G.R. No. L-49496 May 31, 1979
MD TRANSIT, INC., petitioner, vs. THE HONORABLE COURT OF APPEALS and SERGIO MARIANO (for himself and in representation of his minors SERGIO, JR. and MICHAEL all surnamed MARIANO), respondents.

FACTS

Carmen G. Mariano, a 39-year-old employee of General Telephone Directory Co. earning a monthly salary of P1,160.00, was struck and instantly killed by a bus owned by MD Transit, Inc. while she was crossing a pedestrian lane on Ayala Avenue, Makati. The driver was found to have been operating the vehicle recklessly. Sergio Mariano, the victim’s husband, filed a damages suit for himself and their two minor children. The trial court found MD Transit civilly liable for its employee’s negligence and awarded damages, including P309,920.00 as compensatory damages for lost earnings, which was affirmed by the Court of Appeals. The trial court computed this amount based on the deceased’s gross annual income of P13,920.00, deducting P2,000.00 for taxes, and multiplying the resulting net annual income of P11,920.00 by a 26-year life expectancy. MD Transit filed a petition for review, contesting the compensatory damages as excessive.

ISSUE

Whether the Court of Appeals erred in affirming the award of P309,920.00 as compensatory damages for the deceased’s lost earnings.

RULING

The Supreme Court modified the award, reducing the compensatory damages to P200,000.00. The legal logic centers on the proper computation of damages for loss of earning capacity under the doctrine established in Villa Rey Transit, Inc. vs. Court of Appeals. This doctrine requires consideration of two main factors: the life expectancy of the deceased and the net earning capacity, which is the gross income less necessary living and incidental expenses. The Court found the trial court’s computation erroneous as it essentially used gross earnings minus only taxes, failing to deduct the deceased’s necessary personal living expenses. The Court determined a reasonable annual deduction for such expenses to be P4,800.00, considering the husband also had his own income. From the gross annual income of P13,920.00, this leaves a net annual earning capacity of P9,120.00. On life expectancy, the Court found a period of 22 years to be reasonable, noting the deceased was in good health despite petitioner’s arguments about a past caesarian operation. Multiplying P9,120.00 by 22 years yields approximately P200,640.00, justifying the rounded award of P200,000.00. This amount also aligned with the prayer in the complaint. The award was to be divided equally among the husband and two minor children. The other damage awards had become final.