Nestle execs face trial

PEOPLE V. NESTLE

"People v.Nestle"
by Horacio Paredes
Abante, 03 September 2011
(Original article available here)

"Tila nagbunga na rin ang pagsisikap ng dalawang kumpanyang Pinoy na mabigyan ng katarungan ang pagmamalabis at pang-aaping dinanas ng mga ito sa kamay ng isang dayuhang multi-national.

Lumabas na rin ang Resolusyon ng Office of the City Prosecutor ng Quezon City tungkol sa mga kasong isinampa ng Service Edge Distribution, Inc. (SEDI) at ng FDI Forefront II Trading Corporation (FDI 2) laban sa Nestle Philippines, Inc.(NPI).

Ang kaso ay tungkol sa predatory pricing na ipinatutupad ng Nestle kaugnay ng pagbebenta ng iba’t ibang produkto nito. Sa ilalim ng mga patakaran ng Nestle Philippines, ang mga distributor ng kumpanya ay hindi maaring magbenta ng mga produkto sa presyong labas sa idinidikta ng Nestle, kahit na ma­ging dahilan ito sa kanilang pagkalugi.

Ang mga nasakdal ay sina Nestle Chairman at CEO John Martin Miller, Chief Financial Officer Peter Noszek, Business Executive Manager Shahab Bacani, Regional Sales Manager Jose Ceballos, Area Sales Manager Elisa Lupena at dating Chairman at CEO Noreswamy Nandkishore.

Sinabi ni First Assistant City Prosecutor Meynardo M. Bautista Jr. na may sapat na ebidensya upang dalhin ang kaso sa hukuman.

Ayon kay Bautista, may nagawang paglabag ang Nestle sa Article 186 ng Revised Penal Code na nagsisilbing batas ng Pilipinas hinggil sa isyu ng anti-trust practices. Ang nabanggit na artikulo ng Kodigo Penal ay nagtatakda ng sumusunod:

“Any person who shall enter into any contract or agreement or shall take part in any conspiracy or combination in the form of trust or otherwise, in restraint of trade or commerce to prevent by artificial means free competition in the market.”

Ang paglabag ay kaugnay sa mga ipinatutupad ng Nestle na mga limitasyon sa presyo ng mga produkto nito, sa mga gawaing pumipigil sa malayang kalakalan at nagbibigay-daan para mangi­babaw ang monopolyo, kasama na ang kapangyarihang magtakda ng mga presyo at pigilan o harangan ang mga karibal sa negosyo sa isang partikular na lugar.

Lumabas sa imbestigasyon na may kasunduan ang Nestle at ang dalawang distributors kung saan itinakda ng NPI ang mga presyo na dapat sundin ng mga distributors. Inobliga ng NPI ang SEDI at FDI 2 na ibenta lamang ang mga produkto nito sa itinakdang mga presyo, kasabay ng bantang pawawalang-saysay ang distributorship agreement kapag ‘di sila sumunod.

Sinabi ni Bautista na ang ginawang ito ng NPI ay ilegal at isang paglabag sa Paragraph 1 ng Article 186 ng Revised Penal Code. Aniya, ilegal din ang nangyaring price fixing at walang sapat na katwiran upang maging lehitimo ang pagtatakda ng mga presyong nabanggit.

Ang kasunduan sa pagitan ng dalawang panig, ani Bautista, ay labag sa interes hindi lamang ng dalawang distributors kundi pati na ng mga consumers o mamimili. Wala rin aniyang benepisyong ekonomiko na matatamo rito.

Ayon kay Bautista, ang mga isinakdal, na mga responsableng opisyal ng Nestle Philippines, ay hayagang isinagawa ang krimen, o pinayagang mangyari ito, o nabigong pigilan ang nasabing krimen, kaya mayroon silang pananagutan dito.

