"x x x.
Second Issue:
Amount of Liability
Petitioner insists that Borja is not entitled to the full amount of damages awarded by the lower courts. It disputes the use of his gross earning as basis for the computation of the award for loss of earning capacity. Both courts, in computing the value of such loss, used the remaining years of the victim as a government employee and the amount he had been receiving per annum at the time of the incident.
Counsel for Respondent Borja, on the other hand, claims that petitioner had no cause to complain, because the miscomputation had ironically been in its favor. The multiplier used in the computation was erroneously based on the remaining years in government service, instead of the life expectancy, of the victim. Borja’s counsel also points out that the award was based on the former’s meager salary in 1987, or about 23 years ago when the foreign exchange was still P14 to $1. Hence, the questioned award is consistent with the primary purpose of giving what is just, moral and legally due the victim as the aggrieved party.
Both parties have a point. In determining the reasonableness of the damages awarded under Article 1764 in conjunction with Article 2206 of the Civil Code, the factors to be considered are: (1) life expectancy (considering the health of the victim and the mortality table which is deemed conclusive) and loss of earning capacity; (b) pecuniary loss, loss of support and service; and (c) moral and mental sufferings.[19] The loss of earning capacity is based mainly on the number of years remaining in the person’s expected life span. In turn, this number is the basis of the damages that shall be computed and the rate at which the loss sustained by the heirs shall be fixed.[20]
The formula for the computation of loss of earning capacity is as follows:[21]
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).[22]
Petitioner is correct in arguing that 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.Villa Rey Transit v. Court of Appeals[23] explained that “the amount recoverable is not the loss of the entire earning, but rather the loss of that portion of the earnings which the beneficiary would have received.” Hence, in fixing the amount of the said damages, the necessary expenses of the deceased should be deducted from his earnings.
In other words, only net earnings, not gross earnings, are to be considered; that is, the total of the earnings less expenses necessary in the creation of such earnings or income, less living and other incidental expenses. When there is no showing that the living expenses constituted a smaller percentage of the gross income, we fix the living expenses 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.[24]
Counsel for Respondent Borja is also correct in saying that life expectancy should not be based on the retirement age of government employees, which is pegged at 65. In Negros Navigation Co, Inc. v. CA,[25] the Court resolved that 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.
Respondent Borja should not be situated differently just because he was a government employee. Private employees, given the retirement packages provided by their companies, usually retire earlier than government employees; yet, the life expectancy of the former is not pegged at 65 years.
Petitioner avers that Respondent Borja died nine years after the incident and, hence, his life expectancy of 80 years should yield to the reality that he was only 59 when he actually died.
We disagree. The Court uses the American Experience/Expectancy Table of Mortality or the Actuarial or Combined Experience Table of Mortality, which consistently pegs the life span of the average Filipino at 80 years, from which it extrapolates the estimated income to be earned by the deceased had he or she not been killed.[26]
Respondent Borja’s demise earlier than the estimated life span is of no moment. For purposes of determining loss of earning capacity, life expectancy remains at 80. Otherwise, the computation of loss of earning capacity will never become final, being always subject to the eventuality of the victim’s death. The computation should not change even if Borja lived beyond 80 years. Fair is fair.
Based on the foregoing discussion, the award for loss of earning capacity should be computed as follows:
Loss of earning = [2 (80-50)] x [(P2,752x12)-16,512]
capacity 3
= P330,240
Having been duly proven, the moral damages and attorney’s fees awarded are justified under the Civil Code’s Article 2219, paragraph 2; and Article 2208, paragraph 11, respectively.
x x x."
