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Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 126297

January 31, 2007

PROFESSIONAL SERVICES, INC., Petitioner,


vs.
NATIVIDAD and ENRIQUE AGANA, Respondents.
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,


vs.
NATIVIDAD AGANA and ENRIQUE AGANA, Respondents.
DECISION
SANDOVAL-GUTIERREZ, J.:
Hospitals, having undertaken one of mankinds 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 hospitals
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 Decision3dated 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 Natividads
husband, Enrique Agana, to permit Dr. Juan Fuentes, respondent
in G.R. No. 126467, to perform hysterectomy on her.
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. Ampils 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 Natividads 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;
4. As attorneys 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 Natividads 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 Natividads
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.
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 Courts
attention to other possible causes of Natividads detriment. He
argues that the Court should not discount either of the following
possibilities: first, Dr. Fuentes left the gauzes in Natividads 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 Natividads body.
Dr. Ampils 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
Natividads 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 patients 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 patients

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 patients 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 patients 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 Natividads body before closure of the incision.

When he failed to do so, it 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. Ampils negligence is the
proximate cause12 of Natividads 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 Natividads vagina established
the causal link between Dr. Ampils 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 Natividads 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 plaintiffs prima facie
case, and present a question of fact for defendant to meet with an
explanation.13Stated 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 defendants 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 Natividads 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
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 patients 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 businessrelated 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 ones 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

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 physicians 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 hospitals 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, 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
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, 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
PSIs 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 hospitals 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 physicians negligence.
Our jurisdiction recognizes the concept of an agency by
implication or estoppel. Article 1869 of the Civil Code reads:
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, PSIs 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 hospitals act of
listing him and his specialty in its lobby directory, as in the case
herein. The high costs of todays 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 hospitals 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 judiciarys
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
hospitals 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:
x x x PSIs 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 PSIs 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 PSIs 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 Natividads
case.
It is worthy to note that Dr. Ampil and Dr. Fuentes operated on
Natividad with the assistance of the Medical City Hospitals 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

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 patients 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
hospitals 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.
ANGELINA SANDOVAL-GUTIERREZ
Associate Justice
WE CONCUR:
REYNATO S. PUNO
Chief Justice
Chairperson
RENATO C. CORONA
Associate Justice

ADOLFO S. AZCUNA
Asscociate Justice

(No Part)
CANCIO C. GARCIA
Associate Justice
CERTIFICATION
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 Courts 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 petitioners 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.

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

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

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)

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. Johns 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 physicians
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.

29

Blacks 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 agents affairs, allows agent to exercise
powers not granted to him, thus justifying others in believing
the agent possesses requisite authority." Blacks, 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 others
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).