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G.R.No.126297

FIRSTDIVISION

PROFESSIONALSERVICES,INC.,
Petitioner,

versus

THE COURT OF APPEALS and

NATIVIDADandENRIQUEAGANA,
Respondents,
xx
NATIVIDAD (Substituted by her
children MARCELINO AGANA III,
ENRIQUE AGANA, JR., EMMA
AGANA ANDAYA, JESUS AGANA,
and RAYMUND AGANA) and
ENRIQUEAGANA,
Petitioners,

versus

THECOURTOFAPPEALSandJUAN
FUENTES,
Respondents,
xx
MIGUELAMPIL,
Petitioner,

versus

THE COURT OF APPEALS and

NATIVIDAD AGANA and ENRIQUE
AGANA,
Respondents.

G.R.No.126297

G.R.No.126467

G.R.No.127590

Present:

PUNO,C.J.,
SANDOVALGUTIERREZ,
CORONA,
AZCUNA,and
LEONARDODECASTRO,JJ.

Promulgated:
February11,2008
xx

RESOLUTION
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SANDOVALGUTIERREZ,J.:

As the hospital industry changes, so must the laws and jurisprudence governing hospital
liability.Theimmunityfrommedicalmalpracticetraditionallyaccordedtohospitalshastobe
erodedifwearetobalancetheinterestofthepatientsandhospitalsunderthepresentsetting.

BeforethisCourtisamotionforreconsiderationfiledbyProfessionalServices,Inc.(PSI),
petitionerinG.R.No.126297,assailingtheCourtsFirstDivisionDecisiondatedJanuary31,
2007,findingPSIandDr.MiguelAmpil,petitionerinG.R.No.127590,jointlyandseverally
liableformedicalnegligence.

Abriefrevisitoftheantecedentfactsisimperative.

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.
Ampildiagnosedhertobesufferingfromcancerofthesigmoid.Thus,onApril11,1984,Dr.
[1]
Ampil, assisted by the medical staff of Medical City, performed an anterior resection
surgeryuponher.Duringthesurgery,hefoundthatthemalignancyinhersigmoidareahad
spreadtoherleftovary,necessitatingtheremovalofcertainportionsofit.Thus,Dr.Ampil
obtainedtheconsentofAtty.EnriqueAgana,Natividadshusband,topermitDr.JuanFuentes,
respondentinG.R.No.126467,toperformhysterectomyuponNatividad.

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.InthecorrespondingRecordofOperationdatedApril11,1984,theattendingnurses
enteredtheseremarks:

spongecountlacking2
announcedtosurgeonsearcheddone(sic)buttonoavailcontinueforclosure.

After a couple of days, Natividad complained of excruciating pain in her anal region. She
consultedbothDr.AmpilandDr.Fuentesaboutit.Theytoldherthatthepainwasthenatural
consequence of the surgical operation performed upon her. Dr. Ampil recommended that
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Natividadconsultanoncologisttotreatthecancerousnodeswhichwerenotremovedduring
theoperation.

OnMay9,1984,Natividad,accompaniedbyherhusband,wenttotheUnitedStatestoseek
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.

OnAugust31,1984,NatividadflewbacktothePhilippines,stillsufferingfrompains.Two
(2) weeks thereafter, her daughter found a piece of gauze protruding from her vagina. Dr.
Ampilwasimmediatelyinformed.HeproceededtoNatividadshousewherehemanagedto
extract by hand a piece of gauze measuring 1.5 inches in width. Dr. Ampil then assured
Natividadthatthepainswouldsoonvanish.

DespiteDr.Ampilsassurance,thepainsintensified,promptingNatividadtoseektreatmentat
thePolymedic General Hospital. While confined thereat, Dr. Ramon Gutierrez detected the
presenceofaforeignobjectinhervaginaafoulsmellinggauzemeasuring1.5inchesin
width.Thegauzehadbadlyinfectedhervaginalvault.Arectovaginalfistulahadformedin
her reproductive organ which forced stool to excrete through the vagina. Another surgical
operationwasneededtoremedythesituation.Thus,inOctober1984,Natividadunderwent
anothersurgery.

On November 12, 1984, Natividad and her husband filed with the Regional Trial Court,
Branch96,QuezonCityacomplaintfordamagesagainstPSI(ownerofMedicalCity), Dr.
AmpilandDr.Fuentes.

