16. Professional Service Inc. vs.

CA 611 SCRA 282

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
1
preserve and protect the health, and indeed, the very lives of those placed in the hospitals keeping.
2

Assailed in these three consolidated petitions for review on certiorari is the Court of Appeals Decision dated September 6,
3
1996 in CA-G.R. CV No. 42062 and CA-G.R. SP No. 32198 affirming with modification the Decision dated March 17, 1993
of the Regional Trial Court (RTC), Branch 96, Quezon City in Civil Case No. Q-43322 and nullifying its Order dated
September 21, 1993.
The facts, as culled from the records, are:
On April 4, 1984, Natividad Agana was rushed to the Medical City General Hospital (Medical City Hospital) because of
difficulty of bowel movement and bloody anal discharge. After a series of medical examinations, Dr. Miguel Ampil, petitioner
in G.R. No. 127590, diagnosed her to be suffering from "cancer of the sigmoid."
4

On April 11, 1984, Dr. Ampil, assisted by the medical staff 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.

Page 1 of 8

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 abovenamed 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
5
Resolution 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.

Page 2 of 8

Meanwhile, on January 23, 1995, the PRC Board of Medicine rendered its Decision 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 defendantappellant 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.
7

Only Dr. Ampil filed a motion for reconsideration, but it was denied in a Resolution 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.

Page 3 of 8

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
8
prima facie negligence by the operating surgeon. To put it simply, such act is considered so inconsistent with due care as to
9
raise an inference of negligence. There are even legions of authorities to the effect that such act is negligence per se.
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
10
from the effects of the foreign object left in her body as her condition might permit. The ruling in Smith v. Zeagler 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
11
failure or action caused injury to the patient. 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.
12
Ampils negligence is the proximate cause 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
13
prima facie case, and present a question of fact for defendant to meet with an explanation. 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
14
establish that he has observed due care and diligence.
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
15
instrumental is the "control and management of the thing which caused the injury."
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

Page 4 of 8

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
16
personnel connected with the operation. Their duty is to obey his orders. 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
17
independent or separate ground of liability, being a mere evidentiary rule. 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
18
classes of society, without regard for a patients ability to pay. Those who could afford medical treatment were usually
19
treated at home by their doctors. However, the days of house calls and philanthropic health care are over. The modern
health care industry continues to distance itself from its charitable past and has experienced a significant conversion from a
not-for-profit health care to for-profit hospital businesses. Consequently, significant changes in health law have accompanied
the business-related changes in the hospital industry. One important legal change is an increase in hospital liability for
medical malpractice. Many courts now allow claims for hospital vicarious liability under the theories of respondeat superior,
20
apparent authority, ostensible authority, or agency by estoppel.
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 quasidelict 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
21
patients."
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
22
23
capacity. It has been said that medical practice strictly involves highly developed and specialized knowledge, such that
physicians are generally free to exercise their own skill and judgment in rendering medical services sans
24
interference. Hence, when a doctor practices medicine in a hospital setting, the hospital and its employees are deemed to
25
subserve him in his ministrations to the patient and his actions are of his own responsibility.

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26

The case of Schloendorff v. Society of New York Hospital 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
27
for its patients. Thus, in Bing v. Thunig, 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
28
our categorical pronouncement in Ramos v. Court of Appeals 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 clinicopathological 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
29
by estoppel, 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
30
that the relationship or the authority exists. 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
31
question.
The applicability of apparent authority in the field of hospital liability was upheld long time ago in Irving v. Doctor Hospital of
32
Lake Worth, Inc. 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.

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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
33
whether he is independent or employed."
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
34
in the performance of their duties as surgeons." 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
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medical care.
36

The doctrine has its genesis in Darling v. Charleston Community Hospital. 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
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extends to permitting a physician known to be incompetent to practice at the hospital. 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
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policies that ensure quality care for its patients. Thus, in Tucson Medical Center, Inc. v. Misevich, 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.
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Riley, 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

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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
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nurses that the two pieces of gauze were missing. In Fridena v. Evans, 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.

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