One JVA To Go Please (Demystifying the Joint Venture Agreement)

By Obiter 07

In setting up a business, one sometimes looks for partners who can contribute cash, assets or even know-how. In the case of corporations, partnerships usually take the form of a joint venture as documented in a joint venture agreement or JVA. The JVA can be an agreement binding corporations with a mutual purpose or it can actually be a new corporation made up of corporations with a mutual purpose.

It would be best to liken this agreement to a marriage to have a viewpoint on what you need to have. First things first, have you conducted due diligence on your prospective partner? This is something you sort of do in real life, trying to know what you can about someone, if he or she is worthy of you or not. Is the company proposing a joint venture partnership a reputable one and does it honor its obligations? Since the JV is a business, it could be important to know: if it has a track record, its financial state, and anything else you can think of that would matter to you.

Assuming the partner passes muster, what’s next? One of the first provisions in a JVA usually relates to the purpose of the venture, to capture what the parties wish to undertake exactly.

Like a conjugal partnership, you also determine each party’s duties and responsibilities. Next, you will talk about capital structure which is akin to what you do in a pre-nuptial agreement: list each party’s assets pre-nup, during the marriage, and post-nup (just in case). In a JVA, a party’s share of ownership, profits and losses are best set out asap. So the JVA should also provide for guidelines on dividends or distribution of profits and assets during and after the JV. If the JVA relates to a project for example, what happens to pending receivables? What if the company has outstanding liabilities for taxes or expenses? It won’t be ‘til death do you part and you have to provide on what will be the term of the JV, the grounds of dissolution and on what will happen thereafter.

Who calls the shots? In a marriage, the Family Code says it is to be administered jointly (of course, reality may be a different matter which we will no longer discuss to protect the names of the innocent). In the joint venture, you have to craft provisions on how it will be managed. Otherwise, you could have an unwieldy and possibly unwise set-up where decisions cannot be made or made as quickly as you would like them to be. Which officers can be named by each party to the JV? How may directors can each party elect? How will they decide and how frequent can they meet? Who can call meetings? What if a party absents himself/itself on purpose, what can be done?

It’s been said that those who have more in shares should have more in rights or at least they feel they have to. To counterbalance this, the agreement can provide for special voting requirements such as supermajority rights for certain crucial items. For example, you may wish to be in control if you own 60% of the venture but your partner might wish to have a say on certain major matters like selling the company or incurring substantial debt. In these instances, more than a simple majority vote may be required.

Can you get a third party to join in just like that? Of course, we are referring to the joint venture and not marriage. Usually, transfers of shares in the JV are subject to restrictions and can have a provision giving one party’s first crack on any disposition of shares. This is called the right of first refusal. Just like in a marriage, you don’t want a stranger like a mistress or mother-in-law coming into the picture just like that. At the very least, the new party must not be a competitor

Even the name of joint venture can capture the essence of the partnership or even the product or service it wants to grow. It can set you apart if you want to make your mark. This is like the spouse deciding if she will use the husband’s last name or not. Or use a hyphen. This could be an issue for the joint venture, if both companies will have naming rights or if one’s name will come first.

If the other party does not fulfill its promises, what does one do? Give him the silent or cold treatment? That may not be enough in a JV set-up although it could be a start. When the parties cannot agree, what is the counterpart of marriage counseling? You can provide for dispute resolution which usually requires the preliminary discussions between the companies’ top officers to resolve the matter. Then you can proceed to mediation, conciliation or arbitration or directly to litigation. You can even provide for the venue, at your home ground if you can swing it, then otherwise at some venue which is neutral to both parties.

In the end, the joint venture agreement is there to help, just in case it turns out that the partnership you have forged is not made in heaven after you have already said I do. We have to remember that in a business enterprise, one is in it only for better and not for worse, for richer and not for poorer. That is where the similarity ends and business begins.

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Lend Me Your Ears (Wiretapping, Lies and Elections)

By Obiter 07

It should be alarming to learn that private conversations are tapped just like that by military agents. Although it is amusing to eavesdrop on the President’s chats, especially when they’re very controversial to say the least. The alarm bells start ringing again once we realize the manner by which they were obtained and how they can be made so public regardless of the law on the matter.

The law is Republic Act 4200.[1] Thus, it is

“unlawful for any person, not being authorized by all the parties to any private communication or spoken word, to tap any wire or cable, or by using any other device or arrangement, to secretly overhear, intercept, or record such communication or spoken word …”

And,

“any communication or spoken word, or the existence, contents, substance, purport, effect, or meaning of the same or any part thereof, or any information therein contained obtained or secured by any person in violation of the preceding sections of this Act shall not be admissible in evidence in any judicial, quasi-judicial, legislative or administrative hearing or investigation.”

