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COURT OF APPEALS and SOLEDAD PARIAN, respondents. QUIASON, J.: This is a petition for review on certiorari under Rule 45 of the Revised Rules of Court of the Decision of the Court of Appeals dated July 15, 1993, which dismissed the petition for certiorari in CA-G.R. CV Nos. 28391-92. On July 23, 1947, Ong Joi Jong sold a parcel of land located at Fundidor Street, San Nicolas to private respondent Soledad Parian, the wife of Ong Yee. The latter, the brother of petitioner Ong Ching Po, died in January 1983; while petitioner Ong Ching Po died in October 1986. The said sale was evidenced by a notarized Deed of Sale written in English. Subsequently, the document was registered with the Register of Deeds of Manila, which issued Transfer Certificate of Title No. 9260 dated September 2, 1947 in the name of private respondent. According to private respondent, she entrusted the administration of the lot and building to petitioner Ong Ching Po when she and her husband settled in Iloilo. When her husband died, she demanded that the lot be vacated because she was going to sell it. Unfortunately, petitioners refused to vacate the said premises. On March 19, 1984, private respondent filed a case for unlawful detainer against petitioner Ong Ching Po before the Metropolitan Trial Court of Manila, Branch 26. The inferior court dismissed her case. The dismissal was affirmed by the Regional Trial Court, Branch 10, Manila. The decision of the Regional Trial Court was, in turn, affirmed by the Court of Appeals, which dismissed the petition. The decision of the Court of Appeals became final and executory. Petitioners, on the other hand, claimed that on July 23, 1946, petitioner Ong Ching Po bought the said parcel of land from Ong Joi Jong. The sale was evidenced by a photo copy of a Deed of Sale written in Chinese with the letter head "Sincere Trading Co." (Exh. "B"). An English translation of said document (Exh. "C") read as follows: Deed of Sale I, Ong Joi Jong, a party to this Deed of Sale hereby sell in absolutely (sic) manner a lot located on No. 4 Fundidor Street, San Nicolas an (sic) area consisting 213 square meters including a one-story house erected thereon unto Mr. Ong Ching Po for the sum of P6,000.00 the receipt of which is hereby acknowledged by me and consequently I have executed and signed the government registered title (sic) the said lot inclusive of the house erected thereon, now belong (sic) to Mr. Ong Ching Po unequivocally. And the purpose of this document is to precisely serve as proof of the sale. Addendum: I have acceded to the request of Mr. Ong Ching Po into signing another document in favor of Soledad Parian (She is the Filipino wife of Ong Yee, brother of Ong Ching Po) for the purpose of facilitating the issuance of the new title by the City Register of Deeds and for the reason that he is not yet a Filipino. I certify to the truthfulness of this fact. Lot Seller: Ong Joi Jong (Exhibits for the plaintiff, p. 4) On December 6, 1983, petitioner Ong Ching Po executed a Deed of Absolute Sale conveying to his children, petitioners Jimmy and David Ong, the same property sold by Ong Joi Jong to private respondent in 1947. On December 12 1985, petitioners Ong Ching Po, Jimmy Ong and David Ong filed an action for reconveyance and damages against private respondent in the Regional Trial Court, Branch 53, Manila, docketed as Case No. 85-33962.

On July 26, 1986, private respondent filed an action for quieting of title against petitioners Ong Ching Po and his wife, petitioner Yu Siok Lian, in the Regional Trial Court, Branch 58, Manila, docketed as Civil Case No. 86-36818. Upon her motion, the case was consolidated with Civil Case No. 85-33962. On May 30 1990, the trial court rendered a decision in favor of private respondent. On appeal by petitioners to the Court of Appeals, the said court affirmed the decision of the Regional Trial Court. Hence, this petition. II According to petitioners, the Court of Appeals erred: (1) When it gave full faith and credit to the Deed of Sale (Exh. "A") in favor of private respondent, instead of the Deed of Sale (Exh. "B" and its translation, Exh. "C") in favor of petitioner Ong Ching Po. (2) When it concluded that the acts of petitioners were not acts of ownership; and (3) When it ruled that no express nor implied trust existed between petitioners and private respondent (Rollo, pp. 17-18). As stated by petitioners themselves, what is in dispute ". . . is not so much as to which between Exhibit "A" and "Exhibit "B" is more weighty, but whether this document is what it purports to be (i.e., a deed of conveyance in favor of Soledad Parian [private respondent] or it was only resorted to or executed as a subterfuge because the real buyer (Ong Ching Po) was an alien and it was agreed upon between Ong Ching Po and his brother (Ong Yee, Soledad Parian's husband) that the land be registered in the name of Soledad Parian in order to avoid legal complications and to facilitate registration and transfer and that the said title would be transferred by Soledad to Ong Ching Po or his successors-in-interest and that she would be holding the title in trust for him" (Rollo, pp. 19-20). We cannot go along with the claim that petitioner Ong Ching Po merely used private respondent as a dummy to have the title over the parcel of land registered in her name because being an alien he was disqualified to own real property in the Philippines. To sustain such an outrageous contention would be giving a high premium to a violation of our nationalization laws. Assuming that Exhibit "B" is in existence and that it was duly executed, still petitioners cannot claim ownership of the disputed lot by virtue thereof. Section 5, Article XIII of the 1935 Constitution provides, as follows: Save in cases of hereditary succession, no private agricultural land shall be transferred or assigned except to individuals, corporations, or associations qualified to acquire or hold lands of the public domain in the Philippines. Section 14, Article XIV of the 1973 Constitution provides, as follows: Save in cases of hereditary succession, no private land shall be transferred or conveyed except to individuals, corporations, or associations qualified to acquire or hold lands in the public domain. Section 7, Article XII of the 1987 Constitution provides: Save in cases of hereditary succession, no private lands shall be transferred or conveyed except to individuals, corporations, or associations qualified to acquire or hold lands in the public domain. The capacity to acquire private land is made dependent upon the capacity to acquire or hold lands of the public domain. Private land may be transferred or conveyed only to individuals or entities "qualified to acquire lands of the public domain" (II Bernas, The Constitution of the Philippines 439440 [1988 ed.]).

The 1935 Constitution reserved the right to participate in the "disposition, exploitation, development and utilization" of all "lands of the public domain and other natural resources of the Philippines" for Filipino citizens or corporations at least sixty percent of the capital of which was owned by Filipinos. Aliens, whether individuals or corporations, have been disqualified from acquiring public lands; hence, they have also been disqualified from acquiring private lands. Petitioner Ong Ching Po was a Chinese citizen; therefore, he was disqualified from acquiring and owning real property. Assuming that the genuineness and due execution of Exhibit "B" has been established, the same is null and void, it being contrary to law. On the other end of the legal spectrum, the deed of sale executed by Ong Joi Jong in favor of private respondent (Exh. "A") is a notarized document. To remove the mantle of validity bestowed by law on said document, petitioners claim that private respondent admitted that she did not pay anything as consideration for the purported sale in her favor. In the same breath, petitioners said that private respondent implied in her deposition that it was her husband who paid for the property. It appears, therefore, that the sale was financed out of conjugal funds and that it was her husband who handled the transaction for the purchase of the property. Such transaction is a common practice in Filipino-family affairs. It is not correct to say that private respondent never took possession of the property. Under the law, possession is transferred to the vendee by virtue of the notarized deed of conveyance. Under Article 1498 of the Civil Code of the Philippines, "when the sale is made through a public instrument, the execution thereof shall be equivalent to the delivery of the object of the contract, if from the deed the contrary does not appear or cannot clearly be inferred." If what petitioners meant was that private respondent never lived in the building constructed on said land, it was because her family had settled in Iloilo. There is no document showing the establishment of an express trust by petitioner Ong Ching Po as trustor and private respondent as trustee. Not even Exhibit "B" can be considered as such a document because private respondent, the registered owner of the property subject of said "deed of sale," was not a party thereto. The oral testimony to prove the existence of the express trust will not suffice. Under Article 1443 of the Civil Code of the Philippines, "No express trust concerning an immovable or any interest therein may be proved by parole evidence." Undaunted, petitioners argue that if they cannot prove an express trust in writing, they can prove an implied trust orally. While an implied trust may be proved orally (Civil Code of the Philippines, Art. 1457), the evidence must be trustworthy and received by the courts with extreme caution, because such kind of evidence may be easily fabricated (Salao v. Salao, 70 SCRA 65 [1976]). It cannot be made to rest on vague and uncertain evidence or on loose, equivocal or indefinite declarations (Cf. De Leon v. Molo-Peckson, et al., 116 Phil. 1267 [1962]). Petitioners do not claim that Ong Yee was not in a financial position to acquire the land and to introduce the improvements thereon. On the other hand, Yu Siok Lian, the wife of petitioner Ong Ching Po, admitted in her testimony in court that Ong Yee was a stockholder of Lam Sing Corporation and was engaged in business. The Court of Appeals did not give any credence to Exhibit "B" and its translation, Exhibit "C", because these documents had not been properly authenticated. Under Section 4, Rule 130 of the Revised Rules of Court: Secondary Evidence when Original is lost or destroyed. When the original writing has been lost or destroyed, or cannot be produced in court, upon proof of its execution and lost or destruction, or unavailability, its contents may be proved by a copy, or by a recital of its contents in some authentic document, or by the recollection of the witnesses. Secondary evidence is admissible when the original documents were actually lost or destroyed. But prior to the introduction of such secondary evidence, the proponent must establish the former existence of the document. The correct order of proof is as follows: existence; execution; loss; contents. This order may be changed if necessary in the discretion of the court (De Vera v. Aguilar, 218 SCRA 602 [1993]).

Petitioners failed to adduce evidence as to the genuineness and due execution of the deed of sale, Exhibit "B". The due execution of the document may be established by the person or persons who executed it; by the person before whom its execution was acknowledged; or by any person who was present and saw it executed or who after its execution, saw it and recognized the signatures; or by a person to whom the parties to the instrument had previously confessed the execution thereof (De Vera v. Aguilar, supra). Petitioner Yu Siok Lian testified that she was present when said document was executed, but the trial court rejected her claim and held: If it is true that she was present, why did she not sign said document, even merely as a witness? Her oral testimony is easy to concoct or fabricate. Furthermore, she was married only on September 6, 1946 to the plaintiff, Ong Ching Po, in Baguio City where she apparently resided, or after the deed of sale was executed. The Court does not believe that she was present during the execution and signing of the deed of sale involved therein, notwithstanding her pretensions to the contrary (Decision p. 6, Records p. 414). As to the contention of petitioners that all the tax receipts, tax declaration, rental receipts, deed of sale (Exh. "B") and transfer certificate of title were in their possession, private respondent explained that she and her husband entrusted said lot and building to petitioners when they moved to Iloilo. As observed by the Court of Appeals: We find, however, that these acts, even if true, are not necessarily reflective of dominion, as even a mere administrator or manager may lawfully perform them pursuant to his appointment or employment (Rollo, p. 10). It is markworthy that all the tax receipts were in the name of private respondent and her husband. The rental receipts were also in the name of her husband. WHEREFORE, the petition is DISMISSED. ROGELIO E. RAMOS and ERLINDA RAMOS, in their own behalf and as natural guardians of the minors, ROMMEL RAMOS, ROY RODERICK RAMOS and RON RAYMOND RAMOS, petitioners, vs. COURT OF APPEALS, DELOS SANTOS MEDICAL CENTER, DR. ORLINO HOSAKA and DRA. PERFECTA GUTIERREZ, respondents. DECISION KAPUNAN, J.: The Hippocratic Oath mandates physicians to give primordial consideration to the health and welfare of their patients. If a doctor fails to live up to this precept, he is made accountable for his acts. A mistake, through gross negligence or incompetence or plain human error, may spell the difference between life and death. In this sense, the doctor plays God on his patients fate.[1] In the case at bar, the Court is called upon to rule whether a surgeon, an anesthesiologist and a hospital should be made liable for the unfortunate comatose condition of a patient scheduled for cholecystectomy.[2] Petitioners seek the reversal of the decision[3] of the Court of Appeals, dated 29 May 1995, which overturned the decision[4]of the Regional Trial Court, dated 30 January 1992, finding private respondents liable for damages arising from negligence in the performance of their professional duties towards petitioner Erlinda Ramos resulting in her comatose condition. The antecedent facts as summarized by the trial court are reproduced hereunder: Plaintiff Erlinda Ramos was, until the afternoon of June 17, 1985, a 47-year old (Exh. A) robust woman (TSN, October 19, 1989, p. 10). Except for occasional complaints of discomfort due to pains allegedly caused by the presence of a stone in her gall bladder (TSN, January 13, 1988, pp. 4-5), she was as normal as any other woman. Married to Rogelio E. Ramos, an executive of Philippine

