Investing in a business is a risky move. Continuing a business legacy is a daunting challenge.
But these are the two things Mr. Leoncio Lei Yee, Jr. embarked on when he took over the task of continuing his fathers business of running a Nissan dealership located along U.N. Avenue in Manila. The job was made more difficult because this was the first Nissan dealership in the country and has been at it for 41-years.
“We were with Nissan through all the ups and downs. We stood by them during the financial crisis when their other dealers were bailing out. Why would they do this to us?” lamented Leoncio Yee, President of Broadway Motor Sales Corp, the dealership that was unceremoniously ousted by Nissan as he claims.
Leoncio Lei Yee, President of Broadway Motors explaining why he is suing Nissan Philippines.
Now, Broadway Motors under Mr Yee, is suing Nissan Philippines Inc. (NPI) for a criminal case called “Other Deceit” under Article 318 of the Revised Penal Code. Charged in the case are five of NPI’s present and former officers including former NPI President Ramesh Narasimhan, Jonathan Aguilar, Francis Ang and Abner Berdos.
The reason, Yee claims, is that they were deceived by NPI into spending over P28,000,000 in improvement and renovations of their showroom with the knowledge that Broadway Motors will continue the dealership began by his father, Leoncio Sr.
Yee claims they were assured by Narasimhan, in a letter dated March 27, 2018, that their contract renewal is in its finalization phase. The letter even included business aspects such as Sales Targets for the year. But less than two months later, in May, Nissan infomed Yee they were not getting a contract renewal and had only six month to wrap up their Nissan affairs.
Nissan, under Narasimhan, claims Broadway was consistently underperforming and that it was not living up to their part of the contract. Yee countered by saying the period being used by Nissan was when they were renovating the showroom which coincided with a major road repair being conducted along UN Avenue tying their hands for the moment.
What was worse was that Nissan declared all of Broadway Motors remaining inventory as second hand. About 40 units worth some P60 million were now on the losing side of the sheet and since the franchise was cancelled, they could not dispose of the inventory under the Nissan banner.
“It was so embarassing. We had to ask Mantrade and other friendly Nissan dealers to help us sell the cars at a huge loss. And it wasn’t even the loss but the fact that we had literally beg for help,” cries Yee.
And to make things even more bitter, Nissan asked Broadway Motors to continue their service facility operation even as another group was already given the dealership in their area. Nissan claims the new dealer was not yet ready so they needed Yee to help
Filing the case at the Manila Fiscals Office, on May 14, 2019, it was found that there was probable cause to charge NPI with a violation of Article 318 of the Revised Penal Code. The arraignment was supposed to have happened this September 4, 2019 but a petition by NPI to first deal with the arbitration proceedings had the event rescheduled to a still indefinite date.
This case is probably the first time a dealer sued its own principal in the local automotive industry, but sources within the circle told us that some other dismissed Nissan dealers are looking at Broadway Motors as a test case and if successful, they too may try the same tact.
Quite a number of these dealers were told to sell to what they are now describing as a favored business entity, the Gateway Auto Group from Cebu, and they also think this to be quite unfair.
We reached out to Nissan Philippines Inc. to get their side of the case and they sent us this statement:
“Nissan Philippines, Inc. (“NPI”), disputes the allegations and claims of Broadway Motors Corporation against the company, its officers and employees. NPI intends to present its case before the proper fora and will refrain from making public comments in due deference to the on-going legal proceedings. Rest assured that Nissan places high value on its relationships with all dealer partners.”
We will be monitoring this issue very closely and keep everyone updated.
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