necessitating the removal of certain portions of it. Thus, Dr.
2007 Decision Ampil obtained the consent of Natividad's husband, Enrique
[G.R. No. 126297. January 31, 2007.]
PROFESSIONAL SERVICES,
INC., petitioner, vs. NATIVIDAD and
ENRIQUE AGANA, respondents.
[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, respondents.
[G.R. No. 127590. January 31, 2007.]
MIGUEL AMPIL, petitioner, vs.
NATIVIDAD AGANA and ENRIQUE
AGANA, respondents.
DECISION
SANDOVAL-GUTIERREZ, J p:
Hospitals, having undertaken one of mankind's
most important and delicate endeavors, must assume the
grave responsibility of pursuing it with appropriate care. The
care and service dispensed through this high trust, however
technical, complex and esoteric its character may be, must
meet standards of responsibility commensurate with the
undertaking to preserve and protect the health, and indeed,
the very lives of those placed in the hospital's keeping. 1
Assailed in these three consolidated petitions for
review on certiorari is the Court of Appeals' Decision 2 dated
September 6, 1996 in CA-G.R. CV No. 42062 and CA-G.R.
SP No. 32198 affirming with modification the
Decision 3 dated March 17, 1993 of the Regional Trial Court
(RTC), Branch 96, Quezon City in Civil Case No. Q-43322
and nullifying its Order dated September 21, 1993.
The facts, as culled from the records, are:
On April 4, 1984, Natividad Agana was rushed to
the Medical City General Hospital (Medical City Hospital)
because of difficulty of bowel movement and bloody anal
discharge. After a series of medical examinations, Dr. Miguel
Ampil, petitioner in G.R. No. 127590, diagnosed her to be
suffering from "cancer of the sigmoid."
On April 11, 1984, Dr. Ampil, assisted by the
medical staff 4 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,
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. CAcEaS
However, the operation appeared to be flawed. In
the corresponding Record of Operation dated April 11, 1984,
the attending nurses entered these remarks:
"sponge count lacking 2
"announced to surgeon
searched (sic) done but to no avail
continue
 for closure."
On April 24, 1984, Natividad was released from
the hospital. Her hospital and medical bills, including the
doctors' fees, amounted to P60,000.00.
After a couple of days, Natividad complained of
excruciating pain in her anal region. She consulted both Dr.
Ampil and Dr. Fuentes about it. They told her that the pain
was the natural consequence of the surgery. Dr. Ampil then
recommended that she consult an oncologist to examine the
cancerous nodes which were not removed during the
operation.
On May 9, 1984, Natividad, accompanied by her
husband, went to the United States to seek further treatment.
After four months of consultations and laboratory
examinations, Natividad was told she was free of cancer.
Hence, she was advised to return to the Philippines.
On August 31, 1984, Natividad flew back to the
Philippines, still suffering from pains. Two weeks thereafter,
her daughter found a piece of gauze protruding from her
vagina. Upon being informed about it, Dr. Ampil proceeded
to her house where he managed to extract by hand a piece
of gauze measuring 1.5 inches in width. He then assured her
that the pains would soon vanish.
Dr. Ampil's assurance did not come true. Instead,
the pains intensified, prompting Natividad to seek treatment
at the Polymedic General Hospital. While confined there, Dr.
Ramon Gutierrez detected the presence of another foreign
object in her vagina — a foul-smelling gauze measuring 1.5
inches in width which badly infected her vaginal vault. A
recto-vaginal fistula had formed in her reproductive organs
which forced stool to excrete through the vagina. Another
surgical operation was needed to remedy the damage. Thus,
in October 1984, Natividad underwent another surgery.
On November 12, 1984, Natividad and her
husband filed with the RTC, Branch 96, Quezon City a
complaint for damages against the Professional Services,
Inc. (PSI), owner of the Medical City Hospital, Dr. Ampil, and
Dr. Fuentes, docketed as Civil Case No. Q-43322. They
alleged that the latter are liable for negligence for leaving
two pieces of gauze inside Natividad's body
and malpractice for concealing their acts of
negligence. DECcAS
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 filing of the complaint until
failed to acquire jurisdiction over Dr. Ampil who was then in full payment; and
the United States.
6. Costs of suit.
On February 16, 1986, pending the outcome of the
above cases, Natividad died and was duly substituted by her SO ORDERED.
above-named children (the Aganas).
Aggrieved, PSI, Dr. Fuentes and Dr. Ampil
On March 17, 1993, the RTC rendered its Decision interposed an appeal to the Court of Appeals, docketed as
in favor of the Aganas, finding PSI, Dr. Ampil and Dr. CA-G.R. CV No. 42062.
Fuentes liable for negligence and malpractice, the decretal
part of which reads: Incidentally, on April 3, 1993, the Aganas filed with
the RTC a motion for a partial execution of its Decision,
WHEREFORE, judgment is which was granted in an Order dated May 11, 1993.
hereby rendered for the plaintiffs Thereafter, the sheriff levied upon certain properties of Dr.
ordering the Ampil and sold them for P451,275.00 and delivered the
defendants PROFESSIONAL amount to the Aganas.
SERVICES, INC., DR. MIGUEL
AMPIL and DR. JUAN FUENTES to Following their receipt of the money, the Aganas
pay to the plaintiffs, jointly and entered into an agreement with PSI and Dr. Fuentes to
severally, except in respect of the indefinitely suspend any further execution of the RTC
award for exemplary damages and Decision. However, not long thereafter, the Aganas again
the interest thereon which are the filed a motion for an alias writ of execution against the
liabilities of defendants Dr. Ampil and properties of PSI and Dr. Fuentes. On September 21, 1993,
Dr. Fuentes only, as follows: the RTC granted the motion and issued the corresponding
writ, prompting Dr. Fuentes to file with the Court of Appeals a
1. As actual damages, the following petition for certiorari and prohibition, with prayer for
amounts: preliminary injunction, docketed as CA-G.R. SP No. 32198.
During its pendency, the Court of Appeals issued a
a. The equivalent in Resolution 5 dated October 29, 1993 granting Dr. Fuentes'
Philippine prayer for injunctive relief. HEDSCc
Currency of the
total of On January 24, 1994, CA-G.R. SP No. 32198 was
US$19,900.00 at consolidated with CA-G.R. CV No. 42062.
the rate of
P21.60-US$1.00, Meanwhile, on January 23, 1995, the PRC Board
as of Medicine rendered its Decision 6 in Administrative Case
reimbursement of No. 1690 dismissing the case against Dr. Fuentes. The
actual expenses Board held that the prosecution failed to show that Dr.
incurred in the Fuentes was the one who left the two pieces of gauze inside
United States of Natividad's body; and that he concealed such fact from
America; Natividad.

b. The sum of P4,800.00 as On September 6, 1996, the Court of Appeals

travel taxes of rendered its Decision jointly disposing of CA-G.R. CV No.
plaintiffs and their 42062 and CA-G.R. SP No. 32198, thus:
physician
WHEREFORE, except for
daughter;
the modification that the case against
c. The total sum of defendant-appellant Dr. Juan Fuentes
P45,802.50, is hereby DISMISSED, and with the
representing the pronouncement that defendant-
cost of appellant Dr. Miguel Ampil is liable to
hospitalization at reimburse defendant-
Polymedic appellant Professional Services,
Hospital, medical Inc., whatever amount the latter will
fees, and cost of pay or had paid to the plaintiffs-
the saline appellees, the decision appealed from
solution; is hereby AFFIRMED and the instant
appeal DISMISSED.
2. As moral damages, the sum of
P2,000,000.00; Concomitant with the
above, the petition for certiorari and
3. As exemplary damages, the sum of prohibition filed by herein defendant-
P300,000.00; appellant Dr. Juan Fuentes in CA-
G.R. SP No. 32198 is
4. As attorney's fees, the sum of hereby GRANTED and the
P250,000.00; challenged order of the respondent
judge dated September 21, 1993, as
5. Legal interest on items 1 (a), (b), well as the alias writ of execution
and (c); 2; and 3 issued pursuant thereto are
hereinabove, from date of hereby NULLIFIED and SET ASIDE.
 The bond posted by the petitioner in operation, particularly the number of gauzes used. As to the
connection with the writ of preliminary alleged negligence of Dr. Fuentes, we are mindful that Dr.
injunction issued by this Court on Ampil examined his (Dr. Fuentes') work and found it in order.
November 29, 1993 is hereby
cancelled. The glaring truth is that all the major
circumstances, taken together, as specified by the Court of
Costs against defendants- Appeals, directly point to Dr. Ampil as the negligent party,
appellants Dr. Miguel thus:
Ampil and Professional Services,
Inc. First, it is not disputed that
the surgeons used gauzes as
SO ORDERED. sponges to control the bleeding of the
patient during the surgical
Only Dr. Ampil filed a motion for reconsideration, operation. EHTCAa
but it was denied in a Resolution 7 dated December 19,
1996. Second, immediately after
the operation, the nurses who
Hence, the instant consolidated petitions. assisted in the surgery noted in their
report that the ‘sponge count (was)
In G.R. No. 126297, PSI alleged in its petition that lacking 2'; that such anomaly was
the Court of Appeals erred in holding that: (1) it is estopped 'announced to surgeon' and that a
from raising the defense that Dr. Ampil is not its 'search was done but to no avail'
employee; (2) it is solidarily liable with Dr. Ampil; and (3) it is prompting Dr. Ampil to 'continue
not entitled to its counterclaim against the Aganas. PSI for closure' . . . .
contends that Dr. Ampil is not its employee, but a mere
consultant or independent contractor. As such, he alone Third, after the operation,
should answer for his negligence. CSDTac two (2) gauzes were extracted from
the same spot of the body of Mrs.