On February 16, 1986, pending the outcome of the above case, Natividad died. She
wasdulysubstitutedbyherabovenamedchildren(theAganas).

On March 17, 1993, the trial court rendered judgment in favor of spouses Agana
findingPSI,Dr.AmpilandDr.Fuentesjointlyandseverallyliable.Onappeal,theCourtof
Appeals, in its Decision dated September 6, 1996, affirmed the assailed judgment with
modificationinthesensethatthecomplaintagainstDr.Fuenteswasdismissed.

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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
holdingthatPSIisjointlyandseverallyliablewithDr.Ampilforthefollowingreasons:first,
thereisanemployeremployeerelationshipbetweenMedicalCityandDr.Ampil.TheCourt
[2]
relied on Ramos v. Court of Appeals, holding that for the purpose of apportioning
responsibility in medical negligence cases, an employeremployee relationship in effect
exists between hospitals and their attending and visiting physicians second, PSIs 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
employeremployee relationship between them under the doctrine of ostensible agency or
agencybyestoppelandthird,PSIsfailuretosuperviseDr.Ampilanditsresidentphysicians
andnursesandtotakeanactivestepinordertoremedytheirnegligencerendereditdirectly
liableunderthedoctrineofcorporatenegligence.

Initsmotionforreconsideration,PSIcontendsthattheCourterredinfindingitliable
under Article 2180 of the Civil Code, there being no employeremployee relationship
between it and its consultant, Dr. Ampil. PSI stressed that the Courts Decision in Ramos
holdingthatanemployeremployeerelationshipineffectexistsbetweenhospitalsandtheir
attending and visiting physicians for the purpose of apportioning responsibility had been
[3]
reversed in a subsequent Resolution. Further, PSI argues that the doctrine of ostensible
agencyoragencybyestoppelcannotapplybecausespousesAganafailedtoestablishone
requisite of the doctrine, i.e., that Natividad relied on the representation of the hospital in
engagingtheservicesofDr.Ampil.Andlastly,PSImaintainsthatthedoctrineofcorporate
negligence is misplaced because the proximate cause of Natividads injury was Dr. Ampils
negligence.

Themotionlacksmerit.

As earlier mentioned, the First Division, in its assailed Decision, ruled that an
employeremployee relationship in effect exists between the Medical City and Dr. Ampil.
Consequently,botharejointlyandseverallyliabletotheAganas.Thisrulingproceedsfrom
thefollowingratiocinationinRamos:
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
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visiting consultants, who are allegedly not hospital employees, presents problems in
apportioning responsibility for negligence in medical malpractice cases. However, the
difficultyisonlymoreapparentthanreal.
Inthefirstplace,hospitalsexercisesignificantcontrolinthehiringandfiringof
consultantsandintheconductoftheirworkwithinthehospitalpremises.Doctorswho
applyforconsultantslots,visitingorattending,arerequiredtosubmitproofofcompletionof
residency, their educational qualifications generally, evidence of accreditation by the
appropriateboard(diplomate),evidenceoffellowshipinmostcases,andreferences. These
requirements are carefully scrutinized by members of the hospital administration or by a
reviewcommitteesetupbythehospitalwhoeitheracceptorrejecttheapplication.Thisis
particularlytruewithrespondenthospital.
Afteraphysicianisaccepted,eitherasavisitingorattendingconsultant,heis
normally required to attend clinicopathological conferences, conduct bedside rounds
for clerks, interns and residents, moderate grand rounds and patient audits and
perform other tasks and responsibilities, for the privilege of being able to maintain a
clinicinthehospital,and/orfortheprivilegeofadmittingpatientsintothehospital.In
additiontothese,thephysiciansperformanceasaspecialistisgenerallyevaluatedbya
peerreviewcommitteeonthebasisofmortalityandmorbiditystatistics,andfeedback
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
hospitaloritspeerreviewcommittee,isnormallypolitelyterminated.
In other words, private hospitals hire, fire and exercise real control over their
attendingandvisitingconsultantstaff.Whileconsultantsarenot,technicallyemployees,a
point which respondent hospital asserts in denying all responsibility for the patients
condition, the control exercised, the hiring, and the right to terminate consultants all
fulfill the important hallmarks of an employeremployee relationship, with the
exception of the payment of wages. In assessing whether such a relationship in fact
exists,thecontroltestisdetermining.Accordingly,onthebasisoftheforegoing,werule
that for the purpose of allocating responsibility in medical negligence cases, an
employeremployee relationship in effect exists between hospitals and their attending
andvisitingphysicians.Thisbeingthecase,thequestionnowarisesastowhetherornot
respondenthospitalissolidarilyliablewithrespondentdoctorsforpetitionerscondition.
The basis for holding an employer solidarily responsible for the negligence of its
employeeisfoundinArticle2180oftheCivilCodewhichconsidersapersonaccountable
not only for his own acts but also for those of others based on the formers responsibility
underarelationshipofpartiaptetas.