Long Distance Telephone Company, she has three children whose names are Rommel Ramos, Roy Roderick Ramos and Ron Raymond Ramos (TSN, October 19, 1989, pp. 5-6). Because the discomforts somehow interfered with her normal ways, she sought professional advice. She was advised to undergo an operation for the removal of a stone in her gall bladder (TSN, January 13, 1988, p. 5). She underwent a series of examinations which included blood and urine tests (Exhs. A and C) which indicated she was fit for surgery. Through the intercession of a mutual friend, Dr. Buenviaje (TSN, January 13, 1988, p. 7), she and her husband Rogelio met for the first time Dr. Orlino Hozaka (should be Hosaka; see TSN, February 20, 1990, p. 3), one of the defendants in this case, on June 10, 1985. They agreed that their date at the operating table at the DLSMC (another defendant), would be on June 17, 1985 at 9:00 A.M.. Dr. Hosaka decided that she should undergo a cholecystectomy operation after examining the documents (findings from the Capitol Medical Center, FEU Hospital and DLSMC) presented to him. Rogelio E. Ramos, however, asked Dr. Hosaka to look for a good anesthesiologist. Dr. Hosaka, in turn, assured Rogelio that he will get a good anesthesiologist. Dr. Hosaka charged a fee of P16,000.00, which was to include the anesthesiologists fee and which was to be paid after the operation (TSN, October 19, 1989, pp. 14-15, 22-23, 31-33; TSN, February 27, 1990, p. 13; and TSN, November 9, 1989, pp. 3-4, 10, 17). A day before the scheduled date of operation, she was admitted at one of the rooms of the DLSMC, located along E. Rodriguez Avenue, Quezon City (TSN, October 19, 1989, p. 11). At around 7:30 A.M. of June 17, 1985 and while still in her room, she was prepared for the operation by the hospital staff. Her sister-in-law, Herminda Cruz, who was the Dean of the College of Nursing at the Capitol Medical Center, was also there for moral support. She reiterated her previous request for Herminda to be with her even during the operation. After praying, she was given injections. Her hands were held by Herminda as they went down from her room to the operating room (TSN, January 13, 1988, pp. 9-11). Her husband, Rogelio, was also with her (TSN, October 19, 1989, p. 18). At the operating room, Herminda saw about two or three nurses and Dr. Perfecta Gutierrez, the other defendant, who was to administer anesthesia. Although not a member of the hospital staff, Herminda introduced herself as Dean of the College of Nursing at the Capitol Medical Center who was to provide moral support to the patient, to them. Herminda was allowed to stay inside the operating room. At around 9:30 A.M., Dr. Gutierrez reached a nearby phone to look for Dr. Hosaka who was not yet in (TSN, January 13, 1988, pp. 11-12). Dr. Gutierrez thereafter informed Herminda Cruz about the prospect of a delay in the arrival of Dr. Hosaka. Herminda then went back to the patient who asked, Mindy, wala pa ba ang Doctor? The former replied, Huwag kang mag-alaala, darating na iyon (ibid.). Thereafter, Herminda went out of the operating room and informed the patients husband, Rogelio, that the doctor was not yet around (id., p. 13). When she returned to the operating room, the patient told her, Mindy, inip na inip na ako, ikuha mo ako ng ibang Doctor. So, she went out again and told Rogelio about what the patient said (id., p. 15). Thereafter, she returned to the operating room. At around 10:00 A.M., Rogelio E. Ramos was already dying [and] waiting for the arrival of the doctor even as he did his best to find somebody who will allow him to pull out his wife from the operating room (TSN, October 19, 1989, pp. 19-20). He also thought of the feeling of his wife, who was inside the operating room waiting for the doctor to arrive (ibid.). At almost 12:00 noon, he met Dr. Garcia who remarked that he (Dr. Garcia) was also tired of waiting for Dr. Hosaka to arrive (id., p. 21). While talking to Dr. Garcia at around 12:10 P.M., he came to know that Dr. Hosaka arrived as a nurse remarked, Nandiyan na si Dr. Hosaka, dumating na raw. Upon hearing those words, he went down to the lobby and waited for the operation to be completed (id., pp. 16, 29-30). At about 12:15 P.M., Herminda Cruz, who was inside the operating room with the patient, heard somebody say that Dr. Hosaka is already here. She then saw people inside the operating room moving, doing this and that, [and] preparing the patient for the operation (TSN, January 13, 1988, p. 16). As she held the hand of Erlinda Ramos, she then saw Dr. Gutierrez intubating the hapless patient. She thereafter heard Dr. Gutierrez say, ang hirap ma-intubate nito, mali yata ang pagkakapasok. O lumalaki ang tiyan (id., p. 17). Because of the remarks of Dra. Gutierrez, she focused her attention on what Dr. Gutierrez was doing. She thereafter noticed bluish discoloration of the nailbeds of the left hand of the hapless Erlinda even as Dr. Hosaka approached her. She then heard Dr. Hosaka issue an order for someone to call Dr. Calderon, another anesthesiologist (id., p.

19). After Dr. Calderon arrived at the operating room, she saw this anesthesiologist trying to intubate the patient. The patients nailbed became bluish and the patient was placed in a trendelenburg position - a position where the head of the patient is placed in a position lower than her feet which is an indication that there is a decrease of blood supply to the patients brain (Id., pp. 19-20). Immediately thereafter, she went out of the operating room, and she told Rogelio E. Ramos that something wrong was x x x happening (Ibid.). Dr. Calderon was then able to intubate the patient (TSN, July 25, 1991, p. 9). Meanwhile, Rogelio, who was outside the operating room, saw a respiratory machine being rushed towards the door of the operating room. He also saw several doctors rushing towards the operating room. When informed by Herminda Cruz that something wrong was happening, he told her (Herminda) to be back with the patient inside the operating room (TSN, October 19, 1989, pp. 2528). Herminda Cruz immediately rushed back, and saw that the patient was still in trendelenburg position (TSN, January 13, 1988, p. 20). At almost 3:00 P.M. of that fateful day, she saw the patient taken to the Intensive Care Unit (ICU). About two days thereafter, Rogelio E. Ramos was able to talk to Dr. Hosaka. The latter informed the former that something went wrong during the intubation. Reacting to what was told to him, Rogelio reminded the doctor that the condition of his wife would not have happened, had he (Dr. Hosaka) looked for a good anesthesiologist (TSN, October 19, 1989, p. 31). Doctors Gutierrez and Hosaka were also asked by the hospital to explain what happened to the patient. The doctors explained that the patient had bronchospasm (TSN, November 15, 1990, pp. 26-27). Erlinda Ramos stayed at the ICU for a month. About four months thereafter or on November 15, 1985, the patient was released from the hospital. During the whole period of her confinement, she incurred hospital bills amounting to P93,542.25 which is the subject of a promissory note and affidavit of undertaking executed by Rogelio E. Ramos in favor of DLSMC. Since that fateful afternoon of June 17, 1985, she has been in a comatose condition. She cannot do anything. She cannot move any part of her body. She cannot see or hear. She is living on mechanical means. She suffered brain damage as a result of the absence of oxygen in her brain for four to five minutes (TSN, November 9, 1989, pp. 21-22). After being discharged from the hospital, she has been staying in their residence, still needing constant medical attention, with her husband Rogelio incurring a monthly expense ranging from P8,000.00 to P10,000.00 (TSN, October 19, 1989, pp. 32-34). She was also diagnosed to be suffering from diffuse cerebral parenchymal damage (Exh. G; see also TSN, December 21, 1989, p. 6).[5] Thus, on 8 January 1986, petitioners filed a civil case[6] for damages with the Regional Trial Court of Quezon City against herein private respondents alleging negligence in the management and care of Erlinda Ramos. During the trial, both parties presented evidence as to the possible cause of Erlindas injury. Plaintiff presented the testimonies of Dean Herminda Cruz and Dr. Mariano Gavino to prove that the damage sustained by Erlinda was due to lack of oxygen in her brain caused by the faulty management of her airway by private respondents during the anesthesia phase. On the other hand, private respondents primarily relied on the expert testimony of Dr. Eduardo Jamora, a pulmonologist, to the effect that the cause of brain damage was Erlindas allergic reaction to the anesthetic agent, Thiopental Sodium (Pentothal). After considering the evidence from both sides, the Regional Trial Court rendered judgment in favor of petitioners, to wit: After evaluating the evidence as shown in the finding of facts set forth earlier, and applying the aforecited provisions of law and jurisprudence to the case at bar, this Court finds and so holds that defendants are liable to plaintiffs for damages. The defendants were guilty of, at the very least, negligence in the performance of their duty to plaintiff-patient Erlinda Ramos. On the part of Dr. Perfecta Gutierrez, this Court finds that she omitted to exercise reasonable care in not only intubating the patient, but also in not repeating the administration of atropine (TSN, August 20, 1991, pp. 5-10), without due regard to the fact that the patient was inside the operating room for

almost three (3) hours. For after she committed a mistake in intubating [the] patient, the patient's nailbed became bluish and the patient, thereafter, was placed in trendelenburg position, because of the decrease of blood supply to the patient's brain. The evidence further shows that the hapless patient suffered brain damage because of the absence of oxygen in her (patient's) brain for approximately four to five minutes which, in turn, caused the patient to become comatose. On the part of Dr. Orlino Hosaka, this Court finds that he is liable for the acts of Dr. Perfecta Gutierrez whom he had chosen to administer anesthesia on the patient as part of his obligation to provide the patient a `good anesthesiologist', and for arriving for the scheduled operation almost three (3) hours late. On the part of DLSMC (the hospital), this Court finds that it is liable for the acts of negligence of the doctors in their `practice of medicine' in the operating room. Moreover, the hospital is liable for failing through its responsible officials, to cancel the scheduled operation after Dr. Hosaka inexcusably failed to arrive on time. In having held thus, this Court rejects the defense raised by defendants that they have acted with due care and prudence in rendering medical services to plaintiff-patient. For if the patient was properly intubated as claimed by them, the patient would not have become comatose. And, the fact that another anesthesiologist was called to try to intubate the patient after her (the patient's) nailbed turned bluish, belie their claim. Furthermore, the defendants should have rescheduled the operation to a later date. This, they should have done, if defendants acted with due care and prudence as the patient's case was an elective, not an emergency case. xxx WHEREFORE, and in view of the foregoing, judgment is rendered in favor of the plaintiffs and against the defendants. Accordingly, the latter are ordered to pay, jointly and severally, the former the following sums of money, to wit: 1) the sum of P8,000.00 as actual monthly expenses for the plaintiff Erlinda Ramos reckoned from November 15, 1985 or in the total sum of P632,000.00 as of April 15, 1992, subject to its being updated; 2) the sum of P100,000.00 as reasonable attorney's fees; 3) the sum of P800,000.00 by way of moral damages and the further sum of P200,000.00 by way of exemplary damages; and, 4) the costs of the suit. SO ORDERED.[7] Private respondents seasonably interposed an appeal to the Court of Appeals. The appellate court rendered a Decision, dated 29 May 1995, reversing the findings of the trial court. The decretal portion of the decision of the appellate court reads: WHEREFORE, for the foregoing premises the appealed decision is hereby REVERSED, and the complaint below against the appellants is hereby ordered DISMISSED. The counterclaim of appellant De Los Santos Medical Center is GRANTED but only insofar as appellees are hereby ordered to pay the unpaid hospital bills amounting to P93,542.25, plus legal interest for justice must be tempered with mercy. SO ORDERED.[8] The decision of the Court of Appeals was received on 9 June 1995 by petitioner Rogelio Ramos who was mistakenly addressed as Atty. Rogelio Ramos. No copy of the decision, however, was sent nor received by the Coronel Law Office, then counsel on record of petitioners. Rogelio referred the decision of the appellate court to a new lawyer, Atty. Ligsay, only on 20 June 1995, or four (4) days before the expiration of the reglementary period for filing a motion for reconsideration. On the same day, Atty. Ligsay, filed with the appellate court a motion for extension of time to file a motion for reconsideration. The motion for reconsideration was submitted on 4 July 1995. However, the appellate court denied the motion for extension of time in its Resolution dated 25 July

1995.[9] Meanwhile petitioners engaged the services of another counsel, Atty. Sillano, to replace Atty. Ligsay. Atty. Sillano filed on 7 August 1995 a motion to admit the motion for reconsideration contending that the period to file the appropriate pleading on the assailed decision had not yet commenced to run as the Division Clerk of Court of the Court of Appeals had not yet served a copy thereof to the counsel on record. Despite this explanation, the appellate court still denied the motion to admit the motion for reconsideration of petitioners in its Resolution, dated 29 March 1996, primarily on the ground that the fifteen-day (15) period for filing a motion for reconsideration had already expired, to wit: We said in our Resolution on July 25, 1995, that the filing of a Motion for Reconsideration cannot be extended; precisely, the Motion for Extension (Rollo, p. 12) was denied. It is, on the other hand, admitted in the latter Motion that plaintiffs/appellees received a copy of the decision as early as June 9, 1995. Computation wise, the period to file a Motion for Reconsideration expired on June 24. The Motion for Reconsideration, in turn, was received by the Court of Appeals already on July 4, necessarily, the 15-day period already passed. For that alone, the latter should be denied. Even assuming admissibility of the Motion for Reconsideration, but after considering the Comment/Opposition, the former, for lack of merit, is hereby DENIED. SO ORDERED.[10] A copy of the above resolution was received by Atty. Sillano on 11 April 1996. The next day, or on 12 April 1996, Atty. Sillano filed before this Court a motion for extension of time to file the present petition forcertiorari under Rule 45. The Court granted the motion for extension of time and gave petitioners additional thirty (30) days after the expiration of the fifteen-day (15) period counted from the receipt of the resolution of the Court of Appeals within which to submit the petition. The due date fell on 27 May 1996. The petition was filed on 9 May 1996, well within the extended period given by the Court. Petitioners assail the decision of the Court of Appeals on the following grounds: I IN PUTTING MUCH RELIANCE ON THE TESTIMONIES OF RESPONDENTS DRA. GUTIERREZ, DRA. CALDERON AND DR. JAMORA; II IN FINDING THAT THE NEGLIGENCE OF THE RESPONDENTS DID NOT CAUSE THE UNFORTUNATE COMATOSE CONDITION OF PETITIONER ERLINDA RAMOS; III IN NOT APPLYING THE DOCTRINE OF RES IPSA LOQUITUR.[11] Before we discuss the merits of the case, we shall first dispose of the procedural issue on the timeliness of the petition in relation to the motion for reconsideration filed by petitioners with the Court of Appeals. In their Comment,[12] private respondents contend that the petition should not be given due course since the motion for reconsideration of the petitioners on the decision of the Court of Appeals was validly dismissed by the appellate court for having been filed beyond the reglementary period. We do not agree. A careful review of the records reveals that the reason behind the delay in filing the motion for reconsideration is attributable to the fact that the decision of the Court of Appeals was not sent to then counsel on record of petitioners, the Coronel Law Office. In fact, a copy of the decision of the appellate court was instead sent to and received by petitioner Rogelio Ramos on 9 June 1995 wherein he was mistakenly addressed as Atty. Rogelio Ramos. Based on the other communications received by petitioner Rogelio Ramos, the appellate court apparently mistook him for the counsel on record. Thus, no copy of the decision of the appellate court was furnished to the counsel on record. Petitioner, not being a lawyer and unaware of the prescriptive period for filing a motion for reconsideration, referred the same to a legal counsel only on 20 June 1995. It is elementary that when a party is represented by counsel, all notices should be sent to the partys lawyer at his given address. With a few exceptions, notice to a litigant without notice to his counsel on record is no notice at all. In the present case, since a copy of the decision of the

