Corporate Securities Info
Choice of words
By Raul J. Palabrica
Philippine Daily Inquirer
First Posted 03:54:00 02/15/2008
Filed Under: Laws, Language, Company Information
MANILA, Philippines -- There seems to be some confusion about the description of the ordeal that former Philippine Forest Corp. president Rodolfo Noel Lozada Jr. went through after his arrival from Hong Kong several days ago.
Was he abducted or kidnapped?
For most people, any form of forcible taking of a person is abduction or kidnap. But, if we go by the definition of the Revised Penal Code, abduction can be committed only against a woman.
On the other hand, kidnapping is the act of detaining or depriving a person of his liberty. Thus, if Lozada’s claim is true, the correct term to use in his case is kidnap.
The apparent word mix-up is understandable.
Some words have commonly accepted meanings and, at the same time, specific definitions depending on the context they are used.
Also, there are phrases that, at first blush, appear to have the same meaning, but when reviewed closely are susceptible to different interpretations.
Take for instance the phrases “reasonable expenses” and “reasonably incurred expenses.”
Although they look similar, their meanings are not the same.
These words were the subject of a discussion between two American lawyers who separately represented a foreign bank and a Filipino company that wanted to borrow money.
Lawyers’ fees
The issue revolved around the wording of the provision in the loan agreement on reimbursement of the expenses that the bank may incur in servicing the credit facility.
The bank’s lawyer proposed “reasonable expenses” as the criterion for reimbursement. The company’s counsel suggested “reasonably incurred expenses.”
The argument for the first proposal was, the reimbursement obligation should take into consideration the amount of the expenses (Is it within the accepted norm in the industry?), rather than the manner they were incurred.
The company’s lawyer countered that his proposal is premised on, first, looking at the justification for the expense sought to be reimbursed and, second, the reasonableness of the amount.
When it appeared that neither lawyer would budge from his position, the company’s representative exercised his prerogative as client and instructed his lawyer to accept the bank’s wording.
It was a wise move because every minute the lawyers spent arguing represents billable work that the company is obliged to pay under the loan agreement.
Fortuitous event
Another case of mixed word meanings I’ve come across is the “fortuitous events” provision that is standard for business contracts.
In essence, this provision excuses the parties from the performance of their obligations, or the reduction of their responsibilities, in case natural calamities or events beyond their control arise during the life of the contract.
Depending on the appetite for detail by the lawyer involved in the preparation of the contract, those events are either enumerated, or collectively termed as fortuitous events, or described as “Acts of God.”
The use of the last phrase can sometimes be contentious.
Although used in its generic sense, that is, to refer to events brought about by the forces of nature, some businessmen object to this phrase because of its negative connotation.
For them, the phrase “Acts of God,” referring to natural calamities, e.g., storms, floods and earthquakes that bring death and injuries to life and property, gives the impression that the Almighty had willingly caused those sufferings to happen.
That perception would run counter to the image of an all-caring and all-forgiving God that we’ve been taught to believe all these years.
In this kind of situation, rather than go through the effort of disproving the alleged “malicious” subliminal message of the phrase in question, the better part of discretion is to drop it and use “fortuitous events” instead.
Technical terms
Through frequent usage, many words and phrases that are unique to certain professions have found their way to common vocabulary.
For example, the phrase “amortization payment” is accountant-speak for a schedule of partial payments of a loan. Its counterpart in layman’s language is “installment payment.”
Today, that accounting term is as easily understood by market vendors and bus drivers.
Neither is the public a stranger to the legal remedies of “writ of habeas corpus” and “writ of amparo.”
The proliferation of radio programs that discuss business, legal and medical issues has contributed to the demystification of these professions.
And thanks to the live coverage of significant legislative proceedings, our people have become familiar with technical terms like broadband connection, build-operate-transfer, and development assistance loan.
The challenge to this newfound knowledge is to make sure it is understood in the right context and applied in an appropriate manner.
As the saying goes, a little learning is a dangerous thing.
* * *
Announcement: The jubilee celebration of batches 1968 and 1978 of the Upsilon Sigma Phi fraternity and the Sigma Delta Phi sorority will be held Feb. 23 at 6:30 p.m. For details, please call your batch mates.
For feedback, please write to rpalabrica@inquirer.com.ph.
Previous columns:
Registration ‘feng shui’ - 2/08/08
Disclosure vs approval – 02/01/08
Scripophily – 1/25/08
Revoked corporate papers – 1/18/08
Investors protection fund – 01/11/08
New reporting rules – 01/04/08
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