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Torts and Damages

Republic of the Philippines


SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 126297

February 11, 2008

PROFESSIONAL SERVICES, INC., petitioner,


vs.
THE COURT OF APPEALS and NATIVIDAD and ENRIQUE AGANA, respondents,
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - x
G.R. No. 126467

February 11, 2008

NATIVIDAD (Substituted by her children MARCELINO AGANA III, ENRIQUE AGANA, JR.,
EMMA AGANA ANDAYA, JESUS AGANA, and RAYMUND AGANA) and ENRIQUE AGANA,
petitioners,
vs.
THE COURT OF APPEALS and JUAN FUENTES, respondents,
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G.R. No. 127590

February 11, 2008

MIGUEL AMPIL, petitioner,


vs.
THE COURT OF APPEALS and NATIVIDAD AGANA and ENRIQUE AGANA, respondents.
RESOLUTION
SANDOVAL-GUTIERREZ, J.:
As the hospital industry changes, so must the laws and jurisprudence governing hospital liability.
The immunity from medical malpractice traditionally accorded to hospitals has to be eroded if we
are to balance the interest of the patients and hospitals under the present setting.
Before this Court is a motion for reconsideration filed by Professional Services, Inc. (PSI),
petitioner in G.R. No. 126297, assailing the Courts First Division Decision dated January 31,
2007, finding PSI and Dr. Miguel Ampil, petitioner in G.R. No. 127590, jointly and severally liable
for medical negligence.

the medical staff1 of Medical City, performed an anterior resection surgery upon her. During the
surgery, he found that the malignancy in her sigmoid area had spread to her left ovary,
necessitating the removal of certain portions of it. Thus, Dr. Ampil obtained the consent of Atty.
Enrique Agana, Natividads husband, to permit Dr. Juan Fuentes, respondent in G.R. No.
126467, to perform hysterectomy upon Natividad.
Dr. Fuentes performed and completed the hysterectomy. Afterwards, Dr. Ampil took over,
completed the operation and closed the incision. However, the operation appeared to be flawed.
In the corresponding Record of Operation dated April 11, 1984, the attending nurses entered
these remarks:
sponge count lacking 2
announced to surgeon searched done (sic) but to no avail continue for closure.
After a couple of days, Natividad complained of excruciating pain in her anal region. She
consulted both Dr. Ampil and Dr. Fuentes about it. They told her that the pain was the natural
consequence of the surgical operation performed upon her. Dr. Ampil recommended that
Natividad consult an oncologist to treat the cancerous nodes which were not removed during the
operation.
On May 9, 1984, Natividad, accompanied by her husband, went to the United States to seek
further treatment. After four (4) months of consultations and laboratory examinations, Natividad
was told that she was free of cancer. Hence, she was advised to return to the Philippines.
On August 31, 1984, Natividad flew back to the Philippines, still suffering from pains. Two (2)
weeks thereafter, her daughter found a piece of gauze protruding from her vagina. Dr. Ampil was
immediately informed. He proceeded to Natividads house where he managed to extract by hand
a piece of gauze measuring 1.5 inches in width. Dr. Ampil then assured Natividad that the pains
would soon vanish.
Despite Dr. Ampils assurance, the pains intensified, prompting Natividad to seek treatment at
the Polymedic General Hospital. While confined thereat, Dr. Ramon Gutierrez detected the
presence of a foreign object in her vagina -- a foul-smelling gauze measuring 1.5 inches in
width. The gauze had badly infected her vaginal vault. A recto-vaginal fistula had formed in her
reproductive organ which forced stool to excrete through the vagina. Another surgical operation
was needed to remedy the situation. Thus, in October 1984, Natividad underwent another
surgery.
On November 12, 1984, Natividad and her husband filed with the Regional Trial Court, Branch
96, Quezon City a complaint for damages against PSI (owner of Medical City), Dr. Ampil and Dr.
Fuentes.
On February 16, 1986, pending the outcome of the above case, Natividad died. She was duly
substituted by her above-named children (the Aganas).

A brief revisit of the antecedent facts is imperative.


