Algarra v. Sandejas
REITERATIONFacts
The Antecedents: Plaintiff Lucio Algarra sustained personal injuries from a collision with the defendant Sixto Sandejas's automobile, driven by the defendant. The defendant's negligence was not disputed. Procedural History: The lower court, while recognizing the justness of the claim, refused to award damages for injury to the plaintiff's business due to his enforced absence, citing the doctrine in Marcelo vs. Velasco. The plaintiff was awarded damages for medical expenses and two months' lost earnings. The Petition: The plaintiff appealed, seeking damages for the injury to his business, which involved selling distillery products on a 10% commission, averaging P50 per month. He had spent four years building this business, which included about twenty regular customers. Due to the accident, his business suffered significantly, with his wife only managing to net P15 during his incapacitation, and he lost all but four regular customers.
Issue(s)
Whether the indemnity for damages under Article 1902 of the Civil Code includes the loss of prospective profits or injury to an established business (lucrum cessans).
Ruling
The Supreme Court ruled in favor of the plaintiff, setting aside the lower court's judgment and awarding damages for medical expenses, two months of enforced absence, and loss of profits to his business. The total award was P360.
Ratio Decidendi
On Issue 1: The Supreme Court reasoned that the obligation to "repair the damage" under Article 1902 of the Civil Code must result in complete indemnity, as defined in Article 1106. Article 1106 explicitly provides that indemnity includes not only the loss suffered (damnum emergens) but also the profit which the creditor failed to realize (lucrum cessans). The Court distinguished the case from Marcelo v. Velasco, clarifying that the refusal to grant business damages in that earlier case was due to a lack of evidence, not a legal prohibition against such recovery. The Court further observed that the Civil Law concept of liability for quasi-delicts is essentially equivalent to the Anglo-Saxon doctrine of proximate cause, where a person is responsible for all natural and probable consequences of their negligence. While mathematical certainty in calculating lost profits is often impossible, the law requires only reasonable certainty; because Algarra had an established business with a steady income history, the court had a sufficient basis to estimate his loss. The Court concluded that since it took Algarra four years to build his business, and he could likely rebuild it in one year with his existing experience, an award of P250 for business injury was just and reasonable.
Main Doctrine
In civil actions for personal injuries due to negligence, damages may include not only actual incapacity but also loss of prospective profits, provided such losses are the natural and probable consequences of the wrongful act and can be ascertained with reasonable certainty, even if not to a mathematical degree.