“When Cigna came in. it insisted on a change in the Maxicare by-laws which bound all of the present stockholders to give the ‘right of first refusal’ to the other shareholders if and when they sold their shares.”
by Ducky Paredes
According to its internet website, “Maxicare Healthcare Corporation was born in 1987 with the noble mission to provide customers peace of mind through superior core company, we serve the country’s top corporations, with 300,000 membership population nationwide, through a comprehensive Healthcare Provider Network across the land.
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The shareholders of Maxicare were Felicito Payumo, Benjamin Santos, Jose R. San Gabriel, Gertrude L Mirasol, Jose P. Caedo, Vicente D. Arguelles, Francisco C. Pascual, Godofredo B. Banzon, Chester C. Babst, Peter Sen, Raul Concepcion, Fefrico Leelin, Roberto K. Macasaet, Medical Doctors, Inc, and Eduardo de los Angeles, who was also Corporate Secretary.
In 1988, PCIBank and Cigna, a US-based HMO, bought into the company. Each purchased 60,000 shares representing 30% of the stocks. Thus, the two big companies – the bank and the American HMO – owned 60% of Maxicare.
When Cigna came in. it insisted on a change in the Maxicare by-laws which bound all of the present stockholders to give the “right of first refusal” to the other shareholders if and when they sold their shares.
Of course, we all know that PCIBank was merged with Equitable which was later merged with Banco de Oro (BDO) , which is principally owned by the family of Henry Sy, the mall magnate. Cigna decided to sell its shares and BDO bought them. Thus, BDO controlled 60% of Maxicare and appointed the members of the board as well as controlling everything else that Maxicare did.
Last year, BDO informed Maxicare that it wanted to get out of the HMO business to concentrate on its core business and was, thus, selling its shares – all of the 60% — to Antonio Go who was then given one share of the 120,000 shares held by BDO so that he could be elected to the board.
Maxicare, as a company, waived its rights to buy the BDO shares but the original shareholders still had 90 days to exercise their individual rights to match the offer of Antonio Go, if they cared to do so.
Benjamin Santos, former insurance commissioner, Eduardo de los Angeles, former law dean of the Ateneo Law School and former Philippine Stock Exchange (PSE) Chairman and Felicito Payumo, former head of the Subic Bay Metropolitan Authority (SBMA) decided to look at their company. They saw possibilities in Maxicare that they did not see before. For instance, the company had larger gross sales than competing HMOs but lesser profits. Clearly, the business could be made more profitable.
They, thus, pooled their resources together and on December 5, 2007, as Payumo tells it, “we saw Atty. Erlaster Sotto of BDO in his office, who advised us collectively, in a letter dated December 5, 2007 that BDO will ‘immediately execute’ the sale documents covering the offered shares provided that ‘BDO receives the payment of P176 million in case or cleared funds at its BDO Savings Account no. 1463-467 16-8 with BDO EPCI Tower 1 branch (463) in Makati Avenue corner H. V. de la Costa Street, Makati City, on or before 5:00 p.m. on December 5,2007.
“Anyone of us three who would fail to comply with the said payment terms would be charged 10% penalty.”
One supposes that the BDO lawyer did not expect that the three – Payumo, de los Angeles and Santos – could do what he was asking. It was well nigh impossible. After all, how many armored trucks would be needed to transport P176,000,000 in cash to the BDO branch in time to be counted and deposited before the end of the banking day?
But, Payumo, Santos and de los Angeles pulled it off. They were able to place “cleared funds” into the BDO account before the close of business hours of the same day.
Says Payumo “BDO acknowledged receipt of payment and Mr. Sotto expressed relief that, finally, this transaction would be over as it has caused him so much stress.”
But, the story was not over. A few days later, they were told that the appointed signatory to the sale, BDO President Nestor Tan was abroad and would not be back for two days. Then, when, 10 days later, still no document arrived, the Pinoys wrote the Chinese bank demanding for the documents. The answer they got was that the BDO board’s authority to the BDO President was to execute the document of sale to Antonio Go, not to anyone else. Thus, they had to wait for the next BDO board meeting.
The next day, December 11, they were informed by BDO that the Maxicare Board (all appointees of BDO) requested that the three of them be disqualified from buying Maxicare and that this had to, therefore, be referred to the BDO legal department. They were also taken off the board of Maxicare besides being declared as disqualified buyers of the company that they founded decades before!
In the end, contrary to law, business practice and everything ethical, BDO. The Chinese bank, sold Maxicare to their fellow Chinese Antonio Go.
Of course, this is not the end of the story. Clearly, the Chinese buyer and seller connived to deprive the Pinoys of their “right of first refusal.” Under the original Cigna amendment to the corporate by-laws of Maxicare, any disputes must be settled in a Singapore Arbitration Court. This is where Payumo, Santos and de los Angeles have gone since even getting a TRO in the Philippines proved useless against such an entrenched and powerful family as the Henry Sys. The Makati judge refused to issue a TRO and ruled, instead, that Antonio Go had legally and permanently purchased the shares held by BDO. A Pinoy cannot even get justice in a Philippine court.
Perhaps, the Pinoys will do better in Singapore!
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The Third Leg of the six-leg San Mig Senior Tournament of the Federation of Philippine Amateur Senior Golfers, Inc. (FPASGI) will be on Friday, July 18, 2008 at Intramuros Golf Club. Tee-off will be sequential beginning at 6:30 up to 9 in the morning.
Tournament fee (only FPASGI members can join) is P1,500 which includes everything – Green Fee, Caddy Fee, Mandatory Mulligan, Lunch, Giveaways and Raffle Prizes.
Intramuros is not an easy course. It may be shorter than regular courses but the number of hazards that one has to avoid makes it as much as a challenge as other, much longer courses.
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hvp 07.10.08)
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