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Supreme Court of the Philippines

568 Phil. 158

FIRST DIVISION
G.R. No. 126297, February 11, 2008
PROFESSIONAL SERVICES, INC., Petitioner, vs.
THE COURT OF APPEALS and NATIVIDAD and
ENRIQUE AGANA, Respondents,
G.R. No. 126467
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,
G.R. No. 127590
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
Court’s 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.

A brief revisit of the antecedent facts is imperative.

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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 the medical staff[1] 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, Natividad’s 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 Natividad’s 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. Ampil’s 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

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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).

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.

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 employer-employee 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, PSI’s 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, PSI’s 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 Court’s 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

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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 Natividad’s
injury was Dr. Ampil’s negligence.

The motion lacks merit.

As earlier mentioned, the First Division, in its assailed Decision, ruled

that an employer-employee 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 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

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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 patient’s 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 petitioner’s 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 former’s 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 PSI’s 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 hospital’s 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

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“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 contractor-physician. 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 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)].

xxx

The doctrine of apparent authority essentially involves two

factors to determine the liability of an independent
contractor-physician.

The first factor focuses on the hospital’s 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.)

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,

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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 patient’s 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 on how to establish that hospital. And from
there, I have  known that he was a specialist when it comes to
that illness.
Atty. Agcaoili
On  that particular occasion, April 2, 1984, what was your
reason for  choosing to contact Dr. Ampil in connection with
your wife’s illness?
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]

Clearly, PSI is estopped from passing the blame solely to Dr. Ampil.

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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. Agana’s belief that Dr. Ampil was a
member of the hospital’s 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 highly-professional 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 PSI’s
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.

Q Was the hospital immediately informed about the

missing sponges?
A That is the duty of the surgeon, sir.

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

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The hospital already had the record of the two OS

missing, sir.

Q If you place yourself in the position of the

hospital, how will you recover.
A You do not answer my question with another
question.

Q Did the hospital do anything about the missing

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

Q Did the hospital investigate the surgeon who did

the operation?
A 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?

x x x                            x x x

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 follow-up of the case that
happened until now.[9]

The above testimony obviously shows Dr. Jocson’s lack of concern

for the patients. Such conduct is reflective of the hospital’s
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

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negligence of Dr. Ampil under Article 2180 of the Civil Code, but also
directly liable for its own negligence under Article 2176.

Moreover, there is merit in the trial court’s finding that the failure of
PSI to conduct an investigation “established PSI’s 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.

Q 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 PSI’s motion for reconsideration with
finality.

SO ORDERED.

Puno, C.J., Corona, Azcuna, and Leonardo-De Castro, JJ., concur.

[1]
The medical staff was composed of physicians, both residents and
interns, as well as nurses.
[2]
G.R. No. 124354, December 29, 1999, 321 SCRA 584.
[3]
Promulgated on April 11, 2002.
[4]
G.R. No. 142625, December 19, 2006, 511 SCRA 204.
[5]
TSN, April 12, 1985, pp. 25-26.
[6]
Id., citing Hudson V.C., Loan Assn., Inc. v. Horowytz, 116 N.J.L. 605,
608, 186 A 437 (Sup. Ct. 1936).

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[7]
The corporate negligence doctrine imposes several duties on a
hospital: (1) to use reasonable care in the maintenance of safe and
adequate facilities and equipment; (2) to select and retain only
competent physicians; (3) to oversee as to patient care all persons who
practice medicine within its walls; and (4) to formulate, adopt, and
enforce adequate rules and policies to ensure quality care for its
patients. These special tort duties arise from the special relationship
existing between a hospital or nursing home and its patients, which are
based on the vulnerability of the physically or mentally ill persons and
their inability to provide care for themselves. 40 A Am Jur 2d 28 citing
Funkhouser v. Wilson, 89 Wash. App. 644, 950 P 2d 501 (Div.1 1998),
review granted, 135 Wash. 2d 1001,959 P 2d 126 (1998).
[8]
Purcell v. Zimbelman, 18 Ariz. App. 75, 500 P2d 335 (1972).
[9]
TSN, February 26, 1987, pp. 26-28.
[10]
TSN, November 22, 1985, pp. 52-53.

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