appellate court was not sent to the counsel on record of petitioner, there can be no sufficient notice to speak of. Hence, the delay in the filing of the motion for reconsideration cannot be taken against petitioner. Moreover, since the Court of Appeals already issued a second Resolution, dated 29 March 1996, which superseded the earlier resolution issued on 25 July 1995, and denied the motion for reconsideration of petitioner, we believe that the receipt of the former should be considered in determining the timeliness of the filing of the present petition. Based on this, the petition before us was submitted on time. After resolving the foregoing procedural issue, we shall now look into the merits of the case. For a more logical presentation of the discussion we shall first consider the issue on the applicability of the doctrine of res ipsa loquitur to the instant case. Thereafter, the first two assigned errors shall be tackled in relation to the res ipsa loquitur doctrine. Res ipsa loquitur is a Latin phrase which literally means the thing or the transaction speaks for itself. The phrase res ipsa loquitur is a maxim for the rule that the fact of the occurrence of an injury, taken with the surrounding circumstances, may permit an inference or raise a presumption of negligence, or make out a plaintiffs prima facie case, and present a question of fact for defendant to meet with an explanation.[13] Where the thing which caused the injury complained of is shown to be under the management of the defendant or his servants and the accident is such as in ordinary course of things does not happen if those who have its management or control use proper care, it affords reasonable evidence, in the absence of explanation by the defendant, that the accident arose from or was caused by the defendants want of care.[14] The doctrine of res ipsa loquitur is simply a recognition of the postulate that, as a matter of common knowledge and experience, the very nature of certain types of occurrences may justify an inference of negligence on the part of the person who controls the instrumentality causing the injury in the absence of some explanation by the defendant who is charged with negligence. [15] It is grounded in the superior logic of ordinary human experience and on the basis of such experience or common knowledge, negligence may be deduced from the mere occurrence of the accident itself.[16] Hence, res ipsa loquitur is applied in conjunction with the doctrine of common knowledge. However, much has been said that res ipsa loquitur is not a rule of substantive law and, as such, does not create or constitute an independent or separate ground of liability.[17] Instead, it is considered as merely evidentiary or in the nature of a procedural rule.[18] It is regarded as a mode of proof, or a mere procedural convenience since it furnishes a substitute for, and relieves a plaintiff of, the burden of producing specific proof of negligence.[19] In other words, mere invocation and application of the doctrine does not dispense with the requirement of proof of negligence. It is simply a step in the process of such proof, permitting the plaintiff to present along with the proof of the accident, enough of the attending circumstances to invoke the doctrine, creating an inference or presumption of negligence, and to thereby place on the defendant the burden of going forward with the proof.[20] Still, before resort to the doctrine may be allowed, the following requisites must be satisfactorily shown: 1. The accident is of a kind which ordinarily does not occur in the absence of someones negligence; 2. It is caused by an instrumentality within the exclusive control of the defendant or defendants; and 3. The possibility of contributing conduct which would make the plaintiff responsible is eliminated.[21] In the above requisites, the fundamental element is the control of the instrumentality which caused the damage.[22] Such element of control must be shown to be within the dominion of the defendant. In order to have the benefit of the rule, a plaintiff, in addition to proving injury or damage, must show a situation where it is applicable, and must establish that the essential elements of the doctrine were present in a particular incident.[23] Medical malpractice[24]cases do not escape the application of this doctrine. Thus, res ipsa loquitur has been applied when the circumstances attendant upon the harm are themselves of such a character as to justify an inference of negligence as the cause of that harm.[25] The application of res ipsa loquitur in medical negligence cases presents a question of law since it is a judicial function to determine whether a certain set of circumstances does, as a matter of law, permit a given inference.[26] Although generally, expert medical testimony is relied upon in malpractice suits to prove that a physician has done a negligent act or that he has deviated from the standard medical procedure, when the doctrine of res ipsa loquitur is availed by the plaintiff, the need for expert medical testimony is dispensed with because the injury itself provides the proof of negligence.[27] The reason is that the

general rule on the necessity of expert testimony applies only to such matters clearly within the domain of medical science, and not to matters that are within the common knowledge of mankind which may be testified to by anyone familiar with the facts.[28]Ordinarily, only physicians and surgeons of skill and experience are competent to testify as to whether a patient has been treated or operated upon with a reasonable degree of skill and care. However, testimony as to the statements and acts of physicians and surgeons, external appearances, and manifest conditions which are observable by any one may be given by non-expert witnesses.[29] Hence, in cases where the res ipsa loquitur is applicable, the court is permitted to find a physician negligent upon proper proof of injury to the patient, without the aid of expert testimony, where the court from its fund of common knowledge can determine the proper standard of care.[30] Where common knowledge and experience teach that a resulting injury would not have occurred to the patient if due care had been exercised, an inference of negligence may be drawn giving rise to an application of the doctrine of res ipsa loquitur without medical evidence, which is ordinarily required to show not only what occurred but how and why it occurred.[31] When the doctrine is appropriate, all that the patient must do is prove a nexus between the particular act or omission complained of and the injury sustained while under the custody and management of the defendant without need to produce expert medical testimony to establish the standard of care. Resort to res ipsa loquitur is allowed because there is no other way, under usual and ordinary conditions, by which the patient can obtain redress for injury suffered by him. Thus, courts of other jurisdictions have applied the doctrine in the following situations: leaving of a foreign object in the body of the patient after an operation,[32] injuries sustained on a healthy part of the body which was not under, or in the area, of treatment,[33] removal of the wrong part of the body when another part was intended,[34] knocking out a tooth while a patients jaw was under anesthetic for the removal of his tonsils,[35]and loss of an eye while the patient plaintiff was under the influence of anesthetic, during or following an operation for appendicitis,[36] among others. Nevertheless, despite the fact that the scope of res ipsa loquitur has been measurably enlarged, it does not automatically apply to all cases of medical negligence as to mechanically shift the burden of proof to the defendant to show that he is not guilty of the ascribed negligence. Res ipsa loquitur is not a rigid or ordinary doctrine to be perfunctorily used but a rule to be cautiously applied, depending upon the circumstances of each case. It is generally restricted to situations in malpractice cases where a layman is able to say, as a matter of common knowledge and observation, that the consequences of professional care were not as such as would ordinarily have followed if due care had been exercised.[37] A distinction must be made between the failure to secure results, and the occurrence of something more unusual and not ordinarily found if the service or treatment rendered followed the usual procedure of those skilled in that particular practice. It must be conceded that the doctrine of res ipsa loquitur can have no application in a suit against a physician or surgeon which involves the merits of a diagnosis or of a scientific treatment.[38] The physician or surgeon is not required at his peril to explain why any particular diagnosis was not correct, or why any particular scientific treatment did not produce the desired result.[39] Thus, res ipsa loquitur is not available in a malpractice suit if the only showing is that the desired result of an operation or treatment was not accomplished.[40] The real question, therefore, is whether or not in the process of the operation any extraordinary incident or unusual event outside of the routine performance occurred which is beyond the regular scope of customary professional activity in such operations, which, if unexplained would themselves reasonably speak to the average man as the negligent cause or causes of the untoward consequence.[41] If there was such extraneous interventions, the doctrine of res ipsa loquitur may be utilized and the defendant is called upon to explain the matter, by evidence of exculpation, if he could.[42] We find the doctrine of res ipsa loquitur appropriate in the case at bar. As will hereinafter be explained, the damage sustained by Erlinda in her brain prior to a scheduled gall bladder operation presents a case for the application of res ipsa loquitur. A case strikingly similar to the one before us is Voss vs. Bridwell,[43] where the Kansas Supreme Court in applying the res ipsa loquitur stated: The plaintiff herein submitted himself for a mastoid operation and delivered his person over to the care, custody and control of his physician who had complete and exclusive control over him, but the operation was never performed. At the time of submission he was neurologically sound and physically fit in mind and body, but he suffered irreparable damage and injury rendering him decerebrate and totally incapacitated. The injury was one which does not ordinarily occur in the process of a mastoid operation or in the absence of negligence in the administration of an anesthetic, and in the use and employment of an endoctracheal tube. Ordinarily a person being put under anesthesia is not rendered decerebrate as a consequence of administering such anesthesia in the absence of negligence. Upon these facts and under these circumstances a layman would be able to say, as a matter of common knowledge and observation, that the consequences of

professional treatment were not as such as would ordinarily have followed if due care had been exercised. Here the plaintiff could not have been guilty of contributory negligence because he was under the influence of anesthetics and unconscious, and the circumstances are such that the true explanation of event is more accessible to the defendants than to the plaintiff for they had the exclusive control of the instrumentalities of anesthesia. Upon all the facts, conditions and circumstances alleged in Count II it is held that a cause of action is stated under the doctrine of res ipsa loquitur.[44] Indeed, the principles enunciated in the aforequoted case apply with equal force here. In the present case, Erlinda submitted herself for cholecystectomy and expected a routine general surgery to be performed on her gall bladder. On that fateful day she delivered her person over to the care, custody and control of private respondents who exercised complete and exclusive control over her. At the time of submission, Erlinda was neurologically sound and, except for a few minor discomforts, was likewise physically fit in mind and body. However, during the administration of anesthesia and prior to the performance of cholecystectomy she suffered irreparable damage to her brain. Thus, without undergoing surgery, she went out of the operating room already decerebrate and totally incapacitated. Obviously, brain damage, which Erlinda sustained, is an injury which does not normally occur in the process of a gall bladder operation. In fact, this kind of situation does not happen in the absence of negligence of someone in the administration of anesthesia and in the use of endotracheal tube. Normally, a person being put under anesthesia is not rendered decerebrate as a consequence of administering such anesthesia if the proper procedure was followed. Furthermore, the instruments used in the administration of anesthesia, including the endotracheal tube, were all under the exclusive control of private respondents, who are the physicians-in-charge. Likewise, petitioner Erlinda could not have been guilty of contributory negligence because she was under the influence of anesthetics which rendered her unconscious. Considering that a sound and unaffected member of the body (the brain) is injured or destroyed while the patient is unconscious and under the immediate and exclusive control of the physicians, we hold that a practical administration of justice dictates the application of res ipsa loquitur. Upon these facts and under these circumstances the Court would be able to say, as a matter of common knowledge and observation, if negligence attended the management and care of the patient. Moreover, the liability of the physicians and the hospital in this case is not predicated upon an alleged failure to secure the desired results of an operation nor on an alleged lack of skill in the diagnosis or treatment as in fact no operation or treatment was ever performed on Erlinda. Thus, upon all these initial determination a case is made out for the application of the doctrine of res ipsa loquitur. Nonetheless, in holding that res ipsa loquitur is available to the present case we are not saying that the doctrine is applicable in any and all cases where injury occurs to a patient while under anesthesia, or to any and all anesthesia cases. Each case must be viewed in its own light and scrutinized in order to be within the res ipsa loquitur coverage. Having in mind the applicability of the res ipsa loquitur doctrine and the presumption of negligence allowed therein, the Court now comes to the issue of whether the Court of Appeals erred in finding that private respondents were not negligent in the care of Erlinda during the anesthesia phase of the operation and, if in the affirmative, whether the alleged negligence was the proximate cause of Erlindas comatose condition. Corollary thereto, we shall also determine if the Court of Appeals erred in relying on the testimonies of the witnesses for the private respondents. In sustaining the position of private respondents, the Court of Appeals relied on the testimonies of Dra. Gutierrez, Dra. Calderon and Dr. Jamora. In giving weight to the testimony of Dra. Gutierrez, the Court of Appeals rationalized that she was candid enough to admit that she experienced some difficulty in the endotracheal intubation[45]of the patient and thus, cannot be said to be covering her negligence with falsehood. The appellate court likewise opined that private respondents were able to show that the brain damage sustained by Erlinda was not caused by the alleged faulty intubation but was due to the allergic reaction of the patient to the drug Thiopental Sodium (Pentothal), a shortacting barbiturate, as testified on by their expert witness, Dr. Jamora. On the other hand, the appellate court rejected the testimony of Dean Herminda Cruz offered in favor of petitioners that the cause of the brain injury was traceable to the wrongful insertion of the tube since the latter, being a nurse, was allegedly not knowledgeable in the process of intubation. In so holding, the appellate court returned a verdict in favor of respondents physicians and hospital and absolved them of any liability towards Erlinda and her family.

We disagree with the findings of the Court of Appeals. We hold that private respondents were unable to disprove the presumption of negligence on their part in the care of Erlinda and their negligence was the proximate cause of her piteous condition. In the instant case, the records are helpful in furnishing not only the logical scientific evidence of the pathogenesis of the injury but also in providing the Court the legal nexus upon which liability is based. As will be shown hereinafter, private respondents own testimonies which are reflected in the transcript of stenographic notes are replete of signposts indicative of their negligence in the care and management of Erlinda. With regard to Dra. Gutierrez, we find her negligent in the care of Erlinda during the anesthesia phase. As borne by the records, respondent Dra. Gutierrez failed to properly intubate the patient. This fact was attested to by Prof. Herminda Cruz, Dean of the Capitol Medical Center School of Nursing and petitioner's sister-in-law, who was in the operating room right beside the patient when the tragic event occurred. Witness Cruz testified to this effect: ATTY. PAJARES: Q: A: Q: In particular, what did Dra. Perfecta Gutierrez do, if any on the patient? In particular, I could see that she was intubating the patient. Do you know what happened to that intubation process administered by Dra. Gutierrez?

ATTY. ALCERA: She will be incompetent Your Honor. COURT: Witness may answer if she knows. A: As I have said, I was with the patient, I was beside the stretcher holding the left hand of the patient and all of a sudden I heard some remarks coming from Dra. Perfecta Gutierrez herself. She was saying Ang hirap ma-intubate nito, mali yata ang pagkakapasok. O lumalaki ang tiyan. xxx ATTY. PAJARES: Q: A: From whom did you hear those words lumalaki ang tiyan? From Dra. Perfecta Gutierrez. xxx After hearing the phrase lumalaki ang tiyan, what did you notice on the person of the patient? A: Q: A: Q: A: Q: A: Q: A: Q: A: I notice (sic) some bluish discoloration on the nailbeds of the left hand where I was at. Where was Dr. Orlino Ho[s]aka then at that particular time? I saw him approaching the patient during that time. When he approached the patient, what did he do, if any? He made an order to call on the anesthesiologist in the person of Dr. Calderon. Did Dr. Calderon, upon being called, arrive inside the operating room? Yes sir. What did [s]he do, if any? [S]he tried to intubate the patient. What happened to the patient? When Dr. Calderon try (sic) to intubate the patient, after a while the patients nailbed became bluish and I saw the patient was placed in trendelenburg position. xxx Q: Do you know the reason why the patient was placed in that trendelenburg position?


As far as I know, when a patient is in that position, there is a decrease of blood supply to the brain.[46] xxx

The appellate court, however, disbelieved Dean Cruz's testimony in the trial court by declaring that: A perusal of the standard nursing curriculum in our country will show that intubation is not taught as part of nursing procedures and techniques. Indeed, we take judicial notice of the fact that nurses do not, and cannot, intubate. Even on the assumption that she is fully capable of determining whether or not a patient is properly intubated, witness Herminda Cruz, admittedly, did not peep into the throat of the patient. (TSN, July 25, 1991, p. 13). More importantly, there is no evidence that she ever auscultated the patient or that she conducted any type of examination to check if the endotracheal tube was in its proper place, and to determine the condition of the heart, lungs, and other organs. Thus, witness Cruz's categorical statements that appellant Dra. Gutierrez failed to intubate the appellee Erlinda Ramos and that it was Dra. Calderon who succeeded in doing so clearly suffer from lack of sufficient factual bases.[47] In other words, what the Court of Appeals is trying to impress is that being a nurse, and considered a layman in the process of intubation, witness Cruz is not competent to testify on whether or not the intubation was a success. We do not agree with the above reasoning of the appellate court. Although witness Cruz is not an anesthesiologist, she can very well testify upon matters on which she is capable of observing such as, the statements and acts of the physician and surgeon, external appearances, and manifest conditions which are observable by any one.[48] This is precisely allowed under the doctrine of res ipsa loquitur where the testimony of expert witnesses is not required. It is the accepted rule that expert testimony is not necessary for the proof of negligence in non-technical matters or those of which an ordinary person may be expected to have knowledge, or where the lack of skill or want of care is so obvious as to render expert testimony unnecessary.[49] We take judicial notice of the fact that anesthesia procedures have become so common, that even an ordinary person can tell if it was administered properly. As such, it would not be too difficult to tell if the tube was properly inserted. This kind of observation, we believe, does not require a medical degree to be acceptable. At any rate, without doubt, petitioner's witness, an experienced clinical nurse whose long experience and scholarship led to her appointment as Dean of the Capitol Medical Center School of Nursing, was fully capable of determining whether or not the intubation was a success. She had extensive clinical experience starting as a staff nurse in Chicago, Illinois; staff nurse and clinical instructor in a teaching hospital, the FEU-NRMF; Dean of the Laguna College of Nursing in San Pablo City; and then Dean of the Capitol Medical Center School of Nursing. [50]Reviewing witness Cruz' statements, we find that the same were delivered in a straightforward manner, with the kind of detail, clarity, consistency and spontaneity which would have been difficult to fabricate. With her clinical background as a nurse, the Court is satisfied that she was able to demonstrate through her testimony what truly transpired on that fateful day. Most of all, her testimony was affirmed by no less than respondent Dra. Gutierrez who admitted that she experienced difficulty in inserting the tube into Erlindas trachea, to wit: ATTY. LIGSAY: Q: In this particular case, Doctora, while you were intubating at your first attempt (sic), you did not immediately see the trachea?