Inirekomenda ni Bautista na ipaghaharap ng sakdal sa korte ang mga nabanggit na opisyal ng NPI bunsod ng reklamong ini­hain ng FDI Forefront II Trading Corporation. Ang rekomendasyong ito ay inaprubahan at sinang-ayunan ni City Prosecutor Donald T. Lee.

Matinding dagok sa Nestle Philippines ang naging pasiya ng Quezon City Prosecutor’s Office. Panay pa naman ang papogi ng Nestle sa telebisyon at sa mga pahayagan kaugnay ng katatapos pa lamang na selebrasyon ukol sa nakaraang 100th Anniversary nito sa Pilipinas. Parang binagyo ang parada ng Nestle.

Sa kabilang dako, pinawalang-saysay naman ang sakdal ng Service Edge Distributors, Inc. sa dahilang ang negosyo ng Service Edge ay sumasaklaw lamang sa Caloocan, Malabon, Navotas at Valenzuela na pawang nasa labas ng Quezon City. Kaya walang hurisdiksyon ang Quezon City Prosecutors Office sa kaso.

Gayun pa man, napag-alaman na puwede pa ring magsampa ng demanda ang Service Edge sa piskalya ng alin sa mga lugar na sumasaklaw ng operasyon nito. Hindi pa ligtas ang mga nasabing opisyal ng Nestle sa demanda ng Service Edge kapag ito ay iharap ng distributor sa tamang korte.

* * *"

Office of Competition rules nearly ready

"Office of Competition rules nearly ready"

Published in BusinessWorld Online, 04 July 2011

Hit the stands on 05 July 2011

(Original article available online here)

"THE JUSTICE DEPARTMENT expects to soon begin tackling competition issues with guidelines implementing the Palace-ordered mandate likely out next week, a Cabinet official yesterday said.

Justice Secretary Leila M. de Lima said the rules that will govern the planned Office for Competition under her department are still being finalized.

“We are still discussing the guidelines. We hope to release it by next week,” Ms. de Lima said.

Among the issues the competition office will study is Philippine Long Distance Telephone Co.’s (PLDT) planned purchase of rival Digital Telecommunications Philippines, Inc. (Digitel).

“[T]here are [alleged] anti-trust issues in the deal,” Ms. de Lima said.

Executive Order 45, signed by President Benigno S.C. Aquino III on June 9, designated the Justice department as the country’s Competition Authority. It was tasked to investigate violations of competition laws and prosecute violators; “supervise competition in markets” by enforcing such laws; as well as prepare, publish and disseminate studies and reports on competition to inform and guide industry and consumers. It will target monopolies, cartels and other “combinations in restraint of trade”.

The order also formed an Office for Competition under the Justice secretary’s office to carry out the Competition Authority’s functions.

Ms. de Lima said the guidelines, which are being deliberated by an internal panel composed of herself, Justice undersecretaries and assistant secretaries, among others, will adhere to the provisions of Mr. Aquino’s directive.

“We also had to keep in mind that for this year, the budget [for the competition office] will come from the DoJ (Department of Justice) budget and it will only be next year that a full allocation will be made for the office,” she added.

Ms. de Lima has said that the competition office , likely to be staffed by current state lawyers, would also engage the services of technical consultants and advisers from the private sector."

Previous related BusinessWorld post here.

Philippines Graphic responds to Nestle

"Nestle response has no legal basis - NPI distributors"

by Joel Pablo Salud

Published in Business Mirror and Philippines Graphic on 21 April 2011

(Original article available online here)

"Nestlé Philippines, Inc.’s (NPI’s) response to accusations of predatory pricing appears to be based on unfounded generalizations than what is actually founded on law.

Atty. Lorna Kapunan, counsel for Nestlé’s distributors, said what Nestlé has is a “vertical price agreement,” which is a competition restriction between firms that governs products made by NPI. This agreement “is still considered predatory pricing.”

Nestlé’s distributors have accused the biggest food conglomerate of predatory pricing, and ending distributorship agreements without so much as fundamental basis based on Philippine laws.

