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Miracle in Cell No. 8

WHAT MOST PEOPLE KNOW

In the 1920s, Co Ay Tian, then a very young boy, came to Manila from mainland China to work for his uncle Go Tam Co who was then engaged in the lumber and construction business. Upon reaching the age of majority, Co Ay Tian went back to China, got married and had his first child Gonzalo Co. A few years later, Co Ay Tian returned to Manila leaving his wife and young child behind temporarily to try his luck and engaging in several businesses with his uncle as partner. Co Ay Tian would later be joined by his wife and son Gonzalo in Manila. It was in 1952 when he established Gonzalo Laboratories, a sole proprietorship business engaged in the backyard operation of rubbing alcohol with a start-up capital of P15,000. Co Ay Tian named his company after Gonzalo, who was the only one of age then (around 35 years old). His second child, Anthony was around 12 years old at that time. Gonzalo Laboratories then was a small affair, with a staff that included Co Ay Tian, Gonzalo, a driver, and three workers. Later on, they would be joined by Anthony who was studying at Letran and on his sparetime would be manually washing recycled bottles. At that time, the company was producing around 5,000 to 6,000 bottles a month, using the most ingenuous of systems to manufacture alcohol, including using a felt hat as filter. Green Cross was then a relatively unknown brand, fighting the likes of giants Jai Alai of La Tondeña and Starco of Standard. It was in 1971 when Co Ay Tian’s entire brood consisting of Anthony, Joseph, and Mary became of age that the former decided to convert the sole proprietorship into a corporation – Gonzalo Laboratories Inc. (GLI). It was also around that time when the company decided to establish another brand Zonrox in an industry that was lorded over by imported products, particularly Clorox (virtually the “generic” name for the cleaning liquid in the same way that toothpaste was known as Colgate). Upon Gonzalo’s exit from GLI in Dec. 1986, it was Anthony who would take over in managing the business but Gonzalo stayed on as chairman until 1997 with one qualifying share. Anthony recalls that before working full time with GLI, he worked with Go Lam Co upon graduation. “My father was a contractor so I decided to follow his footsteps, taking up civil engineering. After working with my grand uncle, my father invited me to work again with GLI, which was then moving out from its backyard operations to a new plant in Parañaque,” he said. During the 50th anniversary of the company, Anthony said he mentioned two people who helped his father during the company’s difficult times. “My father would frequently call Ang Guan and Jackson Horn to borrow money. He would also borrow from Merced Drug and Pascual Drug who were our clients,” he said. The financial difficulties would persist for many years. The competition remained very strong and both Green Cross and Zonrox were struggling players. The turning point, he recalls, came when younger brother Joseph introduced the “new look” for the two brands, changing the label, the container, and going into massive promotion. “We then had Tia Dely for radio and Helen Vela for television as our endorsers for Green Cross,” Anthony said. Even in the early ‘90s, Zonrox remained a struggling brand. About 95 percent of revenues were still coming from Green Cross and the remainder from Zonrox. According to Anthony, it had to take a lot of imagination and educating the public to introduce new uses for Zonrox. While saddened by Gonzalo’s exit from the business, Anthony muses that it also posed a big challenge for the rest of the family. “We all became very active in the business. We put in 100 percent of our effort, maybe even more,” he pointed out. The younger generation was also being introduced into the business. “Eventually, our children and my nieces and nephews would take over the business so why not start them young,” he said. And because the organization was being run, not by one person but by several well-educated and highly motivated people, it became a professionally managed company, and each member of the family was able to contribute everything they could to make Green Cross Inc. a force to reckon with.

The long years of struggling have finally paid of. Green Cross and Zonrox are industry leaders, and each brand now has several products and variants. People have began to appreciate the many uses for Zonrox, which has dislodged Clorox as the “generic” name for the product. Green Cross alcohol and Louis & Pearl products are now being exported to other countries in the region. Zonrox now has a separate plant (unlike before when it occupied a small corner in the Green Cross compound). The two factories are now fully automated and utilized world-class technology and processes. The company now has between 300 to 400 employees as well as several brands, including Dell Fabric Conditioner.

