THIRD DIVISION
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CANDANO
SHIPPING LINES, INC., Petitioner, - versus - FLORENTINA J. SUGATA-ON, Respondent. |
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G.R. No. 163212 Present: YNARES-SANTIAGO, J., Chairperson, AUSTRIA-MARTINEZ,
CALLEJO, SR.,* CHICO-NAZARIO, and NACHURA, JJ. Promulgated: |
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CHICO-NAZARIO,
J.:
This is a Petition for Review on Certiorari under Rule
45 of the Revised Rules of Court, seeking to reverse and set aside the Court of
Appeals Decision[1]
dated 23 May 2003 and its Resolution dated 1 April 2004, affirming with
modification the Decision of the Regional Trial Court (RTC) of Manila, Branch
20, finding Candano Shipping Lines, Inc. (Candano Shipping) liable for the death of Melquiades Sugata-on. The dispositive
portion of the assailed decision of the appellate court reads:
IN VIEW OF ALL THE FOREGOING, the appealed decision is
AFFIRMED, with the MODIFICATION that: (1) the
awarded compensation for the death of Melquiades Sugata-on is reduced to P608,400.00; and, (2) the
award of moral and exemplary damages as well as attorney’s fees is deleted.
No pronouncement as to costs.[2]
The factual and procedural antecedents
of this instant petition are as follows:
Candano
Shipping is a domestic corporation engaged in the business of coastwise trading
within the P7,800.00.[4]
On
Upon learning of Melquiades’
fate, Florentina immediately went to the office of Candano Shipping in
Such refusal prompted Florentina to institute on
In its Answer,[9]
Candano Shipping countered that Florentina
had no cause of action against it because the death of Melquiades
was not yet an established fact since he was merely reported missing upon the
sinking of M/V David, Jr. The filing of
the case before the RTC therefore was premature for she should have waited
until the body of Melquiades could be recovered or
until the lapse of time which would render the provision of Article 391 of the
New Civil Code[10]
on presumptive death operative.
The RTC resolved the controversy in
favor of Florentina and ratiocinated that the
provision of Article 391 of the New Civil Code on presumptive death had become
operative since the period of four years had already elapsed since Melquiades was reported missing upon the sinking incident
which occurred on 27 March 1996. In a Decision[11]
promulgated on
WHEREFORE,
premises considered, judgment is hereby rendered ordering defendant Candano Shipping Lines, Inc. to indemnify plaintiff Forentina J. Sugata-on the amount
of P988,400.00 as actual damages, P100,000.00 as moral damages P50,000.00
as exemplary damages and 10% of the amount due as and for attorney’s fees plus
the cost of suit.
The award
for actual damages amounting to P988,400.00 was computed by the lower court by adopting
the formula in the computation of loss of earning capacity enunciated in the
case of Villa Rey
Transit, Inc. v. Court of Appeals,[12]
wherein the annual expenses of the deceased are deducted from his gross annual
income and multiplied by life expectancy (gross annual income – annual expense
x life expectancy).[13]
The Motion for Reconsideration
interposed by Candano Shipping was denied by the RTC
for lack of cogent reason to disturb or reconsider its decision.[14]
Aggrieved, Candano
Shipping elevated the adverse RTC decision to the Court of Appeals, which in
turn, affirmed with modification the judgment of the lower court. The award for actual damages was reduced from
P998,400.00
to P608,400.00, while the awards for
moral and exemplary damages including attorney’s fees were deleted for lack of
sufficient basis for their allowance.[15]
In arriving at the sum of P608,400.00,
the appellate court applied the standard prescribed by Article 194 of the Labor
Code of the
ART. 194. DEATH. – (a) Under such regulations as the Commission may approve, the System shall pay to the primary beneficiaries upon the death of the covered employee under this Title an amount equivalent to his monthly income benefit, plus ten percent thereof for each dependent child, but not exceeding five, beginning with the youngest and without substitution, except as provided for in paragraph (j) of Article 167 hereof; Provided, however, That the monthly income benefit shall be guaranteed for five years: Provided, further, That if he has no primary beneficiary, the System shall pay to his secondary beneficiaries the monthly income benefit not to exceed sixty months; Provided, finally, That the minimum monthly death benefit shall not be less that fifteen thousand pesos.
In a Resolution[16]
issued on
Hence, this instant Petition for
Review on Certiorari filed by Candano Shipping raising the following issues:
WHETHER OR NOT THE FORMULA FOR FIXING THE AMOUNT OF DEATH COMPENSATION IN ARTICLE 194 OF THE LABOR CODE APPLIES IN DETERMINING THE COMPENSATION CLAIMED BY THE HEIR OF THE DECEASED EMPLOYEE AGAINST THE EMPLOYER UNDER ARTICLE 1711?