“The practice of vertical restraints are closely monitored by international courts, with many of the agreements being ruled as unlawful per se. NPI currently engages in the practice of setting a minimum price by which its Filipino distributors are required to sell their products. This does not take into consideration the operational costs shouldered by Filipino Small and Medium Enterprises to distribute the products. Decent profit margins are therefore very difficult to attain, considering capital outlay and the lack of marketing and promotional support from NPI.”

Counsel added that non-compliance with the low prices results in NPI threatening to end the distributorship agreement. Thus, small- and medium-scale entrepreneurs (SMEs) like FDI2 find themselves scrambling to reach break-even status by trying to honor the terms of agreement.

Nestlé Philippines’ head of Corporate Affairs Edith de Leon acknowledged in the reply that Nestlé products are not the cheapest in the market and that competition among lower-priced products remains intense. De Leon’s statement allegedly avoids the issue of vertical price agreements with its Filipino partners.

De Leon also stated that Nestlé complies with the country’s laws and standard trade practices, a statement Atty. Kapunan quickly puts in context. Kapunan stressed that NPI knows there are no standards on vertical price agreements in the Philippines.

The Senate is now in the thick of addressing this matter and other issues regarding antitrust through the promulgation of various bills in the Upper House.

According to Atty. Kapunan, by Swiss standards, NPI’s distributorship model is patently illegal. The standards laid down by the Swiss Competition Council in Switzerland would make NPI’s existing distributorship agreement here restrictive of trade, thus subject to penalties.

Similarly, she mentioned, that the case mentioned by de Leon filed with the Department of Trade and Industry (DTI) was dismissed, not for lack of merit as she previously stated, but for lack of jurisdiction on the part of the DTI.

“While FDI2 has filed a motion for reconsideration of DTI’s decision, the case itself is public domain and anyone may see that DTI did not even delve into the merits of the case. To date, no case against NPI, with the exception of the one filed by FDI2 in DTI, has been dismissed,” Kapunan explained.

Moreover, accusations made against Nestlé by its distributors may not be quite as unfounded as the company would have the public believe.

In the case of “Nestlé Philippines, Inc. vs. FY Sons, Inc.” (05 May 2006, G.R. No. 150780), the Supreme Court ruled that FY Sons, also a Nestlé distributor, was lured to invest huge sums of money, time and effort in order “to abide by such distributorship agreement, and to develop market areas for [Nestlé’s] products.

Thereafter, Nestlé breached the distributorship agreement by committing various acts of bad faith such as, but not limited to, failing to provide promotional support, and concocting falsified charges to cause the termination of the distributorship agreement without just cause.”

These incidents are not new, Kapunan explained, as NPI executives John Miller, Shahab Bachani and Doreswamy Nandkishore have been charged with “perjury for issuing conflicting statements in their affidavits with respect to the policies of Nestlé in agreements with their distributors and other Filipino partner firms.”

Cases against Nestlé are now pending in the courts of Quezon City and Makati City. G"

Manila Standard response to Nestle Philippines' statement

From "To The Point" column by Emil Jurado, MANILA STANDARD TODAY, 12 April 2011
(Full column available online here)

"***

Last month, I had a nice “exchange” with Ms. Edith de Leon, head of corporate affairs of Nestle Philippines Inc. over a column I wrote about predatory pricing charges leveled against the food and beverage giant. I mentioned some of the reasons why Nestle is now regarded as the poster boy of corporate bullying in the Philippines. Ms. De Leon reacted by writing an official letter to this paper denying everything.

Without going through the exact nuances of the issue again (I wrote a detailed rejoinder to her reply in my column last March 23) I have to say that the way Nestle has replied to the issue of predatory pricing, clearly a violation of the law, has left me somewhat bewildered.

For the sake of brevity and uniformity, Nestle’s letter to the Manila Standard Today was practically the same one it sent to other newspapers that wrote about the pending cases. That’s perfectly understandable until you consider that the company’s official reply was wrought with inaccuracies and misleading statements. I tackled these one by one in my March 23 column, and Nestle has been silent since.

