G.R. No. L-8385; March 24, 1914
LUCIO ALGARRA, plaintiff-appellant, vs. SIXTO SANDEJAS, defendant-appellee.

FACTS:
Lucio Algarra filed a civil action for damages against Sixto Sandejas due to a vehicular accident caused by the latter’s negligence. The defendant’s negligence was uncontested, leaving only the determination of the proper amount of damages for resolution. As a result of the accident on July 9, 1912, Algarra was hospitalized for ten days and received subsequent medical treatment. He testified that his earning capacity was P50 per month as a commission agent selling distillery products. He claimed he lost most of his regular customers due to his enforced absence, significantly damaging his business which had taken four years to build. The trial court, while recognizing the justness of the claim, refused to award damages for injury to his business, citing the doctrine in Marcelo vs. Velasco (11 Phil. 277) as being opposed to such an allowance.

ISSUE:
Whether the plaintiff is entitled to recover damages for the loss of profits resulting from the injury to his business caused by his enforced absence due to the defendant’s negligence.

RULING:
Yes. The Supreme Court set aside the judgment of the lower court. The Court held that an action for damages based on Article 1902 of the Civil Code requires “complete indemnity” as defined in Article 1106, which includes not only actual loss suffered but also profits which the creditor failed to realize. The Court clarified that the doctrine in Marcelo vs. Velasco did not prohibit the recovery of compensatory damages for injury to a business; that case merely denied damages for pain and suffering due to lack of evidence.

Applying the principles of the Civil Code, the Court ruled that damages must be those that were foreseen or could have been foreseen at the time of the negligent act and are the necessary and immediate consequence thereof. The evidence presented on the damage to Algarra’s business was credible and sufficient to base an award. Considering it would take time to rebuild his clientele, the Court fixed the damages for loss of profits at P250. In total, the plaintiff was awarded: P10 for medical expenses, P100 for two months of lost earnings, and P250 for injury to his business, summing to P360. No costs were awarded.