DRA. GUTIERREZ: A: Q: A: Q: A: Q: A: Q: Yes sir. Did you pull away the tube immediately? You do not pull the ... Did you or did you not? I did not pull the tube. When you said mahirap yata ito, what were you referring to? Mahirap yata itong i-intubate, that was the patient. So, you found some difficulty in inserting the tube?


Yes, because of (sic) my first attempt, I did not see right away.[51]

Curiously in the case at bar, respondent Dra. Gutierrez made the haphazard defense that she encountered hardship in the insertion of the tube in the trachea of Erlinda because it was positioned more anteriorly (slightly deviated from the normal anatomy of a person)[52] making it harder to locate and, since Erlinda is obese and has a short neck and protruding teeth, it made intubation even more difficult. The argument does not convince us. If this was indeed observed, private respondents adduced no evidence demonstrating that they proceeded to make a thorough assessment of Erlindas airway, prior to the induction of anesthesia, even if this would mean postponing the procedure. From their testimonies, it appears that the observation was made only as an afterthought, as a means of defense. The pre-operative evaluation of a patient prior to the administration of anesthesia is universally observed to lessen the possibility of anesthetic accidents. Pre-operative evaluation and preparation for anesthesia begins when the anesthesiologist reviews the patients medical records and visits with the patient, traditionally, the day before elective surgery.[53] It includes taking the patients medical history, review of current drug therapy, physical examination and interpretation of laboratory data.[54] The physical examination performed by the anesthesiologist is directed primarily toward the central nervous system, cardiovascular system, lungs and upper airway.[55] A thorough analysis of the patient's airway normally involves investigating the following: cervical spine mobility, temporomandibular mobility, prominent central incisors, diseased or artificial teeth, ability to visualize uvula and the thyromental distance.[56] Thus, physical characteristics of the patients upper airway that could make tracheal intubation difficult should be studied.[57] Where the need arises, as when initial assessment indicates possible problems (such as the alleged short neck and protruding teeth of Erlinda) a thorough examination of the patients airway would go a long way towards decre asing patient morbidity and mortality. In the case at bar, respondent Dra. Gutierrez admitted that she saw Erlinda for the first time on the day of the operation itself, on 17 June 1985. Before this date, no prior consultations with, or preoperative evaluation of Erlinda was done by her. Until the day of the operation, respondent Dra. Gutierrez was unaware of the physiological make-up and needs of Erlinda. She was likewise not properly informed of the possible difficulties she would face during the administration of anesthesia to Erlinda. Respondent Dra. Gutierrez act of seeing her patient for the first time only an hour before the scheduled operative procedure was, therefore, an act of exceptional negligence and professional irresponsibility. The measures cautioning prudence and vigilance in dealing with human lives lie at the core of the physicians centuries-old Hippocratic Oath. Her failure to follow this medical procedure is, therefore, a clear indicia of her negligence. Respondent Dra. Gutierrez, however, attempts to gloss over this omission by playing around with the trial court's ignorance of clinical procedure, hoping that she could get away with it. Respondent Dra. Gutierrez tried to muddle the difference between an elective surgery and an emergency surgery just so her failure to perform the required pre-operative evaluation would escape unnoticed. In her testimony she asserted: ATTY. LIGSAY: Q: Would you agree, Doctor, that it is good medical practice to see the patient a day before so you can introduce yourself to establish good doctor-patient relationship and gain the trust and confidence of the patient? DRA. GUTIERREZ: A: As I said in my previous statement, it depends on the operative procedure of the anesthesiologist and in my case, with elective cases and normal cardio-pulmonary clearance like that, I usually don't do it except on emergency and on cases that have an abnormalities (sic).[58] However, the exact opposite is true. In an emergency procedure, there is hardly enough time available for the fastidious demands of pre-operative procedure so that an anesthesiologist is able to see the patient only a few minutes before surgery, if at all. Elective procedures, on the other hand, are operative procedures that can wait for days, weeks or even months. Hence, in these cases, the anesthesiologist possesses the luxury of time to make a proper assessment, including the time to be at the patient's bedside to do a proper interview and clinical evaluation. There is ample time to explain the method of anesthesia, the drugs to be used, and their possible hazards for purposes of

informed consent. Usually, the pre-operative assessment is conducted at least one day before the intended surgery, when the patient is relaxed and cooperative. Erlindas case was elective and this was known to respondent Dra. Gutierrez. Thus, she had all the time to make a thorough evaluation of Erlindas case prior to the operation and prepare her for anesthesia. However, she never saw the patient at the bedside. She herself admitted that she had seen petitioner only in the operating room, and only on the actual date of the cholecystectomy. She negligently failed to take advantage of this important opportunity. As such, her attempt to exculpate herself must fail. Having established that respondent Dra. Gutierrez failed to perform pre-operative evaluation of the patient which, in turn, resulted to a wrongful intubation, we now determine if the faulty intubation is truly the proximate cause of Erlindas comatose condition. Private respondents repeatedly hammered the view that the cerebral anoxia which led to Erlindas coma was due to bronchospasm[59] mediated by her allergic response to the drug, Thiopental Sodium, introduced into her system. Towards this end, they presented Dr. Jamora, a Fellow of the Philippine College of Physicians and Diplomate of the Philippine Specialty Board of Internal Medicine, who advanced private respondents' theory that the oxygen deprivation which led to anoxic encephalopathy,[60] was due to an unpredictable drug reaction to the short-acting barbiturate. We find the theory of private respondents unacceptable. First of all, Dr. Jamora cannot be considered an authority in the field of anesthesiology simply because he is not an anesthesiologist. Since Dr. Jamora is a pulmonologist, he could not have been capable of properly enlightening the court about anesthesia practice and procedure and their complications. Dr. Jamora is likewise not an allergologist and could not therefore properly advance expert opinion on allergic-mediated processes. Moreover, he is not a pharmacologist and, as such, could not have been capable, as an expert would, of explaining to the court the pharmacologic and toxic effects of the supposed culprit, Thiopental Sodium (Pentothal). The inappropriateness and absurdity of accepting Dr. Jamoras testimony as an expert witness in the anesthetic practice of Pentothal administration is further supported by his own admission that he formulated his opinions on the drug not from the practical experience gained by a specialist or expert in the administration and use of Sodium Pentothal on patients, but only from reading certain references, to wit: ATTY. LIGSAY: Q: In your line of expertise on pulmonology, did you have any occasion to use pentothal as a method of management?

DR. JAMORA: A: Q: A: Q: A: Q: A: Q: A: We do it in conjunction with the anesthesiologist when they have to intubate our patient. But not in particular when you practice pulmonology? No. In other words, your knowledge about pentothal is based only on what you have read from books and not by your own personal application of the medicine pentothal? Based on my personal experience also on pentothal. How many times have you used pentothal? They used it on me. I went into bronchospasm during my appendectomy. And because they have used it on you and on account of your own personal experience you feel that you can testify on pentothal here with medical authority? No. That is why I used references to support my claims.[61]

An anesthetic accident caused by a rare drug-induced bronchospasm properly falls within the fields of anesthesia, internal medicine-allergy, and clinical pharmacology. The resulting anoxic encephalopathy belongs to the field of neurology. While admittedly, many bronchospastic-mediated pulmonary diseases are within the expertise of pulmonary medicine, Dr. Jamora's field, the anesthetic drug-induced, allergic mediated bronchospasm alleged in this case is within the disciplines of anesthesiology, allergology and pharmacology. On the basis of the foregoing transcript, in which the pulmonologist himself admitted that he could not testify about the drug with medical authority, it is clear that the appellate court erred in giving weight to Dr. Jamoras testimony as an expert in the administration of Thiopental Sodium.

The provision in the rules of evidence[62]regarding expert witnesses states: Sec. 49. Opinion of expert witness. - The opinion of a witness on a matter requiring special knowledge, skill, experience or training which he is shown to possess, may be received in evidence. Generally, to qualify as an expert witness, one must have acquired special knowledge of the subject matter about which he or she is to testify, either by the study of recognized authorities on the subject or by practical experience.[63] Clearly, Dr. Jamora does not qualify as an expert witness based on the above standard since he lacks the necessary knowledge, skill, and training in the field of anesthesiology. Oddly, apart from submitting testimony from a specialist in the wrong field, private respondents intentionally avoided providing testimony by competent and independent experts in the proper areas. Moreover, private respondents theory, that Thiopental Sodium may have produced Erlinda's coma by triggering an allergic mediated response, has no support in evidence. No evidence of stridor, skin reactions, or wheezing - some of the more common accompanying signs of an allergic reaction - appears on record. No laboratory data were ever presented to the court. In any case, private respondents themselves admit that Thiopental induced, allergic-mediated bronchospasm happens only very rarely. If courts were to accept private respondents' hypothesis without supporting medical proof, and against the weight of available evidence, then every anesthetic accident would be an act of God. Evidently, the Thiopental-allergy theory vigorously asserted by private respondents was a mere afterthought. Such an explanation was advanced in order to absolve them of any and all responsibility for the patients condition. In view of the evidence at hand, we are inclined to believe petitioners stand that it was the faulty intubation which was the proximate cause of Erlindas comatose condition. Proximate cause has been defined as that which, in natural and continuous sequence, unbroken by any efficient intervening cause, produces injury, and without which the result would not have occurred.[64] An injury or damage is proximately caused by an act or a failure to act, whenever it appears from the evidence in the case, that the act or omission played a substantial part in bringing about or actually causing the injury or damage; and that the injury or damage was either a direct result or a reasonably probable consequence of the act or omission.[65] It is the dominant, moving or producing cause. Applying the above definition in relation to the evidence at hand, faulty intubation is undeniably the proximate cause which triggered the chain of events leading to Erlindas brain damage and, ultimately, her comatosed condition. Private respondents themselves admitted in their testimony that the first intubation was a failure. This fact was likewise observed by witness Cruz when she heard respondent Dra. Gutierrez remarked, Ang hirap ma-intubate nito, mali yata ang pagkakapasok. O lumalaki ang tiyan. Thereafter, witness Cruz noticed abdominal distention on the body of Erlinda. The development of abdominal distention, together with respiratory embarrassment indicates that the endotracheal tube entered the esophagus instead of the respiratory tree. In other words, instead of the intended endotracheal intubation what actually took place was an esophageal intubation. During intubation, such distention indicates that air has entered the gastrointestinal tract through the esophagus instead of the lungs through the trachea. Entry into the esophagus would certainly cause some delay in oxygen delivery into the lungs as the tube which carries oxygen is in the wrong place. That abdominal distention had been observed during the first intubation suggests that the length of time utilized in inserting the endotracheal tube (up to the time the tube was withdrawn for the second attempt) was fairly significant. Due to the delay in the delivery of oxygen in her lungs Erlinda showed signs of cyanosis.[66] As stated in the testimony of Dr. Hosaka, the lack of oxygen became apparent only after he noticed that the nailbeds of Erlinda were already blue. [67] However, private respondents contend that a second intubation was executed on Erlinda and this one was successfully done. We do not think so. No evidence exists on record, beyond private respondents' bare claims, which supports the contention that the second intubation was successful. Assuming that the endotracheal tube finally found its way into the proper orifice of the trachea, the same gave no guarantee of oxygen delivery, the hallmark of a successful intubation. In fact, cyanosis was again observed immediately after the second intubation. Proceeding from this event (cyanosis), it could not be claimed, as private respondents insist, that the second intubation was accomplished. Even granting that the tube was successfully inserted during the second attempt, it was obviously too late. As aptly explained by the trial court, Erlinda already suffered brain damage as a result of the inadequate oxygenation of her brain for about four to five minutes.[68] are The above conclusion is not without basis. Scientific studies point out that intubation problems responsible for one-third (1/3) of deaths and serious injuries associated with

anesthesia.[69] Nevertheless, ninety-eight percent (98%) or the vast majority of difficult intubations may be anticipated by performing a thorough evaluation of the patients airway prior to the operation.[70] As stated beforehand, respondent Dra. Gutierrez failed to observe the proper preoperative protocol which could have prevented this unfortunate incident. Had appropriate diligence and reasonable care been used in the pre-operative evaluation, respondent physician could have been much more prepared to meet the contingency brought about by the perceived anatomic variations in the patients neck and oral area, defects which would have been easily overcome by a prior knowledge of those variations together with a change in technique.[71] In other words, an experienced anesthesiologist, adequately alerted by a thorough pre-operative evaluation, would have had little difficulty going around the short neck and protruding teeth.[72] Having failed to observe common medical standards in pre-operative management and intubation, respondent Dra. Gutierrez negligence resulted in cerebral anoxia and eventual coma of Erlinda. We now determine the responsibility of respondent Dr. Orlino Hosaka as the head of the surgical team. As the so-called captain of the ship,[73] it is the surgeons responsibility to see to it that those under him perform their task in the proper manner. Respondent Dr. Hosakas negligence can be found in his failure to exercise the proper authority (as the captain of the operative team) in not determining if his anesthesiologist observed proper anesthesia protocols. In fact, no evidence on record exists to show that respondent Dr. Hosaka verified if respondent Dra. Gutierrez properly intubated the patient. Furthermore, it does not escape us that respondent Dr. Hosaka had scheduled another procedure in a different hospital at the same time as Erlindas cholecystectomy, and was in fact over three hours late for the latters operation. Because of this, he had little or no time to confer with his anesthesiologist regarding the anesthesia delivery. This indicates that he was remiss in his professional duties towards his patient. Thus, he shares equal responsibility for the events which resulted in Erlindas condition. We now discuss the responsibility of the hospital in this particular incident. The unique practice (among private hospitals) of filling up specialist staff with attending and visiting consultants, [74] who are allegedly not hospital employees, presents problems in apportioning responsibility for negligence in medical malpractice cases. However, the difficulty is only more apparent than real. In the first place, hospitals exercise significant control in the hiring and firing of consultants and in the conduct of their work within the hospital premises. Doctors who apply for consultant slots, visiting or attending, are required to submit proof of completion of residency, their educational qualifications; generally, evidence of accreditation by the appropriate board (diplomate), evidence of fellowship in most cases, and references. These requirements are carefully scrutinized by members of the hospital administration or by a review committee set up by the hospital who either accept or reject the application.[75] This is particularly true with respondent hospital. After a physician is accepted, either as a visiting or attending consultant, he is normally required to attend clinico-pathological conferences, conduct bedside rounds for clerks, interns and residents, moderate grand rounds and patient audits and perform other tasks and responsibilities, for the privilege of being able to maintain a clinic in the hospital, and/or for the privilege of admitting patients into the hospital. In addition to these, the physicians performance as a specialist is generally evaluated by a peer review committee on the basis of mortality and morbidity statistics, and feedback from patients, nurses, interns and residents. A consultant remiss in his duties, or a consultant who regularly falls short of the minimum standards acceptable to the hospital or its peer review committee, is normally politely terminated. In other words, private hospitals, hire, fire and exercise real control over their attending and visiting consultant staff. While consultants are not, technically employees, a point which respondent hospital asserts in denying all responsibility for the patients condition, the control exercised, the hiring, and the right to terminate consultants all fulfill the important hallmarks of an employer-employee relationship, with the exception of the payment of wages. In assessing whether such a relationship in fact exists, the control test is determining. Accordingly, on the basis of the foregoing, we rule that for the purpose of allocating responsibility in medical negligence cases, an employer-employee relationship in effect exists between hospitals and their attending and visiting physicians. This being the case, the question now arises as to whether or not respondent hospital is solidarily liable with respondent doctors for petitioners condition.[76] The basis for holding an employer solidarily responsible for the negligence of its employee is found in Article 2180 of the Civil Code which considers a person accountable not only for his own acts but also for those of others based on the formers responsibility under a relationship of patria potestas.[77] Such responsibility ceases when the persons or entity concerned prove that they have observed the diligence of a good father of the family to prevent damage.[78] In other words, while the burden of proving negligence rests on the plaintiffs, once negligence is shown, the burden shifts to the respondents (parent, guardian, teacher or employer) who should prove that they observed the diligence of a good father of a family to prevent damage.