Gonzalo Laboratories, now Green Cross Inc., has definitely come a long way.

PEOPLE OUSTED FROM THEIR OWN COMPANIES

Stories of men and women ousted from the companies they founded and nurtured to success are nothing new. Think Steve Jobs at Apple (before his triumphant return), Donald Sterling who was booted by the National Basketball Association from the Clippers for racist remarks, and most recently Dov Charney, removed as chair and CEO of American Apparel, the clothing chain he founded in 1998.

THE REAL STORY

It all started in the ’40s when young Gonzalo worked as a salesman for an American alcohol brand, Grey Cross Rubbing Alcohol. The young and ambitious Gonzalo yearned for a better life—in 1952, he developed his own brand of alcohol called Green Cross, an ode to his alma mater, De La Salle University. Years later, he developed Zonrox Bleach as well. The young Gonzalo manufactured his products from a small garage along Taft Avenue, Manila. Like most struggling entrepreneurs, Gonzalo spent his days hawking his products from one retailer to another, his nights overseeing the manufacturing process. Gonzalo had four siblings—Anthony, Joseph, Peter and Mary—and it was for their welfare that he toiled the way he did. The Co family was not wealthy, and as the eldest of the brood, Gonzalo took it upon himself to send his siblings to school and provide for their needs. Lucky for him, two of the retailers he had established good relations with were Mariano Que and Henry Sy, the founder of Mercury Drug and SM, respectively. Needless to say, Gonzalo’s business grew in tandem with the expansion of Mercury Drug and SM, until Gonzalo Laboratories became one of the country’s top 1,000 corporations.

The Co family lived affluently because of Gonzalo’s hard work. In due time, the siblings graduated from college and each eventually joined the family business. This is where the tragedy begins. As Gonzalo recalls it, envy and greed on the part of his siblings, particularly younger brother Joseph, was what motivated them to ease out the aging Gonzalo from the business in both equity ownership and representation in management. Gonzalo’s children were forced to eke out a living in other pursuits while watching their uncles, aunties, and cousins living the high life. As for Gonzalo, he lost his corporation, and, with it, his legacy. The betrayal and the events that ensued pain the old man deeply. This is why he has sought the assistance of the Intellectual Property Office (IPO) to assert his ownership of the Zonrox brand. (The ownership of the Green Cross brand is yet another saga). This is where a new chapter of Gonzalo’s lifelong drama unravels.

INTELLECTUAL PROPERTY OFFICE

On September 23, 1963, Gonzalo filed an application for the registry of the Zonrox trademark with the Philippine Patents Office (PPO). On November 12, 1964, the patent came through, certifying that Gonzalo was indeed the owner of the Zonrox brand. The patent was awarded under the “first to use doctrine” since Gonzalo had been using the Zonrox brand since January 15, 1960. The PPO has since been replaced by the current IPO.

Fast forward to 2004…with Gonzalo elbowed out of his own company, the siblings, using Green Cross, Inc. as their corporate vehicle, underhandedly registered the Zonrox brand with the IPO. Mystifyingly, the IPO also granted them the rights to the brand under “the doctrine of first use,” notwithstanding the fact that it had already been awarded to Gonzalo in 1964.

With the brand practically stolen from him, Gonzalo lodged a case with the IPO demanding the cancellation of the rights awarded to the siblings. The hearing officer assigned to the case is Atty. Josephine C. Alon. In due time, both parties filed corresponding pleadings, with Gonzalo presenting 28 documents as evidence.

However, during the requisite preliminary conference in January 2013, Atty. Alon ordered the exclusion of 11 of Gonzalo’s evidences, including various affidavits, a report from the NBI, and resolutions from the Department of Justice, among others. The 11 documents excluded by Atty. Alon almost ensured the victory of the siblings. Understandably, the nonagenarian was stricken with grief, fear, anxiety and depression. Not only was his life’s work stolen from him, now his legacy was slipping away, too, due to what he believed is undue bias on the part of the hearing officer.

