My agent suffered a loss doing what I asked. Do I have to indemnify him?

The two things that must line up

Article 1913 provides that The principal must also indemnify the agent for all the damages which the execution of the agency may have caused the latter, without fault or negligence on his part. Two elements have to be present. The damage must have come from executing the agency — from the very job you gave him. And the agent must have been free of fault or negligence. Harm suffered while he was doing something of his own, or on a detour of his own between errands, is outside the article. So is harm he brought on himself by disregarding your instructions.

Whose business it was, whose risk it is

This is a rule about who bears a misfortune, not about who misbehaved. A principal may have been careful, considerate and entirely blameless and still owe indemnity. The reasoning is that the activity was undertaken for his benefit and at his direction, so the risks that come with it are his too. A reader who expects the article to point at a wrongdoer will find it unfair. A reader who sees it as pricing the errand honestly will find it obvious: you asked for the errand, so you carry what the errand ended up costing.

What the agent has to show

Indemnity covers loss actually suffered, and the agent must establish it — medical expenses, the value of property destroyed, income lost while he could not work. It is not a fixed sum and it is not compensation for inconvenience. He should keep receipts, records and any written instructions, because he has to show both that the damage arose from the task and that he did not bring it on himself. Where a third person caused the harm, that person may be answerable as well; the agent is not confined to claiming from the principal merely because the principal is easier to reach.

What this provision is not

It is not an employment claim. If the arrangement is in truth employment, the remedies of labour law and the statutory benefit systems may apply instead, and those run on their own rules and deadlines; the two should not be mixed up. It is also not insurance, and it does not oblige a principal to keep anyone covered. For both sides, the sensible step at the outset is to write down what the task involves, what the agent may and may not do, and how out-of-pocket losses will be met. Claims carry time limits, so advice should be taken early.

Cases citing this provision

These Supreme Court decisions cite the provision above. We list them so you can read them yourself; the summaries of what each decided are not ours to give.

• BP Oil and Chemicals International Philippines, Inc. vs. Total Distribution & Logistic Systems, Inc, G.R. No. 214406, February 6, 2017 — read the decision on LawPhil →
• Pacsports Phils., Inc. vs. Niccolo Sports, Inc, G.R. No. 141602, November 22, 2001 — read the decision on LawPhil →

Related provisions

• Civil Code, Article 1913 — Indemnifying the Agent