16.professional service inc. vs. ca 611 scra 282.pdf

8/10/2019 16.Professional Service Inc. vs. CA 611 SCRA 282.pdf

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16. Professional Service Inc. vs. CA 611 SCRA 282

FIRST DIVISION

G.R. No. 126297 January 31, 2007

PROFESSIONAL SERVICES, INC.,Petitioner,vs.NATIVIDAD and ENRIQUE AGANA,Respondents.

x - - - - - - - - - - - - - - - - - - - - - - - x

G.R. No. 126467 January 31, 2007

NATIVIDAD (Substituted by her children MARCELINO AGANA III, ENRIQUE AGANA, JR., EMMA AGANA ANDAYA,JESUS AGANA, and RAYMUND AGANA) and ENRIQUE AGANA, Petitioners,vs.JUAN FUENTES,Respondent.

x- - - - - - - - - - - - - - - - - - - -- - - - x

G.R. No. 127590 January 31, 2007

MIGUEL AMPIL, Petitioner,vs.

NATIVIDAD AGANA and ENRIQUE AGANA,Respondents.

D E C I S I O N

SANDOVAL-GUTIERREZ, J .:

Hospitals, having undertaken one of mankinds most important and delicate endeavors, must assume the graveresponsibility of pursuing it with appropriate care. The care and service dispensed through this high trust, however technical,complex and esoteric its character may be, must meet standards of responsibility commensurate with the undertaking topreserve and protect the health, and indeed, the very lives of those placed in the hospitals keeping.

1

Assailed in these three consolidated petitions for review on certiorari is the Court of Appeals Decision2dated September 6,

1996 in CA-G.R. CV No. 42062 and CA-G.R. SP No. 32198 affirming with modification the Decision3dated March 17, 1993

of the Regional Trial Court (RTC), Branch 96, Quezon City in Civil Case No. Q-43322 and nullifying its Order datedSeptember 21, 1993.

The facts, as culled from the records, are:

On April 4, 1984, Natividad Agana was rushed to the Medical City General Hospital (Medical City Hospital) because ofdifficulty of bowel movement and bloody anal discharge. After a series of medical examinations, Dr. Miguel Ampil, petitionerin G.R. No. 127590, diagnosed her to be suffering from "cancer of the sigmoid."

On April 11, 1984, Dr. Ampil, assisted by the medical staff4of the Medical City Hospital, performed an anterior resection

surgery on Natividad. He found that the malignancy in her sigmoid area had spread on her left ovary, necessitating theremoval of certain portions of it. Thus, Dr. Ampil obtained the consent of Natividads husband, Enrique Agana, to permit Dr.Juan Fuentes, respondent in G.R. No. 126467, to perform hysterectomy on her.

After Dr. Fuentes had completed the hysterectomy, 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 attendingnurses entered these remarks:

"sponge count lacking 2

"announced to surgeon searched (sic) done but to no avail continue for closure."

On April 24, 1984, Natividad was released from the hospital. Her hospital and medical bills, including the doctors fees,amounted to P60,000.00.

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 surgery. Dr. Ampil then recommended thatshe consult an oncologist to examine 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 fourmonths of consultations and laboratory examinations, Natividad was told she was free of cancer. Hence, she was advised toreturn to the Philippines.
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On August 31, 1984, Natividad flew back to the Philippines, still suffering from pains. Two weeks thereafter, her daughterfound a piece of gauze protruding from her vagina. Upon being informed about it, Dr. Ampil proceeded to her house wherehe managed to extract by hand a piece of gauze measuring 1.5 inches in width. He then assured her that the pains wouldsoon vanish.

Dr. Ampils assurance did not come true. Instead, the pains intensified, prompting Natividad to seek treatment at thePolymedic General Hospital. While confined there, Dr. Ramon Gutierrez detected the presence of another foreign object inher vagina -- a foul-smelling gauze measuring 1.5 inches in width which badly infected her vaginal vault. A recto-vaginalfistula 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 damagesagainst the Professional Services, Inc. (PSI), owner of the Medical City Hospital, Dr. Ampil, and Dr. Fuentes, docketed asCivil Case No. Q-43322. They alleged that the latter are liable for negligence for leaving two pieces of gauze insideNatividads body and malpractice for concealing their acts of negligence.