Clearly, in Ramos, the Court considered the peculiar relationship between a hospital
anditsconsultantsonthebasesofcertainfactors.Onesuchfactoristhecontroltestwherein
thehospitalexercisescontrolinthehiringandfiringofconsultants,likeDr.Ampil,andinthe
conductoftheirwork.

Actually, contrary to PSIs contention, the Court did not reverse its ruling in Ramos.
WhatitclarifiedwasthattheDeLosSantosMedicalClinicdidnotexercisecontroloverits
consultant, hence, there is no employeremployee relationship between them. Thus, despite
thegrantingofthesaidhospitalsmotionforreconsideration,thedoctrineinRamosstays,i.e.,
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for the purpose of allocating responsibility in medical negligence cases, an employer

employeerelationshipexistsbetweenhospitalsandtheirconsultants.

Intheinstantcases,PSImerelyofferedageneraldenialofresponsibility,maintaining
thatconsultants,likeDr.Ampil,areindependentcontractors,notemployeesofthehospital.
Even assuming that Dr. Ampil is not an employee of Medical City, but an independent
contractor,stillthesaidhospitalisliabletotheAganas.

[4]
InNograles,etal.v.CapitolMedicalCenter,etal., throughMr.JusticeAntonioT.
Carpio,theCourtheld:
ThequestionnowiswhetherCMCisautomaticallyexemptfromliabilityconsidering
thatDr.Estradaisanindependentcontractorphysician.
In general, a hospital is not liable for the negligence of an independent contractor
physician.Thereis,however,anexceptiontothisprinciple.Thehospitalmaybeliableifthe
physicianistheostensibleagentofthehospital.(Jonesv.Philpott,702F.Supp.1210[1988])
Thisexceptionisalsoknownasthedoctrineofapparentauthority.(Sometimesreferredtoas
theapparentorostensibleagencytheory.[Kingv.Mitchell,31A.D.3rd958,819N.Y.S.2d169
(2006)].
xxx
The doctrine of apparent authority essentially involves two factors to determine the
liabilityofanindependentcontractorphysician.
Thefirstfactorfocusesonthehospitalsmanifestationsandissometimesdescribedas
an inquirywhether the hospital acted in a manner which would lead a reasonablepersonto
concludethattheindividualwhowasallegedtobenegligentwasanemployeeoragentofthe
hospital.(Diggsv.NovantHealth,Inc., 628 S.E.2d 851 (2006) citing Hylton v. Koontz, 138
N.C.App.629(2000).Inthisregard,thehospitalneednotmakeexpressrepresentations
to the patient that the treating physician is an employee of the hospital rather a
representationmaybegeneralandimplied.(Id.)
Thedoctrineofapparentauthorityisaspecieofthedoctrineofestoppel.Article1431
oftheCivilCodeprovidesthat[t]hroughestoppel,anadmissionorrepresentationisrendered
conclusiveuponthepersonmakingit,andcannotbedeniedordisprovedasagainsttheperson
relyingthereon.Estoppelrestsonthisrule:Whetherapartyhas,byhisowndeclaration,act,
oromission,intentionallyanddeliberatelyledanothertobelieveaparticularthingtrue,andto
act upon such belief, he cannot, in any litigation arising out of such declaration, act or
omission,bepermittedtofalsifyit.(DeCastrov.Ginete,137Phil.453[1969],citingSec.3,
par. A, Rule 131 of the Rules of Court. See also King v. Mitchell, 31 A.D.3rd 958, 819
N.Y.S.2d169[2006]).
xxx
Thesecondfactorfocusesonthepatientsreliance.Itissometimescharacterizedasan
inquiryonwhethertheplaintiffactedinrelianceupontheconductofthehospitaloritsagent,
consistentwithordinarycareandprudence.(Diggsv.NovantHealth,Inc.)