In the instant case, respondent hospital, apart from a general denial of its responsibility over respondent physicians, failed to adduce evidence showing that it exercised the diligence of a good father of a family in the hiring and supervision of the latter. It failed to adduce evidence with regard to the degree of supervision which it exercised over its physicians. In neglecting to offer such proof, or proof of a similar nature, respondent hospital thereby failed to discharge its burden under the last paragraph of Article 2180. Having failed to do this, respondent hospital is consequently solidarily responsible with its physicians for Erlindas condition. Based on the foregoing, we hold that the Court of Appeals erred in accepting and relying on the testimonies of the witnesses for the private respondents. Indeed, as shown by the above discussions, private respondents were unable to rebut the presumption of negligence. Upon these disquisitions we hold that private respondents are solidarily liable for damages under Article 2176[79] of the Civil Code. We now come to the amount of damages due petitioners. The trial court awarded a total of P632,000.00 pesos (should be P616,000.00) in compensatory damages to the plaintiff, subject to its being updated covering the period from 15 November 1985 up to 15 April 1992, based on monthly expenses for the care of the patient estimated at P8,000.00. At current levels, the P8000/monthly amount established by the trial court at the time of its decision would be grossly inadequate to cover the actual costs of home-based care for a comatose individual. The calculated amount was not even arrived at by looking at the actual cost of proper hospice care for the patient. What it reflected were the actual expenses incurred and proved by the petitioners after they were forced to bring home the patient to avoid mounting hospital bills. And yet ideally, a comatose patient should remain in a hospital or be transferred to a hospice specializing in the care of the chronically ill for the purpose of providing a proper milieu adequate to meet minimum standards of care. In the instant case for instance, Erlinda has to be constantly turned from side to side to prevent bedsores and hypostatic pneumonia. Feeding is done by nasogastric tube. Food preparation should be normally made by a dietitian to provide her with the correct daily caloric requirements and vitamin supplements. Furthermore, she has to be seen on a regular basis by a physical therapist to avoid muscle atrophy, and by a pulmonary therapist to prevent the accumulation of secretions which can lead to respiratory complications. Given these considerations, the amount of actual damages recoverable in suits arising from negligence should at least reflect the correct minimum cost of proper care, not the cost of the care the family is usually compelled to undertake at home to avoid bankruptcy. However, the provisions of the Civil Code on actual or compensatory damages present us with some difficulties. Well-settled is the rule that actual damages which may be claimed by the plaintiff are those suffered by him as he has duly proved. The 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. Our rules on actual or compensatory damages generally assume that at the time of litigation, the injury suffered as a consequence of an act of negligence has been completed and that the cost can be liquidated. However, these provisions neglect to take into account those situations, as in this case, where the resulting injury might be continuing and possible future complications directly arising from the injury, while certain to occur, are difficult to predict. In these cases, the amount of damages which should be awarded, if they are to adequately and correctly respond to the injury caused, should be one which compensates for pecuniary loss incurred and proved, up to the time of trial; and one which would meet pecuniary loss certain to be suffered but which could not, from the nature of the case, be made with certainty.[80] In other words, temperate damages can and should be awarded on top of actual or compensatory damages in instances where the injury is chronic and continuing. And because of the unique nature of such cases, no incompatibility arises when both actual and temperate damages are provided for. The reason is that these damages cover two distinct phases. As it would not be equitable - and certainly not in the best interests of the administration of justice - for the victim in such cases to constantly come before the courts and invoke their aid in seeking adjustments to the compensatory damages previously awarded - temperate damages are appropriate. The amount given as temperate damages, though to a certain extent speculative, should take into account the cost of proper care.

In the instant case, petitioners were able to provide only home-based nursing care for a comatose patient who has remained in that condition for over a decade. Having premised our award for compensatory damages on the amount provided by petitioners at the onset of litigation, it would be now much more in step with the interests of justice if the value awarded for temperate damages would allow petitioners to provide optimal care for their loved one in a facility which generally specializes in such care. They should not be compelled by dire circumstances to provide substandard care at home without the aid of professionals, for anything less would be grossly inadequate. Under the circumstances, an award of P1,500,000.00 in temperate damages would therefore be reasonable.[81] In Valenzuela vs. Court of Appeals,[82] this Court was confronted with a situation where the injury suffered by the plaintiff would have led to expenses which were difficult to estimate because while they would have been a direct result of the injury (amputation), and were certain to be incurred by the plaintiff, they were likely to arise only in the future. We awarded P1,000,000.00 in moral damages in that case. Describing the nature of the injury, the Court therein stated: As a result of the accident, Ma. Lourdes Valenzuela underwent a traumatic amputation of her left lower extremity at the distal left thigh just above the knee. Because of this, Valenzuela will forever be deprived of the full ambulatory functions of her left extremity, even with the use of state of the art prosthetic technology. Well beyond the period of hospitalization (which was paid for by Li), she will be required to undergo adjustments in her prosthetic devise due to the shrinkage of the stump from the process of healing. These adjustments entail costs, prosthetic replacements and months of physical and occupational rehabilitation and therapy. During her lifetime, the prosthetic devise will have to be replaced and readjusted to changes in the size of her lower limb effected by the biological changes of middle-age, menopause and aging. Assuming she reaches menopause, for example, the prosthetic will have to be adjusted to respond to the changes in bone resulting from a precipitate decrease in calcium levels observed in the bones of all post-menopausal women. In other words, the damage done to her would not only be permanent and lasting, it would also be permanently changing and adjusting to the physiologic changes which her body would normally undergo through the years. The replacements, changes, and adjustments will require corresponding adjustive physical and occupational therapy. All of these adjustments, it has been documented, are painful. x x x. A prosthetic devise, however technologically advanced, will only allow a reasonable amount of functional restoration of the motor functions of the lower limb. The sensory functions are forever lost. The resultant anxiety, sleeplessness, psychological injury, mental and physical pain are inestimable.[83] The injury suffered by Erlinda as a consequence of private respondents negligence is certainly much more serious than the amputation in the Valenzuela case. Petitioner Erlinda Ramos was in her mid-forties when the incident occurred. She has been in a comatose state for over fourteen years now. The burden of care has so far been heroically shouldered by her husband and children, who, in the intervening years have been deprived of the love of a wife and a mother. Meanwhile, the actual physical, emotional and financial cost of the care of petitioner would be virtually impossible to quantify. Even the temperate damages herein awarded would be inadequate if petitioners condition remains unchanged for the next ten years. We recognized, in Valenzuela that a discussion of the victims actual injury would not even scratch the surface of the resulting moral damage because it would be highly speculative to estimate the amount of emotional and moral pain, psychological damage and injury suffered by the victim or those actually affected by the victims condition.[84] The husband and the children, all petitioners in this case, will have to live with the day to day uncertainty of the patients illness, knowing any hope of recovery is close to nil. They have fashioned their daily lives around the nursing care of petitioner, altering their long term goals to take into account their life with a comatose patient. They, not the respondents, are charged with the moral responsibility of the care of the victim. The familys moral injury and suffering in this case is clearly a real one. For the foregoing reasons, an award of P2,000,000.00 in moral damages would be appropriate. Finally, by way of example, exemplary damages in the amount of P100,000.00 are hereby awarded. Considering the length and nature of the instant suit we are of the opinion that attorneys fees valued atP100,000.00 are likewise proper.

Our courts face unique difficulty in adjudicating medical negligence cases because physicians are not insurers of life and, they rarely set out to intentionally cause injury or death to their patients. However, intent is immaterial in negligence cases because where negligence exists and is proven, the same automatically gives the injured a right to reparation for the damage caused. Established medical procedures and practices, though in constant flux are devised for the purpose of preventing complications. A physicians experience with his patients would sometimes tempt him to deviate from established community practices, and he may end a distinguished career using unorthodox methods without incident. However, when failure to follow established procedure results in the evil precisely sought to be averted by observance of the procedure and a nexus is made between the deviation and the injury or damage, the physician would necessarily be called to account for it. In the case at bar, the failure to observe pre-operative assessment protocol which would have influenced the intubation in a salutary way was fatal to private respondents case. WHEREFORE, the decision and resolution of the appellate court appealed from are hereby modified so as to award in favor of petitioners, and solidarily against private respondents the following: 1) P1,352,000.00 as actual damages computed as of the date of promulgation of this decision plus a monthly payment of P8,000.00 up to the time that petitioner Erlinda Ramos expires or miraculously survives; 2) P2,000,000.00 as moral damages, 3) P1,500,000.00 as temperate damages; 4) P100,000.00 each as exemplary damages and attorneys fees; and, 5) the costs of the suit. SO ORDERED.

[G.R. No. 117384. October 21, 1998]HEIRS OF TEODORO DELA CRUZ represented by EDRONEL DELA CRUZ, petitioners, vs. COURT OF APPEALS, PACIFICO MARQUEZ, FILOMENO and GREGORIO, both surnamed MADRID, respondents.Petitioners seek the reversal of the decision of the Court of Appeals and affirming the decision of the Regional Trial Court of Isabela.FACTS:On November 20, 1986, petitioners filed an action for reconveyance withdamages against private respondents involving a parcel of land situated in Poblacion, San Mateo, Isabela with a total area of 3,277 square meters petitioners assert that the subject land was bought by their predecessor-in-interest from the private respondents, Madrid brothers, for P4,000.00 on May 18, 1959. Since then they have been in actual, physical, continuous and open possession of the property. However in October 1986, private respondents managed to obtain a Torrens Title over the said land, the Madrids denied having executed the said deed of sale and alleged that the document was fictitious and falsified. Meanwhile, Pacifico Marquez contends that he is an innocent purchaser for value of the property having bought the same from the Madrid brothers in 1976.During the trial, petitioners were unable to present the original deed of sale since it was lost.They were constrained to offer, as Exhibit A a photo copyof the purported original carbon copy of the deed of sale in an effort to provethe transaction, The trial court ruled that ExhibitA was inadmissible in evidence, for No proof was adduced that this remaining copy was lost or destroyed.. noattempt was done to produce the copies retained by the notary public although there is a possibility that the same still exist.. Neither was there any proof that the copy sent to the court as required by the notarial law is unavailable.the trial court dismissed petitioners complaint.. Declaring the defendants the lawful owners .. Ordering the plaintiffs.. to vacate the portions of Lots 7036-A-10-A,.. 70360A-10-B and 7036-A-10-C..Court of Appeals AFFIRMED the decision of the RTC rendering its judgment which ruled that Exhibit A was admissible in evidence for failure of the private respondents to object when it was offered during the trial, but it had no probative value to support the allegation of the petitioners that the disputed land was sold to them in 1959.Failing in their bid to reconsider the decision, the petitioners have filed thepresent petition. Issue:Whether Exhibit A is admissible as evidence? Exhibit A is admitted in evidence, we agree with the Court of Appeals thatits probative value must still meet the various tests by which its reliabilityis to be determined. Its tendency to convince and persuade must be considered foradmissibility of evidence should not be confused with its probative value. A cursory glance will immediately reveal that it was unsigned by any of the partiesand undated as to when it was executed. In other words, Atty. Tabangays failure to determine the accuracy of the carbon copy requested by the petitioners predecessor-in-interest renders Exhibit A unreliable.Petitioners explanation that these copies were lost or could not be foundin the National Archives was not even supported by any certification from the said office.It is a well-settled principle that before secondary evidence can be presented, all duplicates and/or counterparts must be accounted for, and no excusefor the non-production of the original document itself can be regarded as establ

Compania Maritima vs. Allied Free Workers Union, et al.

Facts: 1952, Compania Maritima (CM) and Allied (union) entered into a contract whereby the union agrees to perform arrastre (handling of cargo on the wharf) and stevedoring (handling of cargoes in the holds of vessels) work for the consignees of the cargoes of vessels, for a period of 1 month; CM has a right to revoke the contract if union failed to render proper service. Shippers and consigners paid the union for arrastre work, but refused to pay the stevedoring. CM refused to pay the stevedoring work also, because contract provides that it will be paid by the shippers and consignees. Union requested CM to recognize it as SEBA but CM refused; CM thru Teves (branch manager) terminated the contract; union filed charges of ULP. CM entered the same contract with another association; union picketed the wharf and prevented the new workers from performing their work; CM sued the union and its officers for the rescission of contract and to enjoin union from interfering with the loading/unloading of cargo and recovery of damages. Lower court ruled in CMs favor and awarded CM 450K as damages; it held that the officers of the union are solidarily liable for this amount. Union appealed. CM in its original complaint prayed that union and its officials be ordered to pay 450K actual damages, consisting of: 15K for failure to load/unload cargo; 50K for unions inefficiency in performing the work; 50K moral and exemplary damages; 178K+ and 62K+ for lost profit (due to unions obstruction). CM hired 2 auditors to ascertain the losses. Reports of the 2 accountants show that the aggregate amount of damage is 349K+. Issue: WON the evidence presented by CM warrants the award of damages in its favor Held: NO On the basis of the reports of the two accountants, the damages, claimed by the complaint as a matter of simple addition, does not reach the sum of P 450,000 fixed by the trial court. The damages, shown in the accountants' reports and in the statement made by the consignees, chief clerk (who did not testify) amount to P349,245.37 CM argues that the accountants' reports are admissible in evidence because of the rule that "when the original consists of numerous accounts or other documents which cannot be examined in court without great loss-of time and the fact sought to be established from them is the general result of the whole", the original writings need not be produced. SC held that: o That rule cannot be applied in this case because the voluminous character of the records, on which the accountants' reports were based, was not duly established. o It is also a requisite for the application of the rule that the records and accounts should be made accessible to the adverse party so that the company may be tested on cross-examination. o What applies to this case is the general rule "that an audit made by, or the testimony of, a private auditor, is inadmissible in evidence as proof of the original records, books of accounts, reports or the like" o That general rule cannot be relaxed in this case because the company failed to make a preliminary showing as to the difficulty or impossibility attending the production of the records in court and their examination and analysis as evidence by the court A close scrutiny of the accountants' reports reveals their lack of probative value. o One of the accountant, Jayme, did not disclose the names of other "auditors" who assisted him in making the examination of the consignees records. o He gave the impression that he was an independent accountant hired by the company to make a "special investigation" when in truth he was a "personal friend" of Teves.

