Court issues TRO to stop sale of Cosmos to SMC

A Quezon City judge issued yesterday a temporary restraining order (TRO) to stop the sale of Cosmos Bottling Corp. to San Miguel Corp. (SMC).

In an order, Quezon City Executive Judge Monina A. Zenarosa, said "there are strong reasons to believe" that the defendants are proceeding with the sale of their corporations and properties to SMC.

Zenarosa said unless restrained, the sale "would work injustice to the plaintiffs during the pendency of this case and would tend to render any judgement herein nugatory."

The TRO is effective 72 hours from receipt of the order.

The court issued the TRO pending the holding of a special raffle on the petition of the owners of 10 softdrink manufacturing companies bought by Cosmos Bottling Corp. to issue a TRO to prevent the sale of Cosmos to SMC.

The petition also asked the court to rescind the contract of sale of the 10 Visayas-based firms to the Cosmos Bottling Corp. in the amount of P1.168 billion.

In its petition, the Jaz Cola group claimed that Cosmos has about P400 million deficiency of the full and total consideration of the sale under the memorandum of agreement signed by both parties on Nov. 8, 1996.

Iloilo Congressman Augusto Syjuco, Jr., who represents the petitioners, said the P1.168 billion "is not the total consideration of the sale. This is merely a part of the acquisition cost," he said.

He said the total consideration of the sale "includes payment and/or assumption by the defendants of many other obligations," including leasing payments, reimbursable truck leases, advances for operating expenses, advertising and insurance, among others.

Syjuco also claimed that the Cosmos group of the Concepcion family allegedly failed to pay the correct taxes due to the government out of the sale.

He said they were made an "unwitting tool by the defendants in an apparent grand scheme to evade the payment of proper tax due the government by whatever means necessary, whether lawful or not."

The companies bought by the Cosmos group were Jaz Cola Phils., Inc., Jaz Cola Cebu, Inc., Jaz Cola Bacolod Inc., Jaz Cola Iloilo, Inc., Pacific Bottlers Phils. Inc., Asia Plastiko, Inc., Pacific Dairy Queen Inc., Cebu Food and Beverage Resources Inc., Bacolod Food and Beverage Resources Inc., and Iloilo Food and Beverage Resources, Inc.

All these firms were absorbed by Cosmos Bottling Corp. which is being sold to SMC by about P14 billion.

Cosmos questions TRO

In a statement, Cosmos Bottling Corp. (CBC) corporate secretary Cristina Reyes said the TRO seems to have been issued with "undue haste". Reyes said that "the TRO was issued without any hearing conducted and based on evidence we believe are insufficient. Nevertheless, the TRO is effective only 72 hours so it will expire on Monday."

She further said that with the completion of the raffle of the case early yesterday afternoon, she expects the court to schedule its initial hearing on the TRO early next week. She expressed confidence that after the evidence and arguments have been presented in court, there will be no other outcome but the denial of the TRO.

"As we mentioned in our earlier statement, if one has a valid claim, why did it take five years to make that claim, and now, you can sense that everything seems to be suddenly in a rush. It makes you wonder what the real motive is behind the filing of the TRO at this time when there is an ongoing transaction between CBC and SMC," Reyes lamented.

"As far as Cosmos is concerned, it is confident that any legal proceeding will prove that Mr. Syjuco has no valid claims against Cosmos. Mr. Syjuco has been fully paid five years ago, and we have all the documents, the checks, receipts and even the acknowledgment of his own counsel at that time," Reyes said.

She said that "the records will show full payment to Syjuco of the full purchase price plus other obligations that Mr. Syjuco had left behind including taxes due on the transaction. In fact, an audit of the transaction in 1997 shows that there was even an overpayment to Mr. Syjuco, as certified by SGV auditor and Emmanuel Rios, the president of Mr. Syjuco’s company at that time."