Meanwhile, Enrique Agana also filed with the Professional Regulation Commission (PRC) an administrative complaint forgross negligence and malpractice against Dr. Ampil and Dr. Fuentes, docketed as Administrative Case No. 1690. The PRCBoard of Medicine heard the case only with respect to Dr. Fuentes because it failed to acquire jurisdiction over Dr. Ampil whowas 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 fornegligence 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 awardfor exemplary damages and the interest thereon which are the liabilities of defendants Dr. Ampil and Dr. Fuentes only, asfollows:

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, asreimbursement 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, medicalfees, 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 attorneys fees, the sumof 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 fullpayment; 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 wasgranted in an Order dated May 11, 1993. Thereafter, the sheriff levied upon certain properties of Dr. Ampil and sold them forP451,275.00 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 suspendany further execution of the RTC Decision. However, not long thereafter, the Aganas again filed a motion for an alias writ ofexecution against the properties of PSI and Dr. Fuentes. On September 21, 1993, the RTC granted the motion and issuedthe corresponding writ, prompting Dr. Fuentes to file with the Court of Appeals a petition for certiorari and prohibition, withprayer for preliminary injunction, docketed as CA-G.R. SP No. 32198. During its pendency, the Court of Appeals issued aResolution

5dated 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.
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Meanwhile, on January 23, 1995, the PRC Board of Medicine rendered its Decision6in Administrative Case No. 1690

dismissing the case against Dr. Fuentes. The Board held that the prosecution failed to show that Dr. Fuentes was the onewho left the two pieces of gauze inside Natividads 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 herebyDISMISSED, 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 decisionappealed 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 inCA-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 bythe petitioner in connection with the writ of preliminary injunction issued by this Court on November 29, 1993 is herebycancelled.

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 Resolution7dated 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 itscounterclaim against the Aganas. PSI contends that Dr. Ampil is not its employee, but a mere consultant or independentcontractor. 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 ofnegligence or medical malpractice, invoking the doctrine of res ipsa loquitur. They contend that the pieces of gauze areprima 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 andmalpractice sans evidence that he left the two pieces of gauze in Natividads 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 properlycount the gauzes used during surgery; and (3) the medical intervention of the American doctors who examined Natividad inthe United States of America.

For our resolution are these three vital issues: first, whether the Court of Appeals erred in holding Dr. Ampil liable fornegligence 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 Courts attention to other possible causes o f Natividads detriment. Heargues that the Court should not discount either of the following possibilities: first, Dr. Fuentes left the gauzes in Nativi dadsbody after performing hysterectomy; second, the attending nurses erred in counting the gauzes; and third, the Americandoctors were the ones who placed the gauzes in Natividads body.

Dr. Ampils arguments are purely conjectural and without basis. Records show that he did not present any evidence to provethat the American doctors were the ones who put or left the gauzes in Natividads body. Neither did he submit evidence torebut 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 thesurgical operation.

Second, immediately after the operation, the nurses who assisted in the surgery noted in their report that thesponge count (was) lacking 2; that such anomaly was announced to surgeon and that a search was done but tono 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 thesurgery was performed.
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An operation requiring the placing of sponges in the incision is not complete until the sponges are properly removed, and it issettled that the leaving of sponges or other foreign substances in the wound after the incision has been closed is at leastprima facie negligence by the operating surgeon.

8To 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 patients life precludes a surgeon fromfurther 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 hispatients 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 relieffrom the effects of the foreign object left in her body as her condition might permit. The ruling in Smith v. Zeagle r

10is explicit,

thus:

The removal of all sponges used is part of a surgical operation, and when a physician or surgeon fails to remove a spongehe has placed in his patients body that should be removed as part of the operation, he thereby leaves his operationuncompleted and creates a new condition which imposes upon him the legal duty of calling the new condition to his patientsattention, 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 shewas experiencing was the ordinary consequence of her operation. Had he been more candid, Natividad could have taken theimmediate and appropriate medical remedy to remove the gauzes from her body. To our mind, what was initially an act ofnegligence 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 ofcase, 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 thatfailure or action caused injury to the patient.

