9/6/2020 G.R. No.

126297

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Republic of the Philippines

FIRST DIVISION

G.R. No. 126297 January 31, 2007

PROFESSIONAL SERVICES, INC., Petitioner,

x- - - - - - - - - - - - - - - - - - - - - - - x

G.R. No. 126467 January 31, 2007

NATIVIDAD (Substituted by her children MARCELINO AGANA III, ENRIQUE AGANA, JR., EMMA AGANA
ANDAYA, JESUS AGANA, and RAYMUND AGANA) and ENRIQUE AGANA, Petitioners,
vs.
JUAN FUENTES, Respondent.

x- - - - - - - - - - - - - - - - - - - -- - - - x

G.R. No. 127590 January 31, 2007

MIGUEL AMPIL, Petitioner,

DECISIO N

SANDOVAL-GUTIERREZ, J.:

Hospitals, having undertaken one of mankind’s most important and delicate endeavors, must assume the grave
responsibility of pursuing it with appropriate care. The care and service dispensed through this high trust, however
technical, complex and esoteric its character may be, must meet standards of responsibility commensurate with the
undertaking to preserve and protect the health, and indeed, the very lives of those placed in the hospital’s
keeping.1

Assailed in these three consolidated petitions for review on certiorari is the Court of Appeals’ Decision2 dated
September 6, 1996 in CA-G.R. CV No. 42062 and CA-G.R. SP No. 32198 affirming with modification the Decision3
dated March 17, 1993 of the Regional Trial Court (RTC), Branch 96, Quezon City in Civil Case No. Q-43322 and
nullifying its Order dated September 21, 1993.

The facts, as culled from the records, are:

On April 4, 1984, Natividad Agana was rushed to the Medical City General Hospital (Medical City Hospital)
because of difficulty of bowel movement and bloody anal discharge. After a series of medical examinations, Dr.
Miguel Ampil, petitioner in G.R. No. 127590, diagnosed her to be suffering from "cancer of the sigmoid."

On April 11, 1984, Dr. Ampil, assisted by the medical staff4 of the Medical City Hospital, performed an anterior
resection surgery on Natividad. He found that the malignancy in her sigmoid area had spread on her left ovary,
necessitating the removal of certain portions of it. Thus, Dr. Ampil obtained the consent of Natividad’s husband,
Enrique Agana, to permit Dr. Juan Fuentes, respondent in G.R. No. 126467, to perform hysterectomy on her.

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After Dr. Fuentes had completed the hysterectomy, Dr. Ampil took over, completed the operation and closed the
incision.

However, the operation appeared to be flawed. In the corresponding Record of Operation dated April 11, 1984, the
attending nurses entered these remarks:

"sponge count lacking 2

"announced to surgeon searched (sic) done but to no avail continue for closure."

On April 24, 1984, Natividad was released from the hospital. Her hospital and medical bills, including the doctors’
fees, amounted to P60,000.00.

After a couple of days, Natividad complained of excruciating pain in her anal region. She consulted both Dr. Ampil
and Dr. Fuentes about it. They told her that the pain was the natural consequence of the surgery. Dr. Ampil then
recommended that she consult an oncologist to examine the cancerous nodes which were not removed during the
operation.

On May 9, 1984, Natividad, accompanied by her husband, went to the United States to seek further treatment.
After four months of consultations and laboratory examinations, Natividad was told she was free of cancer. Hence,
she was advised to return to the Philippines.

On August 31, 1984, Natividad flew back to the Philippines, still suffering from pains. Two weeks thereafter, her
daughter found a piece of gauze protruding from her vagina. Upon being informed about it, Dr. Ampil proceeded to
her house where he managed to extract by hand a piece of gauze measuring 1.5 inches in width. He then assured
her that the pains would soon vanish.

Dr. Ampil’s assurance did not come true. Instead, the pains intensified, prompting Natividad to seek treatment at
the Polymedic General Hospital. While confined there, Dr. Ramon Gutierrez detected the presence of another
foreign object in her vagina -- a foul-smelling gauze measuring 1.5 inches in width which badly infected her vaginal
vault. A recto-vaginal fistula had formed in her reproductive organs which forced stool to excrete through the
vagina. Another surgical operation was needed to remedy the damage. Thus, in October 1984, Natividad
underwent another surgery.

On November 12, 1984, Natividad and her husband filed with the RTC, Branch 96, Quezon City a complaint for
damages against the Professional Services, Inc. (PSI), owner of the Medical City Hospital, Dr. Ampil, and Dr.
Fuentes, docketed as Civil Case No. Q-43322. They alleged that the latter are liable for negligence for leaving two
pieces of gauze inside Natividad’s body and malpractice for concealing their acts of negligence.

Meanwhile, Enrique Agana also filed with the Professional Regulation Commission (PRC) an administrative
complaint for gross negligence and malpractice against Dr. Ampil and Dr. Fuentes, docketed as Administrative
Case No. 1690. The PRC Board of Medicine heard the case only with respect to Dr. Fuentes because it failed to
acquire jurisdiction over Dr. Ampil who was then in the United States.

On February 16, 1986, pending the outcome of the above cases, Natividad died and was duly substituted by her
above-named children (the Aganas).

