Biz buzz: The Firm’s factions both claim victory

Just as both parties in a broken marriage often claim to come out the winner at the end of a bitter and acrimonious union, so it is for the two sides that used to be the country’s most influential (and most feared?) legal outfit, the Villaraza Cruz Marcelo and Angangco law office, or simply “The Firm.”

A few weeks ago, a Taguig court finally made the split between both camps final. One side, of course, is now known as the Villaraza & Angangco (V&A) law office, led by one of the firm’s original main movers, F. Arthur “Pancho” Villaraza. The other side is now known as the Cruz Marcelo and Tenefrancia (CMT) law office led by, among others, former Ombudsman Simeon “Sonny” Marcelo.

When the Taguig court’s resolution came out, both sides came up with their respective statements hailing the decision a victory.

“The dissolution case filed in RTC Taguig by CMT versus V&A partners has been dismissed as a nuisance suit in V&A’s favor,” said its senior partner Bienvenido Somera Jr.

He added: “The court held that CMT caused the wrongful dissolution of the erstwhile CVCLaw (the firm’s name just before both sides broke up) in breach of the partnership agreement, and partners of V&A has the right to continue the business which we did.”

Somera claimed CMT is liable for damages.

Not so, say the CMT people, who almost simultaneously released a statement saying “the legal fight between the partners of the former Villaraza Cruz Marcelo and Angangco (CVCLaw) has been resolved in favor of CMT.”

“In holding that CVCLaw was already dissolved as early as 2013, the court threw out the claim of CMT’s erstwhile partners that now make up V&A that CVCLaw was never dissolved and that V&A is merely continuing the practice of CVCLaw,” it said.

Marcelo’s side explained that, with this ruling, V&A can no longer continue its illegal practice of using CVCLaw’s government registrations and permits and falsely holding out itself to the public as the successor of CVCLaw.

CMT also pointed out in the court ruling that an agreement between the former partners— which splits the CVCLaw Center building between the warring partners—amounts to the partition of the CVCLaw assets, including the principal assets of eight floors in the building.

The agreement provides that four floors of the swanky building in Bonifacio Global City would be owned by CMT, along with other rights in the building and other partnership assets.

“The court ruled that any damages brought about by the dissolution were waived by the execution of the agreement by CMT and V&A,” Marcelo’s side said.

So there. Both sides say they won. And like a couple in an estranged marriage, Biz Buzz grants that both may actually be happier and more prosperous without the other. Except that they live and work next door to each other—literally speaking—in BGC. Are those sparks we see flying? —DAXIM L. LUCAS

Battered bee

Jollibee Foods Corp.’s (JFC)  9.96-percent fall to P208 per share on Tuesday when it reported its third quarter results came as a big surprise to many investors given that the numbers were not that bad. Well, they were slightly below expectations and had come at a time that valuations were so high and foreign investors were trimming exposures to emerging markets, so some of its investors scrambled to pocket gains.

Third quarter net profit grew by 6.1 percent year-on-year to P1.33 billion while operating income for the quarter contracted by 6.7 percent year-on-year to P1.39 billion.

The Bee, therefore, had to explain to investors why profit growth was below normal, adding that this was but a “temporary” trend and in line with internal quarterly forecasts. This fourth quarter, Jollibee has started modest price increases for its store products to make up for a spike in expenditures.

While profit margins continued to be healthy, general and administrative expenses surged by 17.1 percent, which the company attributed to investments in IT and network development, market research and training for people, and mergers and acquisitions (The Bee earlier bought into American premier hamburger chain SmashBurger).

The company expects store operating expenses, particularly crew cost in the Philippines, to continue to rise in the months ahead. Jollibee said this was an indication of heavier customer traffic.

“In terms of store profitability, our aim is to sustain or even improve it in the months ahead,” Jollibee said in a letter to fund managers and analysts, adding that starting Oct. 1, four of its brands sanctioned a 1-percent price increase.  Another brand raised prices last Nov. 1.

“We will continue with our gradual price increases in 2017,” the letter said.

Expenses were projected to grow at a much lower rate in the fourth quarter given the timing of IT expenditures.

“Following a clarification from the company, we view the weaker-than-expected third quarter operating income as temporary and related to a front loading of IT-related costs,” said BPI Securities president Michaelangelo Oyson. “JFC remains a good proxy for exposure to the Philippine consumer story. I am looking at a fair value of P250.”

Jollibee shares managed to go up 1.15 percent Thursday to close at P211.80, still lower than the level before the sell-off. —DORIS DUMLAO-ABADILLA

Complicating a deal

The Securities and Exchange Commission (SEC) will “comprehensively” review the application of Money Market Association of the Philippines Inc. (MART) for registration as a self-regulatory organization (SRO), Biz Buzz learned.

To recall, MART filed on Nov. 4 an application with the SEC Markets and Securities Regulation Department to register as SRO with SEC for debt, debt-related instruments and products including but not limited to overnight index swaps (OIS). The group intends to operate for now as SRO for peso-denominated OIS market, envisioned to be an interbank over-the-counter (OTC) market under an SRO environment.

This is, however, seen complicating the Philippine Stock Exchange’s renewed bid to take over the Philippine Dealing Systems Holdings Corp. (PDS Group), the holding firm for fixed-income trading platform Philippine Dealing and Exchange Corp. (PDEx), Philippine Depositary and Trust Corp. (PDTC) and Philippine Securities Settlement Corp.

For the PSE, the bigger motivation for the merger is the depository business under PDTC, but it is nonetheless concerned about the fragmentation of what is still a very small local financial market.

The earlier intention was that 30 percent of the PSE’s payment to shareholders of PDS would be put in escrow pending the resolution of a lawsuit involving the alleged monopolistic activities of PDEx in the trading of government securities. In case the critics of PDEx win, the government securities side of the business will simply be carved out of the consolidation. But we heard that PSE has initiated talks to possibly come up with a middle ground on the PDEx dispute in exchange for the withdrawal of the lawsuit.

On the Nov. 15 deadline given by Finance Secretary Carlos Dominguez III for the PSE to draw up a new proposal on the merger with PDS, crucial talks are still ongoing, which means that this could be a moving target. —DORIS DUMLAO-ABADILLA

Financial guru coming

Globally renowned economic analyst and interest rate forecaster John Herrmann, director of Interest Rate Strategy department of the MUFG Securities Americas Inc., will be the special guest speaker at the 2016 Security Bank Economic Forum next week., Biz Buzz learned.

Hermann is expected to share his insights on the prospects of the global financial markets and trading as anchored on the current economic and political environment.

Renowned for his two decades of experience as a US economic and interest rate forecaster and Fed-watcher, Herrmann was a “Bloomberg Best” economics and interest rate forecaster and a frequent commentator on financial news. —DAXIM L. LUCAS