Atty. Alon justified her decision to exclude the 11 pieces of evidences by citing Section 7(c) and Section 13 of the Rules and Regulations on Inter Partes proceedings. In essence, Atty. Alon asserts that Gonzalo should have submitted his evidences upon the filing of the petition. And while the law allows the presentation and submission of affidavits and other evidences during the preliminary conference, only the original and certified copies of the documents are allowed. I suspect that Gonzalo submitted non-original copies. Hence, the poor man fell victim to a technicality.

Gonzalo, however, senses bad faith. He feels that the act of Atty. Alon was meant to deliberately grant undeserved advantages to his powerful siblings. Gonzalo made an appeal, which fell on deaf ears. So, with whatever fight the 94-year-old man has left, he filed a case against Atty. Alon before the Ombudsman, citing corrupt practices, particularly for giving unwarranted preference in the discharge of her administrative and judicial duties in bad faith. If proven guilty, Atty. Alon faces criminal prosecution.

SELF-PUBLISHED AUTOBIOGRAPHY

The most painful part of what he calls “the Green Cross saga,” says Gonzalo Co It, 94, in his self-published autobiography, was when Green Cross Inc., the offshoot of his company Gonzalo Laboratories, celebrated its 50th anniversary in 2002. In full view of his family, relatives and business associates, he was publicly “disowned” as the founder and moving spirit behind the company in an audio-visual presentation where it was claimed that his father, Co Ay Tian, was the founder of Green Cross.
“The slight on my honor re-opened old wounds, and the pain lingers on,” Co It says in a 2006 letter addressed to the Philippine Kho Association, a clan association that plays an important mediation role among Chinese family groups. That evening, at the end of the presentation, Co It says his eldest son Syril tried to stand up to correct the mistaken attribution but Co It put a restraining hand on him. Instead, he merely walked out of the ballroom, tears brimming in his eyes, while his children and spouses followed.

BY THAT time, Co It’s “involvement in company day-to-day affairs had ceased,” having been effectively boxed out by his siblings in 2001. In a complicated series of maneuvers, Co It’s controlling shares of stock in Gonzalo Laboratories and later Green Cross Inc. were steadily diluted. His siblings set up a trust fund of P80 million in his name (but still subject to their control), which he considers a “minuscule amount” given that the company is estimated to be worth around P24 billion.

In his autobiography, Co It tells of how he and his mother were left behind in China by his father who was then working for an uncle in Manila. He was 10 years old when his maternal grandfather died and his father sent for the two of them. That is why Co It is a lot older than his siblings, and why he is almost like a “second father” to them. Syril recalls growing up in the ancestral home in Pasay where his grandparents and uncles and aunts lived above them on the second floor, while he and his seven siblings and parents stayed on the ground floor. “But my father spent most of his time upstairs,” he remembers, “and he explained to us that as the oldest son, he was also responsible for his elderly parents and his siblings.” But in the early years of his business, Co It was also busy roving the country, making the acquaintance of pharmacy owners (he knew the founders of Mercury Drug and even SM when they were still starting out) to convince them to stock Green Cross and, when Zonrox came out, branched out to groceries and dry goods stores.
It was a difficult and lonely life on the road, Co It recalls in his book, but he was sustained by the love and loyalty of his late wife Katherine and of his eight children.

AMICABLE SETTLEMENT

In June 2009, Co It filed a complaint for reconveyance with damages against his siblings before the Regional Trial Court in Pasay City.  A year later, the trial court ruled that Co It’s right to sue his siblings had already lapsed.  After the Court of Appeals affirmed the ruling of the trial court, Co It filed the corresponding petition in the Supreme Court.  That was back in 2011, when Co It was already 91 years old.Soon after the filing of the petition, Co It was enticed by his lawyer to withdraw the petition on account of an alleged offer from his siblings to reconcile with him, and to settle the case amicably, in view of the 2011 yuletide season. Sadly, after Co It withdrew his petition, the reconciliation and amicable settlement promised to him, and which he was looking forward to, were illusory.  Worse, the Supreme Court declared the case closed and terminated as of January 2012, thus leaving Co It with the proverbial empty bag.   

