FIRST DIVISION

The facts, as culled from the records, are:

G.R. No. 126297 January 31, 2007
On April 4, 1984, Natividad Agana was rushed to the Medical City General Hospital (Medical
9.A. PROFESSIONAL SERVICES, INC., Petitioner, City Hospital) because of difficulty of bowel movement and bloody anal discharge. After a
vs. series of medical examinations, Dr. Miguel Ampil, petitioner in G.R. No. 127590, diagnosed
NATIVIDAD and ENRIQUE AGANA, Respondents. her to be suffering from "cancer of the sigmoid."

x-----------------------x On April 11, 1984, Dr. Ampil, assisted by the medical staff4 of the Medical City Hospital,
performed an anterior resection surgery on Natividad. He found that the malignancy in her
G.R. No. 126467 January 31, 2007 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.
NATIVIDAD (Substituted by her children MARCELINO AGANA III, ENRIQUE AGANA, JR., Juan Fuentes, respondent in G.R. No. 126467, to perform hysterectomy on her.
EMMA AGANA ANDAYA, JESUS AGANA, and RAYMUND AGANA) and ENRIQUE AGANA,
Petitioners, After Dr. Fuentes had completed the hysterectomy, Dr. Ampil took over, completed the
vs. operation and closed the incision.
JUAN FUENTES, Respondent.
However, the operation appeared to be flawed. In the corresponding Record of Operation
x- - - - - - - - - - - - - - - - - - - -- - - - x dated April 11, 1984, the attending nurses entered these remarks:

G.R. No. 127590 January 31, 2007 "sponge count lacking 2

MIGUEL AMPIL, Petitioner, "announced to surgeon searched (sic) done but to no avail continue for closure."
vs.
NATIVIDAD AGANA and ENRIQUE AGANA, Respondents. On April 24, 1984, Natividad was released from the hospital. Her hospital and medical bills,
including the doctors’ fees, amounted to P60,000.00.
DECISION
After a couple of days, Natividad complained of excruciating pain in her anal region. She
SANDOVAL-GUTIERREZ, J.: 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
Hospitals, having undertaken one of mankind’s most important and delicate endeavors, oncologist to examine the cancerous nodes which were not removed during the operation.
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 On May 9, 1984, Natividad, accompanied by her husband, went to the United States to seek
character may be, must meet standards of responsibility commensurate with the further treatment. After four months of consultations and laboratory examinations,
undertaking to preserve and protect the health, and indeed, the very lives of those placed in Natividad was told she was free of cancer. Hence, she was advised to return to the
the hospital’s keeping.1 Philippines.

Assailed in these three consolidated petitions for review on certiorari is the Court of
Appeals’ Decision2 dated September 6, 1996 in CA-G.R. CV No. 42062 and CA-G.R. SP No.
32198 affirming with modification the Decision3 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.
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 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 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 dated
December 19, 1996.
Hence, the instant consolidated petitions.
In G.R. No. 126297, PSI alleged in its petition that the Court of Appeals erred in holding that:
(1) it is estopped from raising the defense that Dr. Ampil is not its employee; (2) it is
solidarily liable with Dr. Ampil; and (3) it is not entitled to its counterclaim against the
Aganas. PSI contends that Dr. Ampil is not its employee, but a mere consultant or
independent contractor. As such, he alone should answer for his negligence.
In G.R. No. 126467, the Aganas maintain that the Court of Appeals erred in finding that Dr.
Fuentes is not guilty of negligence or medical malpractice, invoking the doctrine of res ipsa
loquitur. They contend that the pieces of gauze are prima facie proofs that the operating
surgeons have been negligent.
Finally, in G.R. No. 127590, Dr. Ampil asserts that the Court of Appeals erred in finding him
liable for negligence and malpractice sans evidence that he left the two pieces of gauze in
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 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
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 from the effects of the
foreign object left in her body as her condition might permit. The ruling in Smith v. Zeagler10
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 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 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.
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.
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.
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.
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
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 Hospital26 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
Appeals28 that for purposes of apportioning responsibility in medical negligence cases, an
employer-employee relationship in effect exists between hospitals and their attending and
visiting physicians. This Court held:
"We now discuss the responsibility of the hospital in this particular incident. The unique
practice (among private hospitals) of filling up specialist staff with attending and visiting
"consultants," who are allegedly not hospital employees, presents problems in apportioning
responsibility for negligence in medical malpractice cases. However, the difficulty is more
apparent than real.
In the first place, hospitals exercise significant control in the hiring and firing of consultants
and in the conduct of their work within the hospital premises. Doctors who apply for
‘consultant’ slots, visiting or attending, are required to submit proof of completion of
residency, their educational qualifications, generally, evidence of accreditation by the
appropriate board (diplomate), evidence of fellowship in most cases, and references. These
requirements are carefully scrutinized by members of the hospital administration or by a
review committee set up by the hospital who either accept or reject the application. x x x.
After a physician is accepted, either as a visiting or attending consultant, he is normally
required to attend 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 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:
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
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 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:
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 it was
held that a corporation is bound by the knowledge acquired by or notice given to its agents
or officers within the scope of their authority and in reference to a matter to which their
authority extends. This means that the knowledge of any of the staff of Medical City Hospital
constitutes knowledge of PSI. Now, the failure of PSI, despite the attending nurses’ report, to
investigate and inform Natividad regarding the missing gauzes amounts to callous
negligence. Not only did PSI breach its duties to oversee or supervise all persons who
practice medicine within its walls, it also failed to take an active step in fixing the negligence
committed. This renders PSI, not only vicariously liable for the negligence of Dr. Ampil under
Article 2180 of the Civil Code, but also directly liable for its own negligence under Article
2176. In Fridena, the Supreme Court of Arizona held:
x x x In recent years, however, the duty of care owed to the patient by the hospital has
expanded. The emerging trend is to hold the hospital responsible where the hospital has
failed to monitor and review medical services being provided within its walls. See Kahn
Hospital Malpractice Prevention, 27 De Paul . Rev. 23 (1977).
Among the cases indicative of the ‘emerging trend’ is Purcell v. Zimbelman, 18 Ariz. App.
75,500 P. 2d 335 (1972). In Purcell, the hospital argued that it could not be held liable for the
malpractice of a medical practitioner because he was an independent contractor within the
hospital. The Court of Appeals pointed out that the hospital had created a professional staff
whose competence and performance was to be monitored and reviewed by the governing
body of the hospital, and the court held that a hospital would be negligent where it had
knowledge or reason to believe that a doctor using the facilities was employing a method of
treatment or care which fell below the recognized standard of care.
Subsequent to the Purcell decision, the Arizona Court of Appeals held that a hospital has
certain inherent responsibilities regarding the quality of medical care furnished to patients
within its walls and it must meet the standards of responsibility commensurate with this
undertaking. Beeck v. Tucson General Hospital, 18 Ariz. App. 165, 500 P. 2d 1153 (1972). This
court has confirmed the rulings of the Court of Appeals that a hospital has the duty of
supervising the competence of the doctors on its staff. x x x.
x 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.