FIRST DIVISION

PROFESSIONAL SERVICES, INC., G.R. No. 126297

Petitioner,

- versus -

NATIVIDAD and ENRIQUE AGANA,

Respondents.
x-----------------------x

NATIVIDAD (Substituted by her G.R. No. 126467

children MARCELINO AGANA III,
ENRIQUE AGANA, JR., EMMA AGANA
ANDAYA, JESUS AGANA, and
RAYMUND AGANA) and ENRIQUE
AGANA,
Petitioners,
- versus -

JUAN FUENTES,
Respondent.
x- - - - - - - - - - - - - - - - - - - -- - - - x G.R. No. 127590

MIGUEL AMPIL, Present:

Petitioner,
PUNO, C.J., Chairperson
- versus - SANDOVAL-GUTIERREZ,
CORONA,
NATIVIDAD AGANA and ENRIQUE AZCUNA, and
AGANA, *
GARCIA, JJ.
Respondents.
Promulgated:

January 31, 2007

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

DECISION

SANDOVAL-GUTIERREZ, J.:

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

*
No part. Ponente of the assailed Decision in the Court of Appeals.
commensurate with the undertaking to preserve and protect the health, and indeed,
the very lives of those placed in the hospital’s keeping.1[1]
Assailed in these three consolidated petitions for review on certiorari is the
Court of Appeals’ Decision2[2] dated September 6, 1996 in CA-G.R. CV No. 42062 and
CA-G.R. SP No. 32198 affirming with modification the Decision3[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 staff4[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, necessitating the
removal of certain portions of it. Thus, Dr. Ampil obtained the consent of
Natividad’s husband, Enrique Agana, to permit Dr. Juan Fuentes, respondent in G.R.
No. 126467, to perform hysterectomy on her.
After Dr. Fuentes had completed the hysterectomy, Dr. Ampil took over,
completed the operation and closed the incision.
However, the operation appeared to be flawed. In the corresponding Record of
Operation dated April 11, 1984, the attending nurses entered these remarks:
“sponge count lacking 2
“announced to surgeon searched (sic) done but to no avail
continue for closure.”

On April 24, 1984, Natividad was released from the hospital. Her hospital and
medical bills, including the doctors’ fees, amounted to P60,000.00.
After a couple of days, Natividad complained of excruciating pain in her anal
region. She consulted both Dr. Ampil and Dr. Fuentes about it. They told her that
the pain was the natural consequence of the surgery. Dr. Ampil then
1 [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 [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 [3]
Penned by Judge Lucas P. Bersamin (now Justice of the Court of Appeals), Rollo, G.R. No. 126647, pp. 69-83.
4 [4]
The medical staff was composed of physicians, both residents and interns, as well as nurses.
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.
Meanwhile, Enrique Agana also filed with the Professional Regulation
Commission (PRC) an administrative complaint for gross negligence and malpractice
against Dr. Ampil and Dr. Fuentes, docketed as Administrative Case No. 1690. The
PRC Board of Medicine heard the case only with respect to Dr. Fuentes because it
failed to acquire jurisdiction over Dr. Ampil who was then in the United States.
On February 16, 1986, pending the outcome of the above cases, Natividad
died and was duly substituted by her above-named children (the Aganas).
 On March 17, 1993, the RTC rendered its Decision in favor of the Aganas,
finding PSI, Dr. Ampil and Dr. Fuentes liable for negligence and malpractice, the
decretal part of which reads:
WHEREFORE, judgment is hereby rendered for the plaintiffs ordering
the defendants PROFESSIONAL SERVICES, INC., DR. MIGUEL AMPIL and
DR. JUAN FUENTES to pay to the plaintiffs, jointly and severally, except in
respect of the award for exemplary damages and the interest thereon which
are the liabilities of defendants Dr. Ampil and Dr. Fuentes only, as follows:

1. As actual damages, the following amounts:

a. The equivalent in Philippine Currency of the total of

US$19,900.00 at the rate of P21.60-US$1.00, as
reimbursement of actual expenses incurred in the United
States of America;

b. The sum of P4,800.00 as travel taxes of plaintiffs and their

physician daughter;

c. The total sum of P45,802.50, representing the cost of

hospitalization at Polymedic Hospital, medical fees, and cost
of the saline solution;

2. As moral damages, the sum of P2,000,000.00;

3. As exemplary damages, the sum of P300,000.00;

4. As attorney’s fees, the sum of P250,000.00;

5. Legal interest on items 1 (a), (b), and (c); 2; and 3 hereinabove, from date
of filing of the complaint until full payment; and

6. Costs of suit.

SO ORDERED.