Q&A WITH GONZALO CO IT ON AVOIDING BITTER CLASHES IN FAMILY BUSINESSES

Q&A with Gonzalo Co It on Avoiding Bitter Clashes in Family Businesses was written by Josiah Go in 2014. 

Q1: You introduced two new product categories in the Philippines, Green Cross Rubbing Alcohol in 1952 and Zonrox Bleach in 1954. They are popular products now. What made you think there would be a big market for those products in the 1950s?

Back the 1950s, I knew there would be a big market for alcohol because of my experience at Manila Commercial Company where I had begun working as a bodegero/kusinero and was promoted to salesman and then to treasurer.

As treasurer, I wanted to increase our profitability. I saw stocks of Gray Cross rubbing alcohol languishing in our warehouse on Jabonera Street because our salesmen didn’t know how to market the product. I thought we could push it for everyday household use. So I personally introduced rubbing alcohol to retailers, boticas and vendors in Manila. Sales were so brisk that we ran out of stock of the alcohol that we had purchased from Rabin Company of New York. However, because of import controls imposed by the Central Bank, we could not bring in more. That did not deter us. We bought raw materials from La Tondeña and Manila Commercial Company began manufacturing rubbing alcohol. Despite the brisk sales of rubbing alcohol, Manila Commercial Company continued to fail. So that all my efforts in marketing rubbing alcohol would not go to waste, in 1952, I set up Gonzalo Laboratory, a sole proprietorship that I owned 100%. I manufactured and distributed Green Cross Rubbing Alcohol, my first and, at that time, only product. I even registered my trademark with the Bureau of Patents.

I knew my venture would be profitable because I was a very good salesman. I knew the pulse of the market and I dealt with my customers personally. I did not only manufacture and market the products; I delivered my products personally and got to know the major retailers. Largely because of this personal touch, sales of Green Cross Rubbing Alcohol took off and grew steadily. It became the No. 1 brand among locally produced alcohol products.

In two years’ time, after expanding Gonzalo Laboratory, I was able to launch my second product. I knew the market could use a bleaching product, not just as a whitener for clothes and beddings but also as a disinfectant to kill infectious organisms in hospitals, dental clinics, commercial establishments, restaurants and home kitchens and bathrooms. The market was vast because the Philippine economy was growing and that was the time when entrepreneurs with good ideas were amply rewarded. So I produced a bleaching product, which I initially called Gonrox. Gon was the first syllable of my name Gonzalo and rox was from Chlorox, an imported product.

Q2: You changed the name Gonrox to Zonrox because a competitor complained that it sounded like his own brand. Why would you do such a thing and not defend your right to use the name Gonrox?

I changed Gonrox to Zonrox when an old Chinese merchant complained that Gonrox sounded like his own brand, Old Rox. I registered Zonrox as my trademark.

When the old merchant came to me, I agreed to change the name without any fuss. He was surprised that I didn’t put up a fight. But that’s my nature — I’m a peaceful man. I don’t like quarreling with anybody. I still remember how the old merchant left my office in smiles. For me, it was no hardship to yield. In retrospect, the change of one letter in my product’s name turned out to be providential. Zonrox became so popular that it was more profitable than rubbing alcohol for my company.

Q3: Today, many enterprises are tracing their history and recording them for posterity. How can a company’s founder protect its history and legacy? Were you able to do this for your company? Why or why not?

Sadly, no. In fact, published reports have stated erroneously that I was not the founder of the company that I built from scratch.

Back in those days, when I was at the helm of Green Cross, I was concerned about running my company and becoming profitable because I had to support my own family and my father’s family. My wife and I had eight children. My parents were ageing and my father was no longer earning as much. My siblings were 20 years younger than I was and still studying. I treated them like they were my own children. I put food on the table and sent them to good schools. Later, I took them into my company. I employed them and provided them with big salaries and generous benefits to give them a leg up in life. I shared my profits with them.

