession Services Inc.) 2019 Board of Directors on July 9, 2019 being left unquestioned, any ruling on the Sept. 13, 2018 Special Stockholders Meeting is now futile.”
PSI owns and operates TMC.
The court’s decision toward better corporate governance may have a corresponding impact on the other cases of Bengzon, who has been trying to win back control despite having only 0.1 percent of TMC shares.
Bengzon and his daughter-in-law Margaret Bengzon were charged with alleged theft and estafa as an internal audit revealed that they issued TMC checks for non-hospital related transactions.
One check, for P2 million, was issued to Bengzon personally while another check, for P1.8 million, was paid to a law firm used by the Bengzons to file charges against TMC. Bengzon and his daughter-in-law served as the only two signatories of the checking account.
Since taking control of TMC, the Gonzales-led board and the management team, led by Dr. Ramos, has implemented reforms that resulted in “record-breaking” revenue for the hospital network in 2019, growing four times faster than what the previous management was able to do. TMC was also awarded Hospital of the Year by HealthCare Asia Awards 2020.
TMC’s intra-corporate dispute started in 2018 when Bengzon, then chief executive, refused to hold the legally mandated shareholder elections scheduled in June of that year.