Yrasuegui vs. Phil Airlines, G.R. No. 168081, Oct.

17, 2008
Facts:
Armando G. Yrasuegui was a former international flight steward of Philippine Airlines,
Inc. (PAL). He stands five feet and eight inches (58) with a large body frame. The
proper weight for a man of his height and body structure is from 147 to 166 pounds,
the ideal weight being 166 pounds, as mandated by the Cabin and Crew
Administration Manual of PAL. His weight problem dates back to 1984 when PAL
advised him to go on an extended vacation leave from December 29, 1984 to March
4, 1985 to address his weight concerns. For failure to meet the weight standards
another leave without pay from March 5, 1985 to November 1985 was imposed. He
met the required weight and was allowed to work but his weight problem recurred,
thus another leave without pay from October 17, 1988 to February 1989. From 1989
to 1992 his weight fluctuated from 209lb, 215lb, 217lb, 212lb, and 205. During that
period he was requested to lose weight and to report for weight checks which he
constantly failed to do. In the meantime his status was off-duty. Finally in 1993,
petitioner was formally informed by PAL that due to his inability to attain his ideal
weight, and considering the utmost leniency extended to him which spanned a
period covering a total of almost five (5) years, his services were considered
terminated effective immediately. He then filed a complaint for illegal dismissal
against PAL. The Labor Arbiter ruled that he was illegally dismissed and entitles to
reinstatement, backwages and attorneys fees. The NLRC affirmed the LA. The CA
reversed the NLRC.
Issue: Whether or not petitioner was illegally dismissed.
Ruling:The obesity of petitioner is a ground for dismissal under Article 282(e) of the
Labor Code. The weight standards of PAL constitute a continuing qualification of an
employee in order to keep the job. Tersely put, an employee may be dismissed the
moment he is unable to comply with his ideal weight as prescribed by the weight
standards. The dismissal would fall under Article 282(e) of the Labor Code. As
explained by the CA:
x x x [T]he standards violated in this case were not mere orders of the employer;
they were the prescribed weights that a cabin crew must maintain in order to
qualify for and keep his or her position in the company. In other words, they were
standards that establish continuing
qualifications for an employees position. The failure to meet the employers
qualifying standards is in fact a ground that does not squarely fall under grounds (a)
to (d) and is therefore one that falls under Article 282(e) the other causes
analogous to the foregoing.

By its nature, these qualifying standards are norms that apply prior to and after an
employee is hired. x x x
We hold that the obesity of petitioner, when placed in the context of his work as flight
attendant, becomes an analogous cause under Article 282(e) of the Labor Code that
justifies his dismissal from the service. His obesity may not be unintended, but is
nonetheless voluntary.
II. The dismissal of petitioner can be predicated on the bona fide occupational
qualification defense. Employment in particular jobs may not be limited to persons of
a particular sex, religion, or national origin unless the employer can show that sex,
religion, or national origin is an actual qualification for performing the job. The
qualification is called a bona fide occupational qualification (BFOQ). A common
carrier, from the nature of its business and for reasons of public policy, is bound to
observe extraordinary diligence for the safety of the passengers it transports. Thus, it
is only logical to hold that the weight standards of PAL show its effort to comply with
the exacting obligations imposed upon it by law by virtue of being a common carrier.
The primary objective of PAL in the imposition of the weight standards for cabin crew
is flight safety. The task of a cabin crew or flight attendant is not limited to serving
meals or attending to the whims and caprices of the passengers. The most important
activity of the cabin crew is to care for the safety of passengers and the evacuation of
the aircraft when an emergency occurs. Passenger safety goes to the core of the job
of a cabin attendant. Truly, airlines need cabin attendants who have the necessary
strength to open emergency doors, the agility to attend to passengers in cramped
working conditions, and the stamina to withstand grueling flight schedules. On board
an aircraft, the body weight and size of a cabin attendant are important factors to
consider in case of emergency. Aircrafts have constricted cabin space, and narrow
aisles and exit doors. Thus, the arguments of respondent that [w]hether the
airlines flight attendants are overweight or not has no direct relation to its mission of
transporting passengers to their destination; and that the weight standards has
nothing to do with airworthiness of respondents airlines, must fail. The job of a cabin
attendant during emergencies is to speedily get the passengers out of the aircraft
safely. Being overweight necessarily impedes mobility. Indeed, in an emergency
situation, seconds are what cabin attendants are dealing with, not minutes. Three lost
seconds can translate into three lost lives. Evacuation might slow down just because
a wide-bodied cabin attendant is blocking the narrow aisles. Petitioner is entitled to
separation pay. Normally, a legally dismissed employee is not entitled to separation
pay. This may be deduced from the language of Article 279 of the Labor Code that
[a]n employee who is unjustly dismissed from work shall be entitled to
reinstatement without loss of seniority rights and other privileges and to his full
backwages, inclusive of allowances, and to his other benefits or their monetary
equivalent computed from the time his compensation was withheld from him up to the
time of his actual reinstatement. Luckily for petitioner, this is not an ironclad rule.