On March 17, 1993, the RTC rendered its Decision in favor of the Aganas, finding PSI, Dr. Ampil and Dr. Fuentes
liable for negligence and malpractice, the decretal part of which reads:

WHEREFORE, judgment is hereby rendered for the plaintiffs ordering the defendants PROFESSIONAL
SERVICES, INC., DR. MIGUEL AMPIL and DR. JUAN FUENTES to pay to the plaintiffs, jointly and severally, except
in respect of the award for exemplary damages and the interest thereon which are the liabilities of defendants Dr.
Ampil and Dr. Fuentes only, as follows:

1. As actual damages, the following amounts:

a. The equivalent in Philippine Currency of the total of US$19,900.00 at the rate of P21.60-US$1.00,
as reimbursement of actual expenses incurred in the United States of America;

b. The sum of P4,800.00 as travel taxes of plaintiffs and their physician daughter;

c. The total sum of P45,802.50, representing the cost of hospitalization at Polymedic Hospital, medical
fees, and cost of the saline solution;

2. As moral damages, the sum of P2,000,000.00;

3. As exemplary damages, the sum of P300,000.00;

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4. As attorney’s fees, the sum of P250,000.00;

5. Legal interest on items 1 (a), (b), and (c); 2; and 3 hereinabove, from date of filing of the complaint until
full payment; and

6. Costs of suit.

SO ORDERED.

Aggrieved, PSI, Dr. Fuentes and Dr. Ampil interposed an appeal to the Court of Appeals, docketed as CA-G.R. CV
No. 42062.

Incidentally, on April 3, 1993, the Aganas filed with the RTC a motion for a partial execution of its Decision, which
was granted in an Order dated May 11, 1993. Thereafter, the sheriff levied upon certain properties of Dr. Ampil
and sold them for P451,275.00 and delivered the amount to the Aganas.

Following their receipt of the money, the Aganas entered into an agreement with PSI and Dr. Fuentes to
indefinitely suspend any further execution of the RTC Decision. However, not long thereafter, the Aganas again
filed a motion for an alias writ of execution against the properties of PSI and Dr. Fuentes. On September 21, 1993,
the RTC granted the motion and issued the corresponding writ, prompting Dr. Fuentes to file with the Court of
Appeals a petition for certiorari and prohibition, with prayer for preliminary injunction, docketed as CA-G.R. SP No.
32198. During its pendency, the Court of Appeals issued a Resolution5 dated October 29, 1993 granting Dr.
Fuentes’ prayer for injunctive relief.

On January 24, 1994, CA-G.R. SP No. 32198 was consolidated with CA-G.R. CV No. 42062.

Meanwhile, on January 23, 1995, the PRC Board of Medicine rendered its Decision6 in Administrative Case No.
1690 dismissing the case against Dr. Fuentes. The Board held that the prosecution failed to show that Dr. Fuentes
was the one who left the two pieces of gauze inside Natividad’s body; and that he concealed such fact from
Natividad.

On September 6, 1996, the Court of Appeals rendered its Decision jointly disposing of CA-G.R. CV No. 42062 and
CA-G.R. SP No. 32198, thus:

WHEREFORE, except for the modification that the case against defendant-appellant Dr. Juan Fuentes is hereby
DISMISSED, and with the pronouncement that defendant-appellant Dr. Miguel Ampil is liable to reimburse
defendant-appellant Professional Services, Inc., whatever amount the latter will pay or had paid to the plaintiffs-
appellees, the decision appealed from is hereby AFFIRMED and the instant appeal DISMISSED.

Concomitant with the above, the petition for certiorari and prohibition filed by herein defendant-appellant Dr. Juan
Fuentes in CA-G.R. SP No. 32198 is hereby GRANTED and the challenged order of the respondent judge dated
September 21, 1993, as well as the alias writ of execution issued pursuant thereto are hereby NULLIFIED and SET
ASIDE. The bond posted by the petitioner in connection with the writ of preliminary injunction issued by this Court
on November 29, 1993 is hereby cancelled.

Costs against defendants-appellants Dr. Miguel Ampil and Professional Services, Inc.

SO ORDERED.

Only Dr. Ampil filed a motion for reconsideration, but it was denied in a Resolution7 dated December 19, 1996.

Hence, the instant consolidated petitions.

In G.R. No. 126297, PSI alleged in its petition that the Court of Appeals erred in holding that: (1) it is estopped
from raising the defense that Dr. Ampil is not its employee; (2) it is solidarily liable with Dr. Ampil; and (3) it is not
entitled to its counterclaim against the Aganas. PSI contends that Dr. Ampil is not its employee, but a mere
consultant or independent contractor. As such, he alone should answer for his negligence.

In G.R. No. 126467, the Aganas maintain that the Court of Appeals erred in finding that Dr. Fuentes is not guilty of
negligence or medical malpractice, invoking the doctrine of res ipsa loquitur. They contend that the pieces of
gauze are prima facie proofs that the operating surgeons have been negligent.

Finally, in G.R. No. 127590, Dr. Ampil asserts that the Court of Appeals erred in finding him liable for negligence
and malpractice sans evidence that he left the two pieces of gauze in Natividad’s vagina. He pointed to other
probable causes, such as: (1) it was Dr. Fuentes who used gauzes in performing the hysterectomy; (2) the
attending nurses’ failure to properly count the gauzes used during surgery; and (3) the medical intervention of the
American doctors who examined Natividad in the United States of America.

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For our resolution are these three vital issues: first, whether the Court of Appeals erred in holding Dr. Ampil liable
for negligence and malpractice; second, whether the Court of Appeals erred in absolving Dr. Fuentes of any
liability; and third, whether PSI may be held solidarily liable for the negligence of Dr. Ampil.

I - G.R. No. 127590

Whether the Court of Appeals Erred in Holding Dr. Ampil

Liable for Negligence and Malpractice.