On April 4, 1984, Natividad Agana was admitted at the Medical City General Hospital (Medical
City) because of difficulty of bowel movement and bloody anal discharge. Dr. Ampil diagnosed
her to be suffering from "cancer of the sigmoid." Thus, on April 11, 1984, Dr. Ampil, assisted by

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On March 17, 1993, the trial court rendered judgment in favor of spouses Agana finding PSI, Dr.
Ampil and Dr. Fuentes jointly and severally liable. On appeal, the Court of Appeals, in its
Decision dated September 6, 1996, affirmed the assailed judgment with modification in the
sense that the complaint against Dr. Fuentes was dismissed.

Torts and Damages


PSI, Dr. Ampil and the Aganas filed with this Court separate petitions for review on certiorari. On
January 31, 2007, the Court, through its First Division, rendered a Decision holding that PSI is
jointly and severally liable with Dr. Ampil for the following reasons: first, there is an employeremployee relationship between Medical City and Dr. Ampil. The Court relied on Ramos v. Court
of Appeals,2 holding that for the purpose of apportioning responsibility in medical negligence
cases, an employer-employee relationship in effect exists between hospitals and their
attending and visiting physicians; second, 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 employer-employee relationship between them
under the doctrine of ostensible agency or agency by estoppel; and third, PSIs failure to
supervise Dr. Ampil and its resident physicians and nurses and to take an active step in order to
remedy their negligence rendered it directly liable under the doctrine of corporate negligence.
In its motion for reconsideration, PSI contends that the Court erred in finding it liable under
Article 2180 of the Civil Code, there being no employer-employee relationship between it and its
consultant, Dr. Ampil. PSI stressed that the Courts Decision in Ramos holding that "an
employer-employee relationship in effect exists between hospitals and their attending and
visiting physicians for the purpose of apportioning responsibility" had been reversed in a
subsequent Resolution.3 Further, PSI argues that the doctrine of ostensible agency or
agency by estoppel cannot apply because spouses Agana failed to establish one requisite of
the doctrine, i.e., that Natividad relied on the representation of the hospital in engaging the
services of Dr. Ampil. And lastly, PSI maintains that the doctrine of corporate negligence is
misplaced because the proximate cause of Natividads injury was Dr. Ampils negligence.
The motion lacks merit.
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,
both are jointly and severally liable to the Aganas. This ruling proceeds from the following
ratiocination in Ramos:
We now discuss the responsibility of the hospital in this particular incident. The unique
practice (among private hospitals) of filling up specialist staff with attending and
visiting "consultants," who are allegedly not hospital employees, presents problems in
apportioning responsibility for negligence in medical malpractice cases. However, the
difficulty is only more apparent than real.
In the first place, hospitals exercise significant control in the hiring and firing of
consultants and in the conduct of their work within the hospital premises.
Doctors who apply for "consultant" slots, visiting or attending, are required to submit
proof of completion of residency, their educational qualifications; generally, evidence
of accreditation by the appropriate board (diplomate), evidence of fellowship in most
cases, and references. These requirements are carefully scrutinized by members of
the hospital administration or by a review committee set up by the hospital who either
accept or reject the application. This is particularly true with respondent hospital.
After a physician is accepted, either as a visiting or attending consultant, he is
normally required to attend clinico-pathological conferences, conduct bedside
rounds for clerks, interns and residents, moderate grand rounds and patient
audits and perform other tasks and responsibilities, for the privilege of being
able to maintain a clinic in the hospital, and/or for the privilege of admitting
patients into the hospital. In addition to these, the physicians performance as a

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specialist is generally evaluated by a peer review committee on the basis of