Exceptionally, separation pay is granted to a legally dismissed employee as an act

social justice, or based on equity. In both instances, it is required that the
dismissal (1) was not for serious misconduct; and (2) does not reflect on the moral
character of the employee. Here, We grant petitioner separation pay equivalent to
one-half (1/2) months pay for every year of service. It should include regular
allowances which he might have been receiving.
Corporate Law Case Digest:Professional Services, Inc V. CA (2010)
FACTS:
Enrique Agana told his wife Natividad Agana to go look for their neighbor, Dr. Ampil,
a surgeon staff member of Medical City, a prominent and known hospital
Natividad suffered from injury due to 2 gauges left inside her body so they
sued Professional Inc. (PSI) Despite, the report of 2 missing gauzes after the
operation PSI did NOT initiate an investigation
ISSUE: W/N PSI should be liable for tort.
HELD: YES. 15M + 12% int. until full satisfaction.
While PSI had no power to control the means/method by which Dr. Ampil conducted
the surgery on Natividad, they had the power to review or cause the review PSI had
the duty to tread on as captain of the ship for the purpose of ensuing the safety of
thepatients availing themselves of its services and facilities PSI defined its standards
of corporate conduct:
Even after her operation to ensure her safety as a patient NOT limited to record the 2
missing gauzes Extended to determining Dr. Ampils role in it, bringing the matter to
his attention and correcting his negligence
Admission bars itself from arguing that its corp. resp. is NOT yet in existence at the
time Natividad underwent treatment Dr. Ampil - medial negligence
PSI - Corporate Negligence
NOTE:
Liability unique to this case because of implied agency and admitted corporate duty
26 years already and Dr. Ampil's status could no longer be ascertained
ZEL T. ZAFRA and EDWIN B. ECARMA, petitioners, vs. HON. COURT OF
APPEALS, PHILIPPINE LONG DISTANCE TELEPHONE CO., INC.,
AUGUSTO COTELO, and ERIBERTO MELLIZA, respondents.
For review on certiorari is the decision[1] of the Court of Appeals dated
December 22, 1998, in CA-G.R. SP. No. 48578, reversing that of the voluntary

arbitrator which ordered respondent Philippine Long Distance Telephone Co. (PLDT)
to reinstate petitioners. Also impugned is the resolution dated May 24, 1999, denying
petitioners motion for reconsideration.
The undisputed facts, as set forth in the decision of the Court of Appeals, are as
follows:
Petitioner Zel T. Zafra was hired by PLDT on October 1, 1984 as Operations
Analyst II with a monthly salary of P14,382 while co-petitioner Edwin B. Ecarma was
hired as Junior Operations Analyst I on September 16, 1987 at a monthly rate of
P12,032. Both were regular rank-and-file employees assigned at the Regional
Operations and Maintenance Control Center (ROMCC) of PLDTs Cebu Provincial
Division. They were tasked to maintain the operations and maintenance of the
telephone exchanges in the Visayas and Mindanao areas.[2]
In March 1995, petitioners were chosen for the OMC Specialist and System
Software Acceptance Training Program in Germany in preparation for ALCATEL
1000 S12, a World Bank-financed PLDT project in line with its Zero Backlog
Program. ALCATEL, the foreign supplier, shouldered the cost of their training and
travel expenses. Petitioners left for Germany on April 10, 1995 and stayed there until
July 21, 1995.[3]
On July 12, 1995, while petitioners were in Germany, a certain Mr. R. Relucio,
SwitchNet Division Manager, requested advice, through an inter-office memorandum,
from the Cebu and Davao Provincial Managers if any of the training participants were
interested to transfer to the Sampaloc ROMCC to address the operational
requirements therein. The transfer was to be made before the ALCATEL exchanges
and operations and maintenance center in Sampaloc would become operational.
Upon petitioners return from Germany, a certain Mr. W.P. Acantillado, Senior
Manager of the PLDT Cebu Plant, informed them about the memorandum. They
balked at the idea, but PLDT, through an inter-office memorandum dated December
21, 1995, proceeded to transfer petitioners to the Sampaloc ROMCC effective
January 3, 1996.[4]
Petitioners left Cebu for Manila on December 27, 1995 to air their grievance to
PLDT and to seek assistance from their union head office in Mandaluyong. PLDT
ordered petitioners to report for work on January 16, 1996, but they asked for a
deferment to February 1, 1996. Petitioners reported for work at the Sampaloc office
on January 29, 1996. Meanwhile PLDT moved the effectivity date of their transfer to
March 1, 1996. On March 13, 1996, petitioners again appealed to PLDT to no
avail. And, because all their appeals fell on deaf ears, petitioners, while in Manila,
tendered their resignation letters on March 21, 1996. Consequently, the expenses for
their training in Germany were deducted from petitioners final pay.

On September 11, 1996, petitioners filed a complaint with the National Labor
Relations Commission Regional Arbitration Branch No. 7 for alleged constructive
dismissal and non-payment of benefits under the Collective Bargaining
Agreement.[5] In an order dated November 10, 1996, the presiding labor arbiter
referred the complaint to the National Conciliation and Mediation Board, Cebu City,
for appropriate action.[6]On January 17, 1997, the parties agreed to designate lawyer
Rolando M. Lim as their voluntary arbitrator.[7]
In their complaint, petitioners prayed that their dismissal from employment be
declared illegal. They also asked for reinstatement with full backwages, refund of
unauthorized deductions from their final pay, including damages, costs of litigation,
and attorneys fees.[8]
Respondent PLDT, for its part, averred that petitioners agreed to accept any
assignment within PLDT in their application for employment[9]and also in the
undertaking[10] they executed prior to their training in Germany. It prayed that
petitioners complaint be dismissed.
After submission of their respective position papers and admission of facts, the
case was set for hearing. Petitioners presented their witnesses and made their
formal offer of documentary evidence. PLDT, however, requested for a re-setting of
the hearing from October 9 and 10, 1997 to November 10 and 11, 1997.[11] But on
those dates PLDT did not appear. Nor did it file any notice of postponement or
motion to cancel the hearings.[12]
Code,[13]