Aggrieved, PSI, Dr. Fuentes and Dr. Ampil interposed an appeal to the Court of
Appeals, docketed as CA-G.R. CV No. 42062.
Incidentally, on April 3, 1993, the Aganas filed with the RTC a motion for a
partial execution of its Decision, which was granted in an Order dated May 11, 1993.
Thereafter, the sheriff levied upon certain properties of Dr. Ampil and sold them for
P451,275.00 and delivered the amount to the Aganas.
Following their receipt of the money, the Aganas entered into an agreement
with PSI and Dr. Fuentes to indefinitely suspend any further execution of the RTC
Decision. However, not long thereafter, the Aganas again filed a motion for an alias
writ of execution against the properties of PSI and Dr. Fuentes. On September 21,
1993, the RTC granted the motion and issued the corresponding writ, prompting Dr.
Fuentes to file with the Court of Appeals a petition for certiorari and prohibition, with
prayer for preliminary injunction, docketed as CA-G.R. SP No. 32198. During its
pendency, the Court of Appeals issued a Resolution5[5] dated October 29, 1993
granting Dr. Fuentes’ prayer for injunctive relief.
On January 24, 1994, CA-G.R. SP No. 32198 was consolidated with CA-G.R. CV
No. 42062.
Meanwhile, on January 23, 1995, the PRC Board of Medicine rendered its
Decision6[6] in Administrative Case No. 1690 dismissing the case against Dr. Fuentes.
The Board held that the prosecution failed to show that Dr. Fuentes was the one who
left the two pieces of gauze inside Natividad’s body; and that he concealed such
fact from Natividad.
On September 6, 1996, the Court of Appeals rendered its Decision jointly
disposing of CA-G.R. CV No. 42062 and CA-G.R. SP No. 32198, thus:
WHEREFORE, except for the modification that the case against
defendant-appellant Dr. Juan Fuentes is hereby DISMISSED, and with the
pronouncement that defendant-appellant Dr. Miguel Ampil is liable to
reimburse defendant-appellant Professional Services, Inc., whatever
amount the latter will pay or had paid to the plaintiffs-appellees, the decision
appealed from is hereby AFFIRMED and the instant appeal DISMISSED.

Concomitant with the above, the petition for certiorari and prohibition
filed by herein defendant-appellant Dr. Juan Fuentes in CA-G.R. SP No. 32198
is hereby GRANTED and the challenged order of the respondent judge dated
September 21, 1993, as well as the alias writ of execution issued pursuant
thereto are hereby NULLIFIED and SET ASIDE. The bond posted by the
petitioner in connection with the writ of preliminary injunction issued by this
Court on November 29, 1993 is hereby cancelled.

Costs against defendants-appellants Dr. Miguel Ampil and

Professional Services, Inc.

SO ORDERED.

Only Dr. Ampil filed a motion for reconsideration, but it was denied in a
Resolution7[7] dated December 19, 1996.

5 [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 [6]
Rollo of G.R. No. 126467, pp. 84-89.
7 [7]
Rollo of G.R. No. 127590, p. 40.
 Hence, the instant consolidated petitions.
In G.R. No. 126297, PSI alleged in its petition that the Court of Appeals erred
in holding that: (1) it is estopped from raising the defense that Dr. Ampil is not its
employee; (2) it is solidarily liable with Dr. Ampil; and (3) it is not entitled to its
counterclaim against the Aganas. PSI contends that Dr. Ampil is not its employee,
but a mere consultant or independent contractor. As such, he alone should answer
for his negligence.
In G.R. No. 126467, the Aganas maintain that the Court of Appeals erred in
finding that Dr. Fuentes is not guilty of negligence or medical malpractice, invoking
the doctrine of res ipsa loquitur. They contend that the pieces of gauze are prima
facie proofs that the operating surgeons have been negligent.
Finally, in G.R. No. 127590, Dr. Ampil asserts that the Court of Appeals erred in
finding him liable for negligence and malpractice sans evidence that he left the two
pieces of gauze in Natividad’s vagina. He pointed to other probable causes, such
as: (1) it was Dr. Fuentes who used gauzes in performing the hysterectomy; (2) the
attending nurses’ failure to properly count the gauzes used during surgery; and (3)
the medical intervention of the American doctors who examined Natividad in the
United States of America.
For our resolution are these three vital issues: first, whether the Court of
Appeals erred in holding Dr. Ampil liable for negligence and malpractice; second,
whether the Court of Appeals erred in absolving Dr. Fuentes of any liability; and
third, whether PSI may be held solidarily liable for the negligence of Dr. Ampil.