Dr. Ampil, in an attempt to absolve himself, gears the Court’s attention to other possible causes of Natividad’s
detriment. He argues that the Court should not discount either of the following possibilities: first, Dr. Fuentes left
the gauzes in Natividad’s body after performing hysterectomy; second, the attending nurses erred in counting the
gauzes; and third, the American doctors were the ones who placed the gauzes in Natividad’s body.

Dr. Ampil’s arguments are purely conjectural and without basis. Records show that he did not present any
evidence to prove that the American doctors were the ones who put or left the gauzes in Natividad’s body. Neither
did he submit evidence to rebut the correctness of the record of operation, particularly the number of gauzes
used. As to the alleged negligence of Dr. Fuentes, we are mindful that Dr. Ampil examined his (Dr. Fuentes’) work
and found it in order.

The glaring truth is that all the major circumstances, taken together, as specified by the Court of Appeals, directly
point to Dr. Ampil as the negligent party, thus:

First, it is not disputed that the surgeons used gauzes as sponges to control the bleeding of the patient
during the surgical operation.

Second, immediately after the operation, the nurses who assisted in the surgery noted in their report that
the ‘sponge count (was) lacking 2’; that such anomaly was ‘announced to surgeon’ and that a ‘search was
done but to no avail’ prompting Dr. Ampil to ‘continue for closure’ x x x.

Third, after the operation, two (2) gauzes were extracted from the same spot of the body of Mrs. Agana
where the surgery was performed.

An operation requiring the placing of sponges in the incision is not complete until the sponges are properly
removed, and it is settled that the leaving of sponges or other foreign substances in the wound after the incision
has been closed is at least prima facie negligence by the operating surgeon.8 To put it simply, such act is
considered so inconsistent with due care as to raise an inference of negligence. There are even legions of
authorities to the effect that such act is negligence per se.9

Of course, the Court is not blind to the reality that there are times when danger to a patient’s life precludes a
surgeon from further searching missing sponges or foreign objects left in the body. But this does not leave him
free from any obligation. Even if it has been shown that a surgeon was required by the urgent necessities of the
case to leave a sponge in his patient’s abdomen, because of the dangers attendant upon delay, still, it is his legal
duty to so inform his patient within a reasonable time thereafter by advising her of what he had been compelled to
do. This is in order that she might seek relief from the effects of the foreign object left in her body as her condition
might permit. The ruling in Smith v. Zeagler10 is explicit, thus:

The removal of all sponges used is part of a surgical operation, and when a physician or surgeon fails to remove a
sponge he has placed in his patient’s body that should be removed as part of the operation, he thereby leaves his
operation uncompleted and creates a new condition which imposes upon him the legal duty of calling the new
condition to his patient’s attention, and endeavoring with the means he has at hand to minimize and avoid
untoward results likely to ensue therefrom.

Here, Dr. Ampil did not inform Natividad about the missing two pieces of gauze. Worse, he even misled her that the
pain she was experiencing was the ordinary consequence of her operation. Had he been more candid, Natividad
could have taken the immediate and appropriate medical remedy to remove the gauzes from her body. To our
mind, what was initially an act of negligence by Dr. Ampil has ripened into a deliberate wrongful act of deceiving his
patient.

This is a clear case of medical malpractice or more appropriately, medical negligence. To successfully pursue this
kind of case, a patient must only prove that a health care provider either failed to do something which a
reasonably prudent health care provider would have done, or that he did something that a reasonably prudent
provider would not have done; and that failure or action caused injury to the patient.11 Simply put, the elements
are duty, breach, injury and proximate causation. Dr, Ampil, as the lead surgeon, had the duty to remove all
foreign objects, such as gauzes, from Natividad’s body before closure of the incision. When he failed to do so, it

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was his duty to inform Natividad about it. Dr. Ampil breached both duties. Such breach caused injury to Natividad,
necessitating her further examination by American doctors and another surgery. That Dr. Ampil’s negligence is the
proximate cause12 of Natividad’s injury could be traced from his act of closing the incision despite the information
given by the attending nurses that two pieces of gauze were still missing. That they were later on extracted from
Natividad’s vagina established the causal link between Dr. Ampil’s negligence and the injury. And what further
aggravated such injury was his deliberate concealment of the missing gauzes from the knowledge of Natividad and
her family.

II - G.R. No. 126467

Whether the Court of Appeals Erred in Absolving

Dr. Fuentes of any Liability

The Aganas assailed the dismissal by the trial court of the case against Dr. Fuentes on the ground that it is
contrary to the doctrine of res ipsa loquitur. According to them, the fact that the two pieces of gauze were left
inside Natividad’s body is a prima facie evidence of Dr. Fuentes’ negligence.

We are not convinced.

Literally, res ipsa loquitur means "the thing speaks for itself." It is 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 plaintiff’s prima facie case, and present a question of fact for defendant to meet with an explanation.13
Stated differently, where the thing which caused the injury, without the fault of the injured, is under the exclusive
control of the defendant and the injury is such that it should not have occurred if he, having such control used
proper care, it affords reasonable evidence, in the absence of explanation that the injury arose from the
defendant’s want of care, and the burden of proof is shifted to him to establish that he has observed due care and
diligence.14

From the foregoing statements of the rule, the requisites for the applicability of the doctrine of res ipsa loquitur
are: (1) the occurrence of an injury; (2) the thing which caused the injury was under the control and management
of the defendant; (3) the occurrence was such that in the ordinary course of things, would not have happened if
those who had control or management used proper care; and (4) the absence of explanation by the defendant. Of
the foregoing requisites, the most instrumental is the "control and management of the thing which caused the
injury."15

We find the element of "control and management of the thing which caused the injury" to be wanting. Hence, the
doctrine of res ipsa loquitur will not lie.

