Philippine Hawk Corporation v. Lee o (b) P10,000.
00 as temperate damages;
February 16, 2010| Peralta, J. | Actual Damages – Loss of earning capacity
Digester: LO
SUMMARY: Respondent Lee and her husband were riding a motorcycle when it was
bumped by a bus owned by Philippine Hawk. All three courts were unanimous in ruling
that the driver was negligent (last clear chance, it appears) and that Hawk was likewise
liable for failing to exercise due diligence of an employer. However, accepting testimony
of the wife and presented in evidence a Certificate of Creditable Income Tax Withheld
9 years prior to the incident, the SC made an estimate as to his earning capacity at the
time of the incident.
DOCTRINE:
As a rule, documentary evidence should be presented to substantiate the claim for
damages for loss of earning capacity. By way of exception, damages for loss of earning
capacity may be awarded despite the absence of documentary evidence when: (1) the
deceased is selfemployed and earning less than the minimum wage under current labor
laws, in which case, judicial notice may be taken of the fact that in the deceased’s line of
work no documentary evidence is available; or (2) the deceased is employed as a daily
wage worker earning less than the minimum wage under current labor laws
FACTS:
● March 15, 2005 Lee filed complaint against Philippine Hawk for damages based on
quasi-delict in an vehicular collision in Gumaca Quezon, which resulted in the
death of her husband and physical injuries to her.
o She sought the payment of indemnity for the death of her husband,
moral and exemplary damages, funeral and interment expenses,
medical and hospitalization expenses, the cost of the motorcycle’s
repair, attorney’s fees, and other just and equitable reliefs
● She and her husband were riding a motorcycle when a Metro Bus driven by Avila
(employee of Philippine Hawk)
● Material facts which gave rise to a finding of negligence with respect to Avila
o Involved in several sideswiping incidents before
o Since Avila saw the motorcycle before the collision, he should have
stepped on the brakes and slowed down, but he just maintained his
speed and veered to the left – LAST CLEAR CHANCE
● Material facts which gave rise to a finding of negligence with respect to Phil. Hawk
o Did not prove that it exercised due diligence
o Was not aware of Avila’s previous sideswiping incidents
● TC:
o P745,575.00 actual damages
o for loss of earning capacity (P590,000.00)
o (P155,575.00) for funeral expenses
o P50,000.00 as moral damages
● CA:
o (a) P168,019.55 as actual damages;
o (c) P100,000.00 as moral damages;
o (d) P590,000.00 as unearned income; and
o (e) P50,000.00 as civil indemnity
RULING: Judgment affirmed, modification as to damages
● (a) civil indemnity (P50,000.00);
● (b) actual damages (P127,192.85);
● (c) moral damages (P80,000.00);
● (d) indemnity for loss of earning capacity (P1,000,000.00);
● (e) temperate damages (P10,000.00).
W/N negligence may be attributed to petitioner’s driver, and whether negligence
on his part was the proximate cause of the accident, resulting in the death of
Silvino Tan and causing physical injuries to respondent – YES. Factual issues
which SC declined to pass upon
● Avila, the bus driver, who was driving on the right side of the road, already saw the
motorcycle on the left side of the road before the collision. However, he did not
take the necessary precaution to slow down, but drove on and bumped the
motorcycle, and also the passenger jeep parked on the left side of the road,
showing that the bus was negligent in veering to the left lane, causing it to hit the
motorcycle and the passenger jeep.
● Phil. Hawk failed to exercise the diligence of a good father of the family in the
selection and supervision of its bus driver, Margarito Avila, for having failed to
sufficiently inculcate in him discipline and correct behavior on the road. Indeed,
petitioner’s tests were concentrated on the ability to drive and physical fitness to do
so. It also did not know that Avila had been previously involved in sideswiping
incidents
W/N CA erred in awarding (additional) damages because it was Phil Hawk who
appealed and not Lee – NO
● Clothed with ample authority to review matters, even if they are not assigned as
errors on appeal, if it finds that their consideration is necessary in arriving at a just
decision of the case.
● Also, an unassigned error closely related to an error properly assigned will be
considered by the appellate court notwithstanding the failure to assign it as error
Discussion on award of damages
● CA affirmed award of damages although it was modified
Loss of earning capacity
● The indemnity for loss of earning capacity of the deceased is provided for by
Article 2206 of the Civil Code. Compensation of this nature is awarded not for loss
of earnings, but for loss of capacity to earn money
● As a rule, documentary evidence should be presented to substantiate the claim for
damages for loss of earning capacity. By way of exception, damages for loss of
 earning capacity may be awarded despite the absence of documentary evidence ● However, the award of P50,000.00 should be reduced to P30,000.00
when: Civil indemnity for death
o (1) the deceased is selfemployed and earning less than the minimum ● Fixed by current jurisprudence at P50,000.00
wage under current labor laws, in which case, judicial notice may be
taken of the fact that in the deceased’s line of work no documentary
evidence is available; or
o (2) the deceased is employed as a daily wage worker earning less than
the minimum wage under current labor laws.
In this case
● Respondent’s husband was leasing and operating a Caltex gasoline station in
Gumaca, Quezon. Respondent testified that her husband earned an annual
income of one million pesos. Respondent presented in evidence a
Certificate of Creditable Income Tax Withheld at Source for the Year 1990,
which showed that respondent’s husband earned a gross income of P950,988.43 in
1990. It is reasonable to use the Certificate and respondent’s testimony as bases for
fixing the gross annual income of the deceased at one million pesos before
respondent’s husband died on March 17, 1999.
● However, no documentary evidence was presented regarding the income
derived from their copra business; hence, the testimony of respondent as
regards such income cannot be considered.
Computation, applying Villa Rey Standard
● In the computation of loss of earning capacity, only net earnings, not gross
earnings, are to be considered;
● In the absence of documentary evidence, it is reasonable to peg necessary expenses
for the lease and operation of the gasoline station at 80 percent of the gross
income, and peg living expenses at 50 percent of the net income (gross income less
necessary expenses).
Funeral expenses
● Actual damages must be substantiated by documentary evidence, such as receipts,
in order to prove expenses incurred as a result of the death of the victim or the
physical injuries sustained by the victim.
● A review of the valid receipts submitted in evidence showed that the funeral and
related expenses amounted only to P114,948.60, while the medical expenses of
respondent amounted only to P12,244.25, yielding a total of P127,192.85 in actual
damages
Moral damages for death
● Awarded to allow the plaintiff to obtain means, diversions or amusements that will
serve to alleviate the moral suffering he/she has undergone due to the defendant’s
culpable action
Temperate damages
● In the absence of competent proof of the actual damage caused on the motorcycle
or the actual cost of its repair, the award of temperate damages by the appellate
court in the amount of P10,000.00 was reasonable
Moral damages for injuries
● Under Art. 2219 of the Civil Code, 45 moral damages may be recovered in quasi-
delicts causing physical injuries.