Thursday, December 24, 2009


I don't particularly like Senator Miriam but I think she's the only senator with balls (yup, a she-male!) to finally push a law that prevents abuses by giant corporations such as PLDT, JG Summit, SM, Nestle (Sorry I had to mention it.) This law has been pending for years now and the corporations actively lobby against it because it will definitely clip their wings!

Anti-trust law. No more abuses. Filipino SME's and consumers protected. No more bad service or coffee. I say this with a lot of hesitation but, GO MIRIAM!

The Real Life Soap (or shall I say, Coffee) Opera as written by Yutani Weyland (

Monday, December 21, 2009

Nestle Philippines: Good scheming for a good life

Nice tag line. You can bet that they mean it in every sense of the words.

From 2003 to 2007, a distribution company operating in the Northern Quezon City area was illegally terminated for its services by Nestle Philippines, Inc.

Here is an overview of what is happening now not only to that Northern QC company but many others all over the country.

Nestle lures businessmen to become Nestle distributors that start with priming activities such as large amounts of actual start-up promotions, incentives and assistance (i.e. monetary, equipment, or services). Once a distributor takes the bait, they are slowly reeled in, with promising rates of return and greater rewards. With good early net earnings, distributors were encouraged to invest more money into the distribution business.

Once further engaged, Nestle systematically and deliberately withdraws these incentives. The distributor then has to play the investment game with the rules unfairly set in the favor of themselves where more often than not lead's to the distributor's demise.

When distributors are irretrievably committed in substantial financial manpower, and equipment investments, Nestle bullies them into absorbing the entirety of the financial risks. With this particular distributor, it started in 2006. All the hard work is passed on to the distributors through cleverly worded contracts of adhesion.

Fast Moving Consumer Goods (FMCG) distribution is generally a high volume low-margin business. Since trading and retailing in the Philippines is dominated by small and medium scale businesses, the average distributors of most FMCG manufacturers only have PhP 2-5 million in paid-up capital.

When its inventories financing was transferred to local banks in 2006, Nestle started to unfairly push and require its distributors to break barriers in order to sell more of their products without assuming any of the risks. Nestle then began to impose unreasonable sales targets and increased them geometrically ensnaring the distributor into a money trap.

This is their story and these are the players in the game:

1. John Miller - Current President and CEO of Nestle Philippines Inc. (NPI). Problems did not occur under him but being unfamiliar with the situation or perhaps covering his own ass, he does not want to "take the bull by the horns". He allegedly lets his committee decide what should be done, whether right or wrong, especially with how they are trying to weasel their way out of the Central Luzon incident. Could be guilty of sin of omission. Must step up and be morally upright to salvage reputation.

2. Nandu Nandkishore - Former President and CEO of NPI, now global head of infant nutrition. Problems exploded during his tenure. Perhaps, he is the instigator of the "weasel-your-way-out-by-using-SIZE-to-bully-the-small-Filipino-entrepreneur" strategy. Managed to escape by being transferred out to Switzerland. Perhaps, he is washing his hands now and leaving it up to John Miller to fix.

3. Shahab Bachani - Current Sales Director of NPI, to be transferred to Brand Marketing next January. Always blames the distributor for any problem and never himself nor his company. Perhaps, the main proponent of "Hit Target at All Costs" mentality leading to massive discounting (yet until about September, he denies that massive discounting exists). Pretends he wants to listen to the problem, concerns and opportunities of the distributor but apparently never retains anything. Possibly autistic.

4. Atty. Belen Caberte - Former Legal Chief of NPI, now serving as legal consultant to fix the mess she partially was responsible for. Reputation for being an excellent labor negotiator by allegedly bribing and granting favors to labor leaders. Purported NPI policy maker of "Using-your-own-money-against-you-to-make-you-sign-a-general-quitclaim" passing it off as a standard policy and therefore is morally correct. Also heard to direct their external legal team to delay cases against Nestle to wear out the poor Filipino victim.

5. Atty. Russell Andaya - Current Legal Chief of NPI, former second in command of Atty. Caberte. Apparently does whatever the Caberte and the board says.

