Biz buzz: Multimillion peso legal fees

Not even the monsoon rains can ease the long-running legal fireworks at Ayala Alabang Village (AAV), where an emotional homeowners’ squabble has turned costly for the upscale community.

Beyond (but related to) the long-running dispute about the opening of more gates at the village, a group of homeowners questioned the hefty legal expenses incurred by the village association, AAVA. The group said it was shocked to find out that legal fees spent by AAVA from Aug. 25, 2015 to June 1, 2016 had hit P24 million or an average of P2.4 million a month.

“Since two of the three law firms engaged are solo practitioners, their time billing can only be construed as excessive and unjust, for the cost of their operations cannot justify the billing rates.  Note that fees were paid to more than one lawyer for the same cases—with extremely high acceptance fees,” said a letter to AAVA’s auditor general, who was urged to scrutinize AAVA’s spending on legal fees now being claimed as insurance reimbursement.

The group argued that the legal cases handled by these law firms did not expose the village to potential monetary liability in the billions of pesos to justify the billings. None of these cases pertain to issues that expose residents to any physical danger that would cost them their lives or expose the board to huge civil damages.

Worse, the group condemned AAVA’s hiring of lawyer Constantino Marcaida as a board member, despite a provision in the AAVA bylaws that no governor or officer or any of their relatives within the third degree of consanguinity shall enter into any contract or transaction involving monetary consideration with the association.

Marcaida had received P3.36 million in legal fees from the association. The protesting homeowners said this was a “transgression of the conflict of interest.”

A homeowner who is a lawyer, Michelle Victoria Basco, even vowed to take legal action with the Insurance Commission if AAVA’s insurer would process claims for reimbursement of legal expenses. — Doris Dumlao-Abadilla

‘Misguided and misleading’

AAVA, for its part, claimed there was nothing irregular about its legal dealings, saying the complaints on legal fees and the hiring of Marcaida were “frivolous.”

In a Sept. 19 letter-reply to complainant Basco, AAVA president Antonio Laurel said the country’s corporate code allowed dealings of directors with the corporation where they sit as directors on certain conditions. One condition is that the presence of such director in the meeting where the contract was approved was not necessary to constitute a quorum.  Another is that the vote of such director was not necessary for the approval of the contract.  Also, the contract must be “fair and reasonable” and it had been authorized by the board.

“The law does not absolutely disqualify directors from any or all dealings with the corporation,” Laurel said.

Laurel did not dispute the presence of a provision in the AAVA bylaws which disqualifies governors of AAVA from dealing with AAVA. “It is contrary to law,” he said, adding that any provision of bylaws that was contrary to existing laws and regulations was “void and invalid.”

Laurel offered justification on why the AAVA board had engaged the services of Marcaida, a lawyer who sits on the board.

The AAVA chief said bigger law offices had declined to handle the case due to conflict of interest. Marcaida was hired to fend off a number of legal complaints from homeowners who were opposed to the opening of village gates.

As a governor of AAVA, Laurel said Marcaida had a “good, first-hand knowledge of the factual backgrounds of the case, which had certainly been a great boon to the efficient handling of the cases.”  Laurel said this person was a “law scholar and law educator, an expert educator with more than 35 years of extensive law practice,” having headed the litigation team of the country’s biggest land developer, and was very knowledgeable of Housing and Land Use Regulatory Board practice and procedure.  This lawyer, he said, had “great interest in the welfare of the association” and was “willing to deal with the association under reasonable terms.”

“The association is confused whether your group wants to save or waste the association’s money in useless litigations,” Laurel said.

If AAVA’s insurer were to deny its insurance claim because of Basco’s “misguided” and “misleading” arguments, Laurel said AAVA would be constrained to sue the insurer, implead Basco as third-party defendant and hold her liable with the insurer for the damage that the association would suffer.  He also threatened to hold Basco liable for alleged violation of professional ethics “for preventing the performance of lawful obligation.” —Doris Dumlao-Abadilla

BPOs’ father? No, grandfather

The Philippines’ business process outsourcing industry has truly become an economic powerhouse, seen to pull in some $25 billion in revenue this year.

But don’t we sometimes wonder how it began?

A name that constantly crops up is Manuel Roxas II, dubbed the “father” of the BPO industry for helping foster its development when he was trade secretary during the Estrada administration. Other accounts point to Frank Holz, then with US-based Accenture, for opening the first contact center here in the early 1990s.

Predating all that, the industry’s grandfather— we mean this quite literally—just revealed himself.

It’s none other than Washington SyCip, a prominent businessmen and a legend and pioneer in the field of accounting.

At 95  and still with a sharp mind, SyCip claimed to have established the country’s BPO sector way back in 1983.

Addressing German partners from the Lufthansa Group, SyCip said he saw early on the need for the skills and training now commonplace in BPO operations. The testing ground was his own firm, SGV & Co. He said his workers at the time needed additional IT training.  Needless to say, it has grown from a simple problem that needed solving to one of the biggest employers in the country today.

“The outsourcing industry that I started in 1983 now has direct employment of one million people,” SyCip said.

SyCip was drawing comparisons to our foreign visitors on how “East and West” still had plenty to learn from each other. In this case, outsourcing know-how and manpower training versus the engineering marvels the Germans have created.

His statements were devoid of politics, but it was a point that caught our attention at a time when divisiveness was becoming the new normal. His message of cooperation is one that people should never tire of repeating. —Miguel R. Camus

An industry divided

Amid reports that President Duterte will soon issue an EO implementing a nationwide smoking ban, the tobacco lobby reiterated that the country already had existing laws mandating so.

“There is a law that regulates public smoking, and we agree it should be strictly enforced,” the Philippine Tobacco Institute Inc. said in a statement.

In contrast to PTI, the Philippine unit of multinational firm British American Tobacco said it was fully backing the planned smoking ban. BAT is not part of PTI.

“While the government is yet to spell out the details of the proposal, BAT would have no issue with the implementation of such a ban,” BAT Philippines chief executive James Michael Lafferty said in a separate statement.

“Such bans are already being implemented throughout the country at varying degrees of enforcement, as already enshrined in Republic Act (RA) No. 9211 or the Tobacco Regulations Act of 2003. We don’t see any issue with the new administration pushing for a more uniform enforcement across all LGUs,” Lafferty added.

BAT said RA 9211 prohibited smoking in a number public places and mandates putting up separate smoking areas.

“We may be in a controversial industry but we take responsible and honorable positions,” he said. —Ben O. de Vera