The only exception is when a peace officer has been so authorized by court order. Even the recently passed Human Security Act requires a court order before law enforcement can eavesdrop on suspected terrorists. The Constitution contains the same protections.

Although the law is clear, even its restriction on the use of illegally obtained information obviously finds no application when a Senator plays to the gallery. One can cast equal, if not more blame, though on a President who places herself in such a position by calling a sitting Commissioner on Elections during counting time.

So, what then can we do when those tasked to make and enforce the law end up breaking them, no matter what their intentions are? We can and should only go by what the law is. Even if at times it ends up also protecting the guilty, it is meant to always protect those of us who are innocent from unwarranted and unauthorized intrusions of our privacy.


[1] An Act To Prohibit And Penalize Wire Tapping And Other Related Violations Of The Privacy Of Communication, And For Other Purposes.

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Your Honor, A Dog Ate My Pleading (Some Litigation Notes)

By Obiter 07

Litigation invariably involves the filing of motions and pleadings. Motions are documents filed, or verbal requests made, with the court for actions incidental to the proceedings like a motion requesting the postponement of a hearing, for the issuance of a warrant of arrest or for the production of documents. Pleadings are papers prepared and signed by lawyers as part of the case which would cover the complaint, an answer to the complaint, a reply, affidavits, in short all the documents lawyers sign for the client and which are filed formally with the court.

Usually, both motions and pleadings are divided into sections showing first the court with jurisdiction, the names of the parties, the case number and the title. Something like this:

“REPUBLIC OF THE PHILIPPINES
REGIONAL TRIAL COURT
NATIONAL CAPITAL JUDICIAL REGION
BRANCH ___, MAKATI CITY

PARTY A,
Plaintiff,

Civil Case No.________

- versus -

PARTY B,
Defendant.
x—————————————————x

MOTION FOR EXTENSION
xxx”

It almost seems like the title card to a boxing bout what with the A “vs” B caption that one can find. And in a way it is, as only one party would usually prevail with all his claims.

Pleadings end with a prayer, showing that lawyers can also be a bit spiritual especially when it comes to their cases, asking what they want the court to do or grant to their client. Just to show you how clever lawyers can be, apart from a specific prayer there follows a common catch-all plea -

“PRAYER

WHEREFORE, it is respectfully prayed that the Honorable Court grant Defendant an additional period of thirty (30) days from 26 April 2007 or until 26 May 2007 within which to file Defendant’s Reply.

Other just and equitable reliefs are likewise prayed for.”

The last portion is the catch-all plea that the devout might do well to adopt, just in case they forget something from their litany of sins, especially if this proves to be quite lengthy (The author admits nothing here). It is almost like asking for a general absolution from all transgressions, whether confessed or not. Isn’t that neat? There is this story about a litigant who, upon seeing the pleading of his opponent’s counsel, exclaimed, “See how desperate they are, they are already resorting to prayer!” This is not exactly right.

Moving on, there are a number of other technical non-substantive requirements like notices, furnishing copies, etc. because with these pleadings come deadlines. Woe to the lawyer whose case is lost by default for failing to meet a deadline. Although there are allowed excuses, like equally urgent work and serious illness, there are those that won’t do. For example, despite the high-tech world that we find ourselves in, computer viruses do not excuse the late filing of a pleading. In DAGDAGAN vs. BACOLOD [G.R. No. 147848, January 24, 2005], the court took to task a practitioner who sought to justify the late filing of a petition because a computer virus had erased it:

“We agree with the Court of Appeals that the reason stated in her second motion is not compelling. Petitioner’s counsel should have been systematic in his legal work. He should have saved the encoded petition in a diskette and have it printed. Had he followed this procedure, he would not have encountered a problem when his computer was infected by virus.

Deviations from the rules cannot be tolerated. The rationale for this strict attitude is not difficult to appreciate. These rules are designed to facilitate the orderly disposition of appealed cases. In an age where courts are bedeviled by clogged dockets, these rules need to be followed by litigants with greater fidelity. Their observance cannot be left to their whims and caprices. Moreover, rules of procedure are tools designed to promote efficiency and orderliness as well as to facilitate attainment of justice, such that strict adherence thereto is required.”