In G.R. No. 126467, the Aganas maintain that the Agana where the surgery was
Court of Appeals erred in finding that Dr. Fuentes is not performed.
guilty of negligence or medical malpractice, invoking the
doctrine of res ipsa loquitur. They contend that the pieces of An operation requiring the placing of sponges in
gauze are prima facie proofs that the operating surgeons the incision is not complete until the sponges are properly
have been negligent. removed, and it is settled that the leaving of sponges or
other foreign substances in the wound after the incision has
Finally, in G.R. No. 127590, Dr. Ampil asserts that been closed is at least prima facie negligence by the
the Court of Appeals erred in finding him liable for operating surgeon. 8 To put it simply, such act is considered
negligence and malpractice sans evidence that he left the so inconsistent with due care as to raise an inference of
two pieces of gauze in Natividad's vagina. He pointed to negligence. There are even legions of authorities to the
other probable causes, such as: (1) it was Dr. Fuentes who effect that such act is negligence per se. 9
used gauzes in performing the hysterectomy; (2) the
attending nurses' failure to properly count the gauzes used Of course, the Court is not blind to the reality that
during surgery; and (3) the medical intervention of the there are times when danger to a patient's life precludes a
American doctors who examined Natividad in the United surgeon from further searching missing sponges or foreign
States of America. objects left in the body. But this does not leave him free
from any obligation. Even if it has been shown that a
For our resolution are these three vital surgeon was required by the urgent necessities of the case
issues: first, whether the Court of Appeals erred in holding to leave a sponge in his patient's abdomen, because of the
Dr. Ampil liable for negligence and malpractice; second, dangers attendant upon delay, still, it is his legal duty to
whether the Court of Appeals erred in absolving Dr. Fuentes so inform his patient within a reasonable time thereafter
of any liability; and third, whether PSI may be held solidarily by advising her of what he had been compelled to do.
liable for the negligence of Dr. Ampil. This is in order that she might seek relief from the effects of
the foreign object left in her body as her condition might
I — G.R. No. 127590
permit. The ruling in Smith v. Zeagler 10 is explicit, thus:
Whether the Court of Appeals Erred in Holding Dr.
Ampil The removal of all sponges
Liable for Negligence and Malpractice. used is part of a surgical operation,
Dr. Ampil, in an attempt to absolve himself, gears and when a physician or surgeon fails
the Court's attention to other possible causes of Natividad's to remove a sponge he has placed in
detriment. He argues that the Court should not discount his patient's body that should be
either of the following possibilities: first, Dr. Fuentes left the removed as part of the operation, he
gauzes in Natividad's body after performing thereby leaves his operation
hysterectomy; second, the attending nurses erred in uncompleted and creates a new
counting the gauzes; and third, the American doctors were condition which imposes upon him
the ones who placed the gauzes in Natividad's body. the legal duty of calling the new
condition to his patient's attention,
Dr. Ampil's arguments are purely conjectural and and endeavoring with the means
without basis. Records show that he did not present any he has at hand to minimize and
evidence to prove that the American doctors were the ones avoid untoward results likely to
who put or left the gauzes in Natividad's body. Neither did he ensue therefrom.
submit evidence to rebut the correctness of the record of
 Here, Dr. Ampil did not inform Natividad about the
missing two pieces of gauze. Worse, he even misled her
that the pain she was experiencing was the ordinary
consequence of her operation. Had he been more candid,
Natividad could have taken the immediate and appropriate
medical remedy to remove the gauzes from her body. To our
mind, what was initially an act of negligence by Dr. Ampil has
ripened into a deliberate wrongful act of deceiving his
patient.
This is a clear case of medical malpractice or more
appropriately, medical negligence. To successfully pursue
this kind of case, a patient must only prove that a health care
provider either failed to do something which a reasonably
prudent health care provider would have done, or that he did
something that a reasonably prudent provider would not
have done; and that failure or action caused injury to the
patient. 11 Simply put, the elements are duty, breach,
injury and proximate causation. Dr. Ampil, as the lead
surgeon, had the duty to remove all foreign objects, such as
gauzes, from Natividad's body before closure of the incision.
When he failed to do so, it was his duty to inform Natividad
about it. Dr. Ampil breached both duties. Such breach
caused injury to Natividad, necessitating her further
examination by American doctors and another surgery. That
Dr. Ampil's negligence is the proximate cause 12 of
Natividad's injury could be traced from his act of closing the
incision despite the information given by the attending
nurses that two pieces of gauze were still missing. That
they were later on extracted from Natividad's vagina
established the causal link between Dr. Ampil's negligence
and the injury. And what further aggravated such injury was
his deliberate concealment of the missing gauzes from the
knowledge of Natividad and her family. cEaCAH
II — G.R. No. 126467
Whether the Court of Appeals Erred in Absolving
Dr. Fuentes of any Liability
The Aganas assailed the dismissal by the trial
court of the case against Dr. Fuentes on the ground that it is
contrary to the doctrine of res ipsa loquitur. According to
them, the fact that the two pieces of gauze were left inside
Natividad's body is a prima facie evidence of Dr. Fuentes'
negligence.
We are not convinced.
Literally, res ipsa loquitur means "the thing speaks
for itself." It is the rule that the fact of the occurrence of an
injury, taken with the surrounding circumstances, may permit
an inference or raise a presumption of negligence, or make
out a plaintiff's prima facie case, and present a question of
fact for defendant to meet with an explanation. 13 Stated
differently, where the thing which caused the injury, without
the fault of the injured, is under the exclusive control of the
defendant and the injury is such that it should not have
occurred if he, having such control used proper care, it
affords reasonable evidence, in the absence of
explanation that the injury arose from the defendant's want
of care, and the burden of proof is shifted to him to establish
that he has observed due care and diligence. 14
From the foregoing statements of the rule, the
requisites for the applicability of the doctrine of res ipsa
loquitur are: (1) the occurrence of an injury; (2) the thing
which caused the injury was under the control and
management of the defendant; (3) the occurrence was such
that in the ordinary course of things, would not have
happened if those who had control or management used
proper care; and (4) the absence of explanation by the
defendant. Of the foregoing requisites, the most instrumental
is the "control and management of the thing which
caused the injury." 15
We find the element of "control and management
of the thing which caused the injury" to be wanting. Hence,
the doctrine of res ipsa loquitur will not lie.
It was duly established that Dr. Ampil was the lead
surgeon during the operation of Natividad. He requested the
assistance of Dr. Fuentes only to perform hysterectomy
when he (Dr. Ampil) found that the malignancy in her
sigmoid area had spread to her left ovary. Dr. Fuentes
performed the surgery and thereafter reported and showed
his work to Dr. Ampil. The latter examined it and finding
everything to be in order, allowed Dr. Fuentes to leave
the operating room. Dr. Ampil then resumed operating on
Natividad. He was about to finish the procedure when the
attending nurses informed him that two pieces of gauze were
missing. A "diligent search" was conducted, but the
misplaced gauzes were not found. Dr. Ampil then directed
that the incision be closed. During this entire period, Dr.
Fuentes was no longer in the operating room and had, in
fact, left the hospital. HTSaEC
Under the "Captain of the Ship" rule, the
operating surgeon is the person in complete charge of the
surgery room and all personnel connected with the
operation. Their duty is to obey his orders. 16 As stated
before, Dr. Ampil was the lead surgeon. In other words, he
was the "Captain of the Ship." That he discharged such role
is evident from his following conduct: (1) calling Dr. Fuentes
to perform a hysterectomy; (2) examining the work of Dr.
Fuentes and finding it in order; (3) granting Dr. Fuentes'
permission to leave; and (4) ordering the closure of the
incision. To our mind, it was this act of ordering the
closure of the incision notwithstanding that two pieces
of gauze remained unaccounted for, that caused injury
to Natividad's body. Clearly, the control and management
of the thing which caused the injury was in the hands of Dr.
Ampil, not Dr. Fuentes.
In this jurisdiction, res ipsa loquitur is not a rule of
substantive law, hence, does not per se create or constitute
an independent or separate ground of liability, being a mere
evidentiary rule. 17 In other words, mere invocation and
application of the doctrine does not dispense with the
requirement of proof of negligence. Here, the negligence
was proven to have been committed by Dr. Ampil and not by
Dr. Fuentes.
III — G.R. No. 126297
Whether PSI Is Liable for the Negligence of Dr.
Ampil
The third issue necessitates a glimpse at the
historical development of hospitals and the resulting theories
concerning their liability for the negligence of physicians.
Until the mid-nineteenth century, hospitals were
generally charitable institutions, providing medical services
to the lowest classes of society, without regard for a patient's
ability to pay. 18 Those who could afford medical treatment
were usually treated at home by their doctors. 19 However,
the days of house calls and philanthropic health care are
over. The modern health care industry continues to distance
itself from its charitable past and has experienced a
significant conversion from a not-for-profit health care to for-
profit hospital businesses. Consequently, significant changes
in health law have accompanied the business-related
changes in the hospital industry. One important legal change
is an increase in hospital liability for medical malpractice.
Many courts now allow claims for hospital vicarious liability
under the theories of respondeat superior, apparent
authority, ostensible authority, or agency by estoppel. 20
In this jurisdiction, the statute governing liability for
negligent acts is Article 2176 of the Civil Code, which reads:
Art. 2176. Whoever by act
or omission causes damage to
another, there being fault or
negligence, is obliged to pay for the
damage done. Such fault or
negligence, if there is no pre-existing
contractual relation between the
parties, is called a quasi-delict and is
governed by the provisions of this
Chapter. cHAaEC
A derivative of this provision is Article 2180, the
rule governing vicarious liability under the doctrine
of respondeat superior, thus:
ART. 2180. The obligation
imposed by Article 2176 is
demandable not only for one's own
acts or omissions, but also for those
of persons for whom one is
responsible.
xxx xxx xxx
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.
xxx xxx xxx
The responsibility treated of
in this article shall cease when the
persons herein mentioned prove that
they observed all the diligence of a
good father of a family to prevent
damage.
