The Medical City (TMC) said the corporate regulator’s nullification of a shareholder group’s acquisitions of majority shares in Professional Services, Inc. (PSI), the hospital’s operator, puts the country’s response to the coronavirus disease 2019 (COVID-19) at risk.
The Securities and Exchange Commission (SEC) asked The Medical City to return to its ownership structure in 2013 and return money to investors, alleging that the acquisitions are illegal and fraudulent.
TMC in a press release on Sunday said that this is an additional challenge on hospital operations that are seeing a shortage in healthcare workers and delays in bill payments worth P750 million from state-led Philippine Health Insurance Corp. (PhilHealth).
“Where in the law, or even in any other case, can you see the SEC telling a private corporation how to classify shares, how these shares should be sold, and when these shares can be paid? It’s almost as if they were preparing the way for a favored party to buy shares of TMC,” TMC Chairman Jose Xavier Gonzales said.
The SEC’s special hearing panel in November last year penalized Viva Holdings (Philippines) Pte. Ltd., Viva Healthcare Ltd., Fountel Corp. and Felicitas Antoinette, Inc. (FAI) for violating the mandatory tender offer rules under the Securities Regulation Code (SRC) and committing fraud in taking over PSI.
SEC said the four parties in 2013 transformed their business relation into beneficial ownership over each other’s shares. It said the entities increased their collective shareholdings in PSI to more than 50%, mainly through subscriptions in the firm’s capital stock increases, as approved by the regulator between 2013 to 2017.
The Commission en banc said that parties made it seem convincing that the purchases were made independently and will not be used to control the management of the company.
All the processes involved in the share purchases, such as subscription contracts, deeds of assignments and deeds of sale were “tainted with illegality and fraud,” SEC said.
But TMC said that the SEC does not have the jurisdiction to determine fraud.
“Lawyers have also pointed out the SEC has no jurisdiction to determine fraud. Unlike court decisions, which have trials and opposing counsels that allow judges to fully understand the information presented, the SEC decides a case based only on select interviews and paperwork,” TMC said.
TMC Chief Executive Officer Eugenio Jose F. Ramos said that the SEC decision comes “at a really bad time.”
“The last thing our staff needs right now is even more uncertainty — it’s hard enough to face patients who may or may not have COVID. It’s hard enough for them to come home worrying that they might be exposing their family to COVID. Now they also have to worry about what is going to happen to their hospital.”
BusinessWorld has reached out to SEC for comment, but has not received a response as of deadline time. — Jenina P. Ibañez
