Indemnity Agreement (Philippines)
INDEMNITY AGREEMENT
Civil Code of the Philippines
This Indemnity Agreement ("Agreement") is entered into this [Agreement Date] by and between:
INDEMNITOR: [Indemnitor Name], with address at [Indemnitor Address] (hereinafter, the "Indemnitor"); AND
INDEMNITEE: [Indemnitee Name], with address at [Indemnitee Address] (hereinafter, the "Indemnitee").
1. INDEMNITY OBLIGATION
1.1 The Indemnitor hereby agrees to indemnify, defend, and hold harmless the Indemnitee from and against all claims, losses, damages, liabilities, costs, and expenses (including reasonable attorney's fees) arising from or in connection with: [Indemnity Scope].
1.2 Maximum liability of the Indemnitor: [Maximum Liability].
1.3 Exclusions: [Exclusions].
2. CLAIMS PROCEDURE
2.1 The Indemnitee shall promptly notify the Indemnitor in writing upon becoming aware of any claim or event that may give rise to an indemnity obligation under this Agreement, providing reasonable details of the claim and supporting documents.
2.2 The Indemnitor shall have the right to control the defense of any third-party claim at its own cost, using counsel of its choice, provided that the Indemnitee shall have the right to participate in the defense at its own expense.
3. SUBROGATION
3.1 Upon payment by the Indemnitor of any indemnified loss, the Indemnitor shall be subrogated to all rights and claims of the Indemnitee against third parties causing such loss, pursuant to Article 2067 of the Civil Code of the Philippines.
4. GOVERNING LAW
4.1 This Agreement is governed by the laws of the Republic of the Philippines. Any dispute shall be submitted to the appropriate Philippine courts or arbitration as agreed by the parties.
IN WITNESS WHEREOF, the parties have signed this Indemnity Agreement on the date first above written.
[Indemnitor Name]
Indemnitor
[Indemnitee Name]
Indemnitee
Indemnitor
________________
Signature
Indemnitee
________________
Signature
What Is a Indemnity Agreement (Philippines)?
An Indemnity Agreement in the Philippines defines what each party must do under the deal and the consequences of failing to perform.
The Supreme Court of the Philippines has consistently distinguished between contracts of indemnity and contracts of guaranty. In Atok Finance Corporation v. Court of Appeals (G.R. No. 80890, December 7, 1990), the Court held that an indemnity agreement shifts the risk of loss from the indemnitee to the indemnitor, creating a primary obligation to pay upon occurrence of the indemnified event — unlike a guaranty which is merely accessory to a principal obligation. Philippine insurance law under the Insurance Code (Presidential Decree No. 1460, as amended by Republic Act No. 10607) treats indemnity as the fundamental principle governing non-life insurance contracts.
An Indemnity Agreement differs from a Deed of Suretyship in that suretyship is specifically for debt obligations of a third party, while an indemnity agreement may cover a broader range of events including property damage, personal injury, regulatory fines, or legal costs. The Department of Finance and the Insurance Commission of the Philippines regulate surety bond indemnity agreements issued by insurance companies, requiring the counter-indemnity agreement between the insurance company and the bond principal.
Under Article 1306 of the Civil Code, parties may agree to indemnify against any lawful loss or liability, subject to the limitation that provisions indemnifying a party against its own willful act or gross negligence are void as contrary to law, morals, or public policy under Article 1306 read in conjunction with Article 1172.
The legal framework governing the Indemnity Agreement (Philippines) in Philippines draws on several key statutes and regulatory bodies. Under Philippine law, the Civil Code of the Philippines (Republic Act No. 386) governs contractual obligations. The Revised Corporation Code (Republic Act No. 11232) regulates corporate entities through the Securities and Exchange Commission (SEC). The Labor Code of the Philippines (Presidential Decree No. 442) and Department of Labor and Employment (DOLE) govern employment matters. The Data Privacy Act of 2012 (Republic Act No. 10173) and the National Privacy Commission (NPC) protect personal data. The Bureau of Internal Revenue (BIR) administers tax obligations under the National Internal Revenue Code. Parties executing a Indemnity Agreement (Philippines) in Philippines should confirm the document reflects current law, including any amendments enacted since the original drafting date. The National Internal Revenue Code (RA 8424) sets the foundational requirements.
When Do You Need a Indemnity Agreement (Philippines)?
An Indemnity Agreement in the Philippines is needed whenever one party undertakes a risk or obligation on behalf of another and requires protection against resulting losses.