A prominent civilist commented that professionals
engaged by an employer, such as physicians, dentists, and
pharmacists, are not "employees" under this article because
the manner in which they perform their work is not within the
control of the latter (employer). In other words,
professionals are considered personally liable for the
fault or negligence they commit in the discharge of their
duties, and their employer cannot be held liable for such
fault or negligence. In the context of the present case, "a
hospital cannot be held liable for the fault or negligence of a
physician or surgeon in the treatment or operation of
patients." 21
The foregoing view is grounded on
the traditional notion that the professional status and the
very nature of the physician's calling preclude him from
being classed as an agent or employee of a hospital,
whenever he acts in a professional capacity. 22 It has been
said that medical practice strictly involves highly developed
and specialized knowledge, 23 such that physicians are
generally free to exercise their own skill and judgment in
rendering medical services sans interference. 24 Hence,
when a doctor practices medicine in a hospital setting, the
hospital and its employees are deemed to subserve him in
his ministrations to the patient and his actions are of his own
responsibility. 25
The case of Schloendorff v. Society of New York
Hospital 26 was then considered an authority for this view.
The "Schloendorff doctrine" regards a physician, even if
employed by a hospital, as an independent
contractor because of the skill he exercises and the lack of
control exerted over his work. Under this doctrine, hospitals
are exempt from the application of the respondeat
superior principle for fault or negligence committed by
physicians in the discharge of their profession.
However, the efficacy of the foregoing doctrine has
weakened with the significant developments in medical care.
Courts came to realize that modern hospitals are
increasingly taking active role in supplying and regulating
medical care to patients. No longer were a hospital's
functions limited to furnishing room, food, facilities for
treatment and operation, and attendants for its patients.
Thus, in Bing v. Thunig, 27 the New York Court of Appeals
deviated from the Schloendorff doctrine, noting that modern
hospitals actually do far more than provide facilities for
treatment. Rather, they regularly employ, on a salaried basis,
a large staff of physicians, interns, nurses, administrative
and manual workers. They charge patients for medical care
and treatment, even collecting for such services through
legal action, if necessary. The court then concluded that
there is no reason to exempt hospitals from the universal
rule of respondeat superior.
In our shores, the nature of the relationship
between the hospital and the physicians is rendered
inconsequential in view of our categorical pronouncement
in Ramos v. Court of Appeals 28 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. HIACac
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. . . .
After a physician is
accepted, either as a visiting or
attending consultant, he is
normally required to attend clinico-
pathological conferences, conduct
bedside rounds for clerks, interns
and residents, moderate grand
rounds and patient audits and
perform other tasks and
responsibilities, for the privilege of
being able to maintain a clinic in
the hospital, and/or for the
privilege of admitting patients into
the hospital. In addition to these, the
physician's performance as a
specialist is generally evaluated by a
peer review committee on the basis of
mortality and morbidity statistics, and
feedback from patients, nurses,
interns and residents. A consultant
remiss in his duties, or a consultant
who regularly falls short of the
minimum standards acceptable to
the hospital or its peer review
committee, is normally politely
terminated. caTESD
In other words, private
hospitals, hire, fire and exercise
real control over their attending
and visiting 'consultant' staff.
While 'consultants' are not,
technically employees, . . . , the
control exercised, the hiring, and
the right to terminate consultants
all fulfill the important hallmarks of
an employer-employee
relationship, with the exception of
the payment of wages. In assessing
whether such a relationship in fact
exists, the control test is determining.
Accordingly, on the basis of the
foregoing, we rule that for the
purpose of allocating responsibility
in medical negligence cases, an
employer-employee relationship in
effect exists between hospitals and
their attending and visiting
physicians."
But the Ramos pronouncement is not our only
basis in sustaining PSI's liability. Its liability is also anchored
upon the agency principle of apparent authority or agency
by estoppel and the doctrine of corporate
negligence which have gained acceptance in the
determination of a hospital's liability for negligent acts of
health professionals. The present case serves as a perfect
platform to test the applicability of these doctrines, thus,
enriching our jurisprudence. TaISEH
Apparent authority, or what is sometimes referred
to as the "holding out" theory, or doctrine of ostensible
agency or agency by estoppel, 29 has its origin from the
law of agency. It imposes liability, not as the result of the
reality of a contractual relationship, but rather because of the
actions of a principal or an employer in somehow misleading
the public into believing that the relationship or the authority
exists. 30 The concept is essentially one of estoppel and has
been explained in this manner:
"The principal is bound by
the acts of his agent with the apparent
authority which he knowingly permits
the agent to assume, or which he
holds the agent out to the public as
possessing. The question in every
case is whether the principal has by
his voluntary act placed the agent in
such a situation that a person of
ordinary prudence, conversant with
business usages and the nature of
the particular business, is justified in
presuming that such agent has
authority to perform the particular act
in question. 31
The applicability of apparent authority in the field
of hospital liability was upheld long time ago in Irving v.
Doctor Hospital of Lake Worth, Inc. 32 There, it was explicitly
stated that "there does not appear to be any rational
basis for excluding the concept of apparent authority
from the field of hospital liability." Thus, in cases where it
can be shown that a hospital, by its actions, has held out a
particular physician as its agent and/or employee and that a
patient has accepted treatment from that physician in the
reasonable belief that it is being rendered in behalf of the
hospital, then the hospital will be liable for the physician's
negligence.
Our jurisdiction recognizes the concept of an
agency by implication or estoppel. Article 1869 of the Civil
Code reads:
ART. 1869. Agency may be
express, or implied from the acts of
the principal, from his silence or lack
of action, or his failure to repudiate
the agency, knowing that another
person is acting on his behalf without
authority.
In this case, PSI publicly displays in the lobby of
the Medical City Hospital the names and specializations of
the physicians associated or accredited by it, including those
of Dr. Ampil and Dr. Fuentes. We concur with the Court of
Appeals' conclusion that it "is now estopped from passing
all the blame to the physicians whose names it proudly
paraded in the public directory leading the public to
believe that it vouched for their skill and competence."
Indeed, PSI's act is tantamount to holding out to the public
that Medical City Hospital, through its accredited
physicians, offers quality health care services. By
accrediting Dr. Ampil and Dr. Fuentes and publicly
advertising their qualifications, the hospital created the
impression that they were its agents, authorized to perform
medical or surgical services for its patients. As expected,
these patients, Natividad being one of them, accepted the
services on the reasonable belief that such were being
rendered by the hospital or its employees, agents, or
servants. The trial court correctly pointed out:
 . . . regardless of the
education and status in life of the
patient, he ought not be burdened
with the defense of absence of
employer-employee relationship
between the hospital and the
independent physician whose
name and competence are
certainly certified to the general
public by the hospital's act of
listing him and his specialty in its
lobby directory, as in the case
herein. The high costs of today's
medical and health care should at
least exact on the hospital greater,
if not broader, legal responsibility
for the conduct of treatment and
surgery within its facility by its
accredited physician or surgeon,
regardless of whether he is
independent or employed." 33
The wisdom of the foregoing ratiocination is easy
to discern. Corporate entities, like PSI, are capable of acting
only through other individuals, such as physicians. If these
accredited physicians do their job well, the hospital succeeds
in its mission of offering quality medical services and
thus profits financially. Logically, where negligence mars
the quality of its services, the hospital should not be allowed
to escape liability for the acts of its ostensible
agents. DCSTAH
We now proceed to the doctrine of corporate
negligence or corporate responsibility.
One allegation in the complaint in Civil Case No.
Q-43332 for negligence and malpractice is that PSI as
owner, operator and manager of Medical City Hospital, "did
not perform the necessary supervision nor exercise
diligent efforts in the supervision of Drs. Ampil and
Fuentes and its nursing staff, resident doctors, and
medical interns who assisted Drs. Ampil and Fuentes in
the performance of their duties as
surgeons." 34 Premised on the doctrine of corporate
negligence, the trial court held that PSI is directly liable for
such breach of duty.
We agree with the trial court.
Recent years have seen the doctrine of corporate
negligence as the judicial answer to the problem of allocating
hospital's liability for the negligent acts of health
practitioners, absent facts to support the application
of respondeat superior or apparent authority. Its formulation
proceeds from the judiciary's acknowledgment that in these
modern times, the duty of providing quality medical service is
no longer the sole prerogative and responsibility of the
physician. The modern hospitals have changed structure.
Hospitals now tend to organize a highly professional medical
staff whose competence and performance need to be
monitored by the hospitals commensurate with their inherent
responsibility to provide quality medical care. 35
The doctrine has its genesis in Darling v.
Charleston Community Hospital. 36 There, the Supreme
Court of Illinois held that "the jury could have found a
hospital negligent, inter alia, in failing to have a
sufficient number of trained nurses attending the
patient; failing to require a consultation with or
examination by members of the hospital staff; and
failing to review the treatment rendered to the patient.". .
. On the basis of Darling, other jurisdictions held that a
hospital's corporate negligence extends to permitting a
physician known to be incompetent to practice at the
hospital. 37 With the passage of time, more duties were
expected from hospitals, among them: (1) the use of
reasonable care in the maintenance of safe and adequate
facilities and equipment; (2) the selection and retention of
competent physicians; (3) the overseeing or supervision
of all persons who practice medicine within its walls;
and (4) the formulation, adoption and enforcement of
adequate rules and policies that ensure quality care for its
patients. 38 Thus, in Tucson Medical Center, Inc. v.
Misevich, 39 it was held that a hospital, following the doctrine
of corporate responsibility, has the duty to see that it meets
the standards of responsibilities for the care of
patients. Such duty includes the proper supervision of
the members of its medical staff. And in Bost v.
Riley, 40 the court concluded that a patient who enters a
hospital does so with the reasonable expectation that it will
attempt to cure him. The hospital accordingly has the
duty to make a reasonable effort to monitor and oversee
the treatment prescribed and administered by the
physicians practicing in its premises.
In the present case, it was duly established that
PSI operates the Medical City Hospital for the purpose and
under the concept of providing comprehensive medical
services to the public. Accordingly, it has the duty to
exercise reasonable care to protect from harm all
patients admitted into its facility for medical treatment.
Unfortunately, PSI failed to perform such duty. The findings
of the trial court are convincing, thus:
. . . PSI's liability is
traceable to its failure to conduct
an investigation of the matter
reported in the nota bene of the
count nurse. Such failure
established PSI's part in the dark
conspiracy of silence and
concealment about the gauzes.
