The formula generally used by the courts to determine net earning capacity

The denial by the CA of the heirs’ claim for lost earnings is unwarranted

            Going now to the petition filed by the heirs, we note at the outset that the issues of whether the CA erred in deleting the award for loss of earning capacity and in reducing the award for moral damages made by the trial court likewise raise questions of fact as they “involve an examination of the probative value of the evidence presented by the parties”.[40]  However, we find that the heirs’ case falls under one of the exceptions because the findings of the CA conflict with the findings of the RTC.[41]  Since the heirs properly raised the conflicting findings of the lower courts, it is proper for this Court to resolve such contradiction.[42]

            In Ereño, we denied the claim for loss of income because the handwritten estimate of the deceased’s daily income as a self-employed vendor was not supported by competent evidence like income tax returns or receipts.  This was in view of the rule that compensation for lost income is in the nature of damages and as such requires due proof of damages suffered.  We reiterated this rule in People v. Yrat[43] where we likewise denied the same claim because the only evidence presented to show that the deceased was earning P50,000.00 a month was the testimony of the wife.  There we stated that for lost income due to death, there must be unbiased proof of the deceased’s average income.  Self-serving, hence, unreliable statement is not enough.  In People v. Caraig,[44] we declared that “documentary evidence should be presented to substantiate the claim for damages for loss of earning capacity.  By way of exception, damages therefor may be awarded despite the absence of documentary evidence, provided that there is testimony that the victim was either (1) self-employed earning less than the minimum wage under current labor laws, and judicial notice may be taken of the fact that in the victim’s line of work no documentary evidence is available; or (2) employed as a daily-wage worker earning less than the minimum wage under current labor laws”.  However, we subsequently ruled in Pleyto v. Lomboy[45] that “failure to present documentary evidence to support a claim for loss of earning capacity of the deceased need not be fatal to its cause.  Testimonial evidence suffices to establish a basis for which the court can make a fair and reasonable estimate of the loss of earning capacity”.  Hence, we held as sufficient to establish a basis for an estimate of damages for loss of earning capacity the testimony of the victim’s widow that her husband was earning a monthly income of P8,000.00.  Later, in Victory Liner, Inc. v. Gammad,[46] after finding that the deceased’s earnings does not fall within the exceptions laid down in Caraig, we deleted the award for compensatory damages for loss of earning capacity as same was awarded by the lower courts only on the basis of the husband’s testimony that the deceased was 39 years of age and a Section Chief of the Bureau of Internal Revenue with a salary of P83,088.00 per annum at the time of her death.  This same rule was also applied in the 2008 case of Licyayo v. People.[47]

            In all of the cases mentioned except for Ereño, the sole basis for the claim for loss of earning capacity were the testimonies of the claimants.  This is not the case here.  Just like in Ereño where the testimony of the mother of the deceased was accompanied by a handwritten estimate of her daughter’s alleged income as a fish vendor, the testimony of Jose Marcial’s wife that he was earning around P450,000.00 a year was corroborated by a Certification issued by the USAID.  However in Ereño, we declared as self-serving the handwritten estimate submitted by the mother hence we denied the claim for such award.  Based on said ruling, the CA in this case deleted the award for lost income after it found the USAID Certification to be self-serving and unreliable.

            We disagree.  The CA sweepingly concluded that the USAID Certification is self-serving and unreliable without elaborating on how it was able to arrive at such a conclusion.  A research on USAID reveals that it is the “principal [United States] agency to extend assistance to countries recovering from disaster, trying to escape poverty, and engaging in democratic reforms.”[48]  It is an “independent federal government agency that receives over-all foreign policy guidance from the Secretary of the State [of the United States].”[49] Given this background, it is highly improbable that such an agency will issue a certification containing unreliable information regarding an employee’s income.  Besides, there exists a presumption that official duty has been regularly performed.[50] Absent any showing to the contrary, it is presumed that Cruz, as Chief of Human Resources Division of USAID, has regularly performed his duty relative to the issuance of said certification and therefore, the correctness of its contents can be relied upon.  This presumption remains especially so where the authenticity, due execution and correctness of said certification have not been put in issue either before the trial court or the CA.  As to its being self-serving, our discussion on “self-serving evidence” in Heirs of Pedro Clemeña y Zurbano v. Heirs of Irene B. Bien[51] is enlightening, viz:

‘Self-serving evidence,’ perhaps owing to its descriptive formulation, is a concept much misunderstood. Not infrequently, the term is employed as a weapon to devalue and discredit a party’s testimony favorable to his cause. That, it seems, is the sense in which petitioners are using it now. This is a grave error. “Self-serving evidence” is not to be taken literally to mean any evidence that serves its proponent’s interest. The term, if used with any legal sense, refers only to acts or declarations made by a party in his own interest at some place and time out of court x x x.   (Citations omitted; emphasis supplied.)

Verily, the USAID certification cannot be said to be self-serving because it does not refer to an act or declaration made out of court by the heirs themselves as parties to this case.

Clearly, the CA erred in deleting the award for lost income on the ground that the USAID Certification supporting such claim is self-serving and unreliable.  On the contrary, we find said certification sufficient basis for the court to make a fair and reasonable estimate of Jose Marcial’s loss of earning capacity just like in Tamayo v. Señora[52] where we based the victim’s gross annual income on his pay slip from the Philippine National Police.  Hence, we uphold the trial court’s award for Jose Marcial’s loss of earning capacity.

            While the trial court applied the formula generally used by the courts to determine net earning capacity which is, to wit:

Net Earning Capacity = life expectancy* x (gross annual income  –  reasonable living expenses),[53]

*Life expectancy = 2/3 (80 – age of the deceased)

we, however, find incorrect the amount of P6,537, 244.96 arrived at.  The award should be P6,611,634.59 as borne out by the following computation:


Net earning capacity           =             2 (80-36[54]) x 450, 844.49[55]-50%[56]


=             88x 225,422.25

                                                =             29.33 x 225,422.25

                                                =             P6, 611,634.59

About Erineus

Born on December 28, 1965, Surallah, South Cotabato, Southern Mindanao, Philippines.
This entry was posted in Contract of Carriage, Torts and Damages and tagged . Bookmark the permalink.

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