An Indemnity Agreement is required when an insurance company or surety company issues a surety bond — bid bond, performance bond, or payment bond — under Republic Act No. 9184 (Government Procurement Reform Act) or private contracts, and demands a counter-indemnity agreement from the bond principal and its stockholders to protect the surety from claims under the bond.
An Indemnity Agreement is needed when a signatory, endorser, or co-maker of a negotiable instrument under the Negotiable Instruments Law (Act No. 2031) requires the principal obligor to indemnify the signatory against any claims arising from the instrument.
An Indemnity Agreement is required in construction projects under the Philippine Contractors Accreditation Board (PCAB) when a contractor requires an owner to indemnify the contractor against third-party claims arising from the owner's specific instructions or owner-supplied materials.
An Indemnity Agreement is needed when an employer requires an employee handling cash, valuables, or company assets to sign a fidelity or property indemnity bond, protecting the employer against loss arising from the employee's custody and management of assets.
An Indemnity Agreement is required when a company director, officer, or trustee serving on a corporate board requests indemnification from the corporation against claims, suits, or judgments arising from the performance of their official duties, consistent with Section 30 of the Revised Corporation Code (Republic Act No. 11232).
Parties in Philippines should prepare a Indemnity Agreement (Philippines) proactively rather than waiting for a dispute to arise. Courts interpret agreements based on the written terms rather than oral representations. Under Philippine law, the Civil Code of the Philippines (Republic Act No. 386) governs contractual obligations. The Revised Corporation Code (Republic Act No. 11232) regulates corporate entities through the Securities and Exchange Commission (SEC). The Labor Code of the Philippines (Presidential Decree No. 442) and Department of Labor and Employment (DOLE) govern employment matters. The Data Privacy Act of 2012 (Republic Act No. 10173) and the National Privacy Commission (NPC) protect personal data. The Bureau of Internal Revenue (BIR) administers tax obligations under the National Internal Revenue Code. Where the transaction involves regulated activities, prior approval from the relevant authority may be required before execution.
What to Include in Your Indemnity Agreement (Philippines)
A valid Indemnity Agreement in the Philippines must contain the following essential elements to be enforceable and provide the intended protection.
Party Identification: Full legal names, addresses, and legal capacity of the indemnitor (the party providing indemnity) and the indemnitee (the party receiving protection). For corporate parties, include the SEC Registration Number and the Board Resolution or Secretary's Certificate authorizing the signatory under Section 23 of the Revised Corporation Code (RA 11232). Verify that the indemnitor has the financial capacity to fulfill the indemnity — an indemnity agreement from an insolvent party provides no real protection.
Scope of Indemnified Events: A precise description of the events, acts, circumstances, or claims against which indemnity is provided. Vague or overbroad indemnity clauses have been limited by Philippine courts applying the rule of strict construction against the party who drafted the clause. Specify whether indemnity covers claims by third parties, regulatory fines from the Bureau of Internal Revenue (BIR), Insurance Commission penalties, or costs from Securities and Exchange Commission (SEC) proceedings.
Types of Losses Covered: Enumerate the categories of indemnifiable losses — actual damages under Article 2199 of the Civil Code, attorney's fees and litigation costs under Article 2208, court filing fees, bond premiums, and administrative fines. Specify whether the indemnity covers only direct losses or also consequential and indirect losses.
Exclusions and Limitations: State clearly what is NOT covered — losses arising from the indemnitee's own gross negligence or willful misconduct are void under Article 1172 of the Civil Code. Include a maximum liability cap if applicable to bound the indemnitor's exposure.
Notice and Claims Procedure: The procedure for the indemnitee to notify the indemnitor of a claim — written notice within a specified number of days, supporting documentation requirements, and the indemnitor's right to control the defense of third-party claims at its own cost.
Subrogation: A clause granting the indemnitor, after payment, the right of subrogation to all rights and claims of the indemnitee against the party causing the loss, consistent with Article 2067 of the Civil Code.
Duration and Termination: The period during which the indemnity obligation remains in force and the conditions for termination, particularly for continuing indemnity arrangements covering ongoing business relationships.
Additional compliance elements for a Indemnity Agreement (Philippines) used in Philippines include: Under Philippine law, the Civil Code of the Philippines (Republic Act No. 386) governs contractual obligations. The Revised Corporation Code (Republic Act No. 11232) regulates corporate entities through the Securities and Exchange Commission (SEC). The Labor Code of the Philippines (Presidential Decree No. 442) and Department of Labor and Employment (DOLE) govern employment matters. The Data Privacy Act of 2012 (Republic Act No. 10173) and the National Privacy Commission (NPC) protect personal data. The Bureau of Internal Revenue (BIR) administers tax obligations under the National Internal Revenue Code. Forms-legal.com provides this template as a starting point for Philippines-compliant documentation.
