The formula
for the indemnification of loss of earning capacity is:
Net Earning Capacity =
Life Expectancy x
[Gross Annual Income (GAI) – Living Expenses]
= 2/3 (80 – age of deceased)
x (GAI - 50% of GAI).
In addition to the damages awarded, the Supreme
Court imposes on all the amounts of damages an interest at the legal rate of 6% until fully paid.
In
the 2002 case of DODWELL SHIPPING AGENCY
CORPORATION vs. BORJA, G.R. No. 143008, 10 June 2002, the said formula was reiterated:
Net earning capacity =
Life expectancy x [Gross Annual Income – Living Expenses (50% of gross annual
income)],
Where:
Life expectancy = 2/3
(80 – the age of the deceased).
It
is net income (or gross income less living expenses), which is to be used in
the computation of the award for loss of income. In fixing the amount of the said damages, the
necessary expenses of the deceased should be deducted from his earnings. When there is no showing that the living
expenses constituted a smaller percentage of the gross income the living
expenses are fixed at half of the gross income.
To hold that one would have used only a small part of the income, with
the larger part going to the support of one’s children, would be conjectural
and unreasonable. Life expectancy should
not be based on the retirement age of government employees, which is pegged at
65. In calculating the life expectancy
of an individual for the purpose of determining loss of earning capacity under
Article 2206(1) of the Civil Code, it is assumed that the deceased would have
earned income even after retirement from a particular job. (See also: TUBURAN vs. PEOPLE, GR 152618, August 12, 2004; and PEOPLE OF THE PHILIPPINES
vs. DANTE NUEVA y SAMARO, G.R. No.
173248, November 3, 2008).
Further, in PEOPLE vs. DOMINADOR ASPIRAS alias "BOY",
G.R. No. 121203, April 12, 2000, it was held that as to the computation of
expected or future income by multiplying the years for which the victim could
have worked with his employer were it not for his death (11 years) by his
annual gross earnings, we find that the correct formula for computing the loss
of earning capacity is follows: 2/3 x (80 - age of victim at the time of death)
x (reasonable portion of the annual net income which would have been received
as support by heirs). [People vs.
Cawaling, 293 SCRA 267] The age of the victim at the time of his death was
48. He was receiving a monthly salary of P7,610.00, and yearly benefits in the
amount of P38,000.00. Hence, his annual
gross income was P129,320.00. Net income was 50% of the gross annual income, in
the absence of proof showing the deceased’s living expenses. [See also: People vs. Gutierrez, Jr., 302 SCRA 643,
667, February 8,1999.].