He stated that he attached to his report on the comparative statement of gross revenue a certificate of the captain of the vessel Panay showing the delays in its dismissal in Iligan City as indicated in its logbook. No such document was attached to Jayme's report. o It would not be proper to allow Jayme's estimates as recoverable damages. They are not supported by reliable evidence. The rule is that the auditor's summary should not include his conclusions or inferences. His opinion is not evidence. o Jayme allegedly based his computations on the records of the company which were not produced in court. o As to the other auditor Magante, he did not testify on his statement. Instead, accountant Jayme, substituting for Magante, testified on that statement. Jayme said that he verified the consignees records on which Magante based his statement. o Statement by branch manager Teves that union is liable for 38K+ as depreciation of forklifts, etc. used by union >>SC: The best evidence on the cost of the said equipment would have been the sales invoices instead of the oral testimony of Teves. He did not produce the sales invoices. Records voluminous? NO, If the accountant Magante was able to summarize the contents of those records in two days, they could not have been very voluminous. They should have been offered in evidence.


METRO MANILA - DISTRICT III (VALENZUELA), CENTURY-WELL PHIL. CORPORATION, LOURDES CHONG, CHONG TAK KEI and UY CHI KIM, respondents. DECISION TORRES, JR., J.: The present petition springs from a civil action instituted by herein petitioners, to rescind and/or annul the sale of two parcels of land, from petitioner CKH Industrial and Development Corporation (CKH, for brevity) to private respondent Century-Well Phil. Corporation (Century-Well, for brevity), for failure to pay the stipulated price of P800,000.00. Petitioners specifically assail the Decision[1] of the respondent Court of Appeals, which denied the annulment of the sale. The appellate court found that there was payment of the consideration by way of compensation, and ordered petitioners to pay moral damages and attorney's fees to private respondents. The dispositive portion of the questioned decision reads: "WHEREFORE, in view of all the foregoing, the appealed Decision is REVERSED. The complaint is DISMISSED with costs against the plaintiffs. The plaintiffs jointly and severally are required to pay each of the defendants Lourdes Chong, Chong Tak Kei, and Uy Chi Kim moral damages of P20,000.00; and further requiring the plaintiffs, jointly and severally, to pay to each of the defendants Century-Well Phil. Corporation, Lourdes Chong, Chong Tak Kei and Uy Chi Kim attorney's fees of P20,000.00 With costs in this instance against the plaintiffs-appellees. SO ORDERED."[2] The said decision reversed the disposition of the Regional Trial Court of Valenzuela, Branch 172 in Civil Case No. 2845-V-88 entitled "CKH Industrial & Development Corporation vs. CenturyWell Philippine Corporation, Lourdes Chong, Chong Tak Kei, Uy Chi Kim, and the Register of Deeds of Metro Manila, District III (Valenzuela)." The trial court's decision stated pertinently: "WHEREFORE, in view of the foregoing, judgment is hereby rendered in favor of plaintiff: 1. Ordering the rescission/annulment of the Deed of Absolute Sale of Realty. 2. Ordering defendants Lourdes Chong, Chong Tak Kei and Century-Well to pay plaintiffs moral damages in the sum of P200,000.00; 3. Ordering defendants Lourdes Chong, Chong Tak Kei and Century Well to pay plaintiffs Attorney's fees in the amount of 15% of the agreed price of P800,000.00 plus appearance fees of P500.00 per appearance; 4. Ordering defendants Lourdes Chong, Chong Tak Kei and Century Well to pay the costs of suit; 5. As the writ of preliminary injunction was denied, the defendant Register of Deeds of Valenzuela is hereby ordered to cancel the certificates of title issued to Century-Well by virtue of the Deed of Absolute Sale of Realty and to reissue a new title in the name of CKH. The case is dismissed as far as defendant Uy Chi Kim is concerned. His counterclaim is likewise dismissed considering that by his mediation he took it upon himself to assume the damages he allegedly suffered. SO ORDERED."[3] The records disclose that petitioner CKH is the owner of two parcels of land, consisting of 4,590 sq. m. and 300 sq. m. respectively, located in Karuhatan, Valenzuela, and covered by Transfer Certificates of Title Nos. 8710 and 8711, Register of Deeds of Caloocan City (now Register of Deeds District III [Valenzuela]).[4] CKH is a corporation established under Philippine law by the late Cheng Kim Heng (Cheng), an immigrant of Chinese descent. Upon Cheng's demise, control over the petitioner corporation was transferred to Rubi Saw, also of Chinese descent, and Cheng's second wife. It also appears that before coming to the Philippines, Cheng Kim Heng was married to Hung Yuk Wah (Wah), who lived in Hongkong together with their children, Chong Tak Kei, (Kei), Chong Tak Choi (Choi), and Chong Tak Yam (Yam). After Cheng immigrated to the Philippines in 1976,

and married Rubi Saw in 1977, he brought his first wife, Heng, and their children to this country, and established himself and his Chinese family as naturalized Filipino citizens. Heng died in 1984. On May 8, 1988, Rubi Saw and Lourdes Chong, the wife of Cheng's son, Kei, met at the 1266 Soler St., Sta. Cruz, Manila, the residence of Cheng's friend, Uy Chi Kim, and executed a Deed of Absolute Sale,[5] whereby Rubi Saw, representing CKH, agreed to sell the subject properties to Century-Well, a corporation owned in part by Lourdes Chong, Kei and Choi.[6] The pertinent portions of the Deed of Sale are hereby reproduced: "KNOW ALL MEN BY THESE PRESENTS: This Deed of Absolute Sale of Realty executed by and between: CKH INDUSTRIAL & DEVELOPMENT CORPORATION, a corporation duly organized and existing under and by virtue of the laws of the Republic of the Philippines, with business address at 553 Bermuda St., Sta. Cruz, Manila, represented in this act by its authorized representative, Ms. RUBI SAW, hereinafter referred to as VENDOR, - in favor of CENTURY-WELL PHIL. CORPORATION, a corporation duly organized and existing under and by virtue of the laws of the Republic of the Philippines at least sixty (60%) percent of the subscribed capital stock of which is owned by Filipino citizens, duly qualified to own and acquire lands in the Philippines, with office and business address at 66 F Bautista St., Valenzuela, Metro Manila and represented in this act by its Treasurer and authorized representative, Ms. Lourdes Chong, hereinafter referred to as VENDEE, WITNESSETH: That vendor is the registered owner of two adjacent parcels of residential land situated in the Bo. of Karuhatan, Municipality of Valenzuela, Metro Manila, covered by Transfer Certificates of Titles Nos. B-8710 and B-8711 of the Registry of Deeds for Metro Manila District III, and more particularly described as follows: xxx That for and in consideration of the sum of EIGHT HUNDRED THOUSAND (P800,000.00) PESOS, Philippine Currency, paid by VENDEE to VENDOR, receipt of which is hereby acknowledged by the latter to its entire satisfaction, said VENDOR, by these presents, has SOLD, CEDED, TRANSFERRED, and CONVEYED by way of absolute sale unto said VENDEE, its successors and assigns, the two parcels of land above described and any and all improvements therein; That the above-described parcels of land are free from liens and encumbrances of whatever kind and nature. IN WITNESS WHEREOF, the parties hereto and their instrumental witnesses have hereunto set their hand on ________ at ________." Rubi Saw signed on behalf of CKH, while Lourdes Chong signed for Century Well. [7] The document was notarized the day after the parties signed the same, i. e., March 9, 1988.[8] Claiming that the consideration for the sale of the subject properties was not paid by the private respondent-vendee despite several demands to do so, Petitioners CKH and Rubi Saw filed the instant complaint[9] on May 23, 1988, with the Regional Trial Court of Valenzuela, Branch 172, against Century-Well, Lourdes Chong, Chong Tak Kei and Uy Chi Kim. Petitioners prayed for the annulment/rescission of the Deed of Absolute Sale, and in the meantime, for the issuance of a writ of preliminary injunction restraining the Register of Deeds of Valenzuela from registering the Certificates of Title over the subject properties in the name of the private respondent Century-Well. The trial court synthesized the petitioners' submissions as follows: "The complaint alleges the following: Lourdes Chong and Rubi Saw agreed that the full payment of P800,000.00 as purchase price shall be in the form of a Manager's Check, to be delivered to Rubi Saw upon the execution of the Deed of Sale, the preparation of which, Lourdes

Chong undertook. On May 8, 1988, the date agreed upon for the execution of the Deed of Sale, plaintiff Rubi Saw, accompanied by her friend Aurora Chua Ng, went to 1266 Soler St., Sta. Cruz, Manila which is the residence and place of business of defendant Uy Chi Kim, an elderly man of Chinese ancestry and the place suggested by Lourdes Chong as their meeting place. During the meeting, Uy Chi Kim who was there presented to Rubi Saw a Deed of Absolute Sale in favor of defendant Century Well for her signature. Before Rubi Saw signed the Deed of Absolute Sale she inquired about the payment of the P800,000.00. Defendant Uy Chi Kim presented to her a personal check but she refused the same because it was contrary to her arrangement with Lourdes Chong that the payment would be in the form of Manager's Check. Uy Chi Kim then explained to Rubi Saw that since it was a Sunday that day, they were unable to obtain the Manager's Check. He assured her that he had sufficient cash money at the first floor of his residence which is a store owned by Uy Chi Kim. Before Uy Chi Kim left on the pretext of getting the money, he persuaded plaintiff Rubi Saw to sign the Deed of Absolute Sale and give the same to Lourdes Chong together with the two Certificates of Title. Since Uy Chi Kim is an elderly Chinese whom Rubi Saw had no reason to mistrust, following Chinese custom, plaintiff Rubi Saw acceded to the request of Uy Chi Kim, trusting that he had sufficient cash amounting to P800,000.00 kept in the first floor of his residence. When Uy Chi Kim returned, he told Rubi Saw that he had only P20,000 on hand. He assured plaintiff, however, that there was no cause for her to worry (as) he was certain he would have the entire amount ready by the next day when the banks would be open. Again, trusting the elderly defendant Uy Chi Kim, Rubi Saw did not object and did not insist on the return of the Deed of Absolute Sale that she signed, together with the Certificate of Title which she delivered to Lourdes Chong. The next day, May 9, 1988 Rubi Saw called Lourdes Chong and Uy Chi Kim over the telephone but was told they were not around. She could not go to the residence of Uy Chi Kim because she could not leave her office due to business concerns. On May 10, 1988 Rubi Saw repeatedly called the two but was informed they were not around. On May 11, 1988 already anxious, she personally went to the residences and offices of the two defendants but they were not around. On May 12, 1988 Rubi Saw wrote defendant Century Well advising Lourdes Chong of the rescission and cancellation of the Deed of Absolute Sale because of lack of consideration. Lourdes Chong refused to receive the letter. Thereafter, several demand letters were sent to the defendants but they refused to pay plaintiffs. Worried that defendants might surreptitiously transfer the certificates of title to their names, Rubi Saw wrote the public defendant Register of Deeds on May 16, 1988, giving information about the circumstances of the sale and requesting not to allow registration of the Deed of Absolute Sale, together with an Affidavit of Adverse Claim. On May 20, 1988, plaintiffs' representative was informed by the Register of Deeds that defendants have made representations with defendant to Register the Deed of Absolute Sale on May 23, 1988. Plaintiff Rubi Saw filed this Complaint alleging that Lourdes Chong and Uy Chi Kim maliciously misled her to believe that they would pay the P800,000 as consideration when in fact they had no intention to pay plaintiffs, and prayed that they should be awarded moral damages; that defendants be restrained from registering the Deed of Absolute Sale, and be ordered to return to them the 2 titles of the properties together with the Deed of Absolute Sale."[10] On the other hand, private respondents Century-Well, Lourdes Chong, and Chong Tak Kei alleged that: "...the consideration for the two parcels of land was paid by means of off-setting or legal compensation in the amount of P700,000 thru alleged promissory notes executed by Cheng Kim Heng in favor of his sons Chong Tak Choi and Chong Tak Kei (Exh. 6, 7, & 8) and payment of P100,000.00 in cash. The defendant Century Well filed its Answer stating that during the operation of plaintiff CKH, the latter borrowed from Chong Tak Choi and Chong Tak Kei the total sum of P700,000.00 paying interest onP300,000.00 while the remaining P400,000.00 was interest free, and upon the death of Cheng Kim Heng, it stopped making said payments. Defendant tried to prove that the source of this P700,000 was Hung Yuk Wah while she was still residing in Hongkong, sent via bank draft from Hongkong to Chong Tak Choi and Chong Tak Kei on a bank to bank transfer. Defendant likewise tried to prove that after the death of Cheng Kim Heng, Rubi Saw unilaterally arrogated to herself the executive positions in plaintiff corporation such as President, Secretary, Treasurer and General