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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
MedicalCitythatDr.Ampilisitsemployee.

Theargumentlacksmerit.

Atty.AganacategoricallytestifiedthatoneofthereasonswhyhechoseDr.Ampilwas
that he knew him to be a staff member of Medical City, a prominent and known
hospital.
QWillyoutelluswhattranspiredinyourvisittoDr.Ampil?

AWell,IsawDr.AmpilattheMedicalCity,Iknowhimtobeastaffmemberthere,andI
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
consultantsonhowtoestablishthathospital.Andfromthere,Ihaveknownthathe
wasaspecialistwhenitcomestothatillness.

Atty.Agcaoili

Onthatparticularoccasion,April2,1984,whatwasyourreasonforchoosingtocontactDr.
Ampilinconnectionwithyourwifesillness?

AFirst,beforethat,Ihaveknownhimtobeaspecialistonthatpartofthebodyasasurgeon
second,IhaveknownhimtobeastaffmemberoftheMedicalCitywhichisa
prominentandknownhospital.Andthird,becauseheisaneighbor,Iexpectmore
[5]
thantheusualmedicalservicetobegiventous,thanhisordinarypatients.

Clearly, PSI is estopped from passing the blame solely to Dr. Ampil. Its act of
displayinghisnameandthoseoftheotherphysiciansinthepublicdirectoryatthelobbyof
thehospitalamountstoholdingouttothepublicthatitoffersqualitymedicalservicethrough
thelistedphysicians.ThisjustifiesAtty.AganasbeliefthatDr.Ampilwasamemberofthe
hospitals staff. It must be stressed that under the doctrine of apparent authority, the
questionineverycaseiswhethertheprincipalhasbyhisvoluntaryactplacedtheagent
insuchasituationthatapersonofordinaryprudence,conversantwithbusinessusages
andthenatureoftheparticularbusiness,isjustifiedinpresumingthatsuchagenthas
[6]
authoritytoperformtheparticularactinquestion. Inthesecases,thecircumstances
yieldapositiveanswertothequestion.
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The challenged Decision also anchors its ruling on the doctrine of corporate
[7]
responsibility. 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 highlyprofessional medical staff whose competence and performance
need also to be monitored by the hospital commensurate with its inherent responsibility to
[8]
providequalitymedicalcare. Suchresponsibilityincludesthepropersupervisionofthe
members of its medical staff. Accordingly, the hospital has the duty to make a
reasonableefforttomonitorandoverseethetreatmentprescribedandadministeredby
thephysicianspracticinginitspremises.

Unfortunately, PSI had been remiss in its duty. It did not conduct an immediate
investigationonthereportedmissinggauzestothegreatprejudiceandagonyofitspatient.
Dr.Jocson,amemberofPSIsmedicalstaff,whotestifiedonwhetherthehospitalconducted
aninvestigation,wasevasive,thus:
QWe go back to the operative technique, this was signed by Dr. Puruganan, was this
submittedtothehospital?
AYes,sir,thiswassubmittedtothehospitalwiththerecordofthepatient.

QWasthehospitalimmediatelyinformedaboutthemissingsponges?
AThatisthedutyofthesurgeon,sir.

Q As a witness to an untoward incident in the operating room, was it not your

obligation,Dr.,toalsoreporttothehospitalbecauseyouareunderthecontrol
anddirectionofthehospital?
AThehospitalalreadyhadtherecordofthetwoOSmissing,sir.

QIfyouplaceyourselfinthepositionofthehospital,howwillyourecover.
AYoudonotanswermyquestionwithanotherquestion.

QDidthehospitaldoanythingaboutthemissinggauzes?
AThehospitalleftituptothesurgeonwhowasdoingtheoperation,sir.

QDidthehospitalinvestigatethesurgeonwhodidtheoperation?
AIamnotinthepositiontoanswerthat,sir.