WHETHER OR NOT IT IS PERMITTED FOR THE COURT OF APPEALS, ON ORDINARY APPEAL, TO APPLY ART. 194 OF THE LABOR CODE ON A CLAIM FOR DEATH COMPENSATION OF AN EMPLOYEE AGAINST THE EMPLOYER FILED AND TRIED BEFORE THE REGULAR COURTS ON THE BASIS OF ARTICLE 1711 OF THE CIVIL CODE AND THE DOCTRINE ENUNCIATED IN THE VILLA REY TRANSIT CASE?
WHETHER OR NOT APPLICATION OF ARTICLE 194 OF THE LABOR CODE ON THE CLAIM FOR DEATH COMPENSATION OF RESPONDENT OUSTS THE REGULAR COURTS, INCLUDING THE COURT OF APPEALS OF JURISDICTION OVER THE CASE?
IN THE EVENT THAT THE SUPREME COURT RULES THAT THE COURT OF APPEALS APPLICATION OF ARTICLE 194 OF THE LABOR CODE IN THIS CASE SHOULD BE SET ASIDE, IS RESPONDENT ENTITLED TO RECOVER DEATH COMPENSATION FROM PETITIONER IN ACCORDANCE WITH HER THEORY OF THE CASE AS ALLEGED, ARGUED AND TRIED BEFORE THE TRIAL COURT.[17]
Since the
factual findings of the RTC and the Court of Appeals that the non-recovery of Melquiades’ body for the period of four (4) years from 27
March 1996 creates a presumption that he is already dead and that his death was
caused by a fortuitous event, were already settled, and considering that these
findings were not controverted by the parties in this
instant petition, we find no compelling reason to disturb the same. Henceforth, we will limit our discussion to
the computation of the amount of indemnification.
In its Petition, Candano Shipping argues that the application of the measure stipulated under Article 194 of the Labor Code is erroneous since it applies only to death compensation to be paid by the Social Security System to the beneficiaries of a deceased member, to which proposition Florentina concedes. We agree. The remedy availed by Sugata-on in filing the claim under the New Civil Code has been validly recognized by the prevailing jurisprudence on the matter.
In the case of Floresca
v. Philex Mining Company,[18]
we declared that the employees may invoke either the Workmen’s Compensation Act
or the provisions of the Civil Code, subject to the consequence that the choice
of one remedy will exclude the other and that the acceptance of the
compensation under the remedy chosen will exclude the other remedy. The exception is where the claimant who had
already been paid under the Workmen’s Compensation Act may still sue for
damages under the Civil Code on the basis of supervening facts or developments
occurring after he opted for the first remedy.[19]
Stated differently, save for the
recognized exception, an employee cannot pursue both remedies simultaneously
but has the option to proceed by interposing one remedy and waiving his right
over the other. As we have explained in Floresca, this doctrinal rule is rooted on
the theory that the basis of the compensation under the Workmen’s Compensation
Act is separate and distinct from the award of damages under the Civil Code,
thus:
The rationale in awarding compensation under the Workmen’s Compensation Act differs from that in giving damages under the Civil Code. The compensation acts are based on a theory of compensation distinct from the existing theories of damages, payments under the acts being made as compensation and not as damages (99 C.J.S. 53). Compensation is given to mitigate harshness and insecurity of industrial life for the workman and his family. Hence, an employer is liable whether negligence exists or not since liability is created by law. Recovery under the Act is not based on any theory of actionable wrong on the part of the employer (99 D.J.S. 36).
In other words, under compensation acts, the employer is liable to pay compensation benefits for loss of income, as long as the death, sickness or injury is work-connected or work-aggravated, even if the death or injury is not due to the fault of the employer (Murillo v. Mendoza, 66 Phil. 689). On the other hand, damages are awarded to one as a vindication of the wrongful invasion of his rights. It is the indemnity recoverable by a person who has sustained injury either in his person, property or relative rights, through the act or default of another (25 C.J.S. 452).
The principle underscored in the case
of Floresca was further affirmed in the
later case of Ysmael Maritime Corporation
v. Avelino,[20]
wherein we emphasized that once the claimant had already exercised his choice
to pursue his right under one remedy, he is barred from proceeding with an
alternative remedy. As eloquently laid
down by Chief Justice Marcelo Fernan:
It is therefore clear that respondents had not only
opted to recover under the Act but they had also been duly paid. At the very
least, a sense of fair play would demand that if a person entitled to a choice
of remedies made a first election and accepted the benefits thereof, he should
no longer be allowed to exercise the second option. “Having staked his
fortunes on a particular remedy, (he) is precluded from pursuing the alternate
course, at least until the prior claim is rejected by the Compensation
Commission.”