Ethical considerations, if not also
legal, dictated the holding of an
immediate inquiry into the events, if
not for the benefit of the patient to
whom the duty is primarily owed, then
in the interest of arriving at the truth.
The Court cannot accept that the
medical and the healing professions,
through their members like defendant
surgeons, and their institutions like
PSI's hospital facility, can callously
turn their backs on and disregard
even a mere probability of mistake or
negligence by refusing or failing to
investigate a report of such
seriousness as the one in Natividad's
case. ECaScD
It is worthy to note that Dr. Ampil and Dr. Fuentes
operated on Natividad with the assistance of the Medical City
Hospital's staff, composed of resident doctors, nurses, and
interns. As such, it is reasonable to conclude that PSI, as the
operator of the hospital,
has actualor constructive knowledge of the procedures
carried out, particularly the report of the attending nurses
that the two pieces of gauze were missing. In Fridena v.
Evans, 41 it was held that a corporation is bound by the
knowledge acquired by or notice given to its agents or
officers within the scope of their authority and in reference to
a matter to which their authority extends. This means that
the knowledge of any of the staff of Medical City Hospital
constitutes knowledge of PSI. Now, the failure of PSI,
despite the attending nurses' report, to investigate and
inform Natividad regarding the missing gauzes amounts to
callous negligence. Not only did PSI breach its duties to
oversee or supervise all persons who practice medicine
within its walls, it also failed to take an active step in
fixing the negligence committed. This renders PSI, not
only vicariously liable for the negligence of Dr. Ampil under
Article 2180 of the Civil Code, but also directly liable for its
own negligence under Article 2176. In Fridena, the Supreme
Court of Arizona held:
. . . 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. . . . .
xxx xxx xxx
In the amended complaint,
the plaintiffs did plead that the
operation was performed at the
hospital with its knowledge, aid, and
assistance, and that the negligence of
the defendants was the proximate
cause of the patient's injuries. We
find that such general allegations
of negligence, along with the
evidence produced at the trial of
this case, are sufficient to support
the hospital's liability based on the
theory of negligent supervision."
Anent the corollary issue of whether PSI is
solidarily liable with Dr. Ampil for damages, let it be
emphasized that PSI, apart from a general denial of its
responsibility, failed to adduce evidence showing that it
exercised the diligence of a good father of a family in the
accreditation and supervision of the latter. In neglecting to
offer such proof, PSI failed to discharge its burden under the
last paragraph of Article 2180 cited earlier, and, therefore,
must be adjudged solidarily liable with Dr. Ampil. Moreover,
as we have discussed, PSI is also directly liable to the
Aganas.
One final word. Once a physician undertakes the
treatment and care of a patient, the law imposes on him
certain obligations. In order to escape liability, he must
possess that reasonable degree of learning, skill and
experience required by his profession. At the same time, he
must apply reasonable care and diligence in the exercise of
his skill and the application of his knowledge, and exert his
best judgment. aEACcS
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.
Puno, C.J., Corona and Azcuna, JJ., concur.
Garcia, J., took no part.
 
Footnotes
1.Beeck v. Tucson General Hospital, 500 P. 2d 1153
(1972), citing Darling v. Charleston Community
Memorial Hospital, 33 Ill. 2d 326, 211 N.E. 2d
253.
2.Penned by Associate Justice Cancio C. Garcia (now a
member of the Supreme Court) and concurred
in by Associate Justices Eugenio S. Labitoria
and Artemio G. Tuquero (both retired), Rollo,
G.R. Nos. 126297, pp. 36-51; 126467, pp. 27-
42; 127590, pp. 23-38.
3.Penned by Judge Lucas P. Bersamin (now Justice of the
Court of Appeals), Rollo, G.R. No. 126647, pp.
69-83.
4.The medical staff was composed of physicians, both
residents and interns, as well as nurses.
5.The dispositive portion reads:
"WHEREFORE, let a writ of preliminary
injunction be issued upon petitioner's posting of
bond in the amount of P20,000.00, ENJOINING
 public respondents from implementing the
questioned order dated September 21, 1993
and from further taking any action in Civil Case
No. Q-43322 entitled 'Natividad G. Agana, et
al., plaintiffs, versus Professional Services, Inc.,
et al., defendants' pending resolution of the
instant petition.
SO ORDERED."See Rollo, G.R. No. 126297, p.
42.
6.Rollo of G.R. No. 126467, pp. 84-89.
7.Rollo of G.R. No. 127590, p. 40.
8.Rule v. Cheeseman, 317 P. 2d 472 (1957),
citing Russel v. Newman, 116 Kan. 268 P.
752; Bernsden v. Johnson, 174 Kan. 230, 255
P. 2d 1033.
9.Smith v. Zeagler, 157 So. 328 Fla. (1934), citing Ruth v.
Johnson, (C.C.A.) 172 F. 191; Reeves v. Lutz,
179 Mo. App. 61, 162 S.W. 280; Rayburn v.
Day, 126 Or. 135,268 P. 1002, 59 A.L.R.
1062; Wynne v. Harvey, 96 Wash. 379, 165 P.
67; Harris v. Fall (C.C.A.) 177 F. 79, 27 L.R.A.
(N.S.) 1174; Moore v. Ivey, (Tex. Civ. App.) 264
S.W. 283; 21 R.C. L. 388.
10.157 So. 328 Fla. (1934)
11.Garcia-Rueda v. Pascasio, G.R. No. 118141,
September 5, 1997, 278 SCRA 769.
12.In the leading case of Vda. de Bataclan v. Medina,
(102 Phil. 181 [1957]), this Court laid down the
following definition of proximate cause in this
jurisdiction as follows:
[T]hat cause, which, in natural and continuous
sequence unbroken by any efficient intervening
cause, produces the injury and without which
the result would not have occurred. And more
comprehensively, the proximate cause is that
acting first and producing the injury, either
immediately or by setting other events in
motion, all constituting a natural and continuous
chain of events, each having a close causal
connection with the immediate predecessor, the
final event in the chain immediately effecting the
injury as a natural and probable result of the
cause which first acted, under which
circumstances that the person responsible for
the first event should, as an ordinarily prudent
and intelligent person, have reasonable ground
to expect at the moment of his act or default that
an injury to some person might probably result
therefrom.
13.Ramos v. Court of Appeals, G.R. No. 124354,
December 29, 1999, 321 SCRA 584.
14.Africa v. Caltex (Phils.) Inc., 123 Phil. 280 (1966).
15.Ranos v. Court of Appeals, supra. In Ramos, the
phrase used is "control of the instrumentality
which caused the damage," citing St. John's
Hospital and School of Nursing v. Chapman,
434 P2d 160 (1967).
16.Rural Educational Assn v. Bush, 42 Tenn. App. 34, 298
S.W. 2d 761 (1956).
17.Ramos v. Court of Appeals, supra at footnote 13.
18.Levin, Hospital Vicarious Liability for Negligence by
Independent Contractor Physicians: A New Rule
for New Times, October 17, 2005.
19.Id.
20.Id.
21.Tolentino, The Civil Code of the Philippines, Volume V,
1992 Ed., p. 616.
22.Arkansas M.R. Co. v. Pearson, 98 Ark. 442, 153 SW
595 (1911); Runyan v. Goodrum, 147 Ark. 281,
228 SW 397, 13 ALR 1403 (1921); Rosane v.
Senger, 112 Colo. 363, 149 P. 2d 372
(superseded by statute on other
grounds); Moon v. Mercy Hosp., 150 Col. 430,
373 P. 2d 944 (1962); Austin v. Litvak, 682 P.
2d 41, 50 ALR 4th 225 (1984); Western Ins. Co.
v. Brochner, 682 P. 2d 1213 (1983); Rodriguez
v. Denver, 702 P. 2d 1349 (1984).
23.Arkansas M.R. Co. v. Pearson, id.; Nieto v. State, 952
P. 2d 834 (1997). But see Beeck v. Tucson
General Hosp., 18 Ariz. App. 165, 500 P. 2d
1153 (1972); Paintsville Hosp. Co., 683 SW 2d
255 (1985); Kelley v. Rossi, 395 Mass. 659, 481
NE 2d 1340 (1985) which held that a physician's
professional status does not prevent him or her
from being a servant or agent of the hospital.
24.Fridena v. Evans, 127 Ariz. 516, 522 P. 2d 463 (1980).
25.Kitto v. Gilbert, 39 Colo App 374, 570 P. 2d 544
(1977).
26.211 N.Y. 125, 105 N.E. 92, 52 L.R.A., N.S., 505
(1914). The court in Schloendorff opined that a
hospital does not act through physicians but
merely procures them to act on their own
initiative and responsibility. For subsequent
application of the doctrine, see for
instance, Hendrickson v. Hodkin, 250 App. Div
649, 294 NYS 982, revd on other grounds, 276
NY 252, 11 NE 2d 899 (1937); Necolayff v.
Genesee Hosp., 270 App. Div. 648, 61 NYS 2d
832, affd 296 NY 936, 73 NE2d 117
(1946); Davie v. Lenox Hill Hosp., Inc., 81 NYS
2d 583 (1948); Roth v. Beth El Hosp., Inc., 279
App. Div 917, 110 NYS 2d 583 (1952); Rufino
v. US, 126 F. Supp. 132 (1954); Mrachek v.
Sunshine Biscuit, Inc., 308 NY 116, 123 N.E. 2d
801 (1954).
27.2 NY 2d 656, 163 NYS 2d 3, 143 N.E. 2d 3 (1957).
28.Supra at footnote 13.
29.BLACK'S LAW DICTIONARY (6th Ed. 1990) 1100. The
terms "ostensible agency," "agency by
estoppel," "apparent authority," and "holding
out" tend to be used interchangeably by the
courts to refer to this theory of liability. See for
instance, Baker v. Werner, 654 P2d 263 (1982)
and Adamski v. Tacoma Gen. Hosp., 20 Wash
App. 98, 579 P2d 970 (1978). Agency by
estoppel is defined as "one created by
operation of law and established by proof of
such acts of the principal as reasonably lead
third persons to the conclusion of its existence.