mortality and morbidity statistics, and feedback from patients, nurses, interns
and residents. A consultant remiss in his duties, or a consultant who regularly
falls short of the minimum standards acceptable to the hospital or its peer
review committee, is normally politely terminated.
In other words, private hospitals hire, fire and exercise real control over their attending
and visiting "consultant" staff. While "consultants" are not, technically employees,
a point which respondent hospital asserts in denying all responsibility for the
patients condition, the control exercised, the hiring, and the right to terminate
consultants all fulfill the important hallmarks of an employer-employee
relationship, with the exception of the payment of wages. In assessing whether
such a relationship in fact exists, the control test is determining. Accordingly,
on the basis of the foregoing, we rule that for the purpose of allocating
responsibility in medical negligence cases, an employer-employee relationship
in effect exists between hospitals and their attending and visiting physicians.
This being the case, the question now arises as to whether or not respondent hospital
is solidarily liable with respondent doctors for petitioners condition.
The basis for holding an employer solidarily responsible for the negligence of its
employee is found in Article 2180 of the Civil Code which considers a person
accountable not only for his own acts but also for those of others based on the
formers responsibility under a relationship of partia ptetas.
Clearly, in Ramos, the Court considered the peculiar relationship between a hospital and its
consultants on the bases of certain factors. One such factor is the "control test" wherein the
hospital exercises control in the hiring and firing of consultants, like Dr. Ampil, and in the conduct
of their work.
Actually, contrary to PSIs contention, the Court did not reverse its ruling in Ramos. What it
clarified was that the De Los Santos Medical Clinic did not exercise control over its consultant,
hence, there is no employer-employee relationship between them. Thus, despite the granting of
the said hospitals motion for reconsideration, the doctrine in Ramos stays, i.e., for the purpose
of allocating responsibility in medical negligence cases, an employer-employee relationship
exists between hospitals and their consultants.
In the instant cases, PSI merely offered a general denial of responsibility, maintaining that
consultants, like Dr. Ampil, are "independent contractors," not employees of the hospital. Even
assuming that Dr. Ampil is not an employee of Medical City, but an independent contractor, still
the said hospital is liable to the Aganas.
In Nograles, et al. v. Capitol Medical Center, et al.,4 through Mr. Justice Antonio T. Carpio, the
Court held:
The question now is whether CMC is automatically exempt from liability considering
that Dr. Estrada is an independent contractor-physician.
In general, a hospital is not liable for the negligence of an independent contractorphysician. There is, however, an exception to this principle. The hospital may be liable
if the physician is the "ostensible" agent of the hospital. (Jones v. Philpott, 702 F.
Supp. 1210 [1988]) This exception is also known as the "doctrine of apparent

Torts and Damages


authority." (Sometimes referred to as the apparent or ostensible agency theory. [King
v. Mitchell, 31 A.D.3rd 958, 819 N.Y. S.2d 169 (2006)].

on how to establish that hospital. And from there, I have known that he was a
specialist when it comes to that illness.

xxx

Atty. Agcaoili

The doctrine of apparent authority essentially involves two factors to determine the
liability of an independent contractor-physician.

On that particular occasion, April 2, 1984, what was your reason for choosing to
contact Dr. Ampil in connection with your wifes illness?

The first factor focuses on the hospitals manifestations and is sometimes described
as an inquiry whether the hospital acted in a manner which would lead a reasonable
person to conclude that the individual who was alleged to be negligent was an
employee or agent of the hospital. (Diggs v. Novant Health, Inc., 628 S.E.2d 851
(2006) citing Hylton v. Koontz, 138 N.C. App. 629 (2000). In this regard, the hospital
need not make express representations to the patient that the treating physician
is an employee of the hospital; rather a representation may be general and
implied. (Id.)

A First, before that, I have known him to be a specialist on that part of the body as a
surgeon; second, I have known him to be a staff member of the Medical City
which is a prominent and known hospital. And third, because he is a neighbor, I
expect more than the usual medical service to be given to us, than his ordinary
patients.5

The doctrine of apparent authority is a specie of the doctrine of estoppel. Article 1431
of the Civil Code provides that "[t]hrough estoppel, an admission or representation is
rendered conclusive upon the person making it, and cannot be denied or disproved as
against the person relying thereon." Estoppel rests on this rule: "Whether a party has,
by his own declaration, act, or omission, intentionally and deliberately led another to
believe a particular thing true, and to act upon such belief, he cannot, in any litigation
arising out of such declaration, act or omission, be permitted to falsify it. (De Castro v.
Ginete, 137 Phil. 453 [1969], citing Sec. 3, par. A, Rule 131 of the Rules of Court. See
also King v. Mitchell, 31 A.D.3rd 958, 819 N.Y.S.2d 169 [2006]).
xxx
The second factor focuses on the patients reliance. It is sometimes characterized as
an inquiry on whether the plaintiff acted in reliance upon the conduct of the hospital or
its agent, consistent with ordinary care and prudence. (Diggs v. Novant Health, Inc.)
PSI argues that the doctrine of apparent authority cannot apply to these cases because
spouses Agana failed to establish proof of their reliance on the representation of Medical City
that Dr. Ampil is its employee.
The argument lacks merit.
Atty. Agana categorically testified that one of the reasons why he chose Dr. Ampil was that he
knew him to be a staff member of Medical City, a prominent and known hospital.
Q

Will you tell us what transpired in your visit to Dr. Ampil?

