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Professional Services Inc v Agana (2007) Petitioner: Professional Services Inc / Miguel Ampil Respondents: Natividad and Enrique Agana (3 consolidated cases) Ponente: Sandoval-Gutierrez After Dr. Ampil performed a hysterectomy on Natividad Agana, Natividad experienced excruciating pain in her reproductive organs. Dr. Ampil told her the pains were a natural consequence of her surgery. It was discovered months after that 2 pieces of gauze were left lodged in her vagina. April 1984 Natividad Agana was diagnosed by Dr. Miguel Ampil to have cancer of the sigmoid after she was rushed to Medical City for difficulty of bowel movement and bloody anal discharge. April 11, 1984 - Dr. Ampil performed a hysterectomy on Natividad with the help of Dr. Juan Fuentes. o After Dr. Fuentes completed the hysterectomy, Dr. Ampil took over, completed the operation, and closed the incision o However, in the Record of Operation, the attending nurses entered the following remarks: o sponge count lacking 2; o announced to surgeon search done but to no avail continue for closure A couple of days after the operation, Natividad complained of excruciating pain in her anal region. She consulted Dr. Ampil and Dr. Fuentes about it who told her that the pain was a natural consequenc e of the surgery. o Dr. Ampil also recommended that she consult an oncologist to examine the cancerous nodes which were not removed during the operation May 1984 Natividad went to the US to seek further treatment. After 4 months, she was told she was free of cancer. August 31, 1984 Natividad flew back to the Philippines, still suffering from pains. 2 weeks after, her daughter found a piece of gauze protruding from her vagina. o Dr. Ampil proceeded to her house where he extracted by hand a piece of gauze 1.5 inches in width. He assured her that the pains will soon vanish. Natividads pains intensified. She sought treatment at the Polymedic General Hospital where another 1.5 inch gauze was extracted from her vagina. o A recto-vaginal fistula had formed in her reproductive organs which forced stool to excrete through her vagina November 1984 Natividad and her husband filed a complaint for damages against Professional Services Inc (PSI, owner of Medical City), Dr. Ampil and Dr. Fuentes. o They alleged that PSI, Dr. Ampil and Dr. Fuentes are liable for negligence for leaving two pieces of gauze inside Natividads body and malpractice for concealing their acts of negligence. (Feb 1986 Natividad Agana died and was substituted by her children. RTC found PSI, Dr. Agana and Dr. Ampil guilty of negligence and malpractice (a number of other procedural facts occurred i.e. other cases were filed and consolidated, etc.) CA dismissed the case against Dr. Fuentes, but affirmed the conviction of PSI and Dr. Ampil. Dr. Ampil says: there is no evidence that it was he who left the 2 pieces of gauze in Natividads vagina. He avers that: o It was Dr. Fuentes who used gauzes in performing the hysterectomy o The attending nurses failed to properly count the gauzes used o The pieces of gauze might be left by the American doctors who examined Natividad in the US

Issues: Is PSI liable for the negligence of Dr. Ampil? Held: Yes. Ratio:

Under the Respondeat Superior doctrine, there exists an employer-employee relationship between hospitals and their attending and visiting physicians. th Until the mid-19 century, hospitals were generally charitable institutions (now, not anymore) In our jurisdiction, NCC 2176 governs liability for negligent acts. o A derivative of this article is NCC 2180 which is the rule governing vicarious liability under the doctrine of respondeat superior A prominent civilist (Tolentino) said 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). o 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." o ^ This view is grounded on the traditional notion that the professional status and 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. In the Schloendorff case, (Schloendorff doctrine) regards a physician as an independent contractor because of lack of control of someone else over his work. o Under this doctrine, hospitals are exempt from the application of respondeat superior However, modern hospitals are increasingly taking active roles in supplying and regulating medical care to patients So in Bing v. Thunig, the court said that there is no reason to exempt hospitals from respondeat superior.

In this case, there are 3 bases the SC used in determining PSId liability:

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In this jurisprudence: Ramos v. CA o For purposes of apportioning responsibility in medical negligence cases, an employer-employee relationship in effect exists between hospitals and their attending and visiting physicians o 1) Hospitals have significant control over hiring and firing of consultants and in the conduct of their work o 2) Doctors are required to submit proof of completion of residency, educational qualifications o 3) Requirements carefully scrutinized by hospital admin who accept or reject applications o 4) Doctors performance generally evaluated by a peer review committee (mortality and morbidity) o 5) If remiss in duties, politely terminated o SO: While consultants not technically employees, they have the hallmarks of an employer-employee relationship Agency principle of apparent authority or authority by estoppel o Originated from law of agency o Defn: 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. o This principle 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 a relationship or authority exists. o The 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 o NCC1869: Agency may be express or implied from the acts of the principal o PSI publicly displayed names and specializations of the physicians associated or accredited by it, including both doctors Ampil and Fuentes and now estopped from passing all the blame to the physicians whose names it proud paraded in the public directory leading the public to believe that it vouched for their skill and competence Doctrine of Corporate Negligence or Corporate Responsibility o SC says this is the judicial answer to the problem of allocating hospitals liability for negligent acts of health practitioners if absent facts that support application of respondeat superior o Doctrine has genesis in Darling v. Charleston Hospital: the jury found a hospital negligent in failing to have a sufficient number of trained nurses attending the patient o In Tucson Med Ctr v. Misevich: 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. o PSI, owner of Medical City, did not perform necessary supervision nor exercise of diligent efforts in supervision of Dr. Ampil and Dr. Fuentes o Presumption of actual and constructive knowledge is acquired when the corporation is given a notice of the report (report that in the OR, 2 sponges were missing) o After receiving report of flawed operation they should have investigated the case of N atividad which they did not (breach of duty for failure to investigate)