Upon petitioners motion and pursuant to Article 262-A of the Labor

the
voluntary arbitrator issued an order admitting all documentary exhibits offered in
evidence by petitioners and submitting the case for resolution.[14] In said order, PLDT
was declared to have waived its right to present evidence on account of its unjustified
failure to appear in the November 10 to 11 hearings.
On December 1, 1997, the voluntary arbitrator issued a decision which reads:
IN VIEW OF ALL THE FOREGOING CONSIDERATIONS, judgment is hereby
rendered in the above case, in favor of complainants Zel Zafra and Edwin Ecarma
and against respondent PLDT, as follows:
1. Declaring that complainants were illegally dismissed by reason of
the forced resignations or constructive discharge from their
respective employment with PLDT;
2. Ordering the reinstatement of complainants without loss of seniority
rights and other privileges, and granting the award of full
backwages from April 22, 1996, inclusive of allowances granted in
the CBA or their monetary equivalent computed from the time

complainants compensation were withheld up to the time of their

actual reinstatement, or in lieu thereof, ordering the payment of
separation pay with full backwages;
3. Ordering the refund of P35,721.81 to complainant Zafra and
P24,186.67 to complainant Ecarma, which amounts constitute as
unauthorized deductions from their final pay;
4. Ordering payment of P50,000.00 as moral damages; P20,000.00 as
exemplary damages and P20,000.00 as refund for litigation
expenses;
5. Ordering payment of 10% Attorneys Fees computed on all
adjudicated claims.
SO ORDERED.[15]
PLDTs motion for reconsideration of the above decision was denied on July 10,
1998.[16] On August 7, 1998, PLDT initiated a special civil action for certiorari with the
Court of Appeals,[17] which was treated as a petition for review.[18] On December 22,
1998, the CA ruled in favor of PLDT and reversed the voluntary arbitrators decision,
in this wise:
WHEREFORE, the instant petition is hereby given due course. Accordingly, the
assailed Order is hereby REVERSED with the exception of the refund, which is
hereby ordered, of the amount of P35,721.81 to respondent Zafra and P24,186.67 to
respondent Ecarma representing unauthorized deductions from their final pay.
SO ORDERED.[19]
Zafra and Ecarma as respondents below moved for reconsideration of the CA
decision which, however, was denied on May 24, 1999.[20]
Petitioners now anchor their petition on the following grounds:
I. THE COURT OF APPEALS HAS DECIDED A QUESTION OF SUBSTANCE
IN THE RESPONDENTS PETITION IN A WAY PROBABLY NOT IN
ACCORD WITH THE LAW OR THE APPLICABLE DECISIONS OF THE
SUPREME COURT.
A. THE COURT A QUO, INSTEAD OF RESOLVING ERRORS OF
JURISDICTION ALLEGED IN THE RESPONDENTS PETITION
ERRED IN RENDERING THE DECISION ON ITS MERITS, IN

EFFECT NOT ACCORDING RESPECT AND SETTING ASIDE THE

VOLUNTARY ARBITRATORS EVALUATION OF THE EVIDENCE
AND FACTUAL FINDINGS BASED THEREON.
B. THE COURT A QUO, IN GIVING DUE COURSE TO THE
RESPONDENTS PETITION ERRED IN PROCEEDING TO
RESOLVE THE SAME ON THE MERITS, WITHOUT FIRST
REVIEWING THE ENTIRE RECORD OF THE PROCEEDINGS OF
THE VOLUNTARY ARBITRATOR.
II. THE COURT OF APPEALS HAS DEPARTED FROM THE ACCEPTED AND
USUAL COURSE OF JUDICIAL PROCEEDINGS, AS TO CALL FOR AN
EXERCISE OF THE HONORABLE SUPREME COURTS SUPERVISION.
A. THE COURT A QUO COMMITTED GRAVE ABUSE OF DISCRETION
IN RENDERING THE DECISION THROUGH ITS UTTER
DISREGARD OF THE APPROPRIATE MODE OF APPEAL TO BE
TAKEN BY THE RESPONDENTS FROM THE JUDGMENT OF THE
VOLUNTARY ARBITRATOR.
B. THE COURT A QUO COMMITTED GRAVE ABUSE OF ITS
DISCRETION IN TREATING JOINTLY THE RESPONDENTS
PETITION EITHER AS AN APPEAL UNDER RULE 43, OR IN THE
ALTERNATIVE, A SPECIAL CIVIL ACTION FOR CERTIORARI
UNDER RULE 65.
C. THE COURT A QUO COMMITTED GRAVE ABUSE OF ITS
DISCRETION IN FAILING TO DISMISS THE RESPONDENTS
PETITION FOR CERTIORARI OUTRIGHTLY FOR FAILURE TO
COMPLY WITH THE STRICT REQUIREMENTS IN THE FILING
THEREOF.[21]
Briefly, the issues in this case may be restated as follows: (1) whether or not the
CA erred in treating the special civil action for certiorari filed by respondent as a
petition for review, and (2) whether or not the CA erred in its appreciation of facts and
the decision it rendered.
Petitioners invoke Luzon Development Bank vs. Association of Luzon
Development Bank Employees, et al.[22] and Rule 43 of the 1997 Rules of Civil
Procedure[23] in arguing that an appeal and not a petition for certiorari should be the
proper remedy to question the decision or award of the voluntary arbitrator. Even
assuming that Rule 65 applies, petitioners argue that PLDT, nevertheless, erred in