In hindsight, it was a major mistake on my part when I agreed to incorporate my company. In those days, a lot of homegrown enterprises were becoming corporations to avoid 100% liability to creditors in case of grave indebtedness or claims arising from a lawsuit. I let myself be persuaded that it was the right move to make, that it would protect my company from threats. I didn’t see that biggest threat was not from outside but from within — from the very people who convinced me to incorporate.

Incorporation eroded my control of the company. I had to name my parents and siblings as incorporators because my own children were too young to be involved. On paper, I assigned shares to my siblings. I did this with implied trust that the shares continued to belong to me and were not actually theirs to own or to wield. Because I loved them and trusted them, I did not foresee a need for another paper that should have said they were assigning the shares back to me or that the shares truly belonged to me. That oversight proved to be a very costly mistake.

Another mistake was the absence of controls. Because I trusted them completely, I let them run the company office while I went out and sold our products. I was a very good salesman and I had rapport with my customers. I loved that part of the business and devoted myself to it. Before I knew it, I had lost control of my business. This happened before my children could join me in my company.

The major lesson here is to document everything. Even agreements of implied trust should be put in writing so the story will not and cannot change. In this digital age, document those agreements with videos, recordings and photographs, as well. Make sure also that you have original signed documents pertaining to incorporation, registration of trademarks and special agreements among parties involved. Have these done at the start when you’re still in control and they’re willing to go along with you. Any move that could erode your ownership or control should be backed by other documents giving ownership or control back to you.

Document your company’s history. Preferably, if you’re the founder, tell your story with photos and other evidences. If possible, do this while you’re still at the helm. If you intend your children to inherit the company, bring them in early and let them learn the ropes while you are still around and still in control. Protect what would be their inheritance.

It’s not enough to be profitable. Whenever possible, your own personal values (for example, integrity, industry, loyalty, truthfulness, moral rectitude and faith in God) should become the corporate culture. But that cannot happen if you do not remain in control of the company. Titular designations should remain only that — titular. No real power should be given to you nominees if you intention is to remain in charge. If your intention is to spread the workload, then it has to be clear that they are working for you and that they are your employees. For your part, even if you trust them completely, look closely at documents that you are being asked to sign. Read the fine print. With diligence, perhaps you can avoid having to take legal action later on.

Q4: Trust is important in business and in relationships. How can you balance trust and the need for controls?

Indeed, trust is important in business and in relationships. But blind trust is not good, as I have learned. Trusting your relatives, colleagues and employees doesn’t remove the need for controls. In fact, even with family members and in business relationships where trust operates, controls are still needed as guidelines for actions. The presence of controls does not indicate a lack of trust and should not be taken by relatives as a personal affront. To avoid potential misunderstandings, controls should be instituted at the start of the business relationship. When it is clear that trust has been eroded and the relationship has failed and lawsuits are impending, verbal agreements will no longer suffice — especially if arrived at through intermediaries. Everything should be documented.

This was a painful lesson for me. Through an intermediary, I was asked to drop my case so that my claim for my company and my trademarks could proceed. I did — for the sake of an amicable settlement and amity. But my claim was not processed and I was even asked why I dropped my case. As if they hadn’t suggested it in the first place.

Q5: Can there be a win-win solution to this Green Cross controversy that you are embroiled in? If you could write a happy ending to it, what would that be?

That is what I pray for — a happy ending. For me, that would include the history of Green Cross recounted as it really happened, the return of my company and my two trademarks so that my children can have their rightful legacy, and the restoration of a harmonious relationship with my siblings. At 94, I am praying that a win-win resolution will happen in my lifetime. If it does not, then I will importune God for a favorable answer to my other prayer — that we may all be reunited in heaven.

TODAY, Co moves around in a wheelchair and is embroiled in what can only be called a “legacy” struggle—a struggle to retain control of his last remaining link to the company he founded and from which he was unceremoniously ousted, the memory of his early efforts expunged.

He has filed a suit with the Ombudsman charging Josephine C. Alon, a lawyer with the Intellectual Property Office, with bias in the case disputing the claim of Green Cross Inc. that it holds the patent rights to both Green Cross and Zonrox. It was Alon who summarily refused to accept as evidence several documents that Co It submitted to bolster his claim that he is the rightful holder of patents to the two products.