A Well, I saw Dr. Ampil at the Medical City, I know him to be a staff member
there, and I told him about the case of my wife and he asked me to bring my wife over
so she could be examined. Prior to that, I have known Dr. Ampil, first, he was staying
in front of our house, he was a neighbor, second, my daughter was his student in the
University of the East School of Medicine at Ramon Magsaysay; and when my
daughter opted to establish a hospital or a clinic, Dr. Ampil was one of our consultants

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Clearly, PSI is estopped from passing the blame solely to Dr. Ampil. Its act of displaying his
name and those of the other physicians in the public directory at the lobby of the hospital
amounts to holding out to the public that it offers quality medical service through the listed
physicians. This justifies Atty. Aganas belief that Dr. Ampil was a member of the hospitals staff.
It must be stressed that under the doctrine of apparent authority, the question in every
case is whether the principal has by his voluntary act placed the agent in such a situation
that a person of ordinary prudence, conversant with business usages and the nature of
the particular business, is justified in presuming that such agent has authority to perform
the particular act in question.6 In these cases, the circumstances yield a positive answer to
the question.
The challenged Decision also anchors its ruling on the doctrine of corporate responsibility.7
The duty of providing quality medical service is no longer the sole prerogative and responsibility
of the physician. This is because the modern hospital now tends to organize a highlyprofessional medical staff whose competence and performance need also to be monitored by
the hospital commensurate with its inherent responsibility to provide quality medical care. 8 Such
responsibility includes the proper supervision of the members of its medical staff.
Accordingly, the hospital has the duty to make a reasonable effort to monitor and oversee
the treatment prescribed and administered by the physicians practicing in its premises.
Unfortunately, PSI had been remiss in its duty. It did not conduct an immediate investigation
on the reported missing gauzes to the great prejudice and agony of its patient. Dr. Jocson, a
member of PSIs medical staff, who testified on whether the hospital conducted an investigation,
was evasive, thus:
Q We go back to the operative technique, this was signed by Dr. Puruganan,
was this submitted to the hospital?
A

Yes, sir, this was submitted to the hospital with the record of the patient.

Was the hospital immediately informed about the missing sponges?

That is the duty of the surgeon, sir.

Torts and Damages


Q As a witness to an untoward incident in the operating room, was it not your
obligation, Dr., to also report to the hospital because you are under the control
and direction of the hospital?
A

The hospital already had the record of the two OS missing, sir.

If you place yourself in the position of the hospital, how will you recover.

You do not answer my question with another question.

Did the hospital do anything about the missing gauzes?

The hospital left it up to the surgeon who was doing the operation, sir.

Did the hospital investigate the surgeon who did the operation?

I am not in the position to answer that, sir.

Q You never did hear the hospital investigating the doctors involved in this
case of those missing sponges, or did you hear something?
xxxxxx
A I think we already made a report by just saying that two sponges were
missing, it is up to the hospital to make the move.
Atty. Agana
Precisely, I am asking you if the hospital did a move, if the hospital did a move.
A

I cannot answer that.

Court
By that answer, would you mean to tell the Court that you were aware if there
was such a move done by the hospital?
A I cannot answer that, your honor, because I did not have any more followup of the case that happened until now.9
The above testimony obviously shows Dr. Jocsons lack of concern for the patients. 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, 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.

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Moreover, there is merit in the trial courts finding that the failure of PSI to conduct an
investigation "established PSIs part in the dark conspiracy of silence and concealment
about the gauzes." The following testimony of Atty. Agana supports such findings, thus:
Q You said you relied on the promise of Dr. Ampil and despite the promise you were
not able to obtain the said record. Did you go back to the record custodian?
A

I did not because I was talking to Dr. Ampil. He promised me.

After your talk to Dr. Ampil, you went to the record custodian?

A I went to the record custodian to get the clinical record of my wife, and I
was given a portion of the records consisting of the findings, among them, the
entries of the dates, but not the operating procedure and operative report. 10
In sum, we find no merit in the motion for reconsideration.
WHEREFORE, we DENY PSIs motion for reconsideration with finality.
SO ORDERED.