I - G.R. No. 127590

Whether the Court of Appeals Erred in Holding Dr. Ampil
Liable for Negligence and Malpractice.

Dr. Ampil, in an attempt to absolve himself, gears the Court’s attention to

other possible causes of Natividad’s detriment. He argues that the Court should not
discount either of the following possibilities: first, Dr. Fuentes left the gauzes
in Natividad’s body after performing hysterectomy; second, the attending nurses
erred in counting the gauzes; and third, the American doctors were the ones who
placed the gauzes in Natividad’s body.
 Dr. Ampil’s arguments are purely conjectural and without basis. Records show
that he did not present any evidence to prove that the American doctors were the
ones who put or left the gauzes in Natividad’s body. Neither did he submit evidence
to rebut the correctness of the record of operation, particularly the number of
gauzes used. As to the alleged negligence of Dr. Fuentes, we are mindful that Dr.
Ampil examined his (Dr. Fuentes’) work and found it in order.
The glaring truth is that all the major circumstances, taken together, as
specified by the Court of Appeals, directly point to Dr. Ampil as the negligent party,
thus:
First, it is not disputed that the surgeons used gauzes as sponges to
control the bleeding of the patient during the surgical operation.
Second, immediately after the operation, the nurses who assisted in
the surgery noted in their report that the ‘sponge count (was) lacking 2’; that
such anomaly was ‘announced to surgeon’ and that a ‘search was
done but to no avail’ prompting Dr. Ampil to ‘continue for closure’ x x
x.
Third, after the operation, two (2) gauzes were extracted from the
same spot of the body of Mrs. Agana where the surgery was performed.

An operation requiring the placing of sponges in the incision is not complete

until the sponges are properly removed, and it is settled that the leaving of sponges
or other foreign substances in the wound after the incision has been closed is at
least prima facie negligence by the operating surgeon.8[8] To put it simply, such act
is considered so inconsistent with due care as to raise an inference of negligence.
There are even legions of authorities to the effect that such act is negligence per
se.9[9]
Of course, the Court is not blind to the reality that there are times when
danger to a patient’s life precludes a surgeon from further searching missing
sponges or foreign objects left in the body. But this does not leave him free
from any obligation. Even if it has been shown that a surgeon was required by
the urgent necessities of the case to leave a sponge in his patient’s abdomen,
because of the dangers attendant upon delay, still, it is his legal duty to so
inform his patient within a reasonable time thereafter by advising her of
what he had been compelled to do. This is in order that she might seek relief

8 [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 [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.
from the effects of the foreign object left in her body as her condition might permit.
The ruling in Smith v. Zeagler10[10] is explicit, thus:
The removal of all sponges used is part of a surgical operation, and
when a physician or surgeon fails to remove a sponge he has placed in his
patient’s body that should be removed as part of the operation, he thereby
leaves his operation uncompleted and creates a new condition which
imposes upon him the legal duty of calling the new condition to his
patient’s attention, and endeavoring with the means he has at hand
to minimize and avoid untoward results likely to ensue therefrom.