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Reference this free template in an article, syllabus, or research note:
Forms Legal. (2026). Indemnity Agreement (Philippines) (Philippines) [Legal document template]. Forms Legal. https://forms-legal.com/philippines/financial/agreements/indemnity-agreement-philippines
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title = {Indemnity Agreement (Philippines) (Philippines)},
year = {2026},
howpublished = {\url{https://forms-legal.com/philippines/financial/agreements/indemnity-agreement-philippines}},
note = {Free legal document template. Based on National Internal Revenue Code (RA 8424)}
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Frequently Asked Questions
An Indemnity Agreement is legally binding in the Philippines provided it meets the essential requisites of a valid contract under Article 1318 of the Civil Code: consent of the contracting parties, a definite object or subject matter, and a cause or consideration. The agreement must be in writing to be enforceable where required by the Statute of Frauds under Article 1403 of the Civil Code — particularly when it covers the debt, default, or miscarriage of another. Philippine courts enforce indemnity agreements strictly according to their terms, interpreting ambiguities against the drafter. Indemnity clauses that attempt to hold a party harmless from its own willful act or fraud are void under Article 1306 and 1172 of the Civil Code as contrary to public policy. Notarization converts the agreement to a public document but is not required for enforceability.
An Indemnity Agreement is a private contract between two parties by which one party (indemnitor) agrees to compensate the other (indemnitee) for specific losses. A surety bond is a three-party instrument issued by an insurance company (surety) accredited by the Insurance Commission of the Philippines under Presidential Decree No. 1460 (Insurance Code), guaranteeing performance by the bond principal (the obligor) to the obligee (typically the government or project owner). The Insurance Commission regulates all surety companies under Republic Act No. 10607 and requires them to maintain adequate reserves. When an insurance company issues a surety bond, it typically requires the bond principal and the principal's stockholders to sign a counter-indemnity agreement — an Indemnity Agreement — protecting the insurance company from losses it pays on the bond. The two instruments work together in Philippine practice, particularly in government procurement under RA 9184.
Notarization of an Indemnity Agreement is not required by the Civil Code for the agreement to be valid or enforceable between the parties. However, notarization under the 2004 Rules on Notarial Practice (A.M. No. 02-8-13-SC) converts the document into a public instrument under Rule 132, Section 19 of the Rules of Court, which is admissible in evidence without further proof of due execution and gives it the force of a public document. Banks, insurance companies, and government agencies typically require notarized indemnity agreements as part of their documentary requirements. Where the indemnity agreement is used as a counter-indemnity for a surety bond covering real property or registered assets, notarization and registration may be required. Corporate indemnity agreements covering directors and officers under Section 30 of the Revised Corporation Code (RA 11232) are generally required to be in writing and are kept as corporate records.
An Indemnity Agreement in the Philippines may validly cover future or contingent losses provided the scope of the indemnified events is sufficiently defined at the time of signing. Under Article 1347 of the Civil Code, future things may be the object of a contract. A continuing indemnity covering all future losses arising from a specified category of activities — such as all losses from a specific construction project or all claims from employment in a specified role — is enforceable. The Supreme Court in American Home Assurance Company v. Court of Appeals (G.R. No. 94085, October 29, 1991) upheld a broad indemnity clause covering future liabilities where the categories of covered losses were clearly described. However, an indemnity covering losses from the indemnitee's future willful misconduct or fraud is void ab initio under Articles 1172 and 1306 of the Civil Code, as contracting away liability for deliberate wrongdoing is contrary to public policy.
When an indemnitor refuses to fulfill the indemnity obligation, the indemnitee may pursue civil remedies under Philippine law. The indemnitee may file a civil action for specific performance under Article 1165 of the Civil Code requiring the indemnitor to pay the indemnified amount, together with a claim for actual damages under Article 2199, moral damages under Article 2220 (if the breach caused mental anguish), and attorney's fees under Article 2208(2) of the Civil Code where the defendant's act compelled the plaintiff to litigate. The case is filed before the Regional Trial Court (if the amount exceeds PHP 2,000,000 as of the amended Rule on Small Claims effective 2022) or the Metropolitan Trial Court or Municipal Trial Court for smaller amounts. If the indemnity agreement contains an arbitration clause, the indemnitee may initiate arbitration before the Philippine Dispute Resolution Center, Inc. (PDRCI) or the Construction Industry Arbitration Commission (CIAC) for construction disputes under Executive Order No. 1008.
This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change over time. Consult a qualified attorney for advice specific to your situation.Full disclaimer
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