The Securities and Exchange Commission has penalized the group of The Medical City chairman Jose Xavier Gonzales for “surreptitiously” taking over the Ortigas-based hospital, violating the mandatory disclosures under the Securities Regulation Code (SRC).
The SEC’s special hearing panel found that Viva Healthcare Ltd., Viva Holdings (Philippines) Pre. Ltd., Felicitas Antoinette Inc. (FAI) and Fountel Corp., now majority owners of Professional Services Inc. (PSI), failed to disclose their holdings in the hospital when they did not disclose to the regulator that they have breached the 5 percent beneficial ownership rule, as mandated by Section 18 of the SRC.
For violation of SRC’s Section 18, the SEC imposed the penalty of P1 million plus P2,000 for each day of continuing violation from Aug, 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.
The Medical City, operated by PSI, has been led by its long-time chief executive officer Dr. Alfredo R.A. Bengzon, a former health secretary, until he was booted out in September last year by Gonzales’ group, the latter a nephew of the former.
Bengzon’s camp filed an estafa complaint against the Gonzales group – Fountel and FAI as well as Viva Holdings, which is Gonzales’ Singapore partner in The Medical City investment.
In Sept. 6, 2018, the SEC resolved to create the hearing panel following 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,” it added.
Bengzon, a founding shareholder of The Medical City, was responsible for rescuing the institution from near bankruptcy in the 1970s and building it up into one of the biggest healthcare institutions in the Philippines.