Professional Serv vs Argana

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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.

D E C I S I O N

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, andindeed, 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 Decision2dated 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
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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 staff4of 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 theremoval 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.
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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 ofgauze 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 PRCBoard 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).


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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 thedefendants 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 UnitedStates 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.


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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 RTCDecision. 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

Resolution5dated 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

Decision6in 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,
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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

Resolution7dated 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 findingthat 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
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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.


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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.8To 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 thedangers 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 bodythat 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.
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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
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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 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 foregoingrequisites, 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
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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 ofphysicians.

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 business-

related changes in the hospital industry. One important legal change is an

increase in hospital liability for medical malpractice. Many courts now allow
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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 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


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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 thepatient 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.
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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
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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 theapplicability 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.30The 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 theparticular 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
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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 beburdened 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


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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
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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 treatmentprescribed 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
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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,41it was held that a corporation is bound by theknowledge 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


20/26

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 thecompetence 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 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 adjudgedsolidarily 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


21/26

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

C E R T I F I C A T I O 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 Courts Division.

REYNATO S. PUNO

Chief Justice


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Footnotes

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

1Beeck 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.

2Penned 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.

3Penned by Judge Lucas P. Bersamin (now Justice of the Court of Appeals), Rollo,

G.R. No. 126647, pp. 69-83.

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

well as nurses.

5The dispositive portion reads:

"WHEREFORE, let a writ of preliminary injunction be issued upon petitionersposting 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.

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

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

8Rule 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.
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9Smith 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.

10157 So. 328 Fla. (1934)

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

12In 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 responsiblefor 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.

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

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

15Ranos 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).

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

17Ramos v. Court of Appeals, supra at footnote 13.
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18Levin, Hospital Vicarious Liability for Negligence by Independent Contractor

Physicians: A New Rule for New Times, October 17, 2005.

19Id.

20Id.

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

22Arkansas 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).

23Arkansas 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).

26211 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).

272 NY 2d 656, 163 NYS 2d 3, 143 N.E. 2d 3 (1957).
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28Supra at footnote 13.

29Blacks 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 orfrom 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), quotingArthur v. St. Peters Hospital, 169 N.J. 575, 405 A. 2d 443 (1979).

31Id., citing Hudson v. C., Loan Assn., Inc. v. Horowytz, 116 N.J.L. 605, 608, 186 A

437 (Sup. Ct. 1936).

32Supra.

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

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

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

36Supra at footnote 1.
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37Corleto 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).

40262 S.E. 2d 391, cert denied 300 NC 194, 269 S.E. 2d 621 (1980).

41127 Ariz. 516, 622 P. 2d 463 (1980).
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