not including the voluntary arbitrator as one of the respondents in the petition and in
not serving him a copy thereof.[24] These procedural flaws, they aver, merit the
outright dismissal by the CA of the petition.[25]
A perusal of the petition before the CA shows that the mode chosen by PLDT
was a petition for review under Rule 43 and not a special civil action for certiorari
under Rule 65. While it was captioned as a petition for certiorari, it is not the caption
of the pleading but the allegations therein that determine the nature of the
action.[26] The appellate court was not precluded from granting relief as warranted by
PLDTs allegations in the petition and the evidence it had presented to support the
petition.
A perusal of the petition before the CA discloses the following: First, under the
heading Nature of the Action, the PLDT averred it was a petition for review on
certiorari of the Decision dated December 1, 1997 and Order dated July 10, 1998 of
Voluntary Arbitrator Atty. Rolando M. Lim.[27] Second, while the assigned errors
alleged that the voluntary arbitrator acted with grave abuse of discretion,
nevertheless, the issue set forth was whether or not there existed sufficient
evidence to show that complainants [herein petitioners] were constructively
dismissed, and whether they were entitled to reinstatement, back wages and
other monetary awards.[28] Clearly, the issue was factual and not limited to
questions of jurisdiction and grave abuse of discretion. Third, the petition was filed
within the 15-day period to perfect an appeal and did not implead the voluntary
arbitrator as a respondent. All of these indicate that the petition below was indeed
one for review.
Moreover, contrary to petitioners contention that the voluntary arbitrator was not
furnished a copy of the petition, the records reveal otherwise. Attached to the petition
filed before the appellate court was a registry receipt of the copy sent to the voluntary
arbitrator.[29]
Coming now to the substantive merits of the petition before us. Considering
that the CAs findings of fact clash with those of the voluntary arbitrator, with
contradictory results, this Court is compelled to go over the records of the case as
well as the submissions of the parties. Having done so carefully, we are not
convinced that the voluntary arbitrator erred in his factual conclusions so as to justify
reversal thereof by the appellate court. We are persuaded to rule in favor of the
complaining workers, herein petitioners, following the well-established doctrine in
labor-management relations that in case of doubt, labor should prevail.
The fact that petitioners, in their application for employment,[30] agreed to be
transferred or assigned to any branch[31] should not be taken in isolation, but rather in
conjunction with the established company practice in PLDT.

The standard operating procedure in PLDT is to inform personnel regarding the

nature and location of their future assignments after training abroad. This prevailing
company practice is evidenced by the inter-office memorandum[32] of a certain
PLDTs First Vice President (Reyes), dated May 3, 1996 to PLDTs Chief Operating
Officer (Perez), duly-acknowledged by private respondents:
xxx
To

:
Atty. E.D. Perez, SEVP & COO
Thru
:
J.P. de Jesus, EVP - Meet Demand Group
From
:
FVP - Program Planning & Engineering Sector
Subject: NON-ASSIGNABLE TRAINED PERSONNEL

The choice of trainees were made by Network and, therefore, it is incumbent upon
them to brief the participants or trainees they selected on the nature and assignment
of their employment after training.
To prevent similar instances in the future, we strongly recommend the following:
1. Prior to the training, all concerned groups should conform with the standard
practice of informing personnel regarding the nature and/or location of their
future assignments after the training.
2. The contractual obligation of the trainees should include a provision on their
willingness and commitment to perform the related training functionalities
required by the company.

=====================================================
During the Group Heads Meeting on 03 April 1996, Mr. R.R. Zarate reported on the
case of some provincial personnel who had foreign training for functions intended for
Manila Operations but refused to be relocated and assigned to Manila, and who
eventually resigned on account of the said transfer. In view of this situation, two (2)
issues were raised as follows:
1. Network Services to be involved in the planning of facilities, specially when
this involves trainees from Network.
2. Actual training to be undertaken only after the sites where such training will
be utilized have been determined.
xxx
A total of 53 slots (for the Exchange O&M, System Software/Acceptance Engineering
and OMC Specialist Courses) were allocated to Network Services by the Steering
Committee composed of representatives from ProgPlan and TechTrain. The O&M
slots were equally distributed to Provincial Operations on the basis where Alcatel
switches will be geographically installed. With regards to NSC, since the contract has
defined its location to be in Sampaloc and considering that its monitoring function
would focus on provincial exchanges, slots were opened both for Provincial and
Metro Manila Operations. Please note that all these relevant informations were
disseminated to concerned parties as inputs, to enable them to recommend the
appropriate training participants.

x x x (Underscoring supplied.)
The want of notice of transfer to petitioners was the subject of another interoffice memorandum dated November 24, 1995, from one Mr. Relucio, SwitchNet
Division Manager, to a certain Mr. Albania, First Vice President-Regional & Toll
Network. It states:
As the cheaper option is to relocate personnel who have attended the training
already, we have solicited the desire of the Cebu and Davao-based provincial
personnel to transfer to SwitchNet Sampaloc ROMCC which they declined, x x x We
should note that these personnel were not made aware prior to start of training, that
they will be transferred to Manila.[33]
A third inter-office memorandum dated November 29, 1995 confirmed this
procedural flaw, thus:
Alternative 1: Require the four Jones and Davao ROMCC personnel to transfer [to]
the Sampaloc ROMCC, as service requirement. This is the least cost alternative. x x
x We should note however, that these personnel were not aware that they would
relocate after training. [34]
Under these circumstances, the need for the dissemination of notice of transfer
to employees before sending them abroad for training should be deemed necessary
and later to have ripened into a company practice or policy that could no longer be
peremptorily withdrawn, discontinued, or eliminated by the employer. Fairness at the
workplace and settled expectations among employees require that we honor this
practice and commend this policy.