It was duly established that Dr. Ampil was the lead surgeon during the operation of Natividad. He requested the
assistance of Dr. Fuentes only to perform hysterectomy when he (Dr. Ampil) found that the malignancy in her
sigmoid area had spread to her left ovary. Dr. Fuentes performed the surgery and thereafter reported and showed
his work to Dr. Ampil. The latter examined it and finding everything to be in order, allowed Dr. Fuentes to leave the
operating room. Dr. Ampil then resumed operating on Natividad. He was about to finish the procedure when the
attending nurses informed him that two pieces of gauze were missing. A "diligent search" was conducted, but the
misplaced gauzes were not found. Dr. Ampil then directed that the incision be closed. During this entire period, Dr.
Fuentes was no longer in the operating room and had, in fact, left the hospital.

Under the "Captain of the Ship" rule, the operating surgeon is the person in complete charge of the surgery room
and all personnel connected with the operation. Their duty is to obey his orders.16 As stated before, Dr. Ampil was
the lead surgeon. In other words, he was the "Captain of the Ship." That he discharged such role is evident from
his following conduct: (1) calling Dr. Fuentes to perform a hysterectomy; (2) examining the work of Dr. Fuentes and
finding it in order; (3) granting Dr. Fuentes’ permission to leave; and (4) ordering the closure of the incision. To our
mind, it was this act of ordering the closure of the incision notwithstanding that two pieces of gauze remained
unaccounted for, that caused injury to Natividad’s body. Clearly, the control and management of the thing which
caused the injury was in the hands of Dr. Ampil, not Dr. Fuentes.

In this jurisdiction, res ipsa loquitur is not a rule of substantive law, hence, does not per se create or constitute an
independent or separate ground of liability, being a mere evidentiary rule.17 In other words, mere invocation and
application of the doctrine does not dispense with the requirement of proof of negligence. Here, the negligence
was proven to have been committed by Dr. Ampil and not by Dr. Fuentes.

III - G.R. No. 126297

Whether PSI Is Liable for the Negligence of Dr. Ampil

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The third issue necessitates a glimpse at the historical development of hospitals and the resulting theories
concerning their liability for the negligence of physicians.

Until the mid-nineteenth century, hospitals were generally charitable institutions, providing medical services to the
lowest classes of society, without regard for a patient’s ability to pay.18 Those who could afford medical treatment
were usually treated at home by their doctors.19 However, the days of house calls and philanthropic health care
are over. The modern health care industry continues to distance itself from its charitable past and has experienced
a significant conversion from a not-for-profit health care to for-profit hospital businesses. Consequently, significant
changes in health law have accompanied the business-related changes in the hospital industry. One important
legal change is an increase in hospital liability for medical malpractice. Many courts now allow claims for hospital
vicarious liability under the theories of respondeat superior, apparent authority, ostensible authority, or agency by
estoppel. 20

In this jurisdiction, the statute governing liability for negligent acts is Article 2176 of the Civil Code, which reads:

Art. 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to
pay for the damage done. Such fault or negligence, if there is no pre-existing contractual relation between the
parties, is called a quasi-delict and is governed by the provisions of this Chapter.

A derivative of this provision is Article 2180, the rule governing vicarious liability under the doctrine of respondeat
superior, thus:

ART. 2180. The obligation imposed by Article 2176 is demandable not only for one’s own acts or omissions, but
also for those of persons for whom one is responsible.

x x x x x x

The owners and managers of an establishment or enterprise are likewise responsible for damages caused by their
employees in the service of the branches in which the latter are employed or on the occasion of their functions.

Employers shall be liable for the damages caused by their employees and household helpers acting within the
scope of their assigned tasks even though the former are not engaged in any business or industry.

x x x x x x

The responsibility treated of in this article shall cease when the persons herein mentioned prove that they
observed all the diligence of a good father of a family to prevent damage.

A prominent civilist commented that professionals engaged by an employer, such as physicians, dentists, and
pharmacists, are not "employees" under this article because the manner in which they perform their work is not
within the control of the latter (employer). In other words, professionals are considered personally liable for the
fault or negligence they commit in the discharge of their duties, and their employer cannot be held liable for such
fault or negligence. In the context of the present case, "a hospital cannot be held liable for the fault or negligence
of a physician or surgeon in the treatment or operation of patients."21

The foregoing view is grounded on the traditional notion that the professional status and the very nature of the
physician’s calling preclude him from being classed as an agent or employee of a hospital, whenever he acts in a
professional capacity.22 It has been said that medical practice strictly involves highly developed and specialized
knowledge,23 such that physicians are generally free to exercise their own skill and judgment in rendering medical
services sans interference.24 Hence, when a doctor practices medicine in a hospital setting, the hospital and its
employees are deemed to subserve him in his ministrations to the patient and his actions are of his own
responsibility.25

The case of Schloendorff v. Society of New York Hospital26 was then considered an authority for this view. The
"Schloendorff doctrine" regards a physician, even if employed by a hospital, as an independent contractor
because of the skill he exercises and the lack of control exerted over his work. Under this doctrine, hospitals are
exempt from the application of the respondeat superior principle for fault or negligence committed by physicians in
the discharge of their profession.