Manager; thus effectively shunting aside Hung Yuk Wah and her children in the management of plaintiff corporation. Family differences (arose) between Rubi Saw on one hand, and Hung Yuk Wah and her children on the other hand which turned to worst after the death of Cheng Kim Heng. This brought about the entry of Chinese mediators between them, one of whom is defendant Uy Chi Kim, a reason why the execution of the Deed of Absolute Sale was to be done at the residence and business address of Uy Chi Kim."[11] Uy Chi Kim, on the other hand, answered on his behalf, that: "...his only participation in the transaction was as a mediator, he being one of the closest friends of Cheng Kim Heng; that because the heirs of Cheng Kim Heng could not settle their problems he, together with Machao Chan and Tomas Ching tried to mediate in accordance with Chinese traditions; that after long and tedious meetings the parties finally agreed to meet at his residence at 1266 Soler St., Sta. Cruz, Manila for the purpose of pushing thru the sale of the properties in question as part of the settlement of the estate. Defendant Uy Chi Kim corroborated the defense of his co-defendants that the purchase price of the properties was P800,000.00 the payment of which consists in the form of P100,000.00 in cash Philippine Currency; and the balance of P700,000.00 will be applied as a set-off to the amount borrowed by plaintiff CKH from Chong Tak Choi and Chong Tak Kei. He advanced the amount of P100,000.00 by way of his personal check to Rubi Saw but because Rubi Saw refused, he gave Rubi Saw P100,000 in the form ofP100 bills which Rubi Saw and Jacinto Say even counted. After the P100,000.00 cash was given and the promissory notes, Rubi Saw signed the document of sale. It was during the registration of the sale that a problem arose as to the payment of the capital gains (tax) which Rubi Saw refused to pay. The buyer likewise refused to pay the same. The complaint against him is baseless and which besmirched his reputation. Hence his counterclaim for damages."[12] The trial court denied the petitioners' prayer for issuance of the writ of preliminary injunction in its Order dated August 4, 1988.[13] After trial, the lower court rendered its Decision on February 4, 1991, finding that the annulment of the Deed of Absolute Sale was merited, as there was no payment of the stipulated consideration for the sale of the real properties involved to Rubi Saw. In the first place, said the court, the Deed of Sale itself, which is the best evidence of the agreement between the parties, did not provide for payment by off-setting a portion of the purchase price with the outstanding obligation of Cheng Kim Heng to his sons Chong Tak Choi and Chong Tak Kei. On the contrary, it provided for payment in cash, in the amount of P800,000.00. The evidence presented, however, did not disclose that payment of the said amount had ever been made by the private respondent. Moreover, there cannot be any valid off-setting or compensation in this case, as Article 1278 of the Civil Code[14] requires, as a prerequisite for compensation, that the parties be mutually bound principally as creditors and debtors, which is not the case in this instance. The rescission of the contract is, therefore, called for, ruled the court. Upon appeal, the respondent Court of Appeals reversed the findings and pronouncements of the trial court. In its Decision[15] dated April 21, 1993, the appellate court expressed its own findings, that the execution of the Deed of Absolute Sale was in settlement of a dispute between Rubi Saw and the first family of Cheng Kim Heng, which arose upon Cheng's death. The appellate court described the history of their dispute as follows: "In 1977, Heng formed plaintiff-appellee CKH Industrial & Development Corporation (CKH), with his first wife Wah, children Choi and Kei, and second wife Rubi as his coincorporators/stockholders, along with other individuals (Exhs. C and D; ibid., p. 9 and pp. 10-13, respectively). On April 15 and July 17 the following year, Heng, on behalf of CHK [sic], obtained loans of P400,000.00 and P100,000.00 from Choi, for which Heng executed two promissory notes in Choi's favor (Exhs. 6 and 7; ibid., p. 40 and p. 41, respectively). On November 24, 1981, Heng obtained from his other son, Kei, another loan this time in the sum of P200,000.00 on behalf of CKH for which he issued another promissory note (Exh. 8, ibid., p. 42). After its incorporation, CKH acquired two parcels of land situated in Karuhatan, Valenzuela, Bulacan (now Metro Manila) covered by Transfer Certificates of Title Nos. B-8710 (Annex A-Complaint; Record, p. 13) and B-8711 (Annex B-Complaint; ibid., p. 14), which are now the subject of litigation in instant case. On October 11, 1982, Kei was married to defendant-appellant Lourdes Chong nee Lourdes Gochico Hai Huat (Lourdes). During their marriage, Kei and Lourdes resided in the house on Tetuan St., Sta. Cruz, Manila, which CKH was then utilizing as its office. At about this

time, Heng and Rubi had moved residence from Valenzuela, Metro Manila, to Bermuda St., Sta. Cruz, Manila. Two years later, or in late 1984, Heng died. Thenceforth, there appeared to be a falling out between Heng's first wife Wah and their three children on the one hand, and his second wife Rubi, on the other, which came to a head when, Rubi as president of CKH wrote a letter dated August 21, 1985 to the mayor of Valenzuela, Metro Manila, to prevent issuance of a business permit to American Metals managed by Chong Tak Choi, stating that CKH has not allowed it to make use of the property, and on November 7, 1985, when CKH, through counsel, demanded that Wah, Choi and Yam vacate the residential and factory buildings and premises owned by CKH and located on one of the subject lots on 76 F. Bautista St., Valenzuela, which the three and the corporation (of which two of them were stockholders), had been allegedly illegally occupying (Exhs. 10 and 10-A; Folio, pp. 44-45). Respected mediators from the Chinese community in the persons of defendant-appellant Uy Chi Kim, Ma Chao, Tomas Cheng and Johnny Saw, were called in to mediate. The mediation efforts which resulted in the withdrawal by Rubi Saw of her letter about the withholding of a license to American Metals, Inc. and much later, had culminated in the transaction now under litigation. The formula for settlement in the dispute was for the Valenzuela properties of CKH to be sold to Century Well for the amount of P800,000.00, P100,000.00 of which will be paid in cash and the balance ofP700,000.00 to be set-off by the three (3) promissory notes executed in behalf of CKH in favor of Chong Tak Choi and Chong Tak Kei (Exhs. 6, 7 and 8) the accumulated interests thereon to be waived as unstated consideration of the sale. Having reached such agreement, on May 8, 1988, the parties met at the residence of Kim at Soler St., where the corresponding deed of absolute sale of realty was executed (Exhs. 11, 11-A to 11-C; ibid., pp. 46-49), with mediator Cheng and CKH stockholder and Rubi's secretary, Jacinto Say, signing as instrumental witnesses. After having received the cash consideration of P100,000.00 and the promissory notes amounting to P700,000.00 Rubi had signed the deed, and thereafter delivered to Lourdes the document of sale and the owner's copies of the certificates of title for the two lots. The deed having been executed on a Sunday, the parties agreed to have the same notarized the following day, May 9, 1988. The parties again met the next day, May 9, 1988, when they acknowledged the deed before a notary public."[16] In sum, the appellate court found that there was indeed payment of the purchase price, partially in cash for P100,000.00 and partially by compensation by off-setting the debt of Cheng Kim Heng to his sons Choi and Kei for P500,000.00 and P200,000.00 respectively, against the remainder of the stipulated price. Such mode of payment is recognized under Article 1249[17] of the Civil Code. As observed by the appellate court: We are of the considered view that the appellees have not established what they claim to be the invalidity of the subject deed of sale. The appellees are therefore neither entitled to the rescission or annulment of the document nor to the award made in their favor in the decision under question and those other reliefs they are seeking.[18] The question the Court is now tasked to answer is whether or not there was payment of the consideration for the sale of real property subject of this case. More specifically, was there a valid compensation of the obligations of Cheng Kim Heng to his sons with the purchase price of the sale? To resolve this issue, it is first required that we establish the true agreement of the parties. Both parties take exception to the provisions of the Deed of Absolute Sale to bolster their respective claims. Petitioners, while submitting that as worded, the Deed of Absolute Sale does not provide for payment by compensation, thereby ruling out the intention of the parties to provide for such mode of payment, submit on the other hand, that they had not received payment of the stipulated cash payment of P800,000.00. The testimony of Rubi Saw during the hearings for preliminary injunction and during trial was submitted to advance the submission that she was never paid the price of the subject lots, in cash or in promissory notes. On the other side of the fence, private respondents, who, ironically, were the parties who drafted the subject document, claim that the Deed of Sale does not express the true agreement of the parties, specifically with regard to the mode of payment. Private respondents allege that the execution of the deed of absolute sale was the culmination of mediation of the dispute of the first and second families of Cheng Kim Heng, over the properties of the decedent; that the price of the real property subject of the contract of sale was partly in cash, and the reminder to be compensated against Cheng's indebtedness to his sons Choi and Kei, reflected in the promissory notes submitted

as Exhibits 6, 7 and 8 during the trial; that by virtue of such compensation, the sale has been consummated and the private respondent Century-Well is entitled to the registration of the certificates of title over the subject properties in its name. These contrasting submissions of the circumstances surrounding the execution of the subject document have led to this stalemate of sorts. Still, the best test to establish the true intent of the parties remains to be the Deed of Absolute Sale, whose genuineness and due execution, are unchallenged.[19] Section 9 of Rule 130 of the Rules of Court states that when the terms of an agreement have been reduced to writing, it is considered as containing all the terms agreed upon and there can be, between the parties and their successors-in-interest, no evidence of such terms other than the contents of the written agreement. The so-called parol evidence rule forbids any addition to or contradiction of the terms of a written instrument by testimony or other evidence purporting to show that, at or before the execution of the parties written agreement, other or different terms were agreed upon by the parties, varying the purport of the written contract. When an agreement has been reduced to writing, the parties cannot be permitted to adduce evidence to prove alleged practices which to all purposes would alter the terms of the written agreement. Whatever is not found in the writing is understood to have been waived and abandoned.[20] The rule is not without exceptions, however, as it is likewise provided that a party to an action may present evidence to modify, explain, or add to the terms of the written agreement if he puts in issue in his pleadings: (a) An intrinsic ambiguity, mistake or imperfection in the written agreement; (b) The failure of the written agreement to express the true intent and agreement of the parties thereto; (c) The validity of the written agreement; or (d) The existence of other terms agreed to by the parties or their successors in interest after the execution of the written agreement.[21] We reiterate the pertinent provisions of the deed: That for and in consideration of the sum of EIGHT HUNDRED THOUSAND (P800,000.00) PESOS, Philippine Currency, paid by VENDEE to VENDOR, receipt of which is hereby acknowledged by the latter to its entire satisfaction, said VENDOR, by these presents, has SOLD, CEDED, TRANSFERRED, and CONVEYED by way of absolute sale unto said VENDEE, its successors and assigns, the two parcels of land above described and any and all improvements therein;[22] The foregoing stipulation is clear enough in manifesting the vendors admission of receipt of the purchase price, thereby lending sufficient, though reluctant, credence to the private respondents submission that payment had been made by off-setting P700,000.00 of the purchase price with the obligation of Cheng Kim Heng to his sons Choi and Kei. By signing the Deed of Absolute Sale, petitioner Rubi Saw has given her imprimatur to the provisions of the deed, and she cannot now challenge its veracity. However, the suitability of the said stipulations as benchmarks for the intention of the contracting parties, does not come clothed with the cloak of validity. It must be remembered that agreements affecting the civil relationship of the contracting parties must come under the scrutiny of the provisions of law existing and effective at the time of the execution of the contract. We refer particularly to the provisions of the law on compensation as a mode of extinguishment of obligations. Under Article 1231 of the Civil Code, an obligation may be extinguished: (1) by payment or performance; (2) by the loss of the thing due, (3) by the condonation or remission of the debt; (4) by the confusion or merger of the rights of creditor and debtor, (5) by compensation; or (6) by novation. Other causes of extinguishment of obligations include annulment, rescission, fulfillment of a resolutory condition and prescription. Compensation may take place by operation of law (legal compensation), when two persons, in their own right, are creditors and debtors of each other.[23] Article 1279 of the Civil Code provides for the requisites of legal compensation: Article 1279. In order that compensation may be proper, it is necessary: (1) That each one of the obligors be bound principally, and that he be at the same time a principal creditor of the other; (2) That both debts consist in a sum of money, or if the things due are consumable, they be of the same kind, and also of the same quality if the latter has been stated;

(3) That the two debts be due; (4) That they be liquidated and demandable; (5) That over neither of them there be any retention or controversy, commenced by third persons and communicated in due time to the debtor. Compensation may also be voluntary or conventional, that is, when the parties, who are mutually creditors and debtors agree to compensate their respective obligations, even though not all the requisites for legal compensation are present. Without the confluence of the characters of mutual debtors and creditors, contracting parties cannot stipulate to the compensation of their obligations, for then the legal tie that binds contracting parties to their obligations would be absent. At least one party would be binding himself under an authority he does not possess. As observed by a noted author, the requirements of conventional compensation are (1) that each of the parties can dispose of the credit he seeks to compensate, and (2) that they agree to the mutual extinguishment of their credits.[24] In the instant case, there can be no valid compensation of the purchase price with the obligations of Cheng Kim Heng reflected in the promissory notes, for the reason that CKH and Century-Well the principal contracting parties, are not mutually bound as creditors and debtors in their own name. A close scrutiny of the promissory notes does not indicate the late Cheng, as then president of CKH, acknowledging any indebtedness to Century-Well. As worded, the promissory notes reveal CKHs indebtedness to Chong Tak Choi and Chong Tak Kei. Exhibit 6 Metro Manila, Philippines April 15, 1978 For Value Received, We, CKH INDUSTRIAL & DEVELOPMENT CORPORATION, a duly registered corporation with postal address at Rm. 330, MTM Bldg. 1002 C. M. Recto Avenue, Manila, promises [sic] to pay on demand to Mr. CHONG TAK CHOI, the sum of FOUR HUNDRED THOUSAND PESOS, Philippine currency (P400,000.00) To certify the correctness of the indebtedness to the party, I, CHENG KIM HENG, President of CKH INDUSTRIAL & DEVELOPMENT CORPORATION, do hereby signed [sic] in behalf of the Corporation. CKH INDUSTRIAL & DEVELOPMENT CORPORATION signed: CHENG KIM HENG" Exhibit 7 Manila, July 17, 1978 For Value received, we, CKH INDUSTRIAL & DEVELOPMENT CORPORATION, a duly registered domestic corporation in the City of Manila, represented by its president, CHENG KIM HENG with residence certificate no. 118824650 issued at Manila, on 2-28-78 do promise to pay on demand the sum of ONE HUNDRED THOUSAND PESOS ONLY (P100,000.00), Philippine currency with interest from the date hereof at the rate of ten per cent (10%) per annum to Mr. CHONG TAK CHOI. In witness hereof on the consents [sic] of the parties to this promissory note, I, CHENG KIM HENG, president of CKH INDUSTRIAL & DEVELOPMENT CORPORATION do hereby affixed [sic] my signature below. signed: CHENG KIM HENG Exhibit 8 Manila, Philippines, November 24, 1981 I, CHENG KIM HENG, President of CKH INDUSTRIAL & DEVELOPMENT CORPORATION, 831 Tetuan St. (2nd floor) Sta. Cruz, Manila, promises to pay to CHONG

TAK KEI, with postal address at 76 F. Bautista St., Valenzuela, Metro Manila, the sum of PESOS: TWO HUNDRED THOUSAND ONLY (P200,000.00) Philippine Currency, with interest at the rate of Ten per cent (10%) per annum from date stated above to a period of one year and I hereby consent to any renewal, or extension of same amount to a same period which may be requested by any one of us for the payment of this note. I also acknowledge the receipt of the above sum of money today from MR. CHONG TAK KEI. CKH IND. & DEV. CORP. signed: CHENG KIM HENG President In fact, there is no indication at all, that such indebtedness was contracted by Cheng from Choi and Kei as stockholders of Century-Well. Choi and Kei, in turn, are not parties to the Deed of Absolute Sale. They are merely stockholders of Century-Well,[25] and as such, are not bound principally, not even in a representative capacity, in the contract of sale. Thus, their interest in the promissory notes cannot be off-set against the obligations between CKH and Century-Well arising out of the deed of absolute sale, absent any allegation, much less, even a scintilla of substantiation, that Choi and Keis interest in Century-Well are so considerable as to merit a declaration of unity of their civil personalities. Under present law, corporations, such as Century-Well, have personalities separate and distinct from their stockholders,[26] except only when the law sees it fit to pierce the veil of corporate identity, particularly when the corporate fiction is shown to be used to defeat public convenience, justify wrong, protect fraud or defend crime, or where a corporation the mere alter ego or business conduit of a person.[27] The Court cannot, in this instance make such a ruling absent a demonstration of the merit of such a disposition. Considering the foregoing premises, the Court finds it proper to grant the prayer for rescission of the subject deed of sale, for failure of consideration.[28] IN VIEW WHEREOF, the Court hereby RESOLVED to GRANT the present petition. The decision of the Court of Appeals dated April 21, 1993, is hereby REVERSED and SET ASIDE. The decision of the Regional Trial Court of Valenzuela, Branch 173 dated February 4, 1991, is hereby REINSTATED, with the MODIFICATION that the award of moral damages and attorney's fees to Rubi Saw, and the order for payment of costs are DELETED. The parties shall bear their respective costs. SO ORDERED.