In the case at bar, Florentina was forced to institute a civil suit for
indemnity under the New Civil Code, after Candano
Shipping refused to compensate her husband’s death.
The pertinent provision of the New
Civil Code reads:
Article 1711. Owners of enterprises and other employers are obliged to pay compensation for the death of or injuries to their laborers, workmen, mechanics or other employees, even though the event may have been purely accidental or entirely due to a fortuitous cause, if the death or personal injury arose out of and in the course of employment. The employer is also liable for compensation if the employee contracts any illness or diseases caused by such employment or as the result of the nature of employment. If the mishap was due to the employee’s own notorious negligence, or voluntary act, or drunkenness, the employer shall not be liable for compensation. When the employee’s lack of due care contributed to his death or injury, the compensation shall be equitably reduced.
In the case of Philippine Air Lines,
Inc. v. Court of Appeals,[21]
this Court validated the strength of the aforementioned provision and made the
employer liable for the injury suffered by its employee in the course of
employment. We thus ruled:
Having affirmed the gross negligence of PAL in allowing Capt. Delfin Bustamante to fly the plane to Daet on January 8, 1951 whose slow reaction and poor judgment was the cause of the crash-landing of the plane which resulted in private respondent Samson hitting his head against the windshield and causing him injuries for which reason PAL terminated his services and employment as pilot after refusing to provide him with the necessary medical treatment of respondent’s periodic spells, headache and general debility produced from said injuries, We must necessarily affirm likewise the award of damages or compensation under the provisions of Art. 1711 and Art. 1712 of the New Civil Code. x x x.
Appellant’s demand for compensation is predicated on employer’s liability for the sickness of, or injury to, his employee imposed by Article 1711 of the Civil Code, which reads:
Article
1711. Owners of enterprises and other employers are obliged to pay compensation
for the death x x
x.
We find the abovequoted provision to be
applicable and controlling in this case. The matter of the
amount of compensation and allowable medical expenses should be properly
determined by the Municipal Court after the parties are heard accordingly.
Given that the right of the claimant
arose from the contract of employment and the corresponding obligation imposed
by the New Civil Code upon the employer to indemnify the former for death and
injury of the employee circumstanced by his employment, necessarily, the
provisions of the same code on damages shall govern the extent of the
employer’s liability.
The pertinent provision
on damages under the New Civil Code provides:
Art. 2199. Except as provided by law or by stipulation, one is entitled to an adequate compensation only for such pecuniary loss suffered by him as he has duly proved. Such compensation is referred to as actual or compensatory damages.
Article 2200. Indemnification for damages shall comprehend not only the value of the loss suffered, but also that of the profits which the obligee failed to obtain.
In order to give breath to the aforestated provisions on damages of the New Civil Code,
they must be transformed into a more tangible and practical mathematical form,
so that the purpose of the law to indemnify the employee or his heirs for his
death or injury occasioned by his employment, as envisioned by the Article 1711
of the same code may be realized. We
deem it best to adopt the formula for loss of earning capacity enunciated in
the case of Villa Rey v. Court of Appeals,[23]
in computing the amount of actual damages to be awarded to the claimant under
Article 1711 of the New Civil Code.
In Villa
Rey, the common carrier was made liable for the
death of its passenger on board a passenger bus owned and operated by Villa Rey Transit, Inc. going to
The obligation of the common carrier
to indemnify its passenger or his heirs for injury or death arose from the
contract of carriage entered into by the common carrier and the passenger.[25] By the very nature of the obligation which is
imbued with public interest,[26]
in contract of carriage the carrier assumes the express obligation to transport
its passenger to his destination safely and to observe extraordinary diligence
with due regard to all the circumstances, and any injury that might be suffered
by the passenger is right away attributable to the fault or negligence of the
carrier and thus gives rise to the right of the passenger or his heirs for
indemnity.[27]
In the same breadth, the employer
shall be liable for the death or personal injury of its employees in the course
of employment as sanctioned by Article 1711 of the New Civil Code. The liability of the employer for death or
personal injury of his employees arose from the contract of employment entered
into between the employer and his employee which is likewise imbued with public
interest.[28] Accordingly, when the employee died or was
injured in the occasion of employment, the obligation of the employer for
indemnity, automatically attaches. The
indemnity may partake of the form of actual, moral, nominal, temperate,
liquidated or exemplary damages, as the case may be depending on the factual
milieu of the case and considering the criterion for the award of these damages
as outlined by our jurisprudence.[29] In the case at bar, only the award of actual
damages, specifically the award for unearned income is warranted by the
circumstances since it has been duly proven that the cause of
death of Melquiades is a fortuitous event for which Candano Shipping cannot be faulted.
