BUSINESSES should review their contracts and insurance coverage in the wake of the Taal Volcano eruption, according to Aclan Reyes Alcaraz Consulting, an Alabang-based company that provides legal and business advisory services.
Atty. Neil Noe Reyes, the legal management director of ARA Consulting, said companies should ensure their contracts such as lease and financial agreements have provisions on “fortuitous events” or force majeure for their own protection. He said this would minimize their exposure to financial risks brought about by natural disasters such as volcanic eruption.
Atty. Pauline Alcaraz, also of ARA Consulting, said that while the Civil Code of the Philippines has general provisions covering natural disasters, “it is safer for businesses to have those stipulations in their contracts.”
“Fortuitous events are those which cannot be foreseen or those which can be foreseen but inevitable. They are either acts of men or acts of God. Acts of men include war or riots while acts of God include disasters such as typhoons, earthquakes, volcanic eruption,” said Alcaraz. “From our point of view, what the small businesses lack is the provision in their contracts that would protect them against these fortuitous events.”
Reyes said some establishments in Tagaytay are now complaining they have to pay rent when their restaurants are not operating. “That basically is a problem for them. For businesses that haven’t engaged a lawyer to review a contract, they will be forced to pay rent even if their businesses haven’t been operating,” Reyes said.
“For clients who have contracts prepared by lawyers, their businesses are somewhat protected because they are exempted from paying rent in events like volcanic eruption and other calamities,” he said.
Alcaraz said that under the law, businesses and enterprises which had to close operations as a result of a natural disaster could temporarily stop paying salaries to their employees. “In the Philippines, we adopt the ‘no work, no pay’ principle. It is unfair for the employers to continue to pay their employees once the company ceased operations, only that they have to follow the proper procedures. There should be notices sent to DOLE (Department of Labor and Employment),” she said.
“So long as employees work, they should be paid. But if they decide not to go to work which is their right because it will be detrimental to their health and safety, and there was a determination by DOLE that an imminent danger situation exists, then they should not be paid because they are not in the work place, unless the company policy provides otherwise” said Alcaraz.
She said workers also have the right to refuse to go to work because in the case of Taal Volcano eruption, the ash fall poses risks to their health. “If determined by DOLE, employees can refuse to go to work, without fear of losing their jobs permanently. The employers cannot do that,” she said.
Reyes said Taal’s unrest also pointed to the need of having a comprehensive insurance coverage to protect real properties and livelihood from damage.
Alcaraz said insurance is often overlooked in the Philippines. “The usual insurance products are life insurance, fire insurance and auto insurance. But horticulturists, coffee, corn and pineapple farmers and fishermen were also affected. There should also be crop insurance,” she said.
The two lawyers also cited the need for businesses and households to secure their documents.