11Simply 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 Natividads body before closureof the incision. When he failed to do so, it was his duty to inform Natividad about it. Dr. Ampil breached both duties. Suchbreach caused injury to Natividad, necessitating her further examination by American doctors and another surgery. That Dr.

Ampils negligence is the proximate cause12

of Natividads injury could be traced from his act of closing the incision despitethe information given by the attending nurses that two pieces of gauze were still missing. That they were later on extractedfrom Natividads vagina established the causal link between Dr. Ampils negligence and the injury. And what furtheraggravated such injury was his deliberate concealment of the missing gauzes from the knowledge of Natividad and herfamily.

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 thedoctrine of res ipsa loquitur. According to them, the fact that the two pieces of gauze were left inside Natividads body is aprima 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, takenwith the surrounding circumstances, may permit an inference or raise a presumption of negligence, or make out a plaintiffsprima facie case, and present a question of fact for defendant to meet with an explanation.

13Stated 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 issuch that it should not have occurred if he, having such control used proper care, it affords reasonable evidence, in theabsence of explanation that the injury arose from the defendants want of care, and the burden of proof is shifted to him toestablish 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) theoccurrence 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 ormanagement used proper care; and (4) the absence of explanation by the defendant. Of the foregoing requisites, the mostinstrumental 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 ofres ipsa loquitur will not lie.

It was duly established that Dr. Ampil was the lead surgeon during the operation of Natividad. He requested the assistanceof Dr. Fuentes only to perform hysterectomy when he (Dr. Ampil) found that the malignancy in her sigmoid area had spreadto her left ovary. Dr. Fuentes performed the surgery and thereafter reported and showed his work to Dr. Ampil. The latterexamined it and finding everything to be in order, allowed Dr. Fuentes to leave the operating room. Dr. Ampil then resumedoperating on Natividad. He was about to finish the procedure when the attending nurses informed him that two pieces of
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gauze were missing. A "diligent search" was conducted, but the misplaced gauzes were not found. Dr. Ampil then directedthat the incision be closed. During this entire period, Dr. Fuentes was no longer in the operating room and had, in fact, leftthe hospital.

Under the "Captain of the Ship" rule, the operating surgeon is the person in complete charge of the surgery room and allpersonnel connected with the operation. Their duty is to obey his orders.

16As 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 Natividads 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 anindependent or separate ground of liability, being a mere evidentiary rule.

17In 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 havebeen 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 theirliability for the negligence of physicians.

Until the mid-nineteenth century, hospitals were generally charitable institutions, providing medical services to the lowestclasses of society, without regard for a patients ability to pay.

18Those who could afford medical treatment were usually

treated at home by their doctors.19However, the days of house calls and philanthropic health care are over. The modernhealth care industry continues to distance itself from its charitable past and has experienced a significant conversion from anot-for-profit health care to for-profit hospital businesses. Consequently, significant changes in health law have accompaniedthe business-related changes in the hospital industry. One important legal change is an increase in hospital liability formedical 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 thedamage 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 super ior,thus:

ART. 2180. The obligation imposed by Article 2176 is demandable not only for ones own acts or omissions, but also forthose 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 theiremployees 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 theirassigned 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 thediligence 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 thedischarge of their duties, and their employer cannot be held liable for such fault or negligence. In the context of the presentcase, "a hospital cannot be held liable for the fault or negligence of a physician or surgeon in the treatment or operation ofpatients."

21

The foregoing view is grounded on the traditional notion that the professional status and the very nature of the physicianscalling preclude him from being classed as an agent or employee of a hospital, whenever he acts in a professionalcapacity.

22It has been said that medical practice strictly involves highly developed and specialized knowledge,

23such that

physicians are generally free to exercise their own skill and judgment in rendering medical services sansinterference.

