The case arose from a 2019 fire at a garment factory in Bangladesh that killed 63 workers producing clothing under contract for three Philippine retail brands. The victims' families brought a tort claim in Manila arguing that the Philippine companies, by failing to audit and enforce safety standards in their supply chain, had breached a duty of care to workers they had never employed and whose existence they had, in some cases, been unaware of.
The Supreme Court, in a 10 to 5 decision, accepted the core argument. Drawing on the UN Guiding Principles on Business and Human Rights and comparative jurisprudence from the United Kingdom's Vedanta ruling, the majority held that where a Philippine corporation exercises sufficient economic influence over a foreign supplier's operations — through volume purchasing, exclusive contracting, or detailed product specification — it assumes a non-delegable duty of care for the foreseeable consequences of that supplier's conduct for the supplier's workers.
The foreseeability standard is key: the court does not require proof that the specific harm was anticipated, only that the category of harm — unsafe working conditions, forced labour, child labour — was foreseeable given what a diligent corporation exercising reasonable supply chain oversight would have discovered. Defendants cannot escape liability by demonstrating wilful ignorance of their suppliers' practices.
The ruling is prospective, with a 24-month implementation period during which corporations must establish supply chain due diligence frameworks meeting standards the court will review on application. The Securities and Exchange Commission has been directed to develop mandatory supply chain transparency disclosure rules within 12 months.
"You cannot profit from a supply chain," said Associate Justice Alfredo Benjamin Caguioa, "and disclaim responsibility for what happens inside it."