Thanks everyone for the helpful comments...
Although I bought the watch in Europe, I took it to the official distributor in Hong Kong because it was the most convenient channel.
The service personnel there said they had to send the watch back to Switzerland but if I decided not to proceed after a quote was made, I had to pay for transportation charges of around US$1,500. I of course protested but to no avail because there was no viable alternative.
A few weeks went by and today I received a call from a lady representing the distributor in Hong Kong. She said according to Switzerland, it was probably moisture and for a complete service, I would be charged US$4,000.
I said I do not understand what the problem is. She suggested that it might be due to air-conditioning to which I totally disagreed because the affected areas appeared around the three pinions and if that were the case, I should not be the only one experiencing it. After all, the watch is supposed to be water resistant up to 30m. (BTW I kept the watch in a safe face up)
I said I should not be paying for problems not caused by my mishandling and insisted that she check with the service people again.
I will keep you folks posted of the eventual outcome but so far, I was utterly disappointed with PP's service and the lame excuses provided.