When can a Corporation be Liable for Tort or Damages?

When Can a Corporation be Liable for Tort Nicolas and De Vega Law Offices Image

What is Tort?

Tort has been defined by Winfield as tortuous liability which arises from the breach of a duty primarily fixed by laws; such duty is towards persons generally, and its breach is redressible by an action for unliquidated damages. (Winfield, Province of Law of Tort, 1931)

Under the Philippine law, tort may be classified as intentional tort, negligent tort of strict liability tort. Most of the times, natural persons are liable for torts. Can a corporation be made liable for tort?

A Corporation can be Liable for Tort or Damages

In the case of Philippine National Bank vs. Court of Appeals, et. al., G.R. No. L-27155, 18 May 1978, the Supreme Court resolved the issue of whether or not a corporation is liable for the damage caused to another person. The Supreme Court had this to say:

“While petitioner had the ultimate authority of approving or disapproving the proposed lease since the quota was mortgaged to the Bank, the latter certainly cannot escape its responsibility of observing, for the protection of the interest of private respondents, that degree of care, precaution and vigilance which the circumstances justly demand in approving or disapproving the lease of said sugar quota. The law makes it imperative that every person “must in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith, this petitioner failed to do. Certainly, it knew that the agricultural year was about to expire, that by its disapproval of the lease private respondents would be unable to utilize the sugar quota in question. In failing to observe the reasonable degree of care and vigilance which the surrounding circumstances reasonably impose, petitioner is consequently liable for the damages caused on private respondents. Under Article 21 of the New Civil Code, “any person who willfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for the damage.” The afore-cited provisions on human relations were intended to expand the concept of torts in this jurisdiction by granting adequate legal remedy for the untold number of moral wrongs which is impossible for human foresight to specifically provide in the statutes.

A corporation is civilly liable in the same manner as natural persons for torts, because “generally speaking, the rules governing the liability of a principal or master for a tort committed by an agent or servant are the same whether the principal or master be a natural person or a corporation, and whether the servant or agent be a natural or artificial person. All of the authorities agree that a principal or master is liable for every tort which he expressly directs or authorizes, and this is just as true of a corporation as of a natural person, A corporation is liable, therefore, whenever a tortious act is committed by an officer or agent under express direction or authority from the stockholders or members acting as a body, or, generally, from the directors as the governing body.” [Emphasis and underscoring supplied.]

Similarly in American jurisprudence, particularly in the case of Southern R. Co. v. Chambers, 126 Ga. 404, 409 (55 S.E. 37, 7 LRA (NS) 926), it is stated that, to wit:

“. . . when one who is an agent of the corporation commits a tort at places other than the place of agency, the company is not liable for the tort, unless it appears that it authorized the act or ratified it after its commission.” This statement is in complete harmony with the provisions of Code § 105-108 which declare that “Every person shall be liable for torts committed by . . . his servant, by his command or in the prosecution and within the scope of his business, whether the same shall be by negligence or voluntary.”

About Nicolas and De Vega Law Offices

If you need assistance in corporate law, commercial law, corporate or commercial litigation, or civil or other criminal law-related issues,  we can help you. Nicolas and de Vega Law Offices is a full-service law firm in the Philippines.  You may visit us at the 16th Flr., Suite 1607 AIC Burgundy Empire Tower, ADB Ave., Ortigas Center, 1605 Pasig City, Metro Manila, Philippines.  You may also call us at +632 84706126, +632 84706130, +632 84016392 or e-mail us at [email protected]. Visit our website https://ndvlaw.com.