6. Peter Noszek - Chief Finance Office of NPI. Possibly the one of about three sane figures in the NPI board but could be overruled by the other clowns. Excellent marathon runner.

7. Alejandrina Puno - Director of Corporate Communications. Active member of PANA board - "Truth in Advertising" yet was found out to contact by various columnists, opinion writers and editors of various newspapers to stop writing "negative" things by threatening to pull out Nestle's advertising from various broadsheets. She clearly violated the standard of PANA of not letting advertising budgets curtail journalistic freedom.

8. Atty. Aileen Cero - Legal Office of NPI. Allegedly notarized a document she negotiated that is in clear violation of notarial rules on conflict of interest. Implementor of the "Using-your-own-money-against-you-to-make-you-sign-a-general-quitclaim" NPI standard policy. Has pending disbarment case against her. Allegedly, was doing forum shopping by filing a case in a different court in relation to the pending disbarment case in the Supreme Court.

Pugad Greedy: A History of Abuse and Bullying


Nestle drops $6 million demand from Ethiopia

by Global Information Network
January 4, 2003

New York, Jan 1 (GIN) -- Under pressure from aid agencies and mounting bad publicity, Swiss-based multinational Nestle has dropped its demand for $6 million from the famine-stricken Ethiopian government.

Nestle claimed the $6 million was owed by Ethiopia since the former regime lead by Haile Mengistu nationalized a livestock company owned by a Nestle subsidiary.

Ethiopia, in the middle of a ravaging famine that threatens millions of lives, had offered $1.5 million to cover the debt based on the assessed value of the company in 1975, the time of the nationalization. But Nestle rejected that amount, pushing for the value at the current rate of exchange between the dollar and the Ethiopian birr.

The World Bank, which had been negotiating on behalf of the Ethiopian government, reportedly expressed surprise at the hard line taken by the multinational which owns Nestle. "This $1m in our opinion is justifiable. But this is not the point of view of Nestle. They are trying to get as much as they can," said a World Bank spokesman in a published report.

Nestle had just about wriggled free from years of bad publicity over its aggressive marketing of babymilk formula in the developing world. In addition to baby formula, Nestle owns Perrier water, Haagan Dazs ice cream, Nescafe, dozens of candy bars, breakfast cereals and it recently acquired a majority stake in U.S.-based Dreyer's Grand Ice Cream.

Oxfam, a British aid agency, had condemned Nestle's stance, saying there was no justification for diverting Ethiopian Government money to a multinational which made profits of about $3.9 billion in the first six months of last year.

"This is a company that has said publicly that one of the things it wants to do in the world is to help make poor people better off. This is a company that is trying to squeeze out of one of the poorest countries in the world $6 million," said Oxfam's director of policy in the UK, Justin Forsyth.

After reviewing the harsh publicity it was receiving, Nestles chief executive, Peter Bradeck, agreed to accept the $1.6 million Ethiopia had offered to settle the case, adding that the sum would be donated to famine relief along with any other money from the final deal.

"We are not interested in taking money from Ethiopia when it is in such a desperate state of human need," said Bradeck. (Yah right, recanting ONLY after public criticism!)

Ethiopia, with average gross domestic product per person of just $100 a year, faces the prospect of its most serious famine since 1984 after drought caused widespread crop failures earlier this year.

With Nestle's claim off the table, the government still faces claims by other multinationals including another UK-based conglomerate reportedly asking for more than $20 million. According to a report by the BBC, up to 40 governments and individuals are making claims against the Ethiopian Government for money lost during the communist regime.

Wednesday, December 23, 2009

A Pattern of Bullying

Emil Jurado.gif

* * *

Several months ago, I wrote about this food multinational corporation that was bullying one of its Filipino distributors. Considered the world’s largest food and drink company, this multinational had terminated its contract with a distributor and had threatened to do the same with another distributor. The reason stated was conflict of interest.