SALCEDO-ORTANEZ V CAGR NO 110662 FACTS: Respondent Rafael S. Ortanez filed City a complaint for annulment of marriage with damages against petitioner Teresita Salcedo-Ortanez, on grounds of lack of marriage license and/or psychological incapacity of the petitioner. Among the exhibits offered by private respondent were three (3) cassette tapes of alleged telephone conversations between petitioner and unidentified persons. CA dismissed the petition stating tape recordings are not inadmissible per se. They and any other variant t h e r e o f c a n b e a d m i t t e d i n e v i d e n c e f o r c e r t a i n p u r p o s e s , d e p e n d i n g o n h o w t h e y a r e presented and offered and on how the trial judge utilizes them in the interest of truth and fairness and the even handed administration of justice. ISSUE: W/N Tape recordings are admissible as evidence. HELD: No. Rep. Act No. 4200 entitled "An Act to Prohibit and Penalize Wire Tapping and Other Related Violations of the Privacy of Communication, and for other purposes" expressly makes such tape recordings inadmissible in evidence. Clearly, respondents trial court and Court of Appeals failed to consider the afore -quoted provisions of the law in admitting in evidence the cassette tapes in question. Absenta clear showing that both parties to the telephone conversations allowed the recording of the same, the inadmissibility of the subject tapes is mandatory under Rep. Act No. 4200


Before us is a Petition for Review on Certiorari assailing the Decision of the Court of Appeals in CA-G.R. CV No. 52221 promulgated on January 14, 1999, which affirmed in toto the Decision of the Regional Trial Court, Branch 53, Lucena City in Civil Case No. 92-51 dated October 16, 1995. Respondent Tantuco Enterprises, Inc. is engaged in the coconut oil milling and refining industry. It owns two oil mills. Both are located at its factory compound at Iyam, Lucena City. It appears that respondent commenced its business operations with only one oil mill. In 1988, it started operating its second oil mill. The latter came to be commonly referred to as the new oil mill. The two oil mills were separately covered by fire insurance policies issued by petitioner American Home Assurance Co., Philippine Branch.[1] The first oil mill was insured for three million pesos (P3,000,000.00) under Policy No. 306-7432324-3 for the period March 1, 1991 to 1992.[2] The new oil mill was insured for six million pesos (P6,000,000.00) under Policy No. 306-7432321-9 for the same term.[3] Official receipts indicating payment for the full amount of the premium were issued by the petitioner's agent.[4] A fire that broke out in the early morning of September 30,1991 gutted and consumed the new oil mill. Respondent immediately notified the petitioner of the incident. The latter then sent its appraisers who inspected the burned premises and the properties destroyed. Thereafter, in a letter dated October 15, 1991, petitioner rejected respondents claim for the insurance proceeds on the ground that no policy was issued by it covering the burned oil mill. It stated that the description of the insured establishment referred to another building thus: Our policy nos. 3067432321-9 (Ps 6M) and 306-7432324-4 (Ps 3M) extend insurance coverage to your oil mill under Building No. 5, whilst the affected oil mill was under Building No. 14.[5] A complaint for specific performance and damages was consequently instituted by the respondent with the RTC, Branch 53 of Lucena City. On October 16, 1995, after trial, the lower court rendered a Decision finding the petitioner liable on the insurance policy thus:

WHEREFORE, judgment is rendered in favor of the plaintiff ordering defendant to pay plaintiff: (a) P4,406,536.40 representing damages for loss by fire of its insured property with interest at the legal rate; (b) P80,000.00 for litigation expenses; (c) P300,000.00 for and as attorneys fees; and (d) Pay the costs. SO ORDERED.[6]
Petitioner assailed this judgment before the Court of Appeals. The appellate court upheld the same in a Decision promulgated on January 14, 1999, the pertinent portion of which states:

WHEREFORE, the instant appeal is hereby DISMISSED for lack of merit and the trial courts Decision dated October 16, 1995 is hereby AFFIRMED in toto.

Petitioner moved for reconsideration. The motion, however, was denied for lack of merit in a Resolution promulgated on June 10, 1999. Hence, the present course of action, where petitioner ascribes to the appellate court the following errors:

(1) The Court of Appeals erred in its conclusion that the issue of non-payment of the premium was beyond its jurisdiction because it was raised for the first time on appeal.[8] (2) The Court of Appeals erred in its legal interpretation of 'Fire Extinguishing Appliances Warranty' of the policy.[9] (3) With due respect, the conclusion of the Court of Appeals giving no regard to the parole evidence rule and the principle of estoppel is erroneous.[10]
The petition is devoid of merit. The primary reason advanced by the petitioner in resisting the claim of the respondent is that the burned oil mill is not covered by any insurance policy. According to it, the oil mill insured is specifically described in the policy by its boundaries in the following manner:

Front: by a driveway thence at 18 meters distance by Bldg. No. 2. Right: by an open space thence by Bldg. No. 4. Left: Rear: Adjoining thence an imperfect wall by Bldg. No. 4. by an open space thence at 8 meters distance.

However, it argues that this specific boundary description clearly pertains, not to the burned oil mill, but to the other mill. In other words, the oil mill gutted by fire was not the one described by the specific boundaries in the contested policy. What exacerbates respondents predicament, petitioner posits, is that it did not have the supposed wrong description or mistake corrected. Despite the fact that the policy in question was issued way back in 1988, or about three years before the fire, and despite the Important Notice in the policy that Please read and examine the policy and if incorrect, return it immediately for alteration, respondent apparently did not call petitioners attention with respect to the misdescription. By way of conclusion, petitioner argues that respondent is barred by the parole evidence rule from presenting evidence (other than the policy in question) of its self-serving intention (sic) that it intended really to insure the burned oil mill, just as it is barred by estoppel from claiming that the description of the insured oil mill in the policy was wrong, because it retained the policy without having the same corrected before the fire by an endorsement in accordance with its Condition No. 28. These contentions can not pass judicial muster. In construing the words used descriptive of a building insured, the greatest liberality is shown by the courts in giving effect to the insurance.[11] In view of the custom of insurance agents to examine buildings before writing policies upon them, and since a mistake as to the identity and character of the building is extremely unlikely, the courts are inclined to consider that the policy of insurance covers any building which the parties manifestly intended to insure, however inaccurate the description may be.[12]

Notwithstanding, therefore, the misdescription in the policy, it is beyond dispute, to our mind, that what the parties manifestly intended to insure was the new oil mill. This is obvious from the categorical statement embodied in the policy, extending its protection:

On machineries and equipment with complete accessories usual to a coconut oil mill including stocks of copra, copra cake and copra mills whilst contained in the new oil mill building, situate (sic) at UNNO. ALONG NATIONAL HIGH WAY, BO. IYAM, LUCENA CITY UNBLOCKED.[13] (emphasis supplied.)
If the parties really intended to protect the first oil mill, then there is no need to specify it as new. Indeed, it would be absurd to assume that respondent would protect its first oil mill for different amounts and leave uncovered its second one. As mentioned earlier, the first oil mill is already covered under Policy No. 306-7432324-4 issued by the petitioner. It is unthinkable for respondent to obtain the other policy from the very same company. The latter ought to know that a second agreement over that same realty results in its overinsurance. The imperfection in the description of the insured oil mills boundaries can be attributed to a misunderstanding between the petitioners general agent, Mr. Alfredo Borja, and its policy issuing clerk, who made the error of copying the boundaries of the first oil mill when typing the policy to be issued for the new one. As testified to by Mr.Borja:
Atty. G. Camaligan: Q: A: What did you do when you received the report? I told them as will be shown by the map the intention really of Mr. Edison Tantuco is to cover the new oil mill that is why when I presented the existing policy of the old policy, the policy issuing clerk just merely (sic) copied the wording from the old policy and what she typed is that the description of the boundaries from the old policy was copied but she inserted covering the new oil mill and to me at that time the important thing is that it covered the new oil mill because it is just within one compound and there are only two oil mill [s] and so just enough, I had the policy prepared. In fact, two policies were prepared having the same date one for the old one and the other for the new oil mill and exactly the same policy period, sir.[14] (emphasis supplied)

It is thus clear that the source of the discrepancy happened during the preparation of the written contract. These facts lead us to hold that the present case falls within one of the recognized exceptions to the parole evidence rule. Under the Rules of Court, a party may present evidence to modify, explain or add to the terms of the written agreement if he puts in issue in his pleading, among others, its failure to express the true intent and agreement of the parties thereto.[15] Here, the contractual intention of the parties cannot be understood from a mere reading of the instrument. Thus, while the contract explicitly stipulated that it was for the insurance of the new oil mill, the boundary description written on the policy concededly pertains to the first oil mill. This irreconcilable difference can only be clarified by admitting evidence aliunde, which will explain the imperfection and clarify the intent of the parties. Anent petitioners argument that the respondent is barred by estoppel from claiming that the description of the insured oil mill in the policy was wrong, we find that the same proceeds from a wrong assumption. Evidence on record reveals that respondents operating manager, Mr. Edison Tantuco, notified Mr. Borja (the petitioners agent with whom respondent negotiated for the contract) about the inaccurate description in the policy. However, Mr. Borja assured Mr. Tantuco that the use of the adjective new will distinguish the insured property. The assurance convinced respondent that, despite the impreciseness in the specification of the boundaries, the insurance will cover the new oil mill. This can be seen from the testimony on cross of Mr. Tantuco:


You mentioned, sir, that at least in so far as Exhibit A is concern you have read what the policy contents.(sic) Kindly take a look in the page of Exhibit A which was marked as Exhibit A-2 particularly the boundaries of the property insured by the insurance policy Exhibit A, will you tell us as the manager of the company whether the boundaries stated in Exhibit A-2 are the boundaries of the old (sic) mill that was burned or not.


It was not, I called up Mr. Borja regarding this matter and he told me that what is important is the word new oil mill. Mr. Borja said, as a matter of fact, you can never insured (sic) one property with two (2) policies, you will only do that if you will make to increase the amount and it is by indorsement not by another policy, sir."[16]

We again stress that the object of the court in construing a contract is to ascertain the intent of the parties to the contract and to enforce the agreement which the parties have entered into. In determining what the parties intended, the courts will read and construe the policy as a whole and if possible, give effect to all the parts of the contract, keeping in mind always, however, the prime rule that in the event of doubt, this doubt is to be resolved against the insurer. In determining the intent of the parties to the contract, the courts will consider the purpose and object of the contract.[17] In a further attempt to avoid liability, petitioner claims that respondent forfeited the renewal policy for its failure to pay the full amount of the premium and breach of the Fire Extinguishing Appliances Warranty. The amount of the premium stated on the face of the policy was P89,770.20. From the admission of respondents own witness, Mr. Borja, which the petitioner cited, the former only paid it P75,147.00, leaving a difference of P14,623.20. The deficiency, petitioner argues, suffices to invalidate the policy, in accordance with Section 77 of the Insurance Code.[18] The Court of Appeals refused to consider this contention of the petitioner. It held that this issue was raised for the first time on appeal, hence, beyond its jurisdiction to resolve, pursuant to Rule 46, Section 18 of the Rules of Court.[19] Petitioner, however, contests this finding of the appellate court. It insists that the issue was raised in paragraph 24 of its Answer, viz.:

24. Plaintiff has not complied with the condition of the policy and renewal certificate that the renewal premium should be paid on or before renewal date.
Petitioner adds that the issue was the subject of the cross-examination of Mr. Borja, who acknowledged that the paid amount was lacking by P14,623.20 by reason of a discount or rebate, which rebate under Sec. 361 of the Insurance Code is illegal. The argument fails to impress. It is true that the asseverations petitioner made in paragraph 24 of its Answer ostensibly spoke of the polic ys condition for payment of the renewal premium on time and respondents non-compliance with it. Yet, it did not contain any specific and definite allegation that respondent did not pay the premium, or that it did not pay the full amount, or that it did not pay the amount on time. Likewise, when the issues to be resolved in the trial court were formulated at the pre-trial proceedings, the question of the supposed inadequate payment was never raised. Most significant to point, petitioner fatally neglected to present, during the whole course of the trial, any witness to testify that respondent indeed failed to pay the full amount of the premium. The thrust of the cross-examination of Mr. Borja, on the other hand, was not for the purpose of proving this fact. Though it briefly touched on the alleged deficiency, such was made in the course of discussing a discount or rebate, which the agent apparently gave the respondent. Certainly, the whole tenor of Mr. Borjas testimony, both during direct and cross examinations, implicitly assumed a valid and subsisting insurance policy. It must be remembered that he was called to the stand basically to demonstrate that an existing policy issued by the petitioner covers the burned building.

Finally, petitioner contends that respondent violated the express terms of the Fire Extinguishing Appliances Warranty. The said warranty provides:

WARRANTED that during the currency of this Policy, Fire Extinguishing Appliances as mentioned below shall be maintained in efficient working order on the premises to which insurance applies: - PORTABLE EXTINGUISHERS - INTERNAL HYDRANTS - EXTERNAL HYDRANTS - FIRE PUMP - 24-HOUR SECURITY SERVICES BREACH of this warranty shall render this policy null and void and the Company shall no longer be liable for any loss which may occur.[20]
Petitioner argues that the warranty clearly obligates the insured to maintain all the appliances specified therein. The breach occurred when the respondent failed to install internal fire hydrants inside the burned building as warranted. This fact was admitted by the oil mills expeller operator, Gerardo Zarsuela. Again, the argument lacks merit. We agree with the appellate courts conclusion that the aforementioned warranty did not require respondent to provide for all the fire extinguishing appliances enumerated therein. Additionally, we find that neither did it require that the appliances are restricted to those mentioned in the warranty. In other words, what the warranty mandates is that respondent should maintain in efficient working condition within the premises of the insured property, fire fighting equipments such as, but not limited to, those identified in the list, which will serve as the oil mills first line of defense in case any part of it bursts into flame. To be sure, respondent was able to comply with the warranty. Within the vicinity of the new oil mill can be found the following devices: numerous portable fire extinguishers, two fire hoses,[21] fire hydrant,[22] and an emergency fire engine.[23] All of these equipments were in efficient working order when the fire occurred. It ought to be remembered that not only are warranties strictly construed against the insurer, but they should, likewise, by themselves be reasonably interpreted.[24] That reasonableness is to be ascertained in light of the factual conditions prevailing in each case. Here, we find that there is no more need for an internal hydrant considering that inside the burned building were: (1) numerous portable fire extinguishers, (2) an emergency fire engine, and (3) a fire hose which has a connection to one of the external hydrants. IN VIEW WHEREOF, finding no reversible error in the impugned Decision, the instant petition is hereby DISMISSED. SO ORDERED.