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Recent developments in law and jurisprudence
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Bank of the Philippine Islands v. BPI Employees Union-Davao Chapter-Federation of Unions in BPI Unibank, G.R. No. 164301, October 11 2011 The Philippine Labor Code is silent on the implications of a merger on the status of employees of the merging corporations. Nonetheless, provisions of the Philippine Corporation Code on the effects of merger serve as authority for the view that in the case of a merger, there is an automatic succession of employment rights and obligations between the surviving corporation and the employees of the absorbed or merged entities. In other words, in a merger, there is no termination of employment to speak of, as the merged corporation-employer is deemed substituted by operation of law by the surviving corporation-employer.
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The foregoing effect of a merger as regards employment has been clarified and affirmed by the Supreme Court in the above case. There, the Court held that employment contracts of the absorbed corporation are automatically assumed by the surviving corporation in a merger even in the absence of an express stipulation in the articles of merger or the plan of merger. The Court found this to be consistent with the Corporation Code, which provides that the surviving corporation has the legal obligation to assume all the obligations and liabilities of the merged constituent corporation. Moreover, the Court found that the automatic assumption is more in keeping with the dictates of social justice and further strengthens the judicial protection of the right to security of tenure of employees. Data Privacy Act of 2012 The booming information technology (IT) and business process outsourcing (BPO) industry has made significant contributions to the Philippine economy and fostered growth in allied industries. It has spurred the issuance of regulations and passage of laws aimed to align the Philippine environment with global practices and standards. Among these laws is Republic Act No. 10173, also known as the Data Privacy Act of 2012, which took effect on September 8 2012. It is apparent from the underlying legislative bills that the enactment of the law was intended to benefit the IT-BPO industry that caters to a large number of international clientele that are required to outsource only to countries that provide statutory protection to personal data. The Data Privacy Act is primarily based on the Asia-Pacific Economic Cooperation Privacy Framework. It applies to the processing of all types of personal information and to any natural and juridical person involved in personal information processing, including personal information controllers and processors that, although not found or established in the Philippines, use equipment that are located in the Philippines, or those which maintain an office, branch or agency in the Philippines. Personal information refers to any information whether recorded in a material form or not, from which the identity of an individual is apparent or can be reasonably and directly ascertained by the entity holding the information, or when put together with other information would directly and certainly identify an individual. The Data Privacy Act classifies certain personal information as sensitive personal information. Sensitive personal information refers to personal information: About an individual's race, ethnic origin, marital status, age, colour and religious, philosophical or political affiliations; About an individual's health, education, genetic or sexual life; About any proceeding for any offense committed or alleged to have been committed by an individual, the disposal of such proceedings, or the sentence of any court in such proceedings; Issued by government agencies peculiar to an individual which includes, but not limited to, social security numbers, previous or current health records, licenses or its denials, suspension or revocation and tax returns; and Specifically established by an executive order or an act of Congress to be kept classified. The Data Privacy Act also refers to privileged information, which covers any and all forms of data, which, under the Philippine Rules of Court and other pertinent laws, constitute privileged communication. Generally, processing of information is allowed where there is consent: Personal information – The data subject has given his or her consent. Sensitive personal information – The data subject has given his or her consent specific to the purpose prior to the processing. Privileged information – All parties to the exchange have given their consent prior to processing. In the absence of consent, processing of personal information is allowed only under certain conditions or cases. The rules implementing the Data Privacy Act have yet to be issued. Nonetheless, the passage of the law is already viewed as a positive development that could further boost the country's IT-BPO industry. SEC Memorandum Circular No. 8, Series of 2013 The Constitution, Foreign Investments Act and other statutes reserve to Philippine nationals a certain percentage of ownership in the capital of corporations engaged in certain nationalised business activities. In the case of Heirs of Gamboa v. Teves (G.R. No. 176579, October 9 2012), the Supreme Court ruled that capital refers to shares of stock with voting rights and full beneficial ownership. Following the Supreme Court's decision in this case, the Securities and Exchange Commission (SEC) issued Memorandum Circular No. 8, Series of 2013. The Circular covers all corporations engaged in nationalised or partly nationalised activities. It provides that, for purposes of determining compliance with the Filipino ownership requirement, the requisite percentage will be applied to both: (a) the total number of outstanding shares of stock entitled to vote in the election of directors; and (b) the total number of outstanding shares of stock, whether or not entitled to vote in the election of directors. Corporations governed by special laws requiring specific citizenship requirements must comply with such laws. The Circular provides that it is incumbent upon the corporate secretaries of covered corporations to monitor and observe compliance with the ownership requirements. Unless there is express authority from the board of directors, the corporate secretary cannot delegate this duty to another. Failure to comply with the Circular will subject the corporation and the responsible corporate officers to the appropriate sanctions under the Foreign Investments Act.
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