 Arises where principal by negligence in failing to
supervise agent's affairs, allows agent to
exercise powers not granted to him, thus
justifying others in believing the agent
possesses requisite authority." Black's, supra, p.
62. An ostensible agency is "an implied or
presumptive agency which exists where one,
either intentionally or from want of ordinary care,
induces another to believe that a third person is
his agent, though he never in fact, employed
him. It is, strictly speaking, no agency at all, but
is in reality based entirely upon estoppel."
Apparent authority refers to "the power to affect
the legal relations of another person by
transactions with third persons, professedly as
agent for the other, arising from and in
accordance with the other's manifestations to
such third persons." Supra, p. 96. aEDCSI
30.Irving v. Doctors Hospital of Lake Worth, Inc., 415 So.
2d 55 (1982), quoting Arthur v. St. Peters
Hospital, 169 N.J. 575, 405 A. 2d 443 (1979).
31.Id., citing Hudson v. C., Loan Assn., Inc. v. Horowytz,
116 N.J.L. 605, 608, 186 A 437 (Sup. Ct. 1936).
32.Supra.
33.RTC Decision, p. 9, Rollo of G.R. No. 126467, p. 127.
34.RTC Decision, p. 2, Rollo of G.R. No. 126467, p. 120.
35.Purcell v. Zimbelman, 18 Ariz. App. 75, 500 P2d 335
(1972).
36.Supra at footnote 1.
37.Corleto v. Hospital, 138 N.J. Super. 302, 350 A. 2d 534
(Super. Ct. Law Div.1975); Purcell v.
Zimbelman, 18 Ariz. App. 75,500 P. 2d 335
(1972); Hospital Authority v. Joiner, 229 Ga.
140,189 S.E. 2d 412 (1972).
38.Welsh v. Bulger, 548 Pa. 504, 698 A.2d 581 (1997).
39.115 Ariz. 34, 545 P2d 958 (1976).
40.262 S.E. 2d 391, cert denied 300 NC 194, 269 S.E. 2d
621 (1980).
41.127 Ariz. 516, 622 P. 2d 463 (1980).
||| (Professional Services, Inc. v. Natividad, G.R. Nos.
126297, 126467 & 127590, [January 31, 2007], 542 PHIL
464-496)
2008 Resolution:
[G.R. No. 126297. February 11, 2008.]
PROFESSIONAL SERVICES,
INC., petitioner, vs. THE COURT OF
APPEALS and NATIVIDAD and
ENRIQUE AGANA, respondents.
[G.R. No. 126467. February 11, 2008.]
NATIVIDAD (Substituted by her
children MARCELINO AGANA III,
ENRIQUE AGANA, JR., EMMA
AGANA ANDAYA, JESUS AGANA,
and RAYMUND AGANA) and
ENRIQUE AGANA, petitioners, vs.
THE COURT OF APPEALS and
JUAN FUENTES, respondents.
[G.R. No. 127590. February 11, 2008.]
MIGUEL AMPIL, petitioner, vs. THE
COURT OF APPEALS and
NATIVIDAD AGANA and ENRIQUE
AGANA, respondents.
RESOLUTION
SANDOVAL-GUTIERREZ, J p:
As the hospital industry changes, so must the
laws and jurisprudence governing hospital liability. The
immunity from medical malpractice traditionally
accorded to hospitals has to be eroded if we are to
balance the interest of the patients and hospitals under
the present setting.
Before this Court is a motion for
reconsideration filed by Professional Services, Inc.
(PSI), petitioner in G.R. No. 126297, assailing the
Court's First Division Decision dated January 31, 2007,
finding PSI and Dr. Miguel Ampil, petitioner in G.R. No.
127590, jointly and severally liable for medical
negligence.
A brief revisit of the antecedent facts is
imperative.
On April 4, 1984, Natividad Agana was
admitted at the Medical City General Hospital (Medical
City) because of difficulty of bowel movement and
bloody anal discharge. Dr. Ampil diagnosed her to be
suffering from "cancer of the sigmoid." Thus, on April
11, 1984, Dr. Ampil, assisted by the medical staff 1 of
Medical City, performed an anterior resection surgery
upon her. During the surgery, he found that the
malignancy in her sigmoid area had spread to her left
ovary, necessitating the removal of certain portions of it.
Thus, Dr. Ampil obtained the consent of Atty. Enrique
Agana, Natividad's husband, to permit Dr. Juan
Fuentes, respondent in G.R. No. 126467, to perform
hysterectomy upon Natividad.
Dr. Fuentes performed and completed the
hysterectomy. Afterwards, 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 done (sic) but to no avail
 continue for closure.
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
surgical operation performed upon her. Dr. Ampil
recommended that Natividad consult an oncologist to
treat 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 (4) months of consultations and
laboratory examinations, Natividad was told that 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 (2) weeks
thereafter, her daughter found a piece of gauze
protruding from her vagina. Dr. Ampil was immediately
informed. He proceeded to Natividad's house where he
managed to extract by hand a piece of gauze
measuring 1.5 inches in width. Dr. Ampil then assured
Natividad that the pains would soon vanish.
Despite Dr. Ampil's assurance, the pains
intensified, prompting Natividad to seek treatment at the
Polymedic General Hospital. While confined thereat, Dr.
Ramon Gutierrez detected the presence of a foreign
object in her vagina — a foul-smelling gauze measuring
1.5 inches in width. The gauze had badly infected her
vaginal vault. A recto-vaginal fistula had formed in her
reproductive organ which forced stool to excrete
through the vagina. Another surgical operation was
needed to remedy the situation. Thus, in October 1984,
Natividad underwent another surgery.
On November 12, 1984, Natividad and her
husband filed with the Regional Trial Court, Branch 96,
Quezon City a complaint for damages against PSI
(owner of Medical City), Dr. Ampil and Dr. Fuentes.
On February 16, 1986, pending the outcome
of the above case, Natividad died. She was duly
substituted by her above-named children (the Aganas).
On March 17, 1993, the trial court rendered
judgment in favor of spouses Agana finding PSI, Dr.
Ampil and Dr. Fuentes jointly and severally liable. On
appeal, the Court of Appeals, in its Decision dated
September 6, 1996, affirmed the assailed judgment with
modification in the sense that the complaint against Dr.
Fuentes was dismissed.
PSI, Dr. Ampil and the Aganas filed with this
Court separate petitions for review on certiorari. On
January 31, 2007, the Court, through its First Division,
rendered a Decision holding that PSI is jointly and
severally liable with Dr. Ampil for the following
reasons: first, there is an employer-employee
relationship between Medical City and Dr. Ampil. The
Court relied on Ramos v. Court of Appeals, 2 holding
that for the purpose of apportioning responsibility in
medical negligence cases, an employer-employee
relationship in effect exists between hospitals and
their attending and visiting physicians; second, PSI's
act of publicly displaying in the lobby of the Medical City
the names and specializations of its accredited
physicians, including Dr. Ampil, estopped it from
denying the existence of an employer-employee
relationship between them under the doctrine of
ostensible agency or agency by estoppel;
and third, PSI's failure to supervise Dr. Ampil and its
resident physicians and nurses and to take an active
step in order to remedy their negligence rendered it
directly liable under the doctrine of corporate
negligence.
In its motion for reconsideration, PSI
contends that the Court erred in finding it liable under
Article 2180 of the Civil Code, there being no employer-
employee relationship between it and its consultant, Dr.
Ampil. PSI stressed that the Court's Decision
in Ramos holding that "an employer-employee
relationship in effect exists between hospitals and their
attending and visiting physicians for the purpose of
apportioning responsibility" had been reversed in a
subsequent Resolution. 3 Further, PSI argues that
the doctrine of ostensible agency or agency by
estoppel cannot apply because spouses Agana failed
to establish one requisite of the doctrine, i.e., that
Natividad relied on the representation of the hospital in
engaging the services of Dr. Ampil. And lastly, PSI
maintains that the doctrine of corporate negligence is
misplaced because the proximate cause of Natividad's
injury was Dr. Ampil's negligence.
The motion lacks merit.
As earlier mentioned, the First Division, in its
assailed Decision, ruled that an employer-employee
relationship "in effect" exists between the Medical City
and Dr. Ampil. Consequently, both are jointly and
severally liable to the Aganas. This ruling proceeds
from the following ratiocination in Ramos:
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
only 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. This is particularly true
with respondent hospital.
 After a physician is
accepted, either as a visiting or
attending consultant, he is
normally required to attend
clinico-pathological
conferences, conduct bedside
rounds for clerks, interns and
residents, moderate grand
rounds and patient audits and
perform other tasks and
responsibilities, for the privilege
of being able to maintain a clinic
in the hospital, and/or for the
privilege of admitting patients
into the hospital. In addition to
these, the physician's
performance as a specialist is
generally evaluated by a peer
review committee on the basis of
mortality and morbidity
statistics, and feedback from
patients, nurses, interns and
residents. A consultant remiss in
his duties, or a consultant who
regularly falls short of the
minimum standards acceptable
to the hospital or its peer review
committee, is normally politely
terminated.
In other words, private
hospitals hire, fire and exercise real
control over their attending and
visiting "consultant" staff. While
"consultants" are not,
technically employees, a point
which respondent hospital
asserts in denying all
responsibility for the patient's
condition, 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. This being the case,
the question now arises as to
whether or not respondent hospital
is solidarily liable with respondent
doctors for petitioner's condition.
The basis for holding an
employer solidarily responsible for
the negligence of its employee is
found in Article 2180 of the Civil
Code which considers a person
accountable not only for his own
acts but also for those of others
based on the former's responsibility
under a relationship of partia
ptetas.
Clearly, in Ramos, the Court considered the
peculiar relationship between a hospital and its
consultants on the bases of certain factors. One such
factor is the "control test" wherein the hospital exercises
control in the hiring and firing of consultants, like Dr.
Ampil, and in the conduct of their work.
Actually, contrary to PSI's contention, the
Court did not reverse its ruling in Ramos. What it
clarified was that the De Los Santos Medical Clinic did
not exercise control over its consultant, hence, there is
no employer-employee relationship between them.