The alleged conflict of interest was based on Distributor 1’s shareholders’ discovery that one of its executives, a married man, was having an affair with a sales executive of the multinational. The relationship led to double the amount of discounts on the multinational’s goods given to retailers (such as groceries) by the executive. This led to brisk sales, but at a loss to the distributor.

The multinational made money all right because it sold its brands, and their executive got recognition and financial incentives because of her performance. However, all these were at the distributor’s expense. Even more disturbing, an independent audit showed that there were “phantom deliveries” of products to the distributor, non-existent goods, but still paid for because of the connivance between the parties to the illicit affair.

* * *

When the distributor brought up the illicit relationship to the multinational executive’s superiors, they shrugged it off as an affair between two consenting adults. This was despite the company’s Corporate Code of Ethics that enjoins its management and employees to “avoid even the appearance of impropriety in its business relationships on behalf of the company.” In the code, there is also a provison that says “sanctions will be applied in the event of misconduct or abuse of established corporate standards.”

Well, sanctions were applied all right, but to the wrong party—my gulay, to the distributor!

Eventually, the multinational had a dialog with the distributor to settle their differences. Nothing came out of it.

As it turned out, this was not an isolated case. Another sales employee of the multinational coerced five Filipino distributors of the company in Central Luzon to pass on goods to Metro Manila wholesalers at 8 to 10 percent discount.

Manila distributors like Distributor 2 could not compete with such low prices, but because the multinational forced it to “hit targets at all costs,” it had no choice. In the process, it lost money.

* * *

My gulay, the distributors later found out that the customer offering preferential discounts was the executive’s husband. They discovered this when the checks they were given by the customer bounced. Upon investigation, the checks were traced to the executive’s account. And the distributors were not the only ones left holding the bag. Just when the couple’s scam was discovered, the executive’s husband got cash advances from the Metro Manila wholesalers for goods they never got. One of them even lost P22 million.

When the distributor approached the multinational for redress, the company did not accept any responsibility and instead offered to help only as far as paying for the distributors’ legal expense to sue. However, independent lawyers say the executive, by her verbal or written orders, some in documents with the multinational’s letterhead, bound the company to take responsibility by virtue of the doctrine of “apparent authority.”

What do you do with a bully who runs roughshod over its distributors? You take him to court!

By Emil Jurado, Manila Standard

Tuesday, December 22, 2009

Another Journalist Giving His View

Left in the lurch
WHEN the regional sales manager, sporting the rank of vice president in a multinational company, engages in malpractice in the market, can the latter be held liable?

Apparently not in the view of this giant European multinational company whose RSM in Central Luzon and her husband have allegedly duped six wholesalers or major distributors into losing millions in a clever discount scheme.

The RSM had been doing great, surpassing the MNC’s sales targets for which Central Luzon bagged the “Best Area Award” in 2007 and 2008. Why she suddenly went missing in the third quarter of 2009 have been recently uncovered.

It was discovered that the RSM had instructed distributors under her to give eight-percent to 12-percent discount to a particular client, it turned out connected to her husband.

As the distributors themselves were entitled to only a four-percent discount, they stood to lose six-to-eight percent. So they balked but eventually agreed on the RSM’s written assurance — on MNC letterhead — of a refund.

Thus, the serial bulk repeat orders for the MNC’s consumer products by the husband-favored customer who, it was soon found out, touted the same discount scheme to Metro Manila wholesalers — enabling them to undersell the MNC’s metropolitan distributors.

Talk of a conjugal sting operation, Jose, not to mention that soon enough the checks issued by the husband-favored customer to Central Luzon distributors started to bounce and, worse yet, bounced right back to the missing RSM’s bank account.

As even the most shrewdly plan of mouse and man, to paraphrase the adage, has gone woefully awry — the RSM-supervised and gypped CL distributors have had to desperately turn to the European MNC for restitution.

No dice, Jose. Aside from token assistance to defray the legal fees, the MNC has abdicated its duty to be its RSM’s keeper, leaving the CL distributors in a lurch.

