Energy Food and Drinks airs side on DOJ ruling issue

Last 14 August 2012, Alex Magno wrote an opinion piece titled “Disincentive.” He critiqued the ruling of DOJ undersecretary Vicente Salazar for purportedly adding one more disincentive to foreign direct investments in the country. While it is expected of opinion writers to be critical and searching of the undertakings of various segments of government, this attitude must be poised with fairness and objectivity.

It is this balancing act which Mr. Magno sorely failed to perform. Mr. Magno regrettably caused disservice to his readers by writing an article hinged upon contorted facts, assumptions and conjectures. These in turn make for specious arguments and conclusions bearing no other purpose but to muddle the truth and debase a man’s good reputation.

At the start of the article, Mr. Magno narrates that T.C. Pharmaceutical Industries Inc. (TCPI) terminated the distributorship agreement it executed with Energy Food and Drinks Inc. (EFDI). This premise is mistaken. The fact of the matter is that: the issues of whether or not the exclusive distributorship agreement has been terminated; and if EFDI may enforce its rights as the exclusive distributor of Red Bull products under the agreement are yet to be resolved in a pending civil action for Enforcement of Contract and Damages filed by EFDI before Branch 101 of the RTC of Quezon City involving the said parties. The bare assertion made by TCPI that it has already unilaterally terminated the distributorship contract does not automatically determine the said issues in its favor.

Reading on, Mr. Magno suggested that as retaliation to the supposed termination of the exclusive distributorship contract, EFDI filed various criminal nuisance and harassment suits against TCPI and its local distributor Maryland Distributors Inc. (MDI). Contrary to such claim, the cases filed against TCPI and MDI are not nuisance suits meant to harass the parties. This is evidenced by the pending criminal case for Unfair Competition before the RTC of Baguio. Notably, based on the same set of facts, determination of probable cause leading to the elevation of said case to trial only proves that there is sufficient evidence to conclude that a crime has been committed and the parties involved committed said crime. Simply put, the facts alleged by EFDI are meritorious and the case was filed to protect its rights as the exclusive distributor of Red Bull products in the country and not for any malicious purpose.

Similar with the investigating prosecutor in the Baguio case, DOJ undersecretary Salazar, exercising his administrative discretion, only made an independent deliberation of the facts leading to the reversal of the Resolution of the Legazpi City Prosecutor. After all, it is the duty of DOJ undersecretary Salazar to make an independent consideration of the facts and not merely rely on the findings of the Legazpi City Prosecutor. Surely, contrary to Mr. Magno’s insinuation, there is nothing irregular with a reviewing officer having a divergent decision with that of the investigating prosecutor.

Mr. Magno weaves the biggest fib by making it appear that the unfair competition and violations of the intellectual property law charges unjustly implicates the Thai company committing said acts against its own product. As highlighted in his article, it is asked: “How can a manufacturer be sued for unfair competition for its very own product when there are no competing products to begin with? Furthermore, the Thais could not figure out how it was possible they could violate the intellectual property law for their own product.”

The criticized DOJ Resolution places things in their proper perspective when it opined that unfair competition is defined as the passing off or attempting to pass off upon the public, the goods or business of one person as the goods or business of another, with the end and probable effect of deceiving the public. It further states that the scope of protection against unfair competition is not limited to the protection of the manufacturers of goods but extends to those who deal with such goods.

There is no question that TCPI is the owner of the Red Bull products, however, what is in issue here is not the rights of TCPI as owner and manufacturer but the rights of EFDI as the exclusive distributor of the products in the country.

The DOJ Resolution notes that EFDI as exclusive distributor of Red Bull products in the country from 1993 up to the discovery in the market of Red Bull products with tampered labels in 2009, or for a period of 16 years, has established a trade or business in which it had acquired goodwill. Accordingly, EFDI’s rights granted under the exclusive distributorship agreement may not be diminished nor rendered illusory by any act of TCPI, even as the owner and manufacturer of the product, and MDI. Any acts which result in the intrusion and infringement of EFDI’s rights as exclusive distributor of Red Bull products in the Philippines are acts of unfair competition.

In promulgating the assailed Resolution, DOJ undersecretary Salazar did not add disincentive for the Thai company to invest in the country, if at all, he sends a firm message to foreign corporations that wish to avail of the privilege to conduct business in the country to follow the laws and rules in our jurisdiction for the protection of our local businesses but more importantly, for the protection and benefit of the public.

To serve the interests of truth and fairness, it is our request that you allow for this letter, or excerpts herein, to be published in your newspaper. In the spirit of transparency and to give equal opportunity for all parties to air their side of the story, we urge your publication to grant such request.