However, the efficacy of the foregoing doctrine has weakened with the significant developments in medical care.
Courts came to realize that modern hospitals are increasingly taking active role in supplying and regulating
medical care to patients. No longer were a hospital’s functions limited to furnishing room, food, facilities for
treatment and operation, and attendants for its patients. Thus, in Bing v. Thunig,27 the New York Court of Appeals
deviated from the Schloendorff doctrine, noting that modern hospitals actually do far more than provide facilities
for treatment. Rather, they regularly employ, on a salaried basis, a large staff of physicians, interns, nurses,
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administrative and manual workers. They charge patients for medical care and treatment, even collecting for such
services through legal action, if necessary. The court then concluded that there is no reason to exempt hospitals
from the universal rule of respondeat superior.

In our shores, the nature of the relationship between the hospital and the physicians is rendered inconsequential
in view of our categorical pronouncement in Ramos v. Court of Appeals28 that for purposes of apportioning
responsibility in medical negligence cases, an employer-employee relationship in effect exists between hospitals
and their attending and visiting physicians. This Court held:

"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," who are allegedly not hospital
employees, presents problems in apportioning responsibility for negligence in medical malpractice cases. However,
the difficulty is 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. x x x.

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 physician’s
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, x x x, 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. "

But the Ramos pronouncement is not our only basis in sustaining PSI’s liability. Its liability is also anchored upon
the agency principle of apparent authority or agency by estoppel and the doctrine of corporate negligence which
have gained acceptance in the determination of a hospital’s liability for negligent acts of health professionals. The
present case serves as a perfect platform to test the applicability of these doctrines, thus, enriching our
jurisprudence.

Apparent authority, or what is sometimes referred to as the "holding

out" theory, or doctrine of ostensible agency or agency by estoppel,29 has its origin from the law of agency. It
imposes liability, not as the result of the reality of a contractual relationship, but rather because of the actions of a
principal or an employer in somehow misleading the public into believing that the relationship or the authority
exists.30 The concept is essentially one of estoppel and has been explained in this manner:

"The principal is bound by the acts of his agent with the apparent authority which he knowingly permits the agent
to assume, or which he holds the agent out to the public as possessing. The question in every case is whether the
principal has by his voluntary act placed the agent in such a situation that a person of ordinary prudence,
conversant with business usages and the nature of the particular business, is justified in presuming that such
agent has authority to perform the particular act in question.31

The applicability of apparent authority in the field of hospital liability was upheld long time ago in Irving v. Doctor
Hospital of Lake Worth, Inc.32 There, it was explicitly stated that "there does not appear to be any rational basis
for excluding the concept of apparent authority from the field of hospital liability." Thus, in cases where it can be
shown that a hospital, by its actions, has held out a particular physician as its agent and/or employee and that a
patient has accepted treatment from that physician in the reasonable belief that it is being rendered in behalf of
the hospital, then the hospital will be liable for the physician’s negligence.

Our jurisdiction recognizes the concept of an agency by implication or estoppel. Article 1869 of the Civil Code
reads:
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ART. 1869. Agency may be express, or implied from the acts of the principal, from his silence or lack of action, or
his failure to repudiate the agency, knowing that another person is acting on his behalf without authority.

In this case, PSI publicly displays in the lobby of the Medical City Hospital the names and specializations of the
physicians associated or accredited by it, including those of Dr. Ampil and Dr. Fuentes. We concur with the Court
of Appeals’ conclusion that it "is now estopped from passing all the blame to the physicians whose names it
proudly paraded in the public directory leading the public to believe that it vouched for their skill and competence."
Indeed, PSI’s act is tantamount to holding out to the public that Medical City Hospital, through its accredited
physicians, offers quality health care services. By accrediting Dr. Ampil and Dr. Fuentes and publicly advertising
their qualifications, the hospital created the impression that they were its agents, authorized to perform medical or
surgical services for its patients. As expected, these patients, Natividad being one of them, accepted the services
on the reasonable belief that such were being rendered by the hospital or its employees, agents, or servants. The
trial court correctly pointed out:

x x x regardless of the education and status in life of the patient, he ought not be burdened with the defense of
absence of employer-employee relationship between the hospital and the independent physician whose name and
competence are certainly certified to the general public by the hospital’s act of listing him and his specialty in its
lobby directory, as in the case herein. The high costs of today’s medical and health care should at least exact on
the hospital greater, if not broader, legal responsibility for the conduct of treatment and surgery within its facility by
its accredited physician or surgeon, regardless of whether he is independent or employed."33

The wisdom of the foregoing ratiocination is easy to discern. Corporate entities, like PSI, are capable of acting only
through other individuals, such as physicians. If these accredited physicians do their job well, the hospital
succeeds in its mission of offering quality medical services and thus profits financially. Logically, where negligence
mars the quality of its services, the hospital should not be allowed to escape liability for the acts of its ostensible
agents.

We now proceed to the doctrine of corporate negligence or corporate responsibility.

One allegation in the complaint in Civil Case No. Q-43332 for negligence and malpractice is that PSI as owner,
operator and manager of Medical City Hospital, "did not perform the necessary supervision nor exercise diligent
efforts in the supervision of Drs. Ampil and Fuentes and its nursing staff, resident doctors, and medical interns
who assisted Drs. Ampil and Fuentes in the performance of their duties as surgeons."34 Premised on the doctrine
of corporate negligence, the trial court held that PSI is directly liable for such breach of duty.

We agree with the trial court.

