PROFESSIONAL SERVICES, INC.

vs NATIVIDAD AND ENRIQUE AGANA

GR No. 126297, 31 January 2007
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NATIVIDAD (substituted by her children MARCELINO AGANA III, ENRIQUE AGANA, JR.,
EMMA AGANA ANDAYA, JESUS AGANA, and RAYMUND AGANA) AND ENRIQUE
AGANA vs JUAN FUENTES
GR No. 126467, 31 January 2007
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MIGUEL AMPIL vs NATIVIDAD AGANA AND ENRIQUE AGANA
GR No. 127590, 31 January 2007

FACTS: On 14 April 1984, Natividad Agana was rushed to The Medical City General Hospital
due to bowel movement difficulty and bloody anal discharge. She was diagnosed by Dr. Miguel
Ampil to be suffering from “cancer of the sigmoid.” Upon performing anterior resection surgery
on Natividad, Dr. Ampil found that cancer had spread on her left ovary. Dr. Ampil sought the
consent of Enrique Agana (Natividad’s husband) to permit Dr. Juan Fuentes to perform
hysterectomy on her. After Dr. Fuentes completed hysterectomy, Dr. Ampil took over to
complete the operation and to close the incision. However, the operation appeared to be flawed.
A couple of days after her release, Natividad complained of excruciating pain in her anal region.
Her doctors told her that said pain was the consequence of her operation. Dr. Ampil
recommended that she consult an oncologist to examine the cancerous node they were not able
to remove. Natividad then went to the US for further treatment and was later found free from
cancer. She then returned to the Philippines. Two weeks after Natividad’s arrival, her daughter
found a piece of gauze protruding from her vagina. Dr. Ampil removed said piece, and assured
her that the pains would vanish soon. Still suffering from pain, Natividad sought help from
Polymedic General Hospital where it was found that another piece of gauze badly infected her
vaginal vault. She took another surgery to remove the same. The spouses Agana then filed a
complaint for damages against Professional Services, Inc (owner of The Medical City), Dr.
Ampil and Dr. Fuentes. Enrique likewise filed administrative cases against Dr. Ampil (who was
unfortunately abroad at that time, so case did not proceed) and Dr. Fuentes. Pending said
cases, Natividad died and was substituted by her children. RTC favored the spouses, but the
administrative complaint against Dr. Fuentes was dismissed. CA affirmed that Dr. Ampil was
liable for damages but exonerated Dr. Fuentes from liability. Hence, these three consolidated
petitions for review on certiorari.

ISSUE (As to GR No. 126297): Whether PSI should be liable for the negligence of Dr. Ampil.

HOLDING: YES.
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, 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
Appealsthat for purposes of apportioning 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 ofapparent 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, 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. 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.
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. 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.