The MNC is renowned for its virtually incalculable resources. Reports say that its 2008 profit from global operation is in the neighborhood of $16 billion. Its products, by the way, include coffee, milk (powder and liquid), coffee creamer, chocolate, ice cream, food and beverage.

So, in the Yuletide spirit that hopefully also animates corporate social responsibility, I believe the situation isn’t as forlorn as it seems.

A lawyer-friend, 42 years in corporate and criminal law practice, agrees that the MNC properly approached could be persuaded to feel bound by the acts of its missing rogue RSM.

Indubitably, he says, the RSM’s dealings with the distributors in Central Luzon were for and in behalf of her employer, given the authority that the MNC has given her.

Thus, in light of what has befallen the distributors, it might not have happened if the MNC had counter-checked its RSM’s conduct in the market. Why shouldn’t the MNC be liable for the distributors’ losses if due to its negligence?

Paging the Department of Trade and Industry and Securities and Exchange Commission legal departments.

The Squishing of the Lowly Pinoy Entrepreneur by the Giant Multinational

Throwing One's Weight at its Best!

Saturday, December 19, 2009

'Manlolokong' multinational firm by Al Pedroche, December 19, Pilipino Star

ISANG multinational firm ang dawit sa kontrobersya. Isang babaeng regional sales manager (RSM) nito sa Central Luzon ang “nang-onse” ng mga distributors. Ang kompanya ay gumagawa ng dairy products. Umaabot sa US$16-billion ang tinubo nito para lang sa taong 2008.

Lima sa anim na distributors nito ang natangayan ng “daang-milyong piso.” Sa marketing setup ng kom panya, ang mga regional sales manager (RSM) nito ay nag-utos sa mga distributors na magbigay ng discount sa mga customers.

Inutusan ng lady RSM ang mga Central Luzon distributors na magbigay ng walo hanggang sampung por syentong diskuwento sa isang “espesyal na customer” na malakihan kung humango ng produkto. Nangako ang lady RSM na ibabalik sa distributors ang sobrang discount. Kaugnay nito, may written commitment ang lady RSM na nakasulat sa letterhead ng multinational firm. Ang mga produktong hinango ng favored customer mula sa Central Luzon ay binayaran ng tseke sa mga distributors. Tapos, ibinebenta ang mga produkto sa mga wholesalers sa Metro Manila.

Noong Hulyo ay nagtalbugan ang mga tsekeng inisyu ng favored customer na ibinayad sa limang distributors. At ang grabeng nangyari, hindi nai-deliver ang mga produkto sa mga wholesalers na nagbayad ng cash advance. Umaabot daw sa P30 milyong halaga ang nata ngay sa isa sa mga distributors. Samantala, hindi naman malaman ng isang wholesaler kung papaano mababalik sa kanya ang P22 milyong ibinigay niya sa favored customer bilang advance payment. Kaya pala, ang asawa ng lady RSM ang nagpapatakbo sa negosyo ng favored customer. Malinaw ang anggulong sabwatan.

Agad namang ipina si yasat ng multinational firm ang pangyayari pero sina bing wala silang sa gu tin sa ginawa ng lady RSM. Wala yatang corporate ethics ito. Kasalanan ng kanilang top executive sa bansa eh ayaw nilang panagutan? Grabe iyan!

Friday, December 18, 2009

The Miserly Swiss - Nestle

THIS is a re-telling of a fairy tale that did not end happily ever after. You read about it in this column before. It is about the biggest food multinational (MNC) in the world and one of its Filipino distributors.

It began thus: Once a upon a time this MNC known for producing milk, cereals, coffee and a Chocó drink that supposedly energized young people, appointed FDI Forefront I1 Trading Corp. (FD12) and Service Edge Distribution (SEDI) as two of its many distributors.

FDI2 and SED1 had common minority shareholders.

Since MNC was one of the most desired companies because its products sold like the proverbial hot cakes, FD12 and SEDI were ecstatic.

They were assured of adequate advertising and promotions support, in-house financing to acquire the goods they would resell to retailers like groceries and supermarkets, and products whose cute ads made them fly off the shelves. In return, while boosting the MNC’s sales, they would make for themselves a handsome profit. Clearly, it seemed to them, to be a win-win situation.