Thus, despite the granting of the said hospital's motion
for reconsideration, the doctrine
in Ramos stays, i.e., for the purpose of allocating
responsibility in medical negligence cases, an
employer-employee relationship exists between
hospitals and their consultants.
In the instant cases, PSI merely offered
a general denial of responsibility, maintaining that
consultants, like Dr. Ampil, are "independent
contractors," not employees of the hospital. Even
assuming that Dr. Ampil is not an employee of Medical
City, but an independent contractor, still the said
hospital is liable to the Aganas.
In Nograles, et al. v. Capitol Medical Center,
et al., 4 through Mr. Justice Antonio T. Carpio, the
Court held:
The question now is
whether CMC is automatically
exempt from liability considering
that Dr. Estrada is an independent
contractor-physician.
In general, a hospital is
not liable for the negligence of an
independent contractor-physician.
There is, however, an exception to
this principle. The hospital may be
liable if the physician is the
"ostensible" agent of the hospital.
(Jones v. Philpott, 702 F. Supp.
1210 [1988]) This exception is also
known as the "doctrine of apparent
authority." (Sometimes referred to
as the apparent or ostensible
agency theory. [King v. Mitchell, 31
A.D.3rd 958, 819 N.Y. S.2d 169
(2006)].
xxx xxx xxx
The doctrine of apparent
authority essentially involves two
factors to determine the liability of
an independent contractor-
physician.
The first factor focuses
on the hospital's 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. (Diggs v.
 Novant Health, Inc., 628 S.E.2d
851 (2006) citing Hylton v. Koontz,
138 N.C. App. 629 (2000). In this
regard, the hospital need not
make express representations to
the patient that the treating
physician is an employee of the
hospital; rather a representation
may be general and implied. (Id.)
The doctrine of apparent
authority is a specie of the doctrine
of estoppel. Article 1431 of the Civil
Code provides that "[t]hrough
estoppel, an admission or
representation is rendered
conclusive upon the person making
it, and cannot be denied or
disproved as against the person
relying thereon." Estoppel rests on
this rule: "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. (de Castro v.
Ginete, 137 Phil. 453 [1969], citing
Sec. 3, par. A, Rule 131 of the
Rules of Court. See also King v.
Mitchell, 31 A.D.3rd 958, 819
N.Y.S.2d 169 [2006]).
xxx xxx xxx
The second factor
focuses on the patient's reliance. It
is sometimes characterized as an
inquiry on whether the plaintiff
acted in reliance upon the conduct
of the hospital or its agent,
consistent with ordinary care and
prudence. (Diggs v. Novant Health,
Inc.)
PSI argues that the doctrine of apparent
authority cannot apply to these cases because
spouses Agana failed to establish proof of their reliance
on the representation of Medical City that Dr. Ampil is
its employee.
The argument lacks merit.
Atty. Agana categorically testified that one of
the reasons why he chose Dr. Ampil was that he knew
him to be a staff member of Medical City, a
prominent and known hospital.
Q Will you tell us what transpired in
your visit to Dr. Ampil?
A Well, I saw Dr. Ampil at the Medical
City, I know him to be a
staff member there, and I
told him about the case of
my wife and he asked me
to bring my wife over so
she could be examined.
Prior to that, I have known
Dr. Ampil, first, he was
staying in front of our
house, he was a neighbor,
second, my daughter was
his student in the University
of the East School of
Medicine at Ramon
Magsaysay; and when my
daughter opted to establish
a hospital or a clinic, Dr.
Ampil was one of our
consultants on how to
establish that hospital. And
from there, I have known
that he was a specialist
when it comes to that
illness.
Atty. Agcaoili
On that particular occasion,
April 2, 1984, what was
your reason for choosing to
contact Dr. Ampil in
connection with your wife's
illness?
A First, before that, I have known him
to be a specialist on that
part of the body as a
surgeon; second, I have
known him to be a staff
member of the Medical
City which is a prominent
and known hospital. And
third, because he is a
neighbor, I expect more
than the usual medical
service to be given to us,
than his ordinary patients. 5
Clearly, PSI is estopped from passing the
blame solely to Dr. Ampil. Its act of displaying his name
and those of the other physicians in the public directory
at the lobby of the hospital amounts to holding out to
the public that it offers quality medical service through
the listed physicians. This justifies Atty. Agana's belief
that Dr. Ampil was a member of the hospital's staff. It
must be stressed that under the doctrine of
apparent authority, the question in every case is
whether the principal has by his voluntary act
placed the agent in such a situation that a person of
ordinary prudence, conversant with business
usages and the nature of the particular business, is
justified in presuming that such agent has authority
to perform the particular act in question. 6 In these
cases, the circumstances yield a positive answer to the
question.
The challenged Decision also anchors its
ruling on the doctrine of corporate
responsibility. 7 The duty of providing quality medical
service is no longer the sole prerogative and
responsibility of the physician. This is because the
modern hospital now tends to organize a highly-
professional medical staff whose competence and
performance need also to be monitored by the hospital
commensurate with its inherent responsibility to provide
quality medical care. 8 Such responsibility includes
the proper supervision of the members of its
medical staff. Accordingly, the hospital has the duty
to make a reasonable effort to monitor and oversee
the treatment prescribed and administered by the
physicians practicing in its premises.
Unfortunately, PSI had been remiss in its
duty. It did not conduct an immediate investigation on
the reported missing gauzes to the great prejudice and
agony of its patient. Dr. Jocson, a member of PSI's
medical staff, who testified on whether the hospital
conducted an investigation, was evasive, thus:
Q We go back to the operative
technique, this was
signed by Dr. Puruganan,
was this submitted to the
hospital?
A Yes, sir, this was submitted to
the hospital with the
record of the patient.
Q Was the hospital immediately
informed about the
missing sponges?
A That is the duty of the surgeon,
sir.
Q As a witness to an untoward
incident in the operating
room, was it not your
obligation, Dr., to also
report to the hospital
because you are under
the control and direction
of the hospital?
A The hospital already had the
record of the two OS
missing, sir.
Q If you place yourself in the
position of the hospital,
how will you recover.
A You do not answer my question
with another question.
Q Did the hospital do anything
about the missing
gauzes?
A The hospital left it up to the
surgeon who was doing
the operation, sir.
Q Did the hospital investigate the
surgeon who did the
operation?
A I am not in the position to answer
that, sir.
Q You never did hear the hospital
investigating the doctors
involved in this case of
those missing sponges,
or did you hear
something?
xxx xxx xxx
A I think we already made a report
by just saying that two
sponges were missing, it
is up to the hospital to
make the move.
Atty. Agana
Precisely, I am asking
you if the hospital did a
move, if the hospital did a
move.
A I cannot answer that.
Court
By that answer, would
you mean to tell the Court
that you were aware if
there was such a move
done by the hospital?
A I cannot answer that, your honor,
because I did not have
any more follow-up of the
case that happened until
now. 9
The above testimony obviously shows Dr.
Jocson's lack of concern for the patients. Such
conduct is reflective of the hospital's manner of
supervision. Not only did PSI breach its duty 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.
Moreover, there is merit in the trial court's
finding that the failure of PSI to conduct an investigation
"established PSI's part in the dark conspiracy of
silence and concealment about the gauzes." The
following testimony of Atty. Agana supports such
findings, thus:
Q You said you relied on the promise
of Dr. Ampil and despite the
promise you were not able
to obtain the said record.
Did you go back to the
record custodian?
A I did not because I was talking to
Dr. Ampil. He promised me.
Q After your talk to Dr. Ampil, you
went to the record
custodian?
A I went to the record custodian to
get the clinical record of
my wife, and I was given
a portion of the records
consisting of the
findings, among them,
the entries of the dates,
but not the operating
procedure and operative
report. 10
In sum, we find no merit in the motion for
reconsideration.
 WHEREFORE, we DENY PSI's motion for
reconsideration with finality.
SO ORDERED.
||| (Professional Services, Inc. v. Court of Appeals, G.R.
Nos. 126297, 126467 & 127590 (Resolution), [February 11,
2008], 568 PHIL 158-171)
2010 Resolution:
EN BANC
[G.R. No. 126297. February 2, 2010.]
PROFESSIONAL SERVICES,
INC., petitioner, vs. THE COURT OF
APPEALS and NATIVIDAD and
ENRIQUE AGANA, respondents.
[G.R. No. 126467. February 2, 2010.]
NATIVIDAD [substituted by her
children Marcelino Agana III,
Enrique Agana, Jr., Emma Agana-
Andaya, Jesus Agana and
Raymund Agana] and ENRIQUE
AGANA, petitioners, vs. THE
COURT OF APPEALS and JUAN
FUENTES, respondents.
[G.R. No. 127590. February 2, 2010.]
MIGUEL AMPIL, petitioner, vs.
NATIVIDAD and ENRIQUE
AGANA, respondents.
RESOLUTION
CORONA, J p:
With prior leave of court, 1 petitioner
Professional Services, Inc. (PSI) filed a second motion
for reconsideration 2 urging referral thereof to the
Court en banc and seeking modification of the decision
dated January 31, 2007 and resolution dated February
11, 2008 which affirmed its vicarious and direct liability
for damages to respondents Enrique Agana and the
heirs of Natividad Agana (Aganas).
Manila Medical Services, Inc.
(MMSI), 3 Asian Hospital, Inc. (AHI), 4 and Private
Hospital Association of the Philippines (PHAP) 5 all
sought to intervene in these cases invoking the
common ground that, unless modified, the assailed
decision and resolution will jeopardize the financial
viability of private hospitals and jack up the cost of
health care.
The Special First Division of the Court
granted the motions for intervention of MMSI, AHI and
PHAP (hereafter intervenors), 6 and referred en
consulta to the Court en banc the motion for prior leave
of court and the second motion for reconsideration of
PSI. 7
Due to paramount public interest, the
Court en banc accepted the referral 8 and heard the
parties on oral arguments on one particular issue:
whether a hospital may be held liable for the negligence
of physicians-consultants allowed to practice in its
premises. 9
To recall the salient facts, PSI, together with
Dr. Miguel Ampil (Dr. Ampil) and Dr. Juan Fuentes (Dr.