The case may go the way of all the other cases that Co It through his lawyers has filed to help him retain his hold on the company he founded. I suspect it is not so much profit or credit he hankers for today, as much as vindication that all his years of sacrifice for his family were worth it.

FINALLY

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Sources: 

One man’s search for vindication

Q&A with Gonzalo Co It on Avoiding Bitter Clashes in Family Businesses

https://ph.news.yahoo.com/green-cross-alcohol-saga-161902587.html

http://www.newsflash.org/2004/02/tl/tl013182.htm

 

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16 Comments

  • Joes

    Very touching/learning true life story. It sad to know nowadays that whoever the person you trust completely, will ruin you at the end. And the very sad part of it, hindi ibang tao kundi pamilya mo, na ituring mo ng anak. Masyadong kinain ng sakim at inggit. You are Blessed Mr. Gonzalo Co. Thank you mam Gandakoh for this Blog.

  • TAMS

    Did he sold his shares, that leads to lost of control of his business? At old age rift still unsolved so sad =(, thats’ quite hard for him. Great read and lesson learned in life

  • mjp

    parang ganito din ang nangyare as Mcdonalds , d nga lang family ang involved , nakakalungkot lang na ikaw ang naghirap sa simula ,tapos ikaw pa ang mawawalan , parang “AKO ANG NAG SAING , IBA ANG KUMAIN”
    nakakainis ang mga ganung tao , pinagsasamantalahan ang kabaitan ng tao…

  • mjp

    parang ganito din ang nangyare as Mcdonalds , d nga lang family ang involved , nakakalungkot lang na ikaw ang naghirap sa simula ,tapos ikaw pa ang mawawalan ,

  • mjp

    parang ganito din ang nangyare as Mcdonalds , d nga lang family ang involved , nakakalungkot lang na ikaw ang naghirap sa simula ,tapos ikaw pa ang mawawalan ,

  • mjp

    parang ganito din ang nangyare as Mcdonalds , d nga lang family ang involved , nakakalungkot lang na ikaw ang naghirap sa simula ,tapos ikaw pa ang mawawalan ,

  • mjp

    parang ganito din ang nangyare as Mcdonalds , d nga lang family ang involved , nakakalungkot lang na ikaw ang naghirap sa simula ,tapos ikaw pa ang mawawalan ,

  • mjp

    parang ganito din ang nangyare as Mcdonalds , d nga lang family ang involved , nakakalungkot lang na ikaw ang naghirap sa simula ,tapos ikaw pa ang mawawalan ,

  • Ninabonina

    You’re Ms GandaKoh. How I wish this kind of story only happens on movies. Thank you for sharing this

    • Josmith Mangrobang

      The story is so interesting which led me to search more info about Gonzalo’s ordeal in the internet. Good to know the Supreme court reinstated the case.

  • bobby

    Happened in my fam.

    A woman who married my angkong’s (lolo) eldest brother tried to take control over the family business. Our side ended up selling off the company’s properties so that even if the oust took place she’d end up w/ nothing. In the end, the fam business was dissolved and the central plant is untouchable by both sides due to legal troubles. We were 70% of the Ph market in that good during that time. We’re probably on the border of middle to upPer middle class with my ahma (lola) having the most $$$. She says she only has a few million but has private banking services. Canvassing around gave me a guess of the bare minimum that she has.

    When she dies I want to take the remaining inheritance w/ my cousin to rebuild the family name.

  • Malou

    After reading everything, what touches my heart deeply, when Co It says that our life is too short to be filled with greed and bitterness.
    True enough, compared to his unfortunate experiences, our’s are just a bit of it….
    Thank you mam ganda koh for sharing his life.

  • Rain

    after reading this.. a voice, in the inner part of me, is telling me not to patronize Zonrox and Green Cross in protest to Gonzalos Siblings and do justice for Gonzalo Co it.
    God bless him, and may his prayers will be answered in his Lifetime.

  • Chris

    While reading is sad I felt but when I watched the videos that make my tears to drop. We must learn from his experience.

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