FD12 won MNC’s Distributor of the Year in 2005 and 2006 and the MNC’s Area Sales Manager (ASM) assigned to coordinate with FD12 won company awards and corresponding incentives and bonuses.

But along the way, the MNC prince turned into a beast. MNC increased the sales targets or quotas of goods that FD12 and SEDI had to sell even as MNC reduced its marketing and promotional support. Then it forced these two outfits to service additional retailers that had established reputations of being poor payers or had long outstanding receivables. Then sometime in 2006, MNC transferred distributors’ financing to local banks that imposed higher interests rates and a shorter 30-day maturity period.

Yet despite all these limitations, FD12 soldiered on and even won the two awards from MNC. But despite the accolades, the cash flow was miserable and their bottom line was shrinking.

There was a reason for this. Eventually, an independent audit disclosed collusion between the MNC’s Area Sales Manager and the FD12 operations manager. FDI2 was giving retailers discounts way above what FDI2 allowed, in effect practically giving the goods away. Why? Apparently, they were carrying on an illicit affair since the FD12 manager was married.

When FD12 brought this loss – and the reasons behind it – to MNC’s attention, citing conflict of interest, the Pinoy distributor was told that the company considered the affair as one between two consenting adults. This is despite the fact its Corporate Code of Ethics requires its management and employees to "avoid even the appearance of impropriety in its business relationships on behalf of the company." And, what about the Pinoy’s losses?

To add insult to injury, the MNC illegally and, without warning, terminated its distributorship four days before Christmas of 2007 resulting in 100 employees being laid off.

Not content with this bullying, when FD12 went back to get outstanding claims worth P11 million, it was coerced into signing a Release and Quit Claim on future legitimate claims based on a proposed joint audit by the MNC and FD12 of the latter’s financial records. FD12 signed under duress, believing the promise of the MNC lawyer that the company would honor good-faith claims made against it. Of course, the MNC lawyer later denied making such a ridiculous promise.

I wrote about this evil MNC in April and May this year. Under the glare of publicity, MNC initiated talks with FD12 to settle their differences, but, of course, when one is dealing with legendary Swiss misers, nothing came of the talks.

In fact, it gets worse for the MNC’s distributors. Apparently, five of MNC’s six distributors in Central Luzon were also victimized by one of the company’s employees, a Regional Sales Manager who ordered the distributors to give preferential discounts of 10 to 12% to a particular customer who, in turn, sold the discounted goods to Metro Manila (MM) wholesalers at 8 to 10% off. Manila distributors like SEDI and FD12 could not compete with these in-house cut-throat competitors even as they were being bullied to "hit target at all costs." Everyone – in central Luzon and in Metro Manilas ended up losing more money, even as MNC and its managers were hitting their targets and more.

Things eventually came to a head when the checks that the five CL distributors received from the Metro Manila customer to whom they were giving the preferential discount bounced. The bad checks turned out to be from the joint account of the MNC’s Regional Sales manager who, it turned out to be was the wife of the preferred customer!

When the conspiracy surfaced, the manager’s husband got cash advances from the MM wholesalers, one of which forked out P22M for goods he never got. Apparently this MNC manager became one because she was constantly hitting or exceeding her sales targets and under her watch, Central Luzon won Best Area Award in 2007 and 2008.

What did MNC have to say about this financial brouhaha? Again, they dismissed it as the product of a rogue individual, and will only pay for the legal fees of the distributors when they sue the manager who has absconded with the cash and whose whereabouts are now unknown.

However, according to independent lawyers, the MNC manager by her verbal and written orders (some on MNC official letterhead) bound the company through the doctrine of Apparent Authority. The lawyer may be right but trying to get what is due you from the miserly Swiss may be harder than getting blood from a stone.

My advise to the distributors of this MNC: Get together and sue. This MNC should be booted out of this country. This MNC is the moral equivalent of the Ampatuans or the A(H1N1) that victimizes - even kills off -- just about anyone that has dealings with it.