Recent years have seen the doctrine of corporate negligence as the judicial answer to the problem of allocating
hospital’s liability for the negligent acts of health practitioners, absent facts to support the application of
respondeat superior or apparent authority. Its formulation proceeds from the judiciary’s acknowledgment that in
these modern times, the duty of providing quality medical service is no longer the sole prerogative and
responsibility of the physician. The modern hospitals have changed structure. Hospitals now tend to organize a
highly professional medical staff whose competence and performance need to be monitored by the hospitals
commensurate with their inherent responsibility to provide quality medical care.35

The doctrine has its genesis in Darling v. Charleston Community Hospital.36 There, the Supreme Court of Illinois
held that "the jury could have found a hospital negligent, inter alia, in failing to have a sufficient number of trained
nurses attending the patient; failing to require a consultation with or examination by members of the hospital staff;
and failing to review the treatment rendered to the patient." On the basis of Darling, other jurisdictions held that a
hospital’s corporate negligence extends to permitting a physician known to be incompetent to practice at the
hospital.37 With the passage of time, more duties were expected from hospitals, among them: (1) the use of
reasonable care in the maintenance of safe and adequate facilities and equipment; (2) the selection and retention
of competent physicians; (3) the overseeing or supervision of all persons who practice medicine within its walls;
and (4) the formulation, adoption and enforcement of adequate rules and policies that ensure quality care for its
patients.38 Thus, in Tucson Medical Center, Inc. v. Misevich,39 it was held that a hospital, following the doctrine of
corporate responsibility, has the duty to see that it meets the standards of responsibilities for the care of patients.
Such duty includes the proper supervision of the members of its medical staff. And in Bost v. Riley,40 the court
concluded that a patient who enters a hospital does so with the reasonable expectation that it will attempt to cure
him. The hospital accordingly has the duty to make a reasonable effort to monitor and oversee the treatment
prescribed and administered by the physicians practicing in its premises.

In the present case, it was duly established that PSI operates the Medical City Hospital for the purpose and under
the concept of providing comprehensive medical services to the public. Accordingly, it has the duty to exercise
reasonable care to protect from harm all patients admitted into its facility for medical treatment. Unfortunately, PSI
failed to perform such duty. The findings of the trial court are convincing, thus:

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x x x PSI’s liability is traceable to its failure to conduct an investigation of the matter reported in the nota bene of
the count nurse. Such failure established PSI’s part in the dark conspiracy of silence and concealment about the
gauzes. Ethical considerations, if not also legal, dictated the holding of an immediate inquiry into the events, if not
for the benefit of the patient to whom the duty is primarily owed, then in the interest of arriving at the truth. The
Court cannot accept that the medical and the healing professions, through their members like defendant
surgeons, and their institutions like PSI’s hospital facility, can callously turn their backs on and disregard even a
mere probability of mistake or negligence by refusing or failing to investigate a report of such seriousness as the
one in Natividad’s case.

It is worthy to note that Dr. Ampil and Dr. Fuentes operated on Natividad with the assistance of the Medical City
Hospital’s staff, composed of resident doctors, nurses, and interns. As such, it is reasonable to conclude that PSI,
as the operator of the hospital, has actual or constructive knowledge of the procedures carried out, particularly the
report of the attending nurses that the two pieces of gauze were missing. In Fridena v. Evans,41 it was held that a
corporation is bound by the knowledge acquired by or notice given to its agents or officers within the scope of their
authority and in reference to a matter to which their authority extends. This means that the knowledge of any of
the staff of Medical City Hospital constitutes knowledge of PSI. Now, the failure of PSI, despite the attending
nurses’ report, to investigate and inform Natividad regarding the missing gauzes amounts to callous negligence.
Not only did PSI breach its duties to oversee or supervise all persons who practice medicine within its walls, it also
failed to take an active step in fixing the negligence committed. This renders PSI, not only vicariously liable for the
negligence of Dr. Ampil under Article 2180 of the Civil Code, but also directly liable for its own negligence under
Article 2176. In Fridena, the Supreme Court of Arizona held:

x x x In recent years, however, the duty of care owed to the patient by the hospital has expanded. The emerging
trend is to hold the hospital responsible where the hospital has failed to monitor and review medical services being
provided within its walls. See Kahn Hospital Malpractice Prevention, 27 De Paul . Rev. 23 (1977).

Among the cases indicative of the ‘emerging trend’ is Purcell v. Zimbelman, 18 Ariz. App. 75,500 P. 2d 335 (1972).
In Purcell, the hospital argued that it could not be held liable for the malpractice of a medical practitioner because
he was an independent contractor within the hospital. The Court of Appeals pointed out that the hospital had
created a professional staff whose competence and performance was to be monitored and reviewed by the
governing body of the hospital, and the court held that a hospital would be negligent where it had knowledge or
reason to believe that a doctor using the facilities was employing a method of treatment or care which fell below
the recognized standard of care.

Subsequent to the Purcell decision, the Arizona Court of Appeals held that a hospital has certain inherent
responsibilities regarding the quality of medical care furnished to patients within its walls and it must meet the
standards of responsibility commensurate with this undertaking. Beeck v. Tucson General Hospital, 18 Ariz. App.
165, 500 P. 2d 1153 (1972). This court has confirmed the rulings of the Court of Appeals that a hospital has the
duty of supervising the competence of the doctors on its staff. x x x.

x x x x x x

In the amended complaint, the plaintiffs did plead that the operation was performed at the hospital with its
knowledge, aid, and assistance, and that the negligence of the defendants was the proximate cause of the
patient’s injuries. We find that such general allegations of negligence, along with the evidence produced at the trial
of this case, are sufficient to support the hospital’s liability based on the theory of negligent supervision."

