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CANDANO SHIPPING LINES v. FLORENTINA J. SUGATA-ON

FACTS:

This case involves a claim for death compensation filed by Florentina Sugata-on against Candano Shipping. Florentina's husband, Melquiades Sugata-on, worked as a seaman for Candano Shipping. M/V David, Jr., the vessel Melquiades was assigned to, encountered rough seas and sank, resulting in the death of Melquiades. Florentina filed for indemnity, and the RTC ruled in her favor, ordering Candano Shipping to pay compensation. Candano Shipping appealed to the Court of Appeals, which upheld the RTC's decision but reduced the awarded compensation and deleted the award of damages and attorney's fees.

The issue raised in the petition for review is whether the formula for fixing death compensation under the Labor Code is applicable in this case, which falls under the Civil Code. Candano Shipping argues that the Labor Code provision only applies to compensation paid by the Social Security System and that the claim should be filed under the Civil Code. The court ruled that the choice of remedy between the Workmen's Compensation Act and the Civil Code lies with the employee, and pursuing one remedy would exclude the other. However, there is an exception if the claimant had already been paid under the Workmen's Compensation Act and there are supervening facts that warrant pursuing the Civil Code remedy. The court explained that compensation under the Workmen's Compensation Act is different from damages under the Civil Code, with the former aiming to mitigate the harshness and insecurity of industrial life and the latter being based on the theory of actionable wrong.

ISSUES:

  1. Whether the employer is liable to pay compensation benefits even if the death, sickness, or injury is not due to the fault of the employer.

  2. Whether the claimant can pursue an alternative remedy after already exercising his right under one remedy.

  3. Whether the formula for loss of earning capacity enunciated in Villa Rey v. Court of Appeals should be adopted in computing the amount of actual damages to be awarded under Article 1711 of the New Civil Code.

  4. What is the formula for computing unearned income?

  5. Whether or not the formula for determining life expectancy should be applied in this case.

  6. Whether or not the circumstances of the case warrant a reduction in the life expectancy multiplier.

  7. Whether or not the award of actual damages, costs of litigation, and attorney's fees is proper in this case.

RULING:

  1. 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.

  2. Once the claimant had already exercised his choice to pursue his right under one remedy, he is barred from proceeding with an alternative remedy.

  3. Yes, the formula for loss of earning capacity enunciated in Villa Rey v. Court of Appeals should be adopted in computing the amount of actual damages to be awarded under Article 1711 of the New Civil Code.

  4. The formula for computing unearned income is:

  5. Net Earning Capacity = life expectancy x (gross annual income - reasonable and necessary living expenses).

  6. Life expectancy is determined in accordance with the formula:

  7. / 3 x [80 - age of deceased at the time of death]. Additionally, necessary living expenses are pegged at 50% of the gross annual income.

  8. The formula for determining life expectancy, as adopted from the American Expectancy Table of Mortality or the Actuarial of Combined Experience Table of Mortality, has consistently been used in jurisprudence in fixing the amount of indemnity for the death of a party. Therefore, the formula should be applied in this case.

  9. In cases where there are specific circumstances that may affect the life expectancy of the deceased, such as medical history or engagement in dangerous activities, a reduction in the life expectancy multiplier may be warranted. However, since the circumstances in this case do not provide evidence of such factors, the standard life expectancy factor should be applied.

  10. The award of actual damages is proper in this case. However, the awards of moral and exemplary damages are deleted. The award of costs of litigation and attorney's fees is also proper.

PRINCIPLES:

  • Compensation under the Workmen's Compensation Act is distinct from the award of damages under the Civil Code.

  • Recovery under the Workmen's Compensation Act is not based on any theory of actionable wrong on the part of the employer.

  • Owners of enterprises and other employers are obliged to pay compensation for the death of or injuries to their employees, even if the event may have been purely accidental or entirely due to a fortuitous cause.

  • The employer is liable for compensation if the employee contracts any illness or diseases caused by such employment or as the result of the nature of employment.

  • The employer shall not be liable for compensation if the mishap was due to the employee's own notorious negligence, voluntary act, or drunkenness.

  • The compensation awarded should be equitably reduced if the employee's lack of due care contributed to his death or injury.

  • The employer is liable for the injury suffered by its employee in the course of employment, even if the injury is due to the employer's gross negligence.

  • Owners of enterprises and other employers are obliged to pay compensation for the death or injury of their employees as imposed by Article 1711 of the Civil Code.

  • The employer's liability for damages shall comprehend not only the value of the loss suffered but also that of the profits which the obligee failed to obtain.

  • The obligation of a common carrier to indemnify its passenger or the passenger's heirs for injury or death arises from the contract of carriage and is imbued with public interest.

  • The liability of an employer for the death or personal injury of its employees in the course of employment arises from the contract of employment and is imbued with public interest.

  • The award of damages for loss of earning capacity is concerned with the determination of losses or damages sustained by dependents or heirs and 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.

  • The computation of unearned income involves multiplying the life expectancy by the net earnings of the deceased, i.e., the total earnings less necessary expenses in the creation of such earnings or income and less living and other incidental expenses.

  • The necessary living expenses are typically pegged at 50% of the gross annual income.

  • The formula for determining life expectancy, based on the American Expectancy Table of Mortality or the Actuarial of Combined Experience Table of Mortality, is commonly used in fixing the amount of indemnity for the death of a party.

  • Reduction in the life expectancy multiplier may be warranted in cases where there are specific circumstances that may affect the life expectancy of the deceased, such as medical history or engagement in dangerous activities.

  • The awards of actual damages, costs of litigation, and attorney's fees may be proper in cases involving claims for damages.