Pasig court dismisses 'nuisance, harassment' suit vs The Medical City, subsidiary

Mike Navallo, ABS-CBN News

Posted at Mar 19 2019 10:04 PM

MANILA - A Pasig court has junked an injunction case filed by the daughter-in-law of the former CEO of The Medical City (TMC) seeking to stop the hospital from exercising its shareholders’ rights to a subsidiary.

In a 10-page order dated March 11, 2019, Pasig City Regional Trial Court Branch 161 dismissed for being a “nuisance and harassment suit” the application for a writ of preliminary injunction filed by Margaret Bengzon, daughter-in-law of former Health Secretary and TMC CEO Alfredo Bengzon, in November last year.

The younger Bengzon sought to stop Professional Services, Inc. (PSI), the company behind TMC, from holding a stockholders’ meeting and electing its own nominees to PSI Healthcare Development Corp. (PSI Healthcare), a wholly-owned subsidiary of PSI.

She claimed there were issues surrounding the legitimacy of PSI’s board of directors and they should not be allowed to exercise their authority over PSI Healthcare.

She was referring to the ouster of the older Bengzon as long-time CEO of TMC in September last year, in a corporate dispute that saw his nephew, Jose Xavier Gonzales, take control of the company as chairman of the board.

The older Bengzon had contested his ouster, questioning his nephew’s acquisition of majority shares (combined 54%) in the company without notifying the board, its shareholders and the Securities and Exchange Commission.

Two cases on this matter are pending before Pasig RTC as well as before the SEC. Criminal cases have also been filed in Pasig and Makati courts by each camp.

But Pasig RTC Branch 161 Judge Nicanor Manalo, Jr. rejected the younger Bengzon’s injunction application, noting that she lacked “standing and interest” to file the case as she is not a stockholder of PSI and only had 1 share “that may have been held” as nominee shareholder for PSI Healthcare.

The court cited her admissions in court that “she does not have stock certificate evidencing her ownership nor does she have records that she paid for the taxes of PSI Healthcare shares in her name.”

It also noted that the 2017 General Information Sheet of the subsidiary characterized her ownership or interest as “nil” even with a single share credited to her name.
“Neither is the court convinced that plaintiff stands to personally suffer any substantial damage or injury which would vest her with a substantial interest in the dispute,” the order said.

The court also ruled that what the younger Bengzon, in effect, is asking is to prevent PSI from exercising its shareholders’ rights over PSI Healthcare.

It pointed out that a court had already issued a writ of preliminary injunction preventing the former board of directors of PSI from representing themselves as part of the current board and interfering in the exercise of its rights and powers.

“[A] court has already held that defendant PSI’s Board of Directors should exercise PSI’s powers and rights as a corporation in the interim and even while the question on the validity of the corporation’s ownership of PSI shares are still unresolved,” it ruled.

The younger Bengzon served for 4 years as CEO of Guam Regional Medical City, a subsidiary of TMC, before she was booted out in December last year, following the change in leadership in the parent company.

The hospital venture in Guam was cited as among the issues raised against the older Bengzon when he was voted out of management at the hospital.