The formula for the computation of unearned income is:
Net Earning Capacity = life expectancy x (gross annual income - reasonable and necessary living expenses).
Life expectancy is determined in accordance with the formula:
2 / 3 x [80 – age of deceased at the time of death]
Jurisprudence provides that the first factor, i.e.,
life expectancy, shall be computed by applying the formula (2/3 x [80 - age at
death]) adopted in the American Expectancy Table of Mortality or the Actuarial of
Combined Experience Table of Mortality.[30]
In the
computation of the second factor, it is computed by
multiplying the life expectancy by the net earnings of the deceased, i.e.,
the total earnings less expenses necessary in the creation of such earnings or
income and less living and other incidental expenses.[31] The loss is not equivalent to the entire
earnings of the deceased, but only such portion that he would have used to
support his dependents or heirs. Hence,
we deduct from his gross earnings the necessary expenses supposed to be used by
the deceased for his own needs.[32] The Court explained in Villa Rey:
[(The award of damages for loss of earning capacity is)] concerned with the determination of losses or damages sustained by the private respondents, as dependents and intestate heirs of the deceased, and that said damages consist, not of the full amount of his earnings, but of the support they received or would have received from him had he not died in consequence of negligence of petitioner’s agent. In fixing the amount of that support, we must reckon with the ‘necessary expenses of his own living’, which should be deducted from his earnings. Thus, it has been consistently held that earning capacity, as an element of damages to one’s estate for his death by wrongful act is necessarily his net earning capacity or his capacity to acquire money, ‘less necessary expense for his own living.’ Stated otherwise, the amount recoverable is not the loss of entire earning, but rather the loss of that portion of the earnings which the beneficiary would have received. In other words, only net earnings, and 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 and less living and other incidental expenses.[33]
In computing the third factor, the
necessary living expense, a survey of more recent jurisprudence shows that this
Court consistently pegged the amount at 50% of the gross annual income.[34] We held in Smith Bell Dodwell
Shipping Agency Corp. v. Borja,[35]
that when there is no showing that the living expenses constituted the
smaller percentage of the gross income, we fix the living expenses at half of
the gross income.
Applying the aforestated
jurisprudential guidelines in the computation of the amount of award for damages
set out in Villa Rey, we now proceed to determining
Melquiades’ life expectancy, thus:
Life expectancy = 2 / 3 x [80 – age of deceased at the time of death]
2 /3 x [80 – 56]
2 / 3 x [24]
Life expectancy
= 16
With 16 more years of life expectancy
and a monthly income of P7,800.00, as evidenced by the pay slips duly
presented before the RTC, Melquiades’ earning
capacity is computed as follows:
Net Earning Capacity = life expectancy x (gross annual income - reasonable and necessary living expenses).
=
16 x ( P93,600.00 – P 46,800.00)
=
16 x ( P 46,800.00 )
Net
Earning Capacity = P 748,800.00
The argument raised by Candano Shipping that the formula for determining the life
expectancy under Villa Rey cannot be
automatically applied without proof of the basis for the expected length of life
of a Filipino does not merit our consideration.
The formula for life expectancy has been repeatedly adopted in our
jurisprudence in fixing the amount of indemnity for the death of a party. This was adopted from the American Expectancy
Table of Mortality or the Actuarial of Combined Experience Table of Mortality
which was used by insurers in determining the capital sum to be charged for
annuity.[36]
Admittedly,
in several cases, this Court reduced the life expectancy multiplier considering
the medical history such as when the deceased previously underwent a major
surgery[37]
or when it was shown that he was treated for chest pains, backache or
occasional feeling of tiredness[38]
and the fact that the deceased has been consistently engaged in a dangerous and
risky activity tending to shorten his life.[39] Failing to prove, however, that any of these
circumstances is attendant in the case at bar, Candano
Shipping cannot validly assert that the standard life expectancy factor laid
down in Villa Rey cannot be applied in this
case.
Accordingly,
Florentina is entitled to recover the amount of P748,800.00
as actual damages for the death of her husband.