Silent, that is, until a reliable source called me about the articles I had written. Obviously, he spoke on the condition of anonymity, and emphasized that no one from Nestle (apart from Ms. De Leon) was authorized to comment on the issue.

What he told me, however, made my senior citizen skin crawl. My gulay, talk about a snake pit of corporate intrigue and conspiracy allegedly happening at Nestle!

***

It seems that NPI is fully aware that it is standing on weak ground on the pricing and ethics controversies filed against it. This is compounded by the fact that several of its bankrupt distributors have gone to the Department of Trade and Industry to file their complaints. Moreover, a number of the company’s top executives – John Miller, Shahab Bachani and D. Nandkishore - are facing perjury charges in both Quezon City and Makati courts.

Nestle has reportedly realized that the facts are simply too glaring to be argued away or reasonably disputed. In other words, the company has dug itself a hole that it can’t seem to climb out of. There’s also jurisprudence working against Nestle since the Supreme Court ruled against the company five years ago (Nestle Philippines Inc. vs. FY Sons Inc., G. R. No. 150780), for exactly the same things it is now being accused of.

The problem lies in the company’s annual stockholders meeting this coming April 14. If someone should bring up the situation in the Philippines, how would that be addressed? And here’s the jaw-dropping fact: Nandkishore—the very same person facing perjury charges in local courts—now sits on Nestle’s Executive Board occupying a very sensitive position as head of Nutrition.

Allegedly, Nestle’s solution is not to find a way out of the mess. What it is doing now is finding a best possible scapegoat, and Nandkishore has purportedly been singled out. Santa Banana, it seems that his own company is about to throw poor Nandu under the bus!

My source claims that Nandkishore fits the bill perfectly, since the monumental chaos in the Philippines happened under his watch (he used to be the CEO of NPI until he got promoted). Moreover, there are many executives who supposedly questioned his being named to such a senior post within the Executive Committee. Surely, Nandu’s fall from grace only means good things for their job prospects.

Watch your back, Nandu, or you may find yourself crying over spilled milk."

Nestle's idea of fairness and transparency

"Nestle's idea of fairness and transparency"
by Ducky Paredes
22 March 2011, Malaya (original article available online)

“BDO charged that Nestle ‘acted in utmost bad faith and in wanton, fraudulent, reckless, oppressive and malevolent manner.’”

WE wish to assure the public that our activities are conducted in compliance with the Nestle Corporate Business Principles, consistent with universally accepted practices adhering to fairness, transparency and compliance with all applicable laws and regulations. These same principles have governed the way Nestle has done business in the Philippines for 100 years, allowing us to earn the trust of our consumers all these years. In turn, we expect our partners to be guided by the same principles."

This is the assertion of Ms. Edith de Leon, the Head of Corporate Affairs of Nestle Philippines, Inc. (NPI), a Switzerland-based multinational company producing and marketing a wide range of consumer products.

De Leon was reacting to media articles critical of the company’s business practices that, among others, included unjust termination of agreements, predatory pricing, perjury and offering false testimony in evidence.

The particular complaints in this regard were filed by two of its major distributors, Service Edge Distribution, Inc. (SEDI) and FDI Forefront II Trading Corporation (FDI 2).

"Adherence to fairness, transparency and compliance with all applicable laws and regulations." Grandiose words, nice to hear but, if not sincerely meant, amount to nothing.

But how does her company’s actual actuations square with her lofty Corporate Business Principle?

Was Nestle Philippines being fair and transparent when, it ‘’knowingly and deliberately provided false and fraudulent information’’ in 2009 to Banco de Oro regarding the financial status of its distributor, Interbrand Logistics and Distribution, Inc. which was then renewing its loan and credit facility with the bank?