2008 case In an MR, PSI contends that the Court erred in finding it liable under Article 2180 of the Civil Code because: there is no employeremployee relationship between it and its consultant, Dr. Ampil. PSI arguments: (No Employer-employee relationship) Courts Decision in Ramos that an employer-employee relationship in effect exists between hospitals and their attending and visiting physicians had been reversed in a subsequent resolution. (ostensible agency argument) The doctrine of ostensible agency or agency by estoppel cannot apply because Sps. Agana failed to establish one requisite of the doctrine: That Natividad relied on the representation of the hospital engaged the services of Dr. Ampil The application of the doctrine of corporate negligence is misplaced because the proximate cause of the injury of Natividad Agana was the negligence Dr. Ampil, not the hospital. Issue: Is PSI liable? Held: Yes. Ratio: MR lacks merit. Hospital still liable based on those 3 doctrine. PSI is not only vicariously liable for the negligence of Dr. Ampil under CC2180 but also directly liable under CC2176. Re: employer-employee relationship Explanation of the Control Test: Hire, fire, and exercise real control over the staff o There is a screening wherein the physicians are required to submit proof of qualifications and accreditations which are scrutinized by the members of the hospital administration. They can either accept or reject o 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. o 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. Re: ostensible agency doctrine or apparent authority doctrine or agency by estoppel

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Nograles v. Capitol Medical Center o General rule: a hospital is not liable for the negligence of an independent contractor-physician. o Exception: The hospital may be liable if the physician is the ostensible agent of the hospital. Two factors of apparent authority: o Focuses on the hospitals manifestations and is sometimes described as an inquiry whether the hospital acted in a manner which would lead a reasonable person to conclude that the individual who was alleged to be negligent was an employee or agent of the hospital o Whether or not the plaintiff acted in reliance upon the conduct of the hospital or its agent, consistent with ordinary care and prudence Doctrine of apparent authority is a species of Estoppel: o Whether a party has, by his own declaration, act, or omission, intentionally and deliberately led another to believe a particular thing true, and to act upon such belief, he cannot in any litigation arising out of such declaration, act or omission, be permitted to falsify it Test: o Whether or not 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? SC says yes. o Dr. Ampil was a prominent doctor o They are neighbors o He is the professor of his daughter at UERM o When Aganas daughter opted to establish a clinic in Medical City, Dr. Ampil was one of their consultants on how to establish that clinic in the hospital from this point he found out about Dr. Ampils expertise o That his reason for choosing to contact Dr. Ampil was that: o He was a specialist o He knew of him as a staff member of Medical City which is a prominent hospital o Since they knew each other, he was expecting that hell be treated better than other normal patients of the doctor

Re: corporate responsibility Such responsibility includes the proper supervision of the members of the medical staff: o The hospital has a duty to make a reasonable effort to monitor and oversee the treatment prescribed and administered by the physicians practicing in its premises. The hospital failed to do such responsibility o The hospital did not conduct an immediate investigation on the reported missing gauzes o Dr. Jocson, a member of the PSIs medical staff, who testified whether the hospital conducted an investigation answered evasively to questions regarding the investigation: That he cannot answer whether or not the hospital did investigate because until that moment he did not have any more follow-up on the case o Agana testified that he will be given the operative report of the operation as promised by Dr. Ampil, but when he went to the records custodian, only findings with entries and dates but the operative procedure and operative report findings were given to him The hospitals omission to investigate(as testified by Dr. Jocson) shows the hospitals lack of concern for the injury. They also failed to take an active step to rectify the negligence committed. 2010 case SC says there was no employer-employee relationship, so PSI cannot be held vicariously liable under the respondeat superior doctrine. However, by its actions which reinforced the actions of Dr. Ampil of making it appear that the latter is the formers agent, the hospital is vicariously liable under the Apparent Authority doctrine; and the hospital is directly liable for breach of duty to initiate investigations under the Corporate Responsibility doctrine. The duties of the hospital are distinct from those of the doctor-consultant practicing within its premises in relation to the patient. Hence, the failure of PSI to fulfil its duties as a hospital corporation gave rise to a direct liability to the Agan as distinct from that of Dr. Ampil. We make it clear that PSIs hospital liability based on ostensible agency and corporate negligence applies only to this case, pro hac vice. It is not intended to set a precedent and should not serve as a basis to hold hospitals liable for every form of negligence of their doctors-consultants under any and all circumstances. The ruling is unique to this case, for the liability of PSI arose from an implied agency with Dr. Ampil and an admitted corporate duty to Natividad. PSI arguments: Re: Employer-Employee relationship The February 2009 and 2007 decision of Ramos v. CA (qualifying the 2002 decision): an employer -employee relations between hospital and their consultants exists stays but it is set aside for being inconsistent with or contrary to the import of the resolution granting the hospitals motion for reconsideration in 2002 is applicable because: Agana failed to prove an employer-employee relationship between Ampil and PSI (Medical City) The TC found that there is no employer-employee relationship Re: Apparent agency