24Hence, 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
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The case of Schloendorff v. Society of New York Hospital26

was then considered an authority for this view. The "Schloendorffdoctrine" regards a physician, even if employed by a hospital, as an independent contractor because of the skill he exercisesand the lack of control exerted over his work. Under this doctrine, hospitals are exempt from the application of therespondeat 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. Courtscame to realize that modern hospitals are increasingly taking active role in supplying and regulating medical care to patients.No longer were a hospitals functions limited to furnishing room, food, facilities for treatment and operation, and attendantsfor its patients. Thus, in Bing v. Thunig,

27the 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 andtreatment, even collecting for such services through legal action, if necessary. The court then concluded that there is noreason 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 ofour categorical pronouncement in Ramos v. Court of Appeals

28that for purposes of apportioning responsibility in medical

negligence cases, an employer-employee relationship in effect exists between hospitals and their attending and visitingphysicians. This Court held:

"We now discuss the responsibility of the hospital in this particular incident. The unique practice (among private hospitals) offilling up specialist staff with attending and visiting "consultants," who are allegedly not hospital employees, presentsproblems in apportioning responsibility for negligence in medical malpractice cases. However, the difficulty is more apparentthan 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 ofcompletion 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 membersof the hospital administration or by a review committee set up by the hospital who either accept or reject the application. x xx.

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 patientaudits and perform other tasks and responsibilities, for the privilege of being able to maintain a clinic in the hospital, and/orfor the privilege of admitting patients into the hospital. In addition to these, the physicians performance as a specialist isgenerally evaluated by a peer review committee on the basis of mortality and morbidity statistics, and feedback frompatients, nurses, interns and residents. A consultant remiss in his duties, or a consultant who regularly falls short of theminimum 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.Whileconsultants 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. Inassessing whether such a relationship in fact exists, the control test is determining. Accordingly, on the basis of theforegoing, we rule that for the purpose of allocating responsibility in medical negligence cases, an employer-employeerelationship in effect exists between hospitals and their attending and visiting physicians. "

But the Ramos pronouncement is not our only basis in sustaining PSIs liability. Its liability is also anchored upon the agencyprinciple of apparent authority or agency by estoppel and the doctrine of corporate negligence which have gainedacceptance in the determination of a hospitals liability for negligent acts of health professionals. The present case serves asa 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 agencyby estoppel,

29has 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 believingthat the relationship or the authority exists.

30The 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 hisvoluntary act placed the agent in such a situation that a person of ordinary prudence, conversant with business usages andthe nature of the particular business, is justified in presuming that such agent has authority to perform the particular act inquestion.

31

The applicability of apparent authority in the field of hospital liability was upheld long time ago in Irving v. Doctor Hospital ofLake Worth, Inc.

32There, 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 itsactions, has held out a particular physician as its agent and/or employee and that a patient has accepted treatment from thatphysician in the reasonable belief that it is being rendered in behalf of the hospital, then the hospital will be liable for thephysicians negligence.
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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 failureto 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 physiciansassociated or accredited by it, including those of Dr. Ampil and Dr. Fuentes. We concur with the Court of Appeals conclusionthat it "is now estopped from passing all the blame to the physicians whose names it proudly paraded in the public directoryleading the public to believe that it vouched for their skill and competence." Indeed, PSIs act is tantamount to holding out tothe 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 itsagents, authorized to perform medical or surgical services for its patients. As expected, these patients, Natividad being oneof 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 ofemployer-employee relationship between the hospital and the independent physician whose name and competence arecertainly certified to the general public by the hospitals act of listing him and his specialty in its lobby directory, as in the caseherein. The high costs of todays medical and health care should at least exact on the hospital greater, if not broader, legalresponsibility for the conduct of treatment and surgery within its facility by its accredited physician or surgeon, regardless ofwhether 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 throughother individuals, such as physicians. If these accredited physicians do their job well, the hospital succeeds in its mission ofoffering 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 andmanager of Medical City Hospital, "did not perform the necessary supervision nor exercise diligent efforts in the supervisionof Drs. Ampil and Fuentes and its nursing staff, resident doctors, and medical interns who assisted Drs. Ampil and Fuentesin the performance of their duties as surgeons."

