POINTERS IN COMPUTING LOSS OF EARNING CAPACITY

Source: SMITH BELL DODWELL SHIPPING AGENCY CORP v BORJA, G.R. No. 143008, June 10, 2002

Factors in determining reasonableness of damages awarded under Article 1764 in conjunction with
Article 2206 of the Civil Code:
a. 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

Formula in Computing Loss of Earning Capacity

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)

ILLUSTRATIVE EXAMPLE:
Loss of Earning Capacity = [2 (80-50) x [(2,752 x12)- 16,512)]
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3

= 330, 240

NOTE: In this illustration, 2,752 is the monthly living expenses multiply it by 12 to get the
Gross Annual Income Living Expenses. After computing the gross annual income living
expenses, get the 50% of which