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The Aganas sought Dr. Ampils services, not the hospital for medical care and support Aganas did not select Medical City to provide medical care because of any apparent agency Agana procured services of Ampil because of their qualifications and being friend and neighbour

Re: Doctrine of Corporate Negligence The negligence of Doctora Ampil is only an element of corporate negligence Note PSIs admissions in its MR: Captain of the Ship Doctrine makes Ampil the only one liable (res ipsa loquitur) The missing gauzes report was made but no signs of complications were exhibited during Natividads confinement in the hospital, hence, they were not alerted, No negligence on PSIs part until the discharge of the patient There was no complaint from Mrs. Agana after her discharge from the hospital Mrs. Agana only complained to Drs. Ampil and Fuentes how could PSI possibly do something to fix the negligence of Doctor Ampil? Issue: Is PSI liable? Held: Yes. Ratio: PSI is not vicariously liable (under the doctrine of respondeat superior) but is vicariously liable under apparent agency and directly liable under corporate negligence 3 Legal Relationships determining liability of hospital for the negligence of the doctor: Between the hospital and doctor practicing within its premises such is covered by respondeat superior (NCC 2176; NCC2180) Between hospital and the patient being treated or examined within its premises doctrine of Corporate Negligence o Hospital is still liable regardless of its relationship with the doctor o Directly liable for failure to follow established standard of conduct to which it should conform as a corporation Between the patient and the doctor doctrine of apparent authority o Liable even though no employer-employee relationship exists o NCC 2176; NCC 1431; NCC 1869 Re: Respondeat Superior In this case, there is no employer-employee relationship There is lack of evidence of an employment relationship with Dr. Ampil RTC and CA found no employment relationship between PSI and Ampil The Aganas did not question that finding Exact ruling in RTC: That defendant doctors were not employees of PSI in its hospital, they being merely consultants without any employer-employee relationship and in the capacity of independent contractors Aganas never contested this As for CA: CA mistakenly referred to PSI and Dr. Ampil as employer-employee, but discussion of the proved otherwise. Aganas only questioned the non-liability of Dr. Fuentes Such finding is final and conclusive in this Court Re: Using the control test: determinative factor PSI is still not the employer of Dr. Ampil No vicarious liability attached to the hospital No proof of power of control of PSI over Dr Ampil Re: Agency by Estoppel PSI is viariously liable o Hospitals implied manifestation to the patient which led the latter to conclude that the doctor was the hospitals agent o The patients reliance upon the conduct of the hospital and the doctor, consistent with ordinary care and prudence o Act of Ampil: The husband consulted Dr. Ampil regarding the condition of his wife, after the discussion, Dr. Ampil told husband Agana to proceed to Medical City for check-up and tests o Act of hospital: PSI required wife Agana to sign a consent for hospital care preparatory to the surgery stating that the hospital and its staff is given permission to conduct tests for diagnosis and treatments and procedure (including confinement) to Natividad (wife Agana) o The act of the hospital reinforced the act of Dr. Ampil strengthening the belief of Agana that Dr. Ampil was an agent of the hospital. Re: Doctrine of Corporate Responsibility PSI is directly liable o The Court looked into their admissions in their Motion for Reconsideration which implied that:

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o o

The hospital had the power to review or cause the review of what may have irregularly transpired within its walls strictly for the purpose of determining whether some form of negligence may have attended the procedure Treading on the Captain of the Ship Doctrine, the role of any doctor rendering services within its premises for the purpose of ensuring the safety of the patients means that the patient avails themselves of the Hospitals services and facilities

PSI barred itself from arguing in its second motion for reconsideration that the concept of corporate responsibility was not yet in existence at the time Natividad underwent treatment o They admitted that they were responsible for the missing gauze but not for taking an active step in fixing the negligence committed o This admission in their pleading cannot be controverted PSI cannot excuse itself for corporate duty just because the wife complained only to the Doctors: o As stated in the previous MR, Dr. Jocson (part of the group attending Natividad Agana) that toward the end of the surgery they talked about the missing gauzes but Dr. Ampil assured them that he would personally notify the patient about it o Doctor Ampil may have primary responsibility of notifying Natividad about the gauzes, PSI imposed upon itself the separate and independent responsibility of initiating the inquiry into the missing gauzes o The record taken during the operation should have given PSI reason to initiate review of the operation due to the missing gauzes there is no need to wait for a complaint