Running a business is relatively easier when it is small, maybe just the husband-wife tandem of Pinoy Entrepreneurs classified as small or medium enterprise (SME). The challenges multiply with the growth of the business. More advanced accounting and record-keeping tools are needed, for instance. The increase in the number of employees, but itself, creates challenges that Pinoy entrepreneurs must face. The challenge is not only with respect to salaries and other benefits, but also to the liability of entrepreneurs face for acts of their employees.

The Civil Code (Art. 2180) provides that the obligation for damages caused by negligence is demandable not only for one’s own acts or omissions, but also for those of persons for whom one is responsible: "Employers shall be liable for the damages caused by their employees and household helpers acting within the scope of their assigned tasks, even though the former are not engaged in any business or industry."

We thought of providing motorcycles to our employees because speed could be a factor in running an office. We all know, however, the dangers of motorcycles. Our employees would be safer using public transportation. Any unfortunate accident with the motorcycle not only means expense for its repair and potential injury to our personnel, it may also mean vicarious liability on our part.

Whenever an employee’s negligence causes damage or injury to another (or worse, death), it is automatically presumed that the employer failed to exercise the diligence of a good father of a family with respect to the selection or supervision of its employees. This liability is direct, which means the injured party could sue the employer directly.

 

To avoid liability for acts of an employee, the employer must overcome the presumption by presenting convincing proof that he exercised the required diligence both in the selection and supervision of his employee. It's not enough that the employees chosen be competent and qualified, inasmuch as the employer is still required to exercise due diligence in supervising its employees. Due diligence in supervision requires the formulation of rules and regulations for the guidance of employees and the issuance of proper instructions as well as actual implementation and monitoring of consistent compliance with the rules. (Source: Delsan Transport Lines, Inc. vs. C&A Construction, Inc., G.R. No. 156034, 1 October 2003)

So, there you go. Running a business is not an easy task. Projection on money or earnings is necessary, but an important part of running a business so knowing what factors to consider in taking calculated risks on a regular basis. With the proper knowledge and information, Pinoy Entpreneurs could better manage the risk and run a successful business.