The bank renewed Interbrand’s credit facility and extended it a series of 19 loans totalling P123.25 million in the second half of 2009 on the strength of Nestle’s repeated positive endorsements and certifications about its distributor’s financial stability and payment performance. It turned out (eventually) that Nestle knew all along that Interbrand was in serious financial trouble; yet, just the same, Nestle participated in what amounted to a cover-up in order to protect and advance its own business interest.

Banco de Oro took Nestle to the court, accusing it of having "knowingly made a false representation with intent to mislead the bank into renewing Interbrand’s credit facilities and allowing Interbrand to make further availments under the same to finance the purchase of (Nestle’s) products which would eventually lead to (Nestle’s) benefit."

BDO charged that Nestle "acted in utmost bad faith and in wanton, fraudulent, reckless, oppressive and malevolent manner."

Referring to the complaint on predatory pricing filed by SEDI and FDI 2, De Leon said this was dismissed by the Department of Trade and Industry. True or false?

According to the two distributors, what actually happened was that the DTI declined to make a definitive ruling on the merits of the case supposedly because it did not have jurisdiction over the complaint, due to the lack of applicable jurisprudence and the absence of pertinent laws on predatory pricing and unfair trade practices.

This is precisely why several anti-trust bills seeking to curb these abusive practices have been filed in the Senate and in the House of Representatives.

The fact is that top Nestle officials are also facing perjury charges before courts in Quezon City and Makati City and these are now being evaluated by prosecutors of the Department of Justice. Named respondents are Nestle chairman and CEO John Martin, chief financial officer Peter Noszek, business executive manager for liquid beverages Shahab Bacani and regional sales manager Jose Ceballos.

Was Nestle also being transparent when it quietly shipped out Peter Noszek, who is now reportedly in the US? Of course, there was no Hold Departure Order for him, but Nestle insiders say that Noszek’s departure was kept so hush-hush that they only found out about it one morning via an office advisory.

It may be assumed that the company also did not inform the DOJ officials concerned about Noszek’s departure. So he is now effectively out of reach of the country’s judicial system. Neat, isn’t it? Sure it would be -- for a criminal organization but, for a legitimate business? One has to wonder if similar "reassignments" are also in the works for chairman and CEO John Miller and other officers.

De Leon also asserts that Nestle’s pricing policies are compliant with the laws as well as recognized standards of trade practice in the country. But does Nestle include in these "recognized standards" the distributors’ expenses in distributing and delivering Nestle’s products to the wholesalers, dealers and other retail outlets? Does it also take into account the financing cost and high interest rates that distributors have to shoulder in purchasing Nestle products?

Both SEDI and FDI 2 claim that the price bulletins issued by Nestle for its products are so inflexible and do not take these factors into consideration.

They were allegedly also ordered by a Nestle regional sales manager to give unrealistic discounts to a favored group of wholesalers.

They also allege that Nestle’s unfair price strategy, aggressive sales targets and unilateral suspension of in-house financing arrangement caused them to incur heavy losses and placed FDI 2 in dire financial straits. This purportedly prompted Nestle to demand that additional capital be infused into FDI 2, which was complied with, using borrowed money.

In spite of having complied with the demand for additional capital, Nestle allegedly terminated the distributorship agreement on December 21, 2007. This forced the company to cease operations, with the result that it was unable to pay its employees, or to give their 13th month pay.

Again, was Nestle adhering to ‘’fairness and compliance with all applicable laws and regulations" in the case of its distributor, FY Sons, Inc.?

Nestle sued FY Sons before the Makati Regional Trial Court in relation to a dispute over supposed unpaid accounts. But the court handed down an adverse ruling against Nestle and ordered it to pay FY Sons P1 million in actual damages and P200,000 as exemplary damages and attorney’s fees. Nestle elevated the case to the Court of Appeals but to its chagrin, the CA upheld the lower court’s ruling and even raised the penalty to P1.5 million.