So when it comes to a virus eating your pleading, lawyers should know that this excuse doesn’t have much of a prayer with the Supreme Court.

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Greenpeace: Ban the Bulb

29 June 2007. Mysore India.
Greenpeace demonstrates in front of the Mysore Palace. The palace uses over 96,000 incandescent light bulbs for its illumination. Using CFLs (compact fluorescent lamps) instead would save 80,000 kWh of electricity per year.

© Greenpeace/Vinayak Das
Source: Greenpeace (http://www.greenpeace.org)

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Mercy Mercy Me (The Ecology) [1]

by Siesta-friendly

Woh-oh, mercy, mercy me,
Ah, things ain’t what they used to be, no, no.
Where did all the blue skies go?
Poison is the wind that blows from the north and south and east.

Woe indeed to the people of Guimaras who have not found justice from the day the Petron-chartered MT Solar I of the Sunshine Maritime Development Corp. sank with 2.1 million litres of oil on August 11, 2006 in the pristine waters off the Guimaras coast, causing the destruction of the livelihood of thousands of Guimaras residents and the long-term damage to the surrounding marine and coastal ecosystems.

Woh-oh, Mercy, mercy me,
Ah, things ain’t what they used to be, no, no.
Oil wasted on the oceans and upon our seas fish full of mercury,

A big No! No! indeed to the absence (still) of any court complaint filed even under the basic Civil Code provisions on Nuisance namely:

“Art. 694. A nuisance is any act, omission, establishment, business, condition of property, or anything else which: (1) Injures or endangers the health or safety of others; or (2) Annoys or offends the senses;

xxx”

Art. 699. The remedies against a public nuisance are:

(1) A prosecution under the Penal Code or any local ordinance: or

(2) A civil action; …”;

nor under the plain provisions of the “Philippine Clean Water Act of 2004″:[2]

“Section 27. Prohibited Acts. - The following acts are hereby prohibited:

(a) Discharging, depositing or causing to be deposited material of any kind directly or indirectly into the water bodies … which could cause water pollution …”;

“The Philippine Fisheries Code of 1998″:[3]

Sec. 4. Definition of Terms. - As used in this Code, the following terms and phrases shall mean as follows: … 4. Aquatic Pollution - the introduction by human or machine, directly Sec. 4. Definition of Terms. - As used in this Code, the following terms and phrases shall mean as follows: or indirectly, of substances or energy to the aquatic environment which result or is likely to result in such deleterious effects as to harm living and non-living aquatic resources, pose potential and/or real hazard to human health, hindrance to aquatic activities such as fishing and navigation, including dumping/disposal of waste and other marine litters, discharge of petroleum or residual products of petroleum, of carbonaceous materials/substances, and other, radioactive, noxious or harmful liquid, gaseous or solid substances, from any water, land or air transport or other human-made structure …

xxx

Sec. 102. Aquatic Pollution. - Aquatic pollution, as defined in this Code shall be unlawful”;

or the “Marine Pollution Decree of 1976″::[4]

Section 4. Prohibited Acts … it shall be unlawful for any person to:

(a) discharge, dump, or suffer, permit the discharge of oil, noxious gaseous and liquid substances and other harmful substances from or out of any ship, … by any method, means or manner, into or upon the … waters of the Philippines;

xxx

c) deposit or cause, suffer or procure to be deposited material of any kind in any place on the bank of any navigable water, … where the same shall be liable to be washed into such navigable water, … or increase the level of pollution of such water.”

Oh-oh, mercy, mercy me.
Ah, things ain’t what they used to be, no, no, no.
Radiation underground and in the sky; animals and birds who live near by are dying.

Mercy, Mercy on us who have a Department of Justice that could only file a complaint for violation of the Anti-Dummy Law[5] despite the environmental catastrophe that has been caused. And, for having a Provincial Prosecutor who dismissed for lack of evidence the complaint against the officials of Petron Corp. and Sunshine Maritime Development Corp. - for violating the Clean Water Act of 2004, RA 8749 (Clean Air Act of 1999) and RA 9003 (Ecological Solid Waste Management Act of 2000).[6]

In dismissing the complaint, the prosecutor said in his resolution that the sinking of the tanker and the oil spill were unintentional acts.[7] The relevant laws themselves do not distinguish between deliberate and negligent acts so we now have a prosecutor who also legislates and includes terms in legal provisions which the laws themselves do not contain. Mercy, mercy indeed.

Oh, mercy, mercy me.
Ah, things ain’t what they used to be.
What about this overcrowded land?
How much more abuse from man can she stand?