Anent the corollary issue of whether PSI is solidarily liable with Dr. Ampil for damages, let it be emphasized that
PSI, apart from a general denial of its responsibility, failed to adduce evidence showing that it exercised the
diligence of a good father of a family in the accreditation and supervision of the latter. In neglecting to offer such
proof, PSI failed to discharge its burden under the last paragraph of Article 2180 cited earlier, and, therefore, must
be adjudged solidarily liable with Dr. Ampil. Moreover, as we have discussed, PSI is also directly liable to the
Aganas.

One final word. Once a physician undertakes the treatment and care of a patient, the law imposes on him certain
obligations. In order to escape liability, he must possess that reasonable degree of learning, skill and experience
required by his profession. At the same time, he must apply reasonable care and diligence in the exercise of his
skill and the application of his knowledge, and exert his best judgment.

WHEREFORE, we DENY all the petitions and AFFIRM the challenged Decision of the Court of Appeals in CA-G.R.
CV No. 42062 and CA-G.R. SP No. 32198.

Costs against petitioners PSI and Dr. Miguel Ampil.

SO ORDERED.

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ANGELINA SANDOVAL-GUTIERREZ
Associate Justice

WE CONCUR:

REYNATO S. PUNO
Chief Justice
Chairperson

RENATO C. CORONA ADOLFO S. AZCUNA

(No Part)
CANCIO C. GARCIA
Associate Justice

CERT IF ICAT IO N

Pursuant to Article VIII, Section 13 of the Constitution, it is hereby certified that the conclusions in the above
Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court’s
Division.

REYNATO S. PUNO
Chief Justice

Footnotes
*
No part. Ponente of the assailed Decision in the Court of Appeals.

1 Beeck v. Tucson General Hospital, 500 P. 2d 1153 (1972), citing Darling v. Charleston Community
Memorial Hospital, 33 Ill. 2d 326, 211 N.E. 2d 253.

2 Penned by Associate Justice Cancio C. Garcia (now a member of the Supreme Court) and concurred in by
Associate Justices Eugenio S. Labitoria and Artemio G. Tuquero (both retired), Rollo, G.R. Nos. 126297, pp.
36-51; 126467, pp. 27-42; 127590, pp. 23-38.

3 Penned by Judge Lucas P. Bersamin (now Justice of the Court of Appeals), Rollo, G.R. No. 126647, pp.
69-83.

4 The medical staff was composed of physicians, both residents and interns, as well as nurses.

5 The dispositive portion reads:

"WHEREFORE, let a writ of preliminary injunction be issued upon petitioner’s posting of bond in the
amount of P20,000.00, ENJOINING public respondents from implementing the questioned order dated
September 21, 1993 and from further taking any action in Civil Case No. Q-43322 entitled ‘Natividad
G. Agana, et al., plaintiffs, versus Professional Services, Inc., et al., defendants’ pending resolution of
the instant petition.

SO ORDERED." See Rollo, G.R. No. 126297, p. 42.

6 Rollo of G.R. No. 126467, pp. 84-89.

7 Rollo of G.R. No. 127590, p. 40.

8 Rule v. Cheeseman, 317 P. 2d 472 (1957), citing Russel v. Newman, 116 Kan. 268 P. 752; Bernsden v.
Johnson, 174 Kan. 230, 255 P. 2d 1033.

9 Smith v. Zeagler, 157 So. 328 Fla. (1934), citing Ruth v. Johnson, (C.C.A.) 172 F. 191; Reeves v. Lutz, 179
Mo. App. 61, 162 S.W. 280; Rayburn v. Day, 126 Or. 135,268 P. 1002, 59 A.L.R. 1062; Wynne v. Harvey, 96
Wash. 379, 165 P. 67; Harris v. Fall (C.C.A.) 177 F. 79, 27 L.R.A. (N.S.) 1174; Moore v. Ivey, (Tex. Civ. App.)
264 S.W. 283; 21 R.C. L. 388.

10 157 So. 328 Fla. (1934)

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11 Garcia-Rueda v. Pascasio, G.R. No. 118141, September 5, 1997, 278 SCRA 769.

12 In the leading case of Vda. de Bataclan v. Medina, (102 Phil. 181 [1957]), this Court laid down the
following definition of proximate cause in this jurisdiction as follows:

[T]hat cause, which, in natural and continuous sequence unbroken by any efficient intervening cause,
produces the injury and without which the result would not have occurred. And more comprehensively,
the proximate cause is that acting first and producing the injury, either immediately or by setting other
events in motion, all constituting a natural and continuous chain of events, each having a close
causal connection with the immediate predecessor, the final event in the chain immediately effecting
the injury as a natural and probable result of the cause which first acted, under which circumstances
that the person responsible for the first event should, as an ordinarily prudent and intelligent person,
have reasonable ground to expect at the moment of his act or default that an injury to some person
might probably result therefrom.

13 Ramos v. Court of Appeals, G.R. No. 124354, December 29, 1999, 321 SCRA 584.

14 Africa v. Caltex (Phils.) Inc., 123 Phil. 280 (1966).

15 Ranos v. Court of Appeals, supra. In Ramos, the phrase used is "control of the instrumentality which
caused the damage," citing St. John’s Hospital and School of Nursing v. Chapman, 434 P2d 160 (1967).