The appellate courts justification that petitioners transfer was a management

prerogative did not quite square with the preceding evidence on record, which are not
disputed. To say that petitioners were not constructively dismissed inasmuch as the
transfer was effected without demotion in rank or diminution of salary benefits is, to
our mind, inaccurate. It is well to remember that constructive dismissal does not
always involve forthright dismissal or diminution in rank, compensation, benefits, and
privileges. For an act of clear discrimination,insensibility, or disdain by an employer
may become so unbearable on the part of the employee that it could foreclose any
choice by him except to forego his continued employment.[35] The insensibility of
private respondents is at once deducible from the foregoing circumstances.
Despite their knowledge that the lone operations and maintenance center of the
33 ALCATEL 1000 S12 Exchanges would be homed in Sampaloc,[36] PLDT officials
neglected to disclose this vital piece of information to petitioners before they acceded
to be trained abroad. On arriving home, they did not give complaining workers any
other option but placed them in an either/or straightjacket, that appeared too
oppressive for those concerned.
As pointed out in the abovementioned inter-office memorandum by Mr. Reyes:
All sites where training will be utilized are already pre-determined and pinpointed in
the contract documents and technical protocols signed by PLDT and the contractor.
Hence, there should be no reason or cause for the misappointment of the training
participants.[37]
Needless to say, had they known about their pre-planned reassignments,
petitioners could have declined the foreign training intended for personnel assigned
to the Manila office. The lure of a foreign trip is fleeting while a reassignment from
Cebu to Manila entails major and permanent readjustments for petitioners and their
families.
We are not unaware that the transfer of an employee ordinarily lies within the
ambit of management prerogatives. However, a transfer amounts to constructive
dismissal when the transfer is unreasonable, inconvenient, or prejudicial to the
employee, and involves a demotion in rank or diminution of salaries, benefits, and
other privileges.[38] In the present case, petitioners were unceremoniously transferred,
necessitating their families relocation from Cebu to Manila. This act of management
appears to be arbitrary without the usual notice that should have been done even
prior to their training abroad. From the employees viewpoint, such action affecting
their families are burdensome, economically and emotionally. It is no exaggeration to
say that their forced transfer is not only unreasonable, inconvenient, and prejudicial,
but to our mind, also in defiance of basic due process and fair play in employment
relations.

WHEREFORE, this petition for review is GRANTED. The decision of the Court
of Appeals in CA-G.R. SP No. 48578, dated December 22, 1998, is REVERSED and
SET ASIDE. The decision of the Voluntary Arbitrator dated December 1, 1997, is
REINSTATED. No pronouncement as to costs.
SO ORDERED.
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.
Hospitals, having undertaken one of mankinds most important and delicate
endeavors, must assume the grave responsibility of pursuing it with appropriate care.
The care and service dispensed through this high trust, however technical, complex
and esoteric its character may be, must meet standards of responsibility
commensurate with the undertaking to preserve 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 Decision2 dated 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 dated September 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 of difficulty of bowel movement and bloody anal

discharge. After a series of medical examinations, Dr. Miguel Ampil, petitioner in G.R.
No. 127590, diagnosed her to be suffering from "cancer of the sigmoid."
On April 11, 1984, Dr. Ampil, assisted by the medical staff4 of the Medical City
Hospital, performed an anterior resection surgery on Natividad. He found that the
malignancy in her sigmoid area had spread on her left ovary, necessitating the
removal 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 attending nurses 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 that she
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 four months of consultations and laboratory
examinations, Natividad was told 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 weeks thereafter, her daughter found a piece of gauze protruding from her
vagina. Upon being informed about it, Dr. Ampil proceeded to her house where he
managed to extract by hand a piece of gauze measuring 1.5 inches in width. He then
assured her that the pains would soon vanish.

Dr. Ampils assurance did not come true. Instead, the pains intensified, prompting
Natividad to seek treatment at the Polymedic General Hospital. While confined there,
Dr. Ramon Gutierrez detected the presence of another foreign object in her vagina -a foul-smelling gauze measuring 1.5 inches in width which badly infected her vaginal
vault. A recto-vaginal fistula had formed in her reproductive organs which forced stool
to excrete through the vagina. Another surgical operation was needed to remedy the
damage. Thus, in October 1984, Natividad underwent another surgery.
On November 12, 1984, Natividad and her husband filed with the RTC, Branch 96,
Quezon City a complaint for damages against the Professional Services, Inc. (PSI),
owner of the Medical City Hospital, Dr. Ampil, and Dr. Fuentes, docketed as Civil
Case No. Q-43322. They alleged that the latter are liable for negligence for leaving
two pieces of gauze inside Natividads body and malpractice for concealing their acts
of negligence.
Meanwhile, Enrique Agana also filed with the Professional Regulation Commission
(PRC) an administrative complaint for gross negligence and malpractice against Dr.
Ampil and Dr. Fuentes, docketed as Administrative Case No. 1690. The PRC Board
of Medicine heard the case only with respect to Dr. Fuentes because it failed to
acquire jurisdiction over Dr. Ampil who was then in the United States.
On February 16, 1986, pending the outcome of the above cases, Natividad died and
was duly substituted by her above-named children (the Aganas).
On March 17, 1993, the RTC rendered its Decision in favor of the Aganas, finding
PSI, Dr. Ampil and Dr. Fuentes liable for negligence and malpractice, the decretal
part of which reads:
WHEREFORE, judgment is hereby rendered for the plaintiffs ordering the defendants
PROFESSIONAL SERVICES, INC., DR. MIGUEL AMPIL and DR. JUAN FUENTES
to pay to the plaintiffs, jointly and severally, except in respect of the award for
exemplary damages and the interest thereon which are the liabilities of defendants
Dr. Ampil and Dr. Fuentes only, as follows:
1. As actual damages, the following amounts:
a. The equivalent in Philippine Currency of the total of
US$19,900.00 at the rate of P21.60-US$1.00, as reimbursement of
actual expenses incurred in the United States of America;