Readers who missed a column can access This is updated daily. Your reactions are welcome at

Monday, December 7, 2009

Corporate Responsibility and Apparent Authority: Where the buck stops.

Little birdies are again abuzz with reports from the “nest” that multinational corporate giant is again up to its old tricks. It seems that this big bully, er, company, is very fond of “washing its hands” off any situation that gets a bit too sticky for its comfort. Will they ever change?

Before the aggrieved parties accept the company’s attempt at distancing itself from the situation, perhaps they should ask themselves the following questions about “Apparent Authority.”

What is Apparent Authority?

Apparent authority is a term used in the law of agency to describe a situation in which a principal leads a third party to believe that an agent has authority to bind the principal, even where the agent lacks the actual authority to bind the principal. In such circumstances, the law will hold the principal liable for the acts of the agent, out of fairness to the third party. There must be some act or some knowing omission on the part of the principal - if the agent alone acts to give the third party this false impression, then the principal is not bound. However, the principal will be bound if the agent so acts in the presence of the principal, and the principal stands silently and says nothing to dissuade the third party from believing that the agent has the authority to bind the principal.

Little birdie asks:

Does this mean that if a high-placed employee/agent of a corporation orders corporation’s business partners to give preferential discounts to appointed wholesalers and promises that the business partners can claim the expenses of the discounts from the corporation that he or she has APPARENT AUTHORITY?

If said employee/agent has APPARENT AUTHORITY, what is the extent of the corporation’s liability to its business partners? Is the corporation legally bound to honor the expenses claimed by the business partners?

Perhaps, to best answer these questions, we need to take a look at actual legal cases where the ruling was in favor of aggrieved parties that were forced in detrimental situations as a result of the doctrine or APPARENT AUTHORITY (or ESTOPPEL).

1.) [G.R. No. 126297, February 11, 2008] PROFESSIONAL SERVICES, INC., Petitioner, vs. THE COURT OF APPEALS and NATIVIDAD and ENRIQUE AGANA, Respondents,

“It must be stressed that under the doctrine of apparent authority, the question in every case is whether the principal has by his voluntary act placed the agent in such a situation that a person of ordinary prudence, conversant with business usages and the nature of the particular business, is justified in presuming that such agent has authority to perform the particular act in question."

2.) (LINTONJUA, JR. et al. vs. ETERNIT CORPORATION et al., G.R. No. 144805 June 8, 2006)

Agency by Estoppel, Elements. For an agency by estoppel to exist, the following must be established:

(1) the principal manifested a representation of the agent's authority or knowingly allowed the agent to assume such authority;

(2) the third person, in good faith, relied upon such representation;

(3) relying upon such representation, such third person has changed his position to his detriment. An agency by estoppel, which is similar to the doctrine of apparent authority, requires proof of reliance upon the representations, and that, in turn, needs proof that the representations predated the action taken in reliance. Such proof is lacking in this case. In their communications to the petitioners, Glanville and Delsaux positively and unequivocally declared that they were acting for and in behalf of respondent ESAC.




While the power and responsibility to decide whether the corporation should enter into a contract that will bind the corporation is lodged in its board of directors, subject to the articles of incorporation, by-laws, or relevant provisions of law, yet, just as a natural person may authorize another to do certain acts for and on his behalf, the board of directors may validly delegate some of its functions and powers to officers, committees, or agents. The authority of such individuals to bind the corporation is generally derived from law, corporate by-laws, or authorization from the board, either expressly or impliedly by habit, custom, or acquiescence in the general course of business.[31] Apparent authority, is derived not merely from practice. Its existence may be ascertained through (1) the general manner in which the corporation holds out an officer or agent as having the power to act or, in other words, the apparent authority to act in general, with which it clothes him; or (2) the acquiescence in his acts of a particular nature, with actual or constructive knowledge thereof, whether within or beyond the scope of his ordinary powers.[32]

FFR wonders when BIG BULLY will ever learn? What will it take for BIG BULLY to take responsibility for the acts of its employees?