It was established in both the Regional Trial Court and the Court of Appeals that Nestle "indeed failed to provide support to respondent; unjustifiably refused to deliver stocks to respondent; the imposition of P20,000 fine was void for having no basis; that petitioner failed to prove respondent’s alleged outstanding obligation; that petitioner terminated the agreement without sufficient basis in law or equity and in bad faith; and that petitioner should be held liable for damages."

Nestle took the case further up -- to the Supreme Court but Nestle again received a stinging rebuff when the High Tribunal sustained the CA decision. The SC ruled that Nestle failed to prove that FY Sons owed it the sum of P995,319.81 and that the seizure of the distributor’s time deposit of P500,000 was improper.

The Court ordered Nestle to refund the amount, with interest.

Furthermore, the SC castigated Nestle for "being at fault and in bad faith" and rejected its plea for moral damages and attorney’s fee from FY Sons.

In effect, the Supreme Court said Nestle was guilty of violating certain laws and of committing unfair trade practices.

This is what Ms. De Leon calls Nestle’s "adherence to fairness, transparency and compliance with all applicable laws and regulations?"

***

Bullies in the spotlight

"Predatory Nestle" by Ducky Paredes (original article appears here).

NESTLÉ S.A, one of the largest food and nutrition companies in the world, operates in 86 countries and employs 283,000 people. Here, it is Nestlé Philippines, Inc. (NPI).

NPI is once again the subject of complaints, filed by two of its Filipino distributors for allegedly engaging in predatory pricing and for two separate cases of perjury.

What is predatory pricing? Wikipedia defines it as "the practice of selling a product or service at a very low price, intending to drive competitors out of the market, or create barriers to entry for potential new competitors. If competitors or potential competitors cannot sustain equal or lower prices without losing money, they go out of business or choose not to enter the business."

What is surprising here is that the complaint of predatory pricing comes from its own distributors who feel that Nestle itself is the predator that would devour them.

The complainants are Service Edge Distribution, Inc.(SEDI) and its sister firm, FDI Forefront II Trading Corporation (FDI 2). The first has been Nestlé’s distributor for the Caloocan, Malabon, Navotas and Valenzuela (Camanava) area since December 2001 while the latter became the distributor for northwestern Quezon City in July 2003.

The predatory pricing complaint is based on Nestlé’s alleged violation of Article 186 of the Revised Penal Code. Docketed as I.S. No. XV-03-INV-10Q-06071, the case is now pending with Quezon City Assistant City Prosecutor Maribel Arriola. Among the respondents is NPI’s former chairman and CEO Doreswamy Nandkishore, now said to be with the Nestlé main office in Switzerland.

The two distributors say that Nestle, among other things, has been forcing them to sell the company’s products to their own clients at prices controlled and dictated by Nestlé. These price bulletins do not consider the actual cost of distributing these products, and other attendant expenses such as municipal taxes of up to 1 percent of sales. Distributors are compelled to follow the price bulletins under threat of termination of their distributorship contracts.

Apart from this questioned pricing strategy, the two distributors also accuse Nestle of withdrawing its promised marketing support. One specific instance cited was when Nestle allegedly ended the in-house financing of inventories that provided a 30-day credit line to distributors. Nestle used to extend its credit line to 45-60 days without penalty to align it with the actual periods within which the distributors’ own clients usually make the payments.

They said that in place of the in-house financing, and without consultation with its distributors, Nestlé Chief Financial Officer Peter Noszek unilaterally negotiated with different banks whereby the banks would provide distributors with revolving promissory note lines (RPNL) on a strictly 30-day credit limit. Since their own clients usually do not pay within 30 days, the distributors are forced to shoulder higher interest rates and other penalties that increase their operating costs. In effect, Nestlé shifted the cost of financing inventories from Nestlé to the distributors.