At the end of oil retrieval operations early this year, only 9 cubic meters (roughly 9,000 liters) of bunker fuel were recovered from all 10 tanks of MT Solar 1.[8] That’s 9,000 out of 2.1 million litres that the ship was carrying. The rest leaked out into the sea. To date, cases of asthma, diarrhea, high blood pressure and other ailments continue to hound residents of affected coastal villages.[9]Fisherfolk associations which had been affected by the oil spill a year ago have already informed the Bureau of Fisheries and Aquatic Resources (BFAR) of low fish catch.[10]

Things definitely ain’t what they used to be.

[1] Gaye, Marvin. “Mercy Mercy Me (The Ecology)”. What’s Going On. Motown Records, 1971.

[2] Republic Act No. 9275, “An Act Providing For A Comprehensive Water Quality Management And For Other Purposes” (March 22, 2004).

[3] Republic Act No. 8550, “An Act Providing For The Development, Management And Conservation Of The Fisheries And Aquatic Resources, Integrating All Laws Pertinent Thereto, And For Other Purposes” (February 25, 1998).

[4] Presidential Decree No. 979, “Providing For The Revision Of Presidential Decree No. 600 Governing Marine Pollution”. (August 18, 1976).

[5] Commonwealth Act No. 108, as amended, “An Act To Punish Acts Of Evasion Of The Laws On The Nationalization Of Certain Rights, Franchises Or Privileges”. (October 30, 1936).

[6] Burgos, Nestor P. Jr. “Guimaras town appeals junked case vs Petron”. Philippine Daily Inquirer. 30 March 2007.

[7] Ibid.

[8] Angelo, Francis Allan L.. “Only 9,000 liters recovered from Solar I“. http://sludge.wordpress.com/. 2 April 2007.

[9] Villa, Hazel P. and Sinay, David Israel. “Sickness hounds Guimaras residents“. http://sludge.wordpress.com/. 13 August 2007.

[10] Sinay, David Israel. “BFAR to assess Guimaras fishery resources”. http://sludge.wordpress.com/. 14 August 2007.

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Search Me

By Obiter 07

We have increasingly come to rely on electronic files for our everyday lives, from to-do lists, letters, resumés to journals, revealing our innermost thoughts and feelings, our rants and raves. This is why governments would like to tap into these files to track or catch possible criminal behavior. Criminals or not, we are well advised to know how our privacy rights stand with respect to personal electronic information and the government’s inclinations.

The Constitution proscribes unreasonable searches and seizures. Simply put, a man’s home is his castle and his person is likewise sacrosanct. No one can just barge in to search for or even get things or items from him. There must be a search warrant which describes the things to be seized. And it should only issue after a judge has heard evidence to justify the same. A man’s letters also enjoys the same protection. Anything obtained in violation of these rules cannot be used against him.

However, a U.S. court (U.S. v. Romm, No. 04-10648 ) has held that the border guard can indeed take a look at your personal laptop files. An individual was turned back from Canada after his previous conviction for solicitation of a minor turned up. At his return to the U.S., a search was made of his laptop where child pornography was found. He had merely viewed the images and did not download them. But the images were retained in his laptop’s temporary internet caché which was accessed by the authorities and later used against him. So be careful what you surf.

Then in a later case [U.S. v. Arnold, No. 2:05-cr-00772 (C.D. Calif.)], it was held that an individual has privacy rights to his laptop files which can only be accessed if there is reasonable suspicion and not otherwise, even though the government argued that it was a routine search. To distinguish from the earlier case, the man involved here had no previous criminal record even though he was also into child pornography as well. A clean record helped this man no matter how dirty he is now.

Not only can authorities find cause to search your files but they can also find someone else to consent to the search on your behalf. At least that was the decision in the case of U.S. v. Andrus (No. 06-3094 (April 25, 2007)]. The court likened a password-protected computer to a locked suitcase or a padlocked footlocker in a bedroom which raises the expectation of privacy by the owner. And that the legitimacy of a search now turns on an officer’s belief that a third party had authority to consent. In this case, the court refused to suppress the evidence as the father had consented to the search of his son’s computer. Lesson: You have to keep your relatives happy lest they turn against you.

Normally, the warrant should specify everything that is to be seized and those not mentioned cannot be touched. However, the Supreme Court has ruled that when a search warrant refers to a “computer machine” as an item to be seized it necessarily includes diskettes. So it would not pay to hide files on movable media like flash disks and CD-ROMs as they can be seized as well. One question could be raised whether this would cover an email address accessed through that computer. Can the police extend the warrant to cover the virtual mailboxes that are connected to a user’s computer?