b. The sum of P4,800.00 as travel taxes of plaintiffs and their

physician daughter;
c. The total sum of P45,802.50, representing the cost of
hospitalization at Polymedic Hospital, medical fees, and cost of the
saline solution;
2. As moral damages, the sum of P2,000,000.00;
3. As exemplary damages, the sum of P300,000.00;
4. As attorneys fees, the sum of P250,000.00;
5. Legal interest on items 1 (a), (b), and (c); 2; and 3 hereinabove, from date
of filing of the complaint until full payment; and
6. Costs of suit.
SO ORDERED.
Aggrieved, PSI, Dr. Fuentes and Dr. Ampil interposed an appeal to the Court of
Appeals, docketed as CA-G.R. CV No. 42062.
Incidentally, on April 3, 1993, the Aganas filed with the RTC a motion for a partial
execution of its Decision, which was granted in an Order dated May 11, 1993.
Thereafter, the sheriff levied upon certain properties of Dr. Ampil and sold them for
P451,275.00 and delivered the amount to the Aganas.
Following their receipt of the money, the Aganas entered into an agreement with PSI
and Dr. Fuentes to indefinitely suspend any further execution of the RTC Decision.
However, not long thereafter, the Aganas again filed a motion for an alias writ of
execution against the properties of PSI and Dr. Fuentes. On September 21, 1993, the
RTC granted the motion and issued the corresponding writ, prompting Dr. Fuentes to
file with the Court of Appeals a petition for certiorari and prohibition, with prayer for
preliminary injunction, docketed as CA-G.R. SP No. 32198. During its pendency, the
Court of Appeals issued a Resolution5 dated October 29, 1993 granting Dr. Fuentes
prayer for injunctive relief.
On January 24, 1994, CA-G.R. SP No. 32198 was consolidated with CA-G.R. CV No.
42062.

Meanwhile, on January 23, 1995, the PRC Board of Medicine rendered its
Decision6 in Administrative Case No. 1690 dismissing the case against Dr. Fuentes.
The Board held that the prosecution failed to show that Dr. Fuentes was the one who
left the two pieces of gauze inside 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 hereby DISMISSED, and with the pronouncement that
defendant-appellant Dr. Miguel Ampil is liable to reimburse defendant-appellant
Professional Services, Inc., whatever amount the latter will pay or had paid to the
plaintiffs-appellees, the decision appealed from is hereby AFFIRMED and the instant
appeal DISMISSED.
Concomitant with the above, the petition for certiorari and prohibition filed by herein
defendant-appellant Dr. Juan Fuentes in CA-G.R. SP No. 32198 is hereby GRANTED
and the challenged order of the respondent judge dated September 21, 1993, as well
as the alias writ of execution issued pursuant thereto are hereby NULLIFIED and SET
ASIDE. The bond posted by the petitioner in connection with the writ of preliminary
injunction issued by this Court on November 29, 1993 is hereby cancelled.
Costs against defendants-appellants Dr. Miguel Ampil and Professional Services, Inc.
SO ORDERED.
Only Dr. Ampil filed a motion for reconsideration, but it was denied in a
Resolution7 dated December 19, 1996.
Hence, the instant consolidated petitions.
In G.R. No. 126297, PSI alleged in its petition that the Court of Appeals erred in
holding that: (1) it is estopped from raising the defense that Dr. Ampil is not its
employee; (2) it is solidarily liable with Dr. Ampil; and (3) it is not entitled to its
counterclaim against the Aganas. PSI contends that Dr. Ampil is not its employee, but
a mere consultant or independent contractor. As such, he alone should answer for his
negligence.
In G.R. No. 126467, the Aganas maintain that the Court of Appeals erred in finding
that Dr. Fuentes is not guilty of negligence or medical malpractice, invoking the

doctrine of res ipsa loquitur. They contend that the pieces of gauze are prima facie
proofs that the operating surgeons have been negligent.
Finally, in G.R. No. 127590, Dr. Ampil asserts that the Court of Appeals erred in
finding him liable for negligence and malpractice sans evidence that he left the two
pieces of gauze in 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 properly count the gauzes used during surgery; and (3)
the medical intervention of the American doctors who examined Natividad in the
United States of America.
For our resolution are these three vital issues: first, whether the Court of Appeals
erred in holding Dr. Ampil liable for negligence and malpractice; second, whether the
Court of Appeals erred in absolving Dr. Fuentes of any liability; and third, whether PSI
may be held solidarily liable for the negligence of Dr. Ampil.
I - G.R. No. 127590
Whether the Court of Appeals Erred in Holding Dr. Ampil
Liable for Negligence and Malpractice.
Dr. Ampil, in an attempt to absolve himself, gears the Courts attention to other
possible causes of Natividads detriment. He argues that the Court should not
discount either of the following possibilities: first, Dr. Fuentes left the gauzes in
Natividads body after performing hysterectomy; second, the attending nurses erred
in counting the gauzes; and third, the American doctors were the ones who placed
the gauzes in Natividads body.
Dr. Ampils arguments are purely conjectural and without basis. Records show that he
did not present any evidence to prove that the American doctors were the ones who
put or left the gauzes in Natividads body. Neither did he submit evidence to rebut the
correctness of the record of operation, particularly the number of gauzes used. As to
the alleged negligence of Dr. Fuentes, we are mindful that Dr. Ampil examined his
(Dr. Fuentes) work and found it in order.
The glaring truth is that all the major circumstances, taken together, as specified by
the Court of Appeals, directly point to Dr. Ampil as the negligent party, thus:
First, it is not disputed that the surgeons used gauzes as sponges to control
the bleeding of the patient during the surgical operation.