Here, Dr. Ampil did not inform Natividad about the missing two pieces of
gauze. Worse, he even misled her that the pain she was experiencing was
the ordinary consequence of her operation. Had he been more candid,
Natividad could have taken the immediate and appropriate medical remedy to
remove the gauzes from her body. To our mind, what was initially an act of
negligence by Dr. Ampil has ripened into a deliberate wrongful act of deceiving his
patient.
This is a clear case of medical malpractice or more appropriately, medical
negligence. To successfully pursue this kind of case, a patient must only prove that
a health care provider either failed to do something which a reasonably prudent
health care provider would have done, or that he did something that a reasonably
prudent provider would not have done; and that failure or action caused injury to
the patient.11[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 cause12[12] of Natividad’s injury could be traced from his act of

10[10]
157 So. 328 Fla. (1934)
11 [11]
Garcia-Rueda v. Pascasio, G.R. No. 118141, September 5, 1997, 278 SCRA 769.
12 [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.
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.

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[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
[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

13 [13]
Ramos v. Court of Appeals, G.R. No. 124354, December 29, 1999, 321 SCRA 584.
14 [14]
Africa v. Caltex (Phils.) Inc., 123 Phil. 280 (1966).
instrumental is the “control and management of the thing which caused the
injury.”15[15]
We find the element of “control and management of the thing which caused
the injury” to be wanting. Hence, the doctrine of res ipsa loquitur will not lie.
It was duly established that Dr. Ampil was the lead surgeon during the
operation of Natividad. He requested the assistance of Dr. Fuentes only to perform
hysterectomy when he (Dr. Ampil) found that the malignancy in her sigmoid area
had spread to her left ovary. Dr. Fuentes performed the surgery and thereafter
reported and showed his work to Dr. Ampil. The latter examined it and finding
everything to be in order, allowed Dr. Fuentes to leave the operating
room. Dr. Ampil then resumed operating on Natividad. He was about to finish the
procedure when the attending nurses informed him that two pieces of gauze were
missing. A “diligent search” was conducted, but the misplaced gauzes were not
found. Dr. Ampil then directed that the incision be closed. During this entire
period, Dr. Fuentes was no longer in the operating room and had, in fact, left the
hospital.
Under the “Captain of the Ship” rule, the operating surgeon is the person in
complete charge of the surgery room and all personnel connected with the
operation. Their duty is to obey his orders.16[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[17] In other words, mere invocation and application

15 [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 [16]
Rural Educational Assn v. Bush, 42 Tenn. App. 34, 298 S.W. 2d 761 (1956).
17 [17]
Ramos v. Court of Appeals, supra at footnote 13.
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[18] Those who could afford medical treatment
were usually treated at home by their doctors.19[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[20]
In this jurisdiction, the statute governing liability for negligent acts is Article
2176 of the Civil Code, which reads:
Art. 2176. Whoever by act or omission causes damage to another,
there being fault or negligence, is obliged to pay for the damage done. Such
fault or negligence, if there is no pre-existing contractual relation between the
parties, is called a quasi-delict and is governed by the provisions of this
Chapter.

A derivative of this provision is Article 2180, the rule governing vicarious

liability under the doctrine of respondeat superior, thus:
ART. 2180. The obligation imposed by Article 2176 is demandable not
only for one’s own acts or omissions, but also for those of persons for whom
one is responsible.

18 [18]
Levin, Hospital Vicarious Liability for Negligence by Independent Contractor Physicians: A New Rule for New
Times, October 17, 2005.
19 [19]
Id.
20 [20]
Id.
 x x x x x x
The owners and managers of an establishment or enterprise are
likewise responsible for damages caused by their employees in the service of
the branches in which the latter are employed or on the occasion of their
functions.

Employers shall be liable for the damages caused by their employees

and household helpers acting within the scope of their assigned tasks even
though the former are not engaged in any business or industry.
x x x x x x
The responsibility treated of in this article shall cease when the persons
herein mentioned prove that they observed all the diligence of a good father
of a family to prevent damage.