16 Rural Educational Assn v. Bush, 42 Tenn. App. 34, 298 S.W. 2d 761 (1956).

17 Ramos v. Court of Appeals, supra at footnote 13.

18 Levin, Hospital Vicarious Liability for Negligence by Independent Contractor Physicians: A New Rule for
New Times, October 17, 2005.

19 Id.

20 Id.

21 Tolentino, The Civil Code of the Philippines, Volume V, 1992 Ed., p. 616.

22 Arkansas M.R. Co. v. Pearson, 98 Ark. 442, 153 SW 595 (1911); Runyan v. Goodrum, 147 Ark. 281, 228
SW 397, 13 ALR 1403 (1921); Rosane v. Senger, 112 Colo. 363, 149 P. 2d 372 (superseded by statute on
other grounds); Moon v. Mercy Hosp., 150 Col. 430, 373 P. 2d 944 (1962); Austin v. Litvak, 682 P. 2d 41, 50
ALR 4th 225 (1984); Western Ins. Co. v. Brochner, 682 P. 2d 1213 (1983); Rodriguez v. Denver, 702 P. 2d
1349 (1984).

23 Arkansas M.R. Co. v. Pearson, id.; Nieto v. State, 952 P. 2d 834 (1997). But see Beeck v. Tucson General
Hosp., 18 Ariz. App. 165, 500 P. 2d 1153 (1972); Paintsville Hosp. Co., 683 SW 2d 255 (1985); Kelley v.
Rossi, 395 Mass. 659, 481 NE 2d 1340 (1985) which held that a physician’s professional status does not
prevent him or her from being a servant or agent of the hospital.

24 Fridena v. Evans, 127 Ariz. 516, 522 P. 2d 463 (1980).

25 Kitto v. Gilbert, 39 Colo App 374, 570 P. 2d 544 (1977).

26 211 N.Y. 125, 105 N.E. 92, 52 L.R.A., N.S., 505 (1914). The court in Schloendorff opined that a hospital
does not act through physicians but merely procures them to act on their own initiative and responsibility.
For subsequent application of the doctrine, see for instance, Hendrickson v. Hodkin, 250 App. Div 649, 294
NYS 982, revd on other grounds, 276 NY 252, 11 NE 2d 899 (1937); Necolayff v. Genesee Hosp., 270 App.
Div. 648, 61 NYS 2d 832, affd 296 NY 936, 73 NE2d 117 (1946); Davie v. Lenox Hill Hosp., Inc., 81 NYS 2d
583 (1948); Roth v. Beth El Hosp., Inc., 279 App. Div 917, 110 NYS 2d 583 (1952); Rufino v. US, 126 F.
Supp. 132 (1954); Mrachek v. Sunshine Biscuit, Inc., 308 NY 116, 123 N.E. 2d 801 (1954).

27 2 NY 2d 656, 163 NYS 2d 3, 143 N.E. 2d 3 (1957).

28 Supra at footnote 13.

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29 Black’s Law Dictionary (6th Ed. 1990) 1100. The terms "ostensible agency," "agency by estoppel,"
"apparent authority," and "holding out" tend to be used interchangeably by the courts to refer to this theory
of liability. See for instance, Baker v. Werner, 654 P2d 263 (1982) and Adamski v. Tacoma Gen. Hosp., 20
Wash App. 98, 579 P2d 970 (1978). Agency by estoppel is defined as "one created by operation of law and
established by proof of such acts of the principal as reasonably lead third persons to the conclusion of its
existence. Arises where principal by negligence in failing to supervise agent’s affairs, allows agent to
exercise powers not granted to him, thus justifying others in believing the agent possesses requisite
authority." Black’s, supra, p. 62. An ostensible agency is "an implied or presumptive agency which exists
where one, either intentionally or from want of ordinary care, induces another to believe that a third person
is his agent, though he never in fact, employed him. It is, strictly speaking, no agency at all, but is in reality
based entirely upon estoppel." Apparent authority refers to "the power to affect the legal relations of
another person by transactions with third persons, professedly as agent for the other, arising from and in
accordance with the other’s manifestations to such third persons." Supra, p. 96.

30 Irving v. Doctors Hospital of Lake Worth, Inc., 415 So. 2d 55 (1982), quoting Arthur v. St. Peters Hospital,
169 N.J. 575, 405 A. 2d 443 (1979).

31 Id., citing Hudson v. C., Loan Assn., Inc. v. Horowytz, 116 N.J.L. 605, 608, 186 A 437 (Sup. Ct. 1936).

32 Supra.

33 RTC Decision, p. 9, Rollo of G.R. No. 126467, p. 127.

34 RTC Decision, p. 2, Rollo of G.R. No. 126467, p. 120.

35 Purcell v. Zimbelman, 18 Ariz. App. 75, 500 P2d 335 (1972).

36 Supra at footnote 1.

37 Corleto v. Hospital, 138 N.J. Super. 302, 350 A. 2d 534 (Super. Ct. Law Div.1975); Purcell v. Zimbelman,
18 Ariz. App. 75,500 P. 2d 335 (1972); Hospital Authority v. Joiner, 229 Ga. 140,189 S.E. 2d 412 (1972).

38 Welsh v. Bulger, 548 Pa. 504, 698 A.2d 581 (1997).

39 115 Ariz. 34, 545 P2d 958 (1976).

40 262 S.E. 2d 391, cert denied 300 NC 194, 269 S.E. 2d 621 (1980).

41 127 Ariz. 516, 622 P. 2d 463 (1980).

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