Second, immediately after the operation, the nurses who assisted in the
surgery noted in their report that the sponge count (was) lacking 2; that
such anomaly was announced to surgeon and that a search was done but
to no avail prompting Dr. Ampil to continue for closure x x x.
Third, after the operation, two (2) gauzes were extracted from the same spot
of the body of Mrs. Agana where the surgery was performed.
An operation requiring the placing of sponges in the incision is not complete until the
sponges are properly removed, and it is settled that the leaving of sponges or other
foreign substances in the wound after the incision has been closed is at least prima
facie negligence by the operating surgeon.8 To put it simply, such act is considered
so inconsistent with due care as to raise an inference of negligence. There are even
legions of authorities to the effect that such act is negligence per se.9
Of course, the Court is not blind to the reality that there are times when danger to a
patients life precludes a surgeon from further searching missing sponges or foreign
objects left in the body. But this does not leave him free from any obligation. Even if it
has been shown that a surgeon was required by the urgent necessities of the case to
leave a sponge in his patients abdomen, because of the dangers attendant upon
delay, still, it is his legal duty to so inform his patient within a reasonable time
thereafter by advising her of what he had been compelled to do. This is in order that
she might seek relief from the effects of the foreign object left in her body as her
condition might permit. The ruling in Smith v. Zeagler10 is explicit, thus:
The removal of all sponges used is part of a surgical operation, and when a physician
or surgeon fails to remove a sponge he has placed in his patients body that should
be removed as part of the operation, he thereby leaves his operation uncompleted
and creates a new condition which imposes upon him the legal duty of calling the
new condition to his patients attention, and endeavoring with the means he has at
hand to minimize and avoid untoward results likely to ensue therefrom.
Here, Dr. Ampil did not inform Natividad about the missing two pieces of gauze.
Worse, he even misled her that the pain she was experiencing was the ordinary
consequence of her operation. Had he been more candid, Natividad could have taken
the immediate and appropriate medical remedy to remove the gauzes from her body.
To our mind, what was initially an act of negligence by Dr. Ampil has ripened into a
deliberate wrongful act of deceiving his patient.
This is a clear case of medical malpractice or more appropriately, medical
negligence. To successfully pursue this kind of case, a patient must only prove that a
health care provider either failed to do something which a reasonably prudent health

care provider would have done, or that he did something that a reasonably prudent
provider would not have done; and that failure or action caused injury to the
patient.11 Simply put, the elements are duty, breach, injury and proximate causation.
Dr, Ampil, as the lead surgeon, had the duty to remove all foreign objects, such as
gauzes, from Natividads body before closure of the incision. When he failed to do so,
it was his duty to inform Natividad about it. Dr. Ampil breached both duties. Such
breach caused injury to Natividad, necessitating her further examination by American
doctors and another surgery. That Dr. Ampils negligence is the proximate cause12 of
Natividads injury could be traced from his act of closing the incision despite the
information given by the attending nurses that two pieces of gauze were still missing.
That they were later on extracted from Natividads vagina established the causal link
between Dr. Ampils negligence and the injury. And what further aggravated such
injury was his deliberate concealment of the missing gauzes from the knowledge of
Natividad and her family.
II - G.R. No. 126467
Whether the Court of Appeals Erred in Absolving

occurrence was such that in the ordinary course of things, would not have happened
if those who had control or management used proper care; and (4) the absence of
explanation by the defendant. Of the foregoing requisites, the most instrumental is
the "control and management of the thing which caused the injury."15
We find the element of "control and management of the thing which caused the
injury" to be wanting. Hence, the doctrine of res ipsa loquitur will not lie.
It was duly established that Dr. Ampil was the lead surgeon during the operation of
Natividad. He requested the assistance of Dr. Fuentes only to perform hysterectomy
when he (Dr. Ampil) found that the malignancy in her sigmoid area had spread to her
left ovary. Dr. Fuentes performed the surgery and thereafter reported and showed his
work to Dr. Ampil. The latter examined it and finding everything to be in order,
allowed Dr. Fuentes to leave the operating room. Dr. Ampil then resumed operating
on Natividad. He was about to finish the procedure when the attending nurses
informed him that two pieces of gauze were missing. A "diligent search" was
conducted, but the misplaced gauzes were not found. Dr. Ampil then directed that the
incision be closed. During this entire period, Dr. Fuentes was no longer in the
operating room and had, in fact, left the hospital.

Dr. Fuentes of any Liability

The Aganas assailed the dismissal by the trial court of the case against Dr. Fuentes
on the ground that it is contrary to the doctrine of res ipsa loquitur. According to them,
the fact that the two pieces of gauze were left inside Natividads body is a prima facie
evidence of Dr. Fuentes negligence.
We are not convinced.
Literally, res ipsa loquitur means "the thing speaks for itself." It is the rule that the fact
of the occurrence of an injury, taken with the surrounding circumstances, may permit
an inference or raise a presumption of negligence, or make out a plaintiffs prima
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 is
such that it should not have occurred if he, having such control used proper care, it
affords reasonable evidence, in the absence of explanation that the injury arose from
the defendants want of care, and the burden of proof is shifted to him to establish
that he has observed due care and diligence.14
From the foregoing statements of the rule, the requisites for the applicability of the
doctrine of res ipsa loquitur are: (1) the occurrence of an injury; (2) the thing which
caused the injury was under the control and management of the defendant; (3) the