A prominent civilist commented that professionals engaged by an employer,

such as physicians, dentists, and pharmacists, are not “employees” under this
article because the manner in which they perform their work is not within the
control of the latter (employer). In other words, professionals are considered
personally 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[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[22] It has been said that medical practice strictly involves
highly developed and specialized knowledge,23[23] such that physicians are generally
free to exercise their own skill and judgment in rendering medical services sans
interference.24[24] Hence, when a doctor practices medicine in a hospital setting,

21 [21]
Tolentino, The Civil Code of the Philippines, Volume V, 1992 Ed., p. 616.
22 [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 [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 [24]
Fridena v. Evans, 127 Ariz. 516, 522 P. 2d 463 (1980).
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[25]
The case of Schloendorff v. Society of New York Hospital26[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[27] the New York Court of Appeals deviated from the Schloendorff
doctrine, noting that modern hospitals actually do far more than provide facilities for
treatment. Rather, they regularly employ, on a salaried basis, a large staff of
physicians, interns, nurses, administrative and manual workers. They charge
patients for medical care and treatment, even collecting for such services through
legal action, if necessary. The court then concluded that there is no reason to
exempt hospitals from the universal rule of respondeat superior.
In our shores, the nature of the relationship between the hospital and the
physicians is rendered inconsequential in view of our categorical pronouncement in
Ramos v. Court of Appeals28[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:

25 [25]
Kitto v. Gilbert, 39 Colo App 374, 570 P. 2d 544 (1977).
26 [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 [27]
2 NY 2d 656, 163 NYS 2d 3, 143 N.E. 2d 3 (1957).
28 [28]
Supra at footnote 13.
 “We now discuss the responsibility of the hospital in this particular
incident. The unique practice (among private hospitals) of filling up specialist
staff with attending and visiting “consultants,” who are allegedly not hospital
employees, presents problems in apportioning responsibility for negligence in
medical malpractice cases. However, the difficulty is more apparent than real.
In the first place, hospitals exercise significant control in the
hiring and firing of consultants and in the conduct of their work
within the hospital premises. Doctors who apply for ‘consultant’
slots, visiting or attending, are required to submit proof of
completion of residency, their educational qualifications, generally,
evidence of accreditation by the appropriate board (diplomate),
evidence of fellowship in most cases, and references. These
requirements are carefully scrutinized by members of the hospital
administration or by a review committee set up by the hospital who
either accept or reject the application. x x x.
After a physician is accepted, either as a visiting or attending
consultant, he is normally required to attend clinico-pathological
conferences, conduct bedside rounds for clerks, interns and
residents, moderate grand rounds and patient audits and perform
other tasks and responsibilities, for the privilege of being able to
maintain a clinic in the hospital, and/or for the privilege of admitting
patients into the hospital. In addition to these, the 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, x x x, the control
exercised, the hiring, and the right to terminate consultants all fulfill
the important hallmarks of an employer-employee relationship, with
the exception of the payment of wages. In assessing whether such a
relationship in fact exists, the control test is determining. Accordingly, on the
basis of the foregoing, we rule that for the purpose of allocating
responsibility in medical negligence cases, an employer-employee
relationship in effect exists between hospitals and their attending
and visiting physicians. ”

But the Ramos pronouncement is not our only basis in sustaining 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.
Apparent authority, or what is sometimes referred to as the “holding out”
theory, or doctrine of ostensible agency or agency by estoppel,29[29] has its
29 [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
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[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[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[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

(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.
30 [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 [31]
Id., citing Hudson v. C., Loan Assn., Inc. v. Horowytz, 116 N.J.L. 605, 608, 186 A 437 (Sup. Ct. 1936).
32 [32]
Supra.
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:
x x x regardless of the education and status in life of the patient,
he ought not be burdened with the defense of absence of employer-
employee relationship between the hospital and the independent
physician whose name and competence are certainly certified to the
general public by the 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[33]

The wisdom of the foregoing ratiocination is easy to discern. Corporate

entities, like PSI, are capable of acting only through other individuals, such as
physicians. If these accredited physicians do their job well, the hospital succeeds in
its mission of offering quality medical services and thus profits financially.
Logically, where negligence mars the quality of its services, the hospital should not
be allowed to escape liability for the acts of its ostensible agents.
We now proceed to the doctrine of corporate negligence or corporate
responsibility.
One allegation in the complaint in Civil Case No. Q-43332 for negligence and
malpractice is that PSI as owner, operator and manager of Medical City Hospital,
“did not perform the necessary supervision nor exercise diligent efforts in
the supervision of Drs. Ampil and Fuentes and its nursing staff, resident
doctors, and medical interns who assisted Drs. Ampil and Fuentes in the
performance of their duties as surgeons.”34[34] Premised on the doctrine of
33 [33]
RTC Decision, p. 9, Rollo of G.R. No. 126467, p. 127.
34 [34]
RTC Decision, p. 2, Rollo of G.R. No. 126467, p. 120.
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[35]
The doctrine has its genesis in Darling v. Charleston Community Hospital.36[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[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[38] Thus, in Tucson Medical Center,
Inc. v. Misevich,39[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