34Premised 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 hospitalsliability for the negligent acts of health practitioners, absent facts to support the application of respondeat superior orapparent authority. Its formulation proceeds from the judiciarys acknowledgment that in these modern times, the duty ofproviding quality medical service is no longer the sole prerogative and responsibility of the physician. The modern hospitalshave changed structure. Hospitals now tend to organize a highly professional medical staff whose competence andperformance need to be monitored by the hospitals commensurate with their inherent responsibility to provide qualitymedical 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 thepatient; failing to require a consultation with or examination by members of the hospital staff; and failing to review thetreatment rendered to the patient." On the basis of Darling, other jurisdictions held that a hospitals corporate negligenceextends to permitting a physician known to be incompetent to practice at the hospital .

37With the passage of time, more

duties were expected from hospitals, among them: (1) the use of reasonable care in the maintenance of safe and adequatefacilities and equipment; (2) the selection and retention of competent physicians; (3) the overseeing or supervision of allpersons who practice medicine within its walls; and (4) the formulation, adoption and enforcement of adequate rules andpolicies that ensure quality care for its patients.

38Thus, in Tucson Medical Center, Inc. v. Misevich,

39it was held that a

hospital, following the doctrine of corporate responsibility, has the duty to see that it meets the standards of responsibilitiesfor the care of patients. Such duty includes the proper supervision of the members of its medical staff. And in Bost v.Riley,

40the 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 treatmentprescribed 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 theconcept of providing comprehensive medical services to the public. Accordingly, it has the duty to exercise reasonable careto 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 PSIs liability is traceable to its failure to conduct an investigation of the matter reported inthe nota bene of the countnurse. Such failure established PSIs part in the dark conspiracy of silence and concealment about the gauzes. Ethicalconsiderations, if not also legal, dictated the holding of an immediate inquiry into the events, if not for the benefit of thepatient to whom the duty is primarily owed, then in the interest of arriving at the truth. The Court cannot accept that the
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medical and the healing professions, through their members like defendant surgeons, and their institutions like PS Is hospitalfacility, can callously turn their backs on and disregard even a mere probability of mistake or negligence by refusing or failingto investigate a report of such seriousness as the one in Natividads case.

It is worthy to note that Dr. Ampil and Dr. Fuentes operated on Natividad with the assistance of the Medical City Hospitalsstaff, composed of resident doctors, nurses, and interns. As such, it is reasonable to conclude that PSI, as the operator ofthe hospital, has actual or constructive knowledge of the procedures carried out, particularly the report of the attendingnurses that the two pieces of gauze were missing. In Fridena v. Evans,

41it 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 constitutesknowledge of PSI. Now, the failure of PSI, despite the attending nurses report, to investigate and inform Natividad regardingthe missing gauzes amounts to callous negligence. Not only did PSI breach its duties to oversee or supervise all personswho practice medicine within its walls, it also failed to take an active step in fixing the negligence committed. This rendersPSI, not only vicariously liable for the negligence of Dr. Ampil under Article 2180 of the Civil Code, but also directly liable forits 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 tohold the hospital responsible where the hospital has failed to monitor and review medical services being provided within itswalls. 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). InPurcell, the hospital argued that it could not be held liable for the malpractice of a medical practitioner because he was anindependent contractor within the hospital. The Court of Appeals pointed out that the hospital had created a professionalstaff whose competence and performance was to be monitored and reviewed by the governing body of the hospital, and thecourt 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 responsibilitiesregarding the quality of medical care furnished to patients within its walls and it must meet the standards of responsibilitycommensurate with this undertaking. Beeck v. Tucson General Hospital, 18 Ariz. App. 165, 500 P. 2d 1153 (1972). Thiscourt has confirmed the rulings of the Court of Appeals that a hospital has the duty of supervising the competence of thedoctors 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 patients injuries. We find thatsuch general allegations of negligence, along with the evidence produced at the trial of this case, are sufficient to support thehospitals 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 fatherof a family in the accreditation and supervision of the latter. In neglecting to offer such proof, PSI failed to discharge itsburden 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 hisprofession. At the same time, he must apply reasonable care and diligence in the exercise of his skill and the application ofhis 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.
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