The awards of moral and exemplary damages are deleted. However, the award of costs of litigation and
attorney’s fees are proper.[40]
WHEREFORE, in view of the
foregoing, the instant petition is DENIED and the Decision dated
Pursuant to the
appropriate provisions of the New Civil Code and the prevailing jurisprudence
on the matter, petitioner Candano Shipping Lines,
Inc., is ORDERED to pay the amount
of P748,800.00, as actual damages, plus 10% of the
amount awarded as attorney’s fee plus cost of the suit.
SO ORDERED.
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MINITA V. CHICO-NAZARIOAssociate Justice |
WE
CONCUR:
CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson
No part; on leave
Associate Justice Associate Justice
ANTONIO EDUARDO B. NACHURA
Associate Justice
ATTESTATION
I attest that the conclusions in the above
Decision were reached in consultation before the case was assigned to the writer
of the opinion of the Court’s Division.
CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson,
Third Division
CERTIFICATION
Pursuant to Section 13, Article VIII
of the Constitution, and the Division Chairperson’s Attestation, it is hereby
certified that the conclusions in the above Decision were reached in
consultation before the case was assigned to the writer of the opinion of the
Court’s Division.
REYNATO S.
PUNO
Chief Justice
[1] Penned by Associate Justice Conrado M. Vasquez, Jr. with Associate Justices Mercedes Gozo-Dadole and Rosmari D. Carandang, concurring; rollo, pp. 29-39.
[2]
[3]
[4] Records, p. 199.
[5] Rollo, pp. 29-39.
[6] Records, p. 199.
[7] Article 1711. Owners of enterprises and other employers are obliged to pay compensation for the death of or injuries to their laborers, workmen, mechanics or other employees even though the event may have been purely accidental or entirely due to a fortuitous cause, if the death or personal injury arose out of and in the course of employment. The employer is also liable for compensation if the employee contracts any illness or diseases caused by such employment or as the result of the nature of the employment. If the mishap was due to the employee’s own notorious negligence, or voluntary act, or drunkenness, the employer shall not be liable for compensation. When the employee’s lack of due care contributed to his death or injury, the compensation shall be equitably reduced.
[8] Records, pp. 1-10.
[9]
[10] Article 391, New Civil Code. The
following shall be presumed dead for all purposes , including the division of the estate among the heirs:
(1) A
person on board a vessel lost during a sea voyage, or an aeroplane
which is missing, who has not be heard for four years since the loss of the
vessel or aeroplane;
(2)
A person in the armed forces who has taken part in war,
and has been missing for four years;
(3) A person who has been in danger of death under other circumstances and his existence has not been known for four years.
[11] Records, pp. 199-203.
[12] Villa
Rey Transit, Inc v. Court of Appeals, G.R. No.
L-25499,
[13] Records, pp. 199-203.
[14]
[15] CA rollo, pp. 86-96.
[16] Rollo, p. 40.
[17]
[18] Floresca v. Philex Mining Corporation, 220 Phil. 533, 547-548 (1985).
[19] Macropper Mining Corporation v. Abeleda, G.R. No.
L-33851,
[20] G.R. No. L-43674,
[21] 193 Phil. 560, 577 (1981).
[22] 138 Phil. 761, 765-766 (1969).
[23] Villa Rey Transit v. Court of Appeals, supra note 12.
[24]
[25] La
[26] Bacarro v. Castaño, 203 Phil. 563, 571 (1982).
[27] Article 1764, New Civil Code, Batangas Transportation Co. v. Caguimbal, 130 Phil. 166, 171 (1968).
[28] Article 1700, New Civil Code. The relations between capital and labor are not merely contractual. They are so impressed with public interest that labor contacts must yield to the common good. Therefore, such contracts are subject to the special laws on labor unions, collective bargaining, strikes and lockouts, closed shops, wages, working conditions, hours of labor and similar subjects.
[29] Article 2197. Damages may be:
(1) Actual or compensatory;
(2) Moral;
(3) Nominal;
(4) Temperate or moderate;
(5) Liquidated; or
(6) Exemplary or corrective.
[30] Lambert
v. Heirs of Ray Castillon, G.R. No. 160709,
[31]
[32] Magbanua v. Tabusares, Jr.,G.R. No. 152134,
[33]
[34]
[35] 432 Phil. 913, 925 (2002).
[36] Winfield and Jolowich, p. 770 a cited in Aquino, Torts and Damages, 2001 Ed., pp. 843-844.
[37] MD
Transit, Inc. v. Court of Appeals, G.R. No. L-49496,
[38] Davila v. Philippine Air Lines, 151 Phil. 549, 556 (1973).
[39] Rodgriguez –Luna v. Intermediate Appellate Court, G.R. No. L-62988,
[40] Singson v. Court of Appeals, G.R. No. 119995,