In the U.S., an employee termination based on “inappropriate” e-mail has been upheld as not violative of the right to privacy nor of any public policy since “the company’s interest in preventing inappropriate and unprofessional comments…over its e-mail system” would outweigh any privacy interest.” Employees do not appear to enjoy privacy rights or have a lesser expectation of privacy with respect to computer systems in the workplace. So do keep from sending that rant about your boss or hold off until you get to a computer away from your jobsite. And even then, don’t send it to someone in the office. That email may get you fired.

Privacy rights are currently being challenged and the Philippines is no exception what with Republic Act 9372, “AN ACT TO SECURE THE STATE AND PROTECT OUR PEOPLE FROM TERRORISM otherwise known as the “Human Security Act of 2007.” Among others, it allows the surveillance of suspects and the recording of communications upon written order of the Court of Appeals using any mode of electronic or other surveillance or intercepting and tracking devices. It is currently being questioned in the courts.

If a tree falls in the forest and no one is around to hear it, does it make a sound? We can likewise ask, if your files are accessed surreptitiously or your conversations bugged without your knowledge, is still a violation of your rights? It should be, but unless we get to know about it, we cannot assert any of our rights. It is sort of a catch 22, when your rights have to be violated before you can act to protect them. Actually, we should not be worrying since the idea is that those in power will also protect those who are powerless. But it is easy to justify in a post 9-11 world of terror and threats that certain excesses are justified or even needed. However, if there is one thing that history teaches us, it is that those who sleep on their rights get to lose them. So it pays to be watchful of our watchers as well, no matter how noble their intentions might be.

Sources:
1 PEOPLE vs. BURGOS [G.R. No. 92739, 02 August 1991.]

2 Please see Smyth vs. Pillsbury, 54 USLW 2564 (E.D. Pa. 1999) and Mclaren vs. Microsoft Corp., 1999 W.L. 339015 as cited in Introduction; Privacy in the Workplace, Course Material, Privacy in Cyberspace, Berkman Center, Harvard Law School, p.8.

3 SEC.7. Surveillance of Suspects and Interception and Recording of Communications. - The provisions of Republic Act No. 4200 (Anti-wire Tapping Law) to the contrary notwithstanding, a police or law enforcement official and the members of his team may, upon a written order of the Court of Appeals, listen to, intercept and record, with the use of any mode, form, kind or type of electronic or other surveillance equipment or intercepting and tracking devices, or with the use of any other suitable ways and means for that purpose, any communication, message, conversation, discussion, or spoken or written words between members of a judicially declared and outlawed terrorist organization, association, or group of persons or of any person charged with or suspected of the crime of terrorism or conspiracy to commit terrorism.
Provided, That surveillance, interception and recording of communications between lawyers and clients, doctors and patients, journalists and their sources and confidential business correspondence shall not be authorized.

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Honey, Have You Seen My Contracts?

By Obiter 07

It seems absurd to even contemplate, but what if you lose a contract? A contract is not like a comb, a ring or a book that you just misplace or forget where you have left it. But that is what the Philippine government seems to be claiming with respect to a major broadband contract with a Chinese company. Assuming it really happens to you, what can one do when one loses his contract?

First, you try to remember, how many copies were made? It seems so tedious signing all those copies but they do serve a purpose. Then you try to trace where those copies went to. The party with whom you signed the contract would have a copy and you can certainly ask for one. He would probably give you the contract, if not a duplicate original, then a photocopy. If the broadband contract has suddenly passed through a blackhole or on to a parallel universe, then we can always ask the Chinese counter-part for a copy. But, assuming you are now having problems with your contract’s other party and no copy is forthcoming, and he may even be inclined to deny such a contract existed, is there anything else you can do?

Well, if it’s a contract that was notarized then you can get a copy from the notary public who can even give you a certified true copy which is almost as good as the original. He is required to keep an original and to forward one to the Clerk of Court of the Regional Trial Court having jurisdiction over his office. And if that fails, a copy should be with the National Library where all the documents are later sent for filing.

But what if there is no such copy to be found and the other party denies such a contract ever existed, what can you do?

Why should contracts be written anyway? Isn’t a handshake enough? It could be, but when the handshake is denied, nothing beats an agreement in writing. But the law actually requires only certain types of contracts to be in writing.