Among the allegations was that Nestlé Area Sales Manager Elisa Lupena, "in conspiracy with the other respondents even forced complainant FDI 2 to deliver new supplies to customers that owed FDI 2 more than P1 million in unpaid deliveries." Nestle’s Regional Sales Manager Jose Ceballos, "in conspiracy with his co-respondents, likewise ordered complainant SEDI to give a unilateral discount of five percent (5%) discount to George Cua of the Welcome Group of Quezon City."

The same discounts were purportedly ordered by Ceballos to be given to other wholesalers and supermarket customers in its area. These discounts resulted in losses for the distributors of P8.4 million in 2007 and P8.6 million in 2009. In spite of these losses and additional expenses, they were not allowed to go beyond the prices specified in the price bulletins. The complaint includes the accusation that although additional capital from borrowed money was infused into FDI 2 in compliance with the demand of Nestlé, the company still terminated the former’s distributorship agreement on December 21, 2007, or four days before Christmas Day. Thus, the firm was forced to stop operations and lay off its employees.

The perjury charges were an offshoot of the September 17, 2010 counter-affidavits of four top officials of Nestlé, The four are Nestlé Chairman and CEO John Martin Miller, Regional Sales Manager Jose Ceballos, Chief Financial Officer Peter Noszek, and Business Executive Manager for Liquid Beverages Shahab Bacani.

In their counter-affidavits, the four officials purportedly committed perjury and offered false testimony into evidence. These are alleged in several instances covering the issues of whether incentives and discounts are mere privileges or a matter of right, the infusion of additional capital in FDI 2 and the subsequent termination of its distributorship contract, the supposed indiscretions of Area Sales Manager Lupena, the mediation entered into by the contending parties, the granting of discounts to certain favored wholesalers as ordered by Lupena and Ceballos

The perjury charges also touched on the separate disbarment case filed by the distributors against Nestlé lawyer Aileen Cero for her alleged violation of the 2004 Rules on Notarial Practice (A.M. 02-8-13-SC) when she notarized a document concerning a negotiation wherein she was a participant.

Complainants also cited Nestlé’s claim that that it never acted in an oppressive, unjust or illegal manner in its dealings with its distributors. They referred to the judgment handed down by the Second Division of the Supreme Court in the case of Nestlé Philippines, Inc. vs. FY Sons, Inc. on May 5, 2006 under G. R. No. 150780.

Nestle filed the case in the Makati Regional Trial court which ruled against it and ordered the multinational to pay defendant FY Sons P1 million in actual damages, P100,000 as exemplary damages and P100,000 as attorneys fees.

Nestlé went to the Court of Appeals where it again lost. In fact, the CA even increased to P1.5 million the amount of actual damages that Nestlé was ordered to pay FY Sons. This was for the unjust termination of the distributorship agreement with FY Sons, unfair imposition of fines, and confiscation of the latter’s P500,000 time deposit to secure FY Sons credit purchases.

Nestlé elevated the CA decision to the Supreme Court but was again rebuffed when the High Tribunal, in a decision written by then Associate Justice Renato Corona, affirmed the ruling. The Supreme Court found Nestlé "at fault and (acting) in bad faith."

Banco de Oro (BDO) also sued Nestlé for P109.792 million in damages, together with its distributor, Interbrand Logistics and Distribution, Inc. The case involved hundreds of millions of pesos in loans and credit facilities that the bank extended to Interbrand on the strength of endorsements and certifications that Nestlé made concerning the financial standing and credit worthiness of its distributor. It turned out that the endorsements and certifications were fraudulently issued.

BDO charged the defendants of having "acted in utmost bad faith, and in wanton, fraudulent, reckless, oppressive and malevolent manner." In particular, BDO accused Nestle of having "knowingly made a false representation with intent to mislead the bank into renewing Interbrand’s credit facilities and allowing Interbrand to make further availments under the same to finance the purchase of (its) products which would eventually lead to (its) benefit".

Nestlé Philippines, Inc. is a member of the European Chamber of Commerce. We wonder if there is any action that this organization is contemplating in regard to this particular multinational considering the many complaints lodged against Nestlé Philippines, Inc..

***

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