Fuentes), was impleaded by Enrique Agana and
Natividad Agana (later substituted by her heirs), in a
complaint 10 for damages filed in the Regional Trial
Court (RTC) of Quezon City, Branch 96, for the injuries
suffered by Natividad when Dr. Ampil and Dr. Fuentes
neglected to remove from her body two
gauzes 11 which were used in the surgery they
performed on her on April 11, 1984 at the Medical City
General Hospital. PSI was impleaded as owner,
operator and manager of the hospital. DETACa
In a decision 12 dated March 17, 1993, the
RTC held PSI solidarily liable with Dr. Ampil and Dr.
Fuentes for damages. 13 On appeal, the Court of
Appeals (CA), absolved Dr. Fuentes but affirmed the
liability of Dr. Ampil and PSI, subject to the right of PSI
to claim reimbursement from Dr. Ampil. 14
On petition for review, this Court, in its
January 31, 2007 decision, affirmed the CA
decision. 15 PSI filed a motion for
reconsideration 16 but the Court denied it in a
resolution dated February 11, 2008. 17
The Court premised the direct liability of PSI
to the Aganas on the following facts and law:
First, there existed between PSI and Dr.
Ampil an employer-employee relationship as
contemplated in the December 29, 1999 decision
in Ramos v. Court of Appeals 18 that "for purposes of
allocating responsibility in medical negligence cases, an
employer-employee relationship exists between
hospitals and their consultants." 19 Although the Court
in Ramos later issued a Resolution dated April 11,
2002 20 reversing its earlier finding on the existence of
an employment relationship between hospital and
doctor, a similar reversal was not warranted in the
present case because the defense raised by PSI
consisted of a mere general denial of control or
responsibility over the actions of Dr. Ampil. 21
Second, by accrediting Dr. Ampil and
advertising his qualifications, PSI created the public
impression that he was its agent. 22 Enrique testified
that it was on account of Dr. Ampil's accreditation with
PSI that he conferred with said doctor about his wife's
(Natividad's) condition. 23 After his meeting with Dr.
Ampil, Enrique asked Natividad to personally consult
Dr. Ampil. 24 In effect, when Enrigue and Natividad
engaged the services of Dr. Ampil, at the back of their
minds was that the latter was a staff member of a
 prestigious hospital. Thus, under the doctrine of
apparent authority applied in Nogales, et al. v. Capitol
Medical Center, et al., 25 PSI was liable for the
negligence of Dr. Ampil.
Finally, as owner and operator of Medical
City General Hospital, PSI was bound by its duty to
provide comprehensive medical services to Natividad
Agana, to exercise reasonable care to protect her from
harm, 26 to oversee or supervise all persons who
practiced medicine within its walls, and to take active
steps in fixing any form of negligence committed within
its premises. 27 PSI committed a serious breach of its
corporate duty when it failed to conduct an immediate
investigation into the reported missing gauzes. 28
PSI is now asking this Court to reconsider the
foregoing rulings for these reasons: DHIaTS
I the principle of ostensible agency for the negligence of
The declaration in the 31
January 2007 Decision vis-a-vis the
11 February 2009 Resolution that the
ruling in Ramos vs. Court of
Appeals (G.R. No. 134354,
December 29, 1999) that "an
employer-employee relations exists
between hospital and their
consultants" stays should be set
aside for being inconsistent with or
contrary to the import of the resolution
granting the hospital's motion for
reconsideration in Ramos vs. Court of
Appeals (G.R. No. 134354, April 11,
2002), which is applicable to PSI
since the Aganas failed to prove an
employer-employee relationship
between PSI and Dr. Ampil and PSI
proved that it has no control over Dr.
Ampil. In fact, the trial court has found
that there is no employer-employee
relationship in this case and that the
doctor's are independent contractors.
II
Respondents Aganas
engaged Dr. Miguel Ampil as their
doctor and did not primarily and
specifically look to the Medical City
Hospital (PSI) for medical care and
support; otherwise stated,
respondents Aganas did not select
Medical City Hospital (PSI) to provide
medical care because of any
apparent authority of Dr. Miguel Ampil
as its agent since the latter was
chosen primarily and specifically
based on his qualifications and being
friend and neighbor.
III
PSI cannot be liable under
doctrine of corporate negligence since
the proximate cause of Mrs. Agana's
injury was the negligence of Dr.
Ampil, which is an element of the
principle of corporate negligence. 29
In their respective memoranda, intervenors
raise parallel arguments that the Court's ruling on the
existence of an employer-employee relationship
between private hospitals and consultants will force a
drastic and complex alteration in the long-established
and currently prevailing relationships among patient,
physician and hospital, with burdensome operational
and financial consequences and adverse effects on all
three parties. 30
The Aganas comment that the arguments of
PSI need no longer be entertained for they have all
been traversed in the assailed decision and
resolution. 31
After gathering its thoughts on the issues, this
Court holds that PSI is liable to the Aganas, not under
the principle of respondeat superior for lack of evidence
of an employment relationship with Dr. Ampil but under
Dr. Ampil and, pro hac vice, under the principle of
corporate negligence for its failure to perform its duties
as a hospital. SHTcDE
While in theory a hospital as a juridical entity
cannot practice medicine, 32 in reality it utilizes doctors,
surgeons and medical practitioners in the conduct of its
business of facilitating medical and surgical
treatment. 33 Within that reality, three legal
relationships crisscross: (1) between the hospital and
the doctor practicing within its premises; (2) between
the hospital and the patient being treated or examined
within its premises and (3) between the patient and the
doctor. The exact nature of each relationship
determines the basis and extent of the liability of the
hospital for the negligence of the doctor.
Where an employment relationship exists , the
hospital may be held vicariously liable under Article
2176 34 in relation to Article 2180  35 of the Civil
Code or the principle of  respondeat superior . Even
when no employment relationship exists but it is shown
that the hospital holds out to the patient that the doctor
is its agent, the hospital may still be vicariously liable
under Article 2176 in relation to Article 1431  36 and
Article 1869 37 of the Civil Code or the principle of
apparent authority. 38 Moreover, regardless of its
relationship with the doctor, the hospital may be held
directly liable to the patient for its own negligence or
failure to follow established standard of conduct to
which it should conform as a corporation. 39
This Court still employs the "control test" to
determine the existence of an employer-employee
relationship between hospital and doctor. In Calamba
Medical Center, Inc. v. National Labor Relations
Commission, et al. 40 it held:
Under the "control test", an
employment relationship exists
between a physician and a hospital if
the hospital controls both the means
and the details of the process by
which the physician is to accomplish
his task.
xxx xxx xxx
As priorly stated, private
respondents maintained specific
work-schedules, as determined by
petitioner through its medical director,
 which consisted of 24-hour shifts
totaling forty-eight hours each week
and which were strictly to be
observed under pain of administrative
sanctions.
That petitioner exercised
control over respondents gains
light from the undisputed fact that
in the emergency room, the
operating room, or any department
or ward for that matter,
respondents' work is monitored
through its nursing supervisors,
charge nurses and orderlies.
Without the approval or consent of
petitioner or its medical director,
no operations can be undertaken in
those areas. For control test to
apply, it is not essential for the
employer to actually supervise the
performance of duties of the
employee, it being enough that it
has the right to wield the
power. (emphasis supplied) 
Even in its December 29, 1999
decision 41 and April 11, 2002
resolution 42 in Ramos, the Court found the control test
decisive. STADIH
In the present case, it appears to have
escaped the Court's attention that both the RTC and the
CA found no employment relationship between PSI and
Dr. Ampil, and that the Aganas did not question such
finding. In its March 17, 1993 decision, the RTC found
"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." 43 The Aganas never
questioned such finding.
PSI, Dr. Ampil and Dr. Fuentes
appealed 44 from the RTC decision but only on the
issues of negligence, agency and corporate liability. In
its September 6, 1996 decision, the CA mistakenly
referred to PSI and Dr. Ampil as employer-employee,
but it was clear in its discussion on the matter that it
viewed their relationship as one of mere apparent
agency. 45
The Aganas appealed from the CA decision,
but only to question the exoneration of Dr.
Fuentes. 46 PSI also appealed from the CA decision,
and it was then that the issue of employment, though
long settled, was unwittingly resurrected.
In fine, as there was no dispute over the RTC
finding that PSI and Dr. Ampil had no employer-
employee relationship, such finding became final and
conclusive even to this Court. 47 There was no reason
for PSI to have raised it as an issue in its petition. Thus,
whatever discussion on the matter that may have
ensued was purely academic.
Nonetheless, to allay the anxiety of the
intervenors, the Court holds that, in this particular
instance, the concurrent finding of the RTC and the CA
that PSI was not the employer of Dr. Ampil is correct.
Control as a determinative factor in testing the
employer-employee relationship between doctor and
hospital under which the hospital could be held
vicariously liable to a patient in medical negligence
cases is a requisite fact to be established by
preponderance of evidence. Here, there was insufficient
evidence that PSI exercised the power of control or
wielded such power over the means and the details of
the specific process by which Dr. Ampil applied his
skills in the treatment of Natividad. Consequently, PSI
cannot be held vicariously liable for the negligence of
Dr. Ampil under the principle of respondeat superior.
There is, however, ample evidence that the
hospital (PSI) held out to the patient (Natividad) 48 that
the doctor (Dr. Ampil) was its agent. Present are the
two factors that determine apparent authority: first, the
hospital's implied manifestation to the patient which led
the latter to conclude that the doctor was the hospital's
agent; and second, the patient's reliance upon the
conduct of the hospital and the doctor, consistent with
ordinary care and prudence. 49
Enrique testified that on April 2, 1984, he
consulted Dr. Ampil regarding the condition of his wife;
that after the meeting and as advised by Dr. Ampil, he
"asked [his] wife to go to Medical City to be examined
by [Dr. Ampil]"; and that the next day, April 3, he told his
daughter to take her mother to Dr. Ampil. 50 This
timeline indicates that it was Enrique who actually made
the decision on whom Natividad should consult and
where, and that the latter merely acceded to it. It
explains the testimony of Natividad that she consulted
Dr. Ampil at the instigation of her daughter. 51 cCaATD
Moreover, when asked what impelled him to
choose Dr. Ampil, Enrique testified:
Atty. Agcaoili
On that particular occasion,
April 2, 1984, what was
your reason for choosing
Dr. Ampil to contact with in
connection with your wife's
illness?
