Published — January 16, 2019
The following post does not create a lawyer-client relationship between Alburo Alburo and Associates Law Offices (or any of its lawyers) and the reader. It is still best for you to engage the services of your own lawyer to address your legal concerns, if any.
Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.
Nowadays, Corporations are mindful of the fact that their businesses do not merely affect the interests of their shareholders, directors, officers and employees, but also, have an impact to the public in general. It is believed that corporate governance practices in this jurisdiction cannot disregard the different stakeholders in the corporation. It is the intent of the legislature to encourage social and civil responsibility of corporations. Hence, the importance of Corporate Social Responsibility is recognized and adopted in this jurisdiction. In fact, firms likewise voluntarily adopt Corporate Social Responsibility (CSR) standards. For example, compliance with CSR standards is required before getting the widely coveted International Organization for Standardization (ISO) and Occupational Health and Safety (OHAS) Certifications. In addition, corporations likewise voluntarily adopt the principles of corporate governance of the Organization for Economic Co-Operation and Development (OECD) (Aquino, Philippine Corporate Law Compendium, 2014 Edition, p.251-253).
What is the Doctrine of Corporate Social Responsibility?
The Doctrine of Corporate Social Responsibility demonstrates an awareness that corporations are not mere business organizations exclusively intended to serve the personal interests of shareholders or managers but are social institutions in which all sectors of society have an interest. While inanimate, they cannot be without moral values or ethical concerns; nor can they be bereft of social and civil responsibilities. Thus, as an assurance of a welcome place in society, while the code does not directly mandate the performance of specific social and civil obligations, it encourages and provides corporations with every means of becoming valuable social institutions (Records of the Batasan, Second Regular Session, 1979-1980, Vol. III, pp. 1212-1213, hereinafter referred to as “III Record of the Batasan, pp. 1212-1213.”).
Cases decided by the Supreme Court based on the Doctrine of Corporate Social Responsibility
In Professional Services, Inc. v. Court of Appeals (G.R. No. 126297, January 31, 2007), the Supreme Court sustained the liability of hospitals based on the Doctrine of Corporate Responsibility. The Court stated:
Recent years have seen the doctrine of corporate negligence as the judicial answer to the problem of allocating hospital’s liability for the negligent acts of health practitioners xxx. Its formulation proceeds from the judiciary’s acknowledgment that in these modern times, the duty of providing quality medical service is no longer the sole prerogative and responsibility of the physician. The modern hospitals have changed structure. Hospitals now tend to organize a highly professional medical staff whose competence and performance need to be monitored by the hospitals commensurate with their inherent responsibility to provide quality medical care.
The doctrine has its genesis in Darling v. Charleston Community Hospital (33 Ill. 2d 326, 211 N.E. 2d 253). There, the Supreme Court of Illinois held that “the jury could have found a hospital negligent, inter alia, in failing to have a sufficient number of trained nurses attending the patient; failing to require a consultation with or examination by members of the hospital staff; and failing to review the treatment rendered to the patient.” On the basis of Darling, other jurisdictions held that a hospital’s corporate negligence extends to permitting a physician known to be incompetent to practice at the hospital. With the passage of time, more duties were expected from hospitals, among them: (1) the use of reasonable care in the maintenance of safe and adequate facilities and equipment; (2) the selection and retention of competent physicians; (3) the overseeing or supervision of all persons who practice medicine within its walls; and (4) the formulation, adoption and enforcement of adequate rules and policies that ensure quality care for its patients. Thus, in Tucson Medical Center, Inc. v. Misevich (115 Ariz. 34, 545 P2d 958 (1976)), it was held that a hospital, following the doctrine of corporate responsibility, has the duty to see that it meets the standards of responsibilities for the care of patients. Such duty includes the proper supervision of the members of its medical staff. And in Bost v. Riley (262 S.E. 2d 391, cert denied 300 NC 194, 269 S.E. 2d 621 (1980)), the court concluded that a patient who enters a hospital does so with the reasonable expectation that it will attempt to cure him. The hospital accordingly has the duty to make a reasonable effort to monitor and oversee the treatment prescribed and administered by the physicians practicing in its premises.
Thus, hospitals are expected be more diligent and cautious as to contracting physicians, nurses and other medical staff to ensure that they also abide to the principle that corporations are not merely for business purposes but also social institutions which the public has an interest. The hospitals should have high regard to the well being and health of their patients.
The Doctrine of Corporate Responsibility also applies to schools. In the book of Timoteo B. Aquino entitled Torts and Damages, 2005 Edition, p. 672, the author is of the opinion that the school, which has a special parental authority over its minor students, has “the corresponding responsibility to take care of a minor student with the diligence of a good father of a family. Included in the exercise of due diligence is the duty of the school to provide the students with adequate security and safe facilities. If due care is not exercised, damages may be imposed under Articles 19, 20, 21 and 2176 of the Civil Code of the Philippines”. It is consistent with the ruling of the Supreme Court in Child Learning Center, Inc. v. Tagario, G.R. No. 150920, November 25, 2005. In the said case, a preschooler was trapped inside a small toilet in the third floor of a school building. The child panicked and banged and kicked the door several times while shouting for help. When no help came, the child opened the window to call for help. Tragically, in the process of opening the window, the child went right through and fell down three stories. The child suffered multiple serious injuries. The school was made directly and primarily liable under Article 2176. The liability is not vicarious because the obligation to provide safe facilities is imposed directly on the corporation, the school (Aquino, Philippine Corporate Law Compendium, 2014 Edition, p.93).
The school was made directly and primarily liable because it has the duty to ensure the safety of its students by providing safe facilities and other safeguards to prevent any mishaps. However, in this case, the school failed to do so. As a school, it must abide to the Doctrine of Corporate Social Responsibility, it should be aware of what is at stake and that society have an interest on its business especially considering that it caters to the public particularly, to minor students. Hence, schools should have high regard and set precautions to ensure the safety of its students.
Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.
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