CA reverses SEC order on The Medical City’s control
MANILA, Philippines — The Court of Appeals (CA) has overturned a Securities and Exchange Commission (SEC) order for a major hospital chain’s current majority stockholders to divest their shares and yield management to the previous group handling the medical facility.
In an order dated last February 11, CA said that the SEC cannot order the current board and management of The Medical City to step down from their post, because the commission does not have the power to order the divesting of shares.
Furthermore, CA noted that the corporate conflict that the hospital is going through is outside its control and therefore comes under the jurisdiction of the regional trial courts.
SEC in 2020 voided the takeover of the hospital’s board by current chair Jose Xavier Gonzales and his group from the previous management in 2013. According to the order from SEC, the hospital should restore the composition of its 2013 board.
In response, the current management said that such an order would lead to turmoil, rumors, and instability which may not only be bad for the hospital but for its brand of service as well, especially amid the COVID-19 pandemic.
With the CA order, Gonzales remains as The Medical City chairperson while the management led by Dr. Eugenio Jose Ramos stays in place.
SEC initially stated that the manner in which the current management took the company from the previous board was fraudulent, although Gonzales’ legal counsel consistently disputed such issues.
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