A. First, before that, I have
known him to be a specialist on that
part of the body as a surgeon,
second, I have known him to be
a staff member of the Medical City
which is a prominent and
known hospital. And third, because
he is a neighbor, I expect more than
the usual medical service to be given
to us, than his ordinary
patients. 52 (emphasis supplied)
Clearly, the decision made by Enrique for
Natividad to consult Dr. Ampil was significantly
influenced by the impression that Dr. Ampil was a staff
member of Medical City General Hospital, and that said
hospital was well known and prominent. Enrique looked
upon Dr. Ampil not as independent of but as integrally
related to Medical City.
PSI's acts tended to confirm and reinforce,
rather than negate, Enrique's view. It is of record that
PSI required a "consent for hospital care" 53 to be
signed preparatory to the surgery of Natividad. The
form reads:
Permission is hereby given
to the medical, nursing and laboratory
staff of the Medical City General
 Hospital to perform such diagnostic
procedures and to administer such
medications and treatments as may
be deemed necessary or advisable
by the physicians of this
hospital for and during the
confinement of . . . . (emphasis
supplied)
By such statement, PSI virtually reinforced
the public impression that Dr. Ampil was a
physician of its hospital, rather than one independently
practicing in it; that the medications and treatments he
prescribed were necessary and desirable; and that the
hospital staff was prepared to carry them out.
PSI pointed out in its memorandum that Dr.
Ampil's hospital affiliation was not the exclusive basis of
the Aganas' decision to have Natividad treated in
Medical City General Hospital, meaning that, had Dr.
Ampil been affiliated with another hospital, he would still
have been chosen by the Aganas as Natividad's
surgeon. 54
The Court cannot speculate on what could
have been behind the Aganas' decision but would
rather adhere strictly to the fact that, under the
circumstances at that time, Enrique decided to consult
Dr. Ampil for he believed him to be a staff member of a
prominent and known hospital. After his meeting with
Dr. Ampil, Enrique advised his wife Natividad to go to
the Medical City General Hospital to be examined by
said doctor, and the hospital acted in a way that fortified
Enrique's belief. DEICHc
This Court must therefore maintain the ruling
that PSI is vicariously liable for the negligence of Dr.
Ampil as its ostensible agent.
Moving on to the next issue, the Court notes
that PSI made the following admission in its Motion for
Reconsideration:
51. Clearly, not being an
agent or employee of petitioner PSI,
PSI [sic] is not liable for Dr. Ampil's
acts during the operation. Considering
further that Dr. Ampil was personally
engaged as a doctor by Mrs. Agana, it
is incumbent upon Dr. Ampil, as
"Captain of the Ship", and as the
Agana's doctor to advise her on what
to do with her situation vis-a-vis the
two missing gauzes. In addition to
noting the missing gauzes, regular
check-ups were made and no signs
of complications were exhibited
during her stay at the hospital,
which could have alerted petitioner
PSI's hospital to render and
provide post-operation services to
and tread on Dr. Ampil's role as the
doctor of Mrs. Agana. The absence
of negligence of PSI from the
patient's admission up to her
discharge is borne by the finding
of facts in this case. Likewise
evident therefrom is the absence of
any complaint from Mrs. Agana
after her discharge from the
hospital which had she brought to
the hospital's attention, could have
alerted petitioner PSI to act
accordingly and bring the matter to
Dr. Ampil's attention. But this was
not the case. Ms. Agana
complained ONLY to Drs. Ampil
and Fuentes, not the hospital. How
then could PSI possibly do
something to fix the negligence
committed by Dr. Ampil when it
was not informed about it at
all. 55 (emphasis supplied)
PSI reiterated its admission when it stated
that had Natividad Agana "informed the hospital of her
discomfort and pain, the hospital would have
been obliged to act on it." 56
The significance of the foregoing statements
is critical.
First, they constitute judicial admission by
PSI that while it had no power to control the means or
method by which Dr. Ampil conducted the surgery on
Natividad Agana, it 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
any procedure done inside its premises, with the
ultimate end of protecting its patients.
Second, it is a judicial admission that, by
virtue of the nature of its business as well as its
prominence 57 in the hospital industry, it assumed a
duty to "tread on" the "captain of the ship" role of any
doctor rendering services within its premises for the
purpose of ensuring the safety of the patients availing
themselves of its services and facilities.
Third, by such admission, PSI defined the
standards of its corporate conduct under the
circumstances of this case, specifically: (a) that it had a
corporate duty to Natividad even after her operation to
ensure her safety as a patient; (b) that its corporate
duty was not limited to having its nursing staff note or
record the two missing gauzes and (c) that its corporate
duty extended to determining Dr. Ampil's role in it,
bringing the matter to his attention, and correcting his
negligence. SDHacT
And finally, by such admission, 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; 58 and that if it had any
corporate responsibility, the same was limited to
reporting the missing gauzes and did not include "taking
an active step in fixing the negligence
committed." 59 An admission made in the pleading
cannot be controverted by the party making such
admission and is conclusive as to him, and all proofs
submitted by him contrary thereto or inconsistent
therewith should be ignored, whether or not objection is
interposed by a party. 60
Given the standard of conduct that
PSI defined for itself, the next relevant inquiry is
whether the hospital measured up to it. 
PSI excuses itself from fulfilling its corporate
duty on the ground that Dr. Ampil assumed the
personal responsibility of informing Natividad about the
two missing gauzes. 61 Dr. Ricardo Jocson, who was
part of the group of doctors that attended to Natividad,
testified that toward the end of the surgery, their group
talked about the missing gauzes but Dr. Ampil assured
them that he would personally notify the patient about
it. 62 Furthermore, PSI claimed that there was no
reason for it to act on the report on the two missing
gauzes because Natividad Agana showed no signs of
complications. She did not even inform the hospital
about her discomfort. 63
The excuses proffered by PSI are totally
unacceptable.
To begin with, PSI could not simply wave off
the problem and nonchalantly delegate to Dr. Ampil the
duty to review what transpired during the operation. The
purpose of such review would have been to pinpoint
when, how and by whom two surgical gauzes were
mislaid so that necessary remedial measures could be
taken to avert any jeopardy to Natividad's recovery.
Certainly, PSI could not have expected that purpose to
be achieved by merely hoping that the person likely to
have mislaid the gauzes might be able to retrace his
own steps. By its own standard of corporate conduct,
PSI's duty to initiate the review was non-delegable.
While Dr. Ampil may have had the primary
responsibility of notifying Natividad about the missing
gauzes, PSI imposed upon itself the separate and
independent responsibility of initiating the inquiry into
the missing gauzes. The purpose of the first would have
been to apprise Natividad of what transpired during her
surgery, while the purpose of the second would have
been to pinpoint any lapse in procedure that led to the
gauze count discrepancy, so as to prevent a recurrence
thereof and to determine corrective measures that
would ensure the safety of Natividad. That Dr. Ampil
negligently failed to notify Natividad did not release PSI
from its self-imposed separate responsibility.
Corollary to its non-delegable undertaking to
review potential incidents of negligence committed
within its premises, PSI had the duty to take notice of
medical records prepared by its own staff and
submitted to its custody, especially when these bear
earmarks of a surgery gone awry. Thus, the record
taken during the operation of Natividad which reported
a gauze count discrepancy should have given PSI
sufficient reason to initiate a review. It should not have
waited for Natividad to complain. HDIATS
As it happened, PSI took no heed of the
record of operation and consequently did not initiate a
review of what transpired during Natividad's operation.
Rather, it shirked its responsibility and passed it on to
others — to Dr. Ampil whom it expected to inform
Natividad, and to Natividad herself to complain before it
took any meaningful step. By its inaction, therefore, PSI
failed its own standard of hospital care. It committed
corporate negligence.
It should be borne in mind that the corporate
negligence ascribed to PSI is different from the medical
negligence attributed to Dr. Ampil. 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 fulfill its duties as a hospital
corporation gave rise to a direct liability to the Aganas
distinct from that of Dr. Ampil.
All this notwithstanding, we make it clear that
PSI's 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. 64
Other circumstances peculiar to this case
warrant this ruling, 65 not the least of which being that
the agony wrought upon the Aganas has gone on for 26
long years, with Natividad coming to the end of her
days racked in pain and agony. Such wretchedness
could have been avoided had PSI simply done what
was logical: heed the report of a guaze count
discrepancy, initiate a review of what went wrong and
take corrective measures to ensure the safety of
Nativad. Rather, for 26 years, PSI hemmed and hawed
at every turn, disowning any such responsibility to its
patient. Meanwhile, the options left to the Aganas have
all but dwindled, for the status of Dr. Ampil can no
longer be ascertained. 66
Therefore, taking all the equities of this case
into consideration, this Court believes P15 million would
be a fair and reasonable liability of PSI, subject to 12%
p.a. interest from the finality of this resolution to full
satisfaction.
WHEREFORE, the second motion for
reconsideration is DENIED and the motions for
intervention are NOTED.
Professional Services, Inc. is ORDERED pro
hac vice to pay Natividad (substituted by her children
Marcelino Agana III, Enrique Agana, Jr., Emma Agana-
Andaya, Jesus Agana and Raymund Agana) and
Enrique Agana the total amount of P15 million, subject
to 12% p.a. interest from the finality of this resolution to
full satisfaction. HTaSEA
No further pleadings by any party shall be
entertained in this case.
Let the long-delayed entry of judgment be made in
this case upon receipt by all concerned parties of this
resolution.
SO ORDERED.
||| (Professional Services, Inc. v. Court of Appeals, G.R.
Nos. 126297, 126467 & 127590 (Resolution), [February 2,
2010], 625 PHIL 122-142)