To paraphrase, these must-be-in-writing contracts are: (1) those which state that they are not to be performed within one year from their execution; (2) a promise to answer for a debt, default or miscarriage of another (like a guarantee); (3) an agreement in consideration of marriage; (4) an agreement for the sale of personal property for P500.00 or more; (5) a lease of more than one year or the sale of real property; and (5) a representation as to the credit of a third person (Article 1403, New Civil Code). A contract covered by the foregoing classification which is not in writing cannot be enforced, so you cannot compel a party to perform it even if you both know the contract exists. The courts will not help you.

If your contract is not covered by the listing above, then it doesn’t have to be in writing and you can prove it by oral or other evidence, which simply means saying that there was such an agreement. And even if it is covered by the list above, the requirement that an agreement be in writing does not apply if the contract has been performed or observed, whether fully or partially.

So if you’ve agreed to buy a car and have paid a deposit, you can claim that there is contract even if the law requires that this be in writing. The contract has already been partially performed in that case.

Now when it is not your spouse but your very representatives in government who seem to have the penchant for losing major contracts just when you want to examine them, you may be well entitled to think of changing or replacing them. For the avoidance of doubt, we meant changing your representatives and not your spouses, as the latter are covered by, alas! a written agreement - the marriage contract. And it’s enforceable even if you misplace it by accident or hide it by design (again, the contract not the spouse).

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TEXT BLUES

By Obiter 07

Ever feel that texts or SMS are fleeting snippets of information that can’t do you harm? Think again. They may bring you to litigation, or worse, a prison term.

An exchange of text messages via cellular phones, otherwise known as the Short Messaging System (”SMS”), can conceivably result in a contract. A “text” contract would qualify as an electronic document which is given legal recognition under the Philippine E-Commerce law1. Applying by analogy one U.S. court ruling (Shattuck vs. Klotzbach Superior Ct., Mass., December 11, 2001 (Civ. Act No. 01-1109A), an exchange of e-mails could constitute a binding contract over real estate. An exchange of texts could be treated in the same manner.

In one actual Philippine case, a possibly less than brilliant court employee recorded for posterity and future administrative action her demands for a bribe via text messages to a litigant. This resulted in her dismissal from the service.

As held by the Supreme Court in NUEZ vs. CRUZ-APAO [A.M. No. CA-05-18-P. April 12, 2005]:

“Complainant was able to prove by his testimony in conjunction with the text messages from respondent duly presented before the Committee that the latter asked for One Million Pesos (P1,000,000.00) in exchange for a favorable decision of the former’s pending case with the CA. The text messages were properly admitted by the Committee since the same are now covered by Section 1(k), Rule 2 of the Rules on Electronic Evidence which provides:

“Ephemeral electronic communication” refers to telephone conversations, text messages . . . and other electronic forms of communication the evidence of which is not recorded or retained.”2

Under Section 2, Rule 11 of the Rules on Electronic Evidence, “Ephemeral electronic communications shall be proven by the testimony of a person who was a party to the same or who has personal knowledge thereof . . . .” In this case, complainant who was the recipient of said messages and therefore had personal knowledge thereof testified on their contents and import. Respondent herself admitted that the cellphone number reflected in complainant’s cellphone from which the messages originated was hers. xxx “

Wrongdoers are now forewarned that a text sent may be the text that damns them.

Break-ups via text are not unheard of and serves to emphasize how heartless and impersonal this medium can be. But would you like be fired via text? Is there such an employer who can be heartless enough to do this?

The answer is yes. In Australia, a man has filed suit for “unfair dismissal” raising “procedural fairness” when he was fired through a text message.3 There was a similar occurrence in the United Kingdom when 2,400 workers were laid off via text messages.4 While Article 283 of the Philippine Labor Code requires a written notice of dismissal, the E-Commerce Act provides for legal recognition to electronic documents which appears to include SMS.

Breaking up could be hard enough to do via SMS. Getting fired the same way can be worse. Both could be the only times where, for once, one would like that this recorded message be heard by the sender, “Sorry, the subscriber cannot be reached. Please try again later.”

Sources:
1 Electronic Commerce Act of 2000 (Republic Act No. 8792)

2 A.M. No. 01-7-01 SC.- Re: Rules On Electronic Evidence

3 Sturgeon, Man sacked by SMS sues for unfair dismissal, 20 May 2003, silicon.com.

4 BBC News, Accident Group boss ‘gobsmacked,’ BBC, 31 May 2003.

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