QYouneverdidhearthehospitalinvestigatingthedoctorsinvolvedinthiscaseofthose
missingsponges,ordidyouhearsomething?

xxxxxx

AIthinkwealreadymadeareportbyjustsayingthattwospongesweremissing,itis
uptothehospitaltomakethemove.

Atty.Agana

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Precisely,Iamaskingyouifthehospitaldidamove,ifthehospitaldidamove.
AIcannotanswerthat.

Court
Bythatanswer,wouldyoumeantotelltheCourtthatyouwereawareiftherewassuch
amovedonebythehospital?
AIcannotanswerthat,yourhonor,becauseIdidnothaveanymorefollowupofthe
[9]
casethathappeneduntilnow.

TheabovetestimonyobviouslyshowsDr.Jocsonslackofconcernforthepatients.
Such conduct is reflective of the hospitals manner of supervision. Not only did PSI
breach its duty to oversee or supervise all persons who practice medicine within its
walls,italsofailedtotakeanactivestepinfixingthenegligencecommitted.Thisrenders
PSI, not only vicariously liable for the negligence of Dr. Ampil under Article 2180 of the
CivilCode,butalsodirectlyliableforitsownnegligenceunderArticle2176.

Moreover,thereismeritinthetrialcourtsfindingthatthefailureofPSItoconductan
investigation established PSIs part in the dark conspiracy of silence and concealment
aboutthegauzes.ThefollowingtestimonyofAtty.Aganasupportssuchfindings,thus:
QYousaidyoureliedonthepromiseofDr.Ampilanddespitethepromiseyouwerenotable
toobtainthesaidrecord.Didyougobacktotherecordcustodian?
AIdidnotbecauseIwastalkingtoDr.Ampil.Hepromisedme.
QAfteryourtalktoDr.Ampil,youwenttotherecordcustodian?
AIwenttotherecordcustodiantogettheclinicalrecordofmywife,andIwasgivena
portionoftherecordsconsistingofthefindings,amongthem,theentriesofthe
[10]
dates,butnottheoperatingprocedureandoperativereport.

Insum,wefindnomeritinthemotionforreconsideration.

WHEREFORE,weDENYPSIsmotionforreconsiderationwithfinality.

SOORDERED.
ANGELINASANDOVALGUTIERREZ
AssociateJustice

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WECONCUR:

REYNATOS.PUNO
ChiefJustice

RENATOC.CORONA
ADOLFOS.AZCUNA
AssociateJustice
AssociateJustice

TERESITAJ.LEONARDODECASTRO
AssociateJustice

CERTIFICATION

PursuanttoSection13,ArticleVIIIoftheConstitution,itisherebycertifiedthatthe
conclusions in the above Resolution were reached in consultation before the case was
assignedtothewriteroftheopinionoftheCourtsDivision.

REYNATOS.PUNO
ChiefJustice

[1]
Themedicalstaffwascomposedofphysicians,bothresidentsandinterns,aswellasnurses.
[2]
G.R.No.124354,December29,1999,321SCRA584.
[3]
PromulgatedonApril11,2002.
[4]
G.R.No.142625,December19,2006,511SCRA204.
[5]
TSN,April12,1985,pp.2526.
[6]
Id.,citingHudsonV.C.,LoanAssn.,Inc.v.Horowytz,116N.J.L.605,608,186A437(Sup.Ct.1936).
[7]
Thecorporatenegligencedoctrineimposesseveraldutiesonahospital:(1)tousereasonablecareinthemaintenanceofsafe
andadequatefacilitiesandequipment(2)toselectandretainonlycompetentphysicians(3)tooverseeastopatientcareall
personswhopracticemedicinewithinitswallsand(4)toformulate,adopt,andenforceadequaterulesandpoliciestoensure
qualitycareforitspatients.Thesespecialtortdutiesarisefromthespecialrelationshipexistingbetweenahospitalornursing
homeanditspatients,whicharebasedonthevulnerabilityofthephysicallyormentallyillpersonsandtheirinabilityto
providecareforthemselves.40AAmJur2d28citingFunkhouserv.Wilson,89Wash.App.644,950P2d501(Div.11998),
reviewgranted,135Wash.2d1001,959P2d126(1998).
[8]
Purcellv.Zimbelman,18Ariz.App.75,500P2d335(1972).
[9]
TSN,February26,1987,pp.2628.
[10]
TSN,November22,1985,pp.5253.
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