35 [35]
Purcell v. Zimbelman, 18 Ariz. App. 75, 500 P2d 335 (1972).
36 [36]
Supra at footnote 1.
37 [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 [38]
Welsh v. Bulger, 548 Pa. 504, 698 A.2d 581 (1997).
39 [39]
115 Ariz. 34, 545 P2d 958 (1976).
the care of patients. Such duty includes the proper supervision of the
members of its medical staff. And in Bost v. Riley,40[40] the court concluded that
a patient who enters a hospital does so with the reasonable expectation that it will
attempt to cure him. The hospital accordingly has the duty to make a
reasonable effort to monitor and oversee the treatment prescribed and
administered by the physicians practicing in its premises.
In the present case, it was duly established that PSI operates the Medical City
Hospital for the purpose and under the concept of providing comprehensive medical
services to the public. Accordingly, it has the duty to exercise reasonable care to
protect from harm all patients admitted into its facility for medical
treatment. Unfortunately, PSI failed to perform such duty. The findings of the trial
court are convincing, thus:
x x x 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.

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 actual or constructive knowledge of the procedures carried
out, particularly the report of the attending nurses that the two pieces of
gauze were missing. In Fridena v. Evans,41[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

40 [40]
262 S.E. 2d 391, cert denied 300 NC 194, 269 S.E. 2d 621 (1980).
41 [41]
127 Ariz. 516, 622 P. 2d 463 (1980).
supervise all persons who practice medicine within its walls, it also failed
to take an active step in fixing the negligence committed. This renders PSI,
not only vicariously liable for the negligence of Dr. Ampil under Article 2180 of the
Civil Code, but also directly liable for its own negligence under Article 2176. In
Fridena, the Supreme Court of Arizona held:
x x x In recent years, however, the duty of care owed to the patient by
the hospital has expanded. The emerging trend is to hold the hospital
responsible where the hospital has failed to monitor and review
medical services being provided within its walls. See Kahn Hospital
Malpractice Prevention, 27 De Paul . Rev. 23 (1977).
Among the cases indicative of the ‘emerging trend’ is Purcell v.
Zimbelman, 18 Ariz. App. 75,500 P. 2d 335 (1972). In Purcell, the hospital
argued that it could not be held liable for the malpractice of a medical
practitioner because he was an independent contractor within the hospital.
The Court of Appeals pointed out that the hospital had created a
professional staff whose competence and performance was to be
monitored and reviewed by the governing body of the hospital, and
the court held that a hospital would be negligent where it had
knowledge or reason to believe that a doctor using the facilities was
employing a method of treatment or care which fell below the
recognized standard of care.

Subsequent to the Purcell decision, the Arizona Court of

Appeals held that a hospital has certain inherent responsibilities
regarding the quality of medical care furnished to patients within its
walls and it must meet the standards of responsibility commensurate
with this undertaking. Beeck v. Tucson General Hospital, 18 Ariz. App. 165,
500 P. 2d 1153 (1972). This court has confirmed the rulings of the Court of
Appeals that a hospital has the duty of supervising the competence of the
doctors on its staff. x x x.
x x x x x x
In the amended complaint, the plaintiffs did plead that the operation
was performed at the hospital with its knowledge, aid, and assistance, and
that the negligence of the defendants was the proximate cause of the
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.
WHEREFORE, we DENY all the petitions and AFFIRM the challenged
Decision of the Court of Appeals in CA-G.R. CV No. 42062 and CA-G.R. SP No. 32198.
Costs against petitioners PSI and Dr. Miguel Ampil.
SO ORDERED.

ANGELINA SANDOVAL-GUTIERREZ
Associate Justice

WE CONCUR:

REYNATO S. PUNO
Chief Justice
Chairperson

RENATO C. CORONA
Associate Justice

ADOLFO S. AZCUNA
Associate Justice

(No Part)
CANCIO C. GARCIA
Associate Justice