Under the "Captain of the Ship" rule, the operating surgeon is the person in complete
charge of the surgery room and all personnel connected with the operation. Their
duty is to obey his orders.16 As stated before, Dr. Ampil was the lead surgeon. In
other words, he was the "Captain of the Ship." That he discharged such role is
evident from his following conduct: (1) calling Dr. Fuentes to perform a hysterectomy;
(2) examining the work of Dr. Fuentes and finding it in order; (3) granting Dr. Fuentes
permission to leave; and (4) ordering the closure of the incision. To our mind, it was
this act of ordering the closure of the incision notwithstanding that two pieces of
gauze remained unaccounted for, that caused injury to 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 an independent or separate ground of liability, being a
mere evidentiary rule.17 In other words, mere invocation and application of the
doctrine does not dispense with the requirement of proof of negligence. Here, the
negligence was proven to have been committed by Dr. Ampil and not by Dr. Fuentes.
III - G.R. No. 126297
Whether PSI Is Liable for the Negligence of Dr. Ampil

The third issue necessitates a glimpse at the historical development of hospitals and
the resulting theories concerning their liability for the negligence of physicians.
Until the mid-nineteenth century, hospitals were generally charitable institutions,
providing medical services to the lowest classes of society, without regard for a
patients ability to pay.18 Those who could afford medical treatment were usually
treated at home by their doctors.19 However, the days of house calls and
philanthropic health care are over. The modern health care industry continues to
distance itself from its charitable past and has experienced a significant conversion
from a not-for-profit health care to for-profit hospital businesses. Consequently,
significant changes in health law have accompanied the business-related changes in
the hospital industry. One important legal change is an increase in hospital liability for
medical malpractice. Many courts now allow claims for hospital vicarious liability
under the theories of respondeat superior, apparent authority, ostensible authority, or
agency by estoppel. 20
In this jurisdiction, the statute governing liability for negligent acts is Article 2176 of
the Civil Code, which reads:
Art. 2176. Whoever by act or omission causes damage to another, there being fault
or negligence, is obliged to pay for the damage done. Such fault or negligence, if
there is no pre-existing contractual relation between the parties, is called a quasidelict and is governed by the provisions of this Chapter.
A derivative of this provision is Article 2180, the rule governing vicarious liability under
the doctrine of respondeat superior, thus:
ART. 2180. The obligation imposed by Article 2176 is demandable not only for ones
own acts or omissions, but also for those of persons for whom one is responsible.
x x x

x x x

The owners and managers of an establishment or enterprise are likewise responsible

for damages caused by their employees in the service of the branches in which the
latter are employed or on the occasion of their functions.
Employers shall be liable for the damages caused by their employees and household
helpers acting within the scope of their assigned tasks even though the former are
not engaged in any business or industry.

The responsibility treated of in this article shall cease when the persons herein
mentioned prove that they observed all the diligence of a good father of a family to
prevent damage.
A prominent civilist commented that professionals engaged by an employer, such as
physicians, dentists, and pharmacists, are not "employees" under this article because
the manner in which they perform their work is not within the control of the latter
(employer). In other words, professionals are considered personally liable for the fault
or negligence they commit in the discharge of their duties, and their employer cannot
be held liable for such fault or negligence. In the context of the present case, "a
hospital cannot be held liable for the fault or negligence of a physician or surgeon in
the treatment or operation of patients."21
The foregoing view is grounded on the traditional notion that the professional status
and the very nature of the physicians calling preclude him from being classed as an
agent or employee of a hospital, whenever he acts in a professional capacity. 22 It has
been said that medical practice strictly involves highly developed and specialized
knowledge,23 such that physicians are generally free to exercise their own skill and
judgment in rendering medical services sans interference.24 Hence, when a doctor
practices medicine in a hospital setting, the hospital and its employees are deemed to
subserve him in his ministrations to the patient and his actions are of his own
responsibility.25
The case of Schloendorff v. Society of New York Hospital26 was then considered an
authority for this view. The "Schloendorff doctrine" regards a physician, even if
employed by a hospital, as an independent contractor because of the skill he
exercises and the lack of control exerted over his work. Under this doctrine, hospitals
are exempt from the application of the respondeat superior principle for fault or
negligence committed by physicians in the discharge of their profession.
However, the efficacy of the foregoing doctrine has weakened with the significant
developments in medical care. Courts came to realize that modern hospitals are
increasingly taking active role in supplying and regulating medical care to patients. No
longer were a hospitals functions limited to furnishing room, food, facilities for
treatment and operation, and attendants for its patients. Thus, in Bing v. Thunig, 27 the
New York Court of Appeals deviated from the Schloendorff doctrine, noting that
modern hospitals actually do far more than provide facilities for treatment. Rather,
they regularly employ, on a salaried basis, a large staff of physicians, interns, nurses,
administrative and manual workers. They charge patients for medical care and
treatment, even collecting for such services through legal action, if necessary. The
court then concluded that there is no reason to exempt hospitals from the universal
rule of respondeat superior.

In our shores, the nature of the relationship between the hospital and the physicians
is rendered inconsequential in view of our categorical pronouncement in Ramos v.
Court of Appeals28 that for purposes of apportioning responsibility in medical
negligence cases, an employer-employee relationship in effect exists between
hospitals and their attending and visiting physicians. This Court held:
"We now discuss the responsibility of the hospital in this particular incident. The
unique practice (among private hospitals) of filling up specialist staff with attending
and visiting "consultants," who are allegedly not hospital employees, presents
problems in apportioning responsibility for negligence in medical malpractice cases.
However, the difficulty is more apparent than real.
In the first place, hospitals exercise significant control in the hiring and firing of
consultants and in the conduct of their work within the hospital premises. Doctors who
apply for consultant slots, visiting or attending, are required to submit proof of
completion of residency, their educational qualifications, generally, evidence of
accreditation by the appropriate board (diplomate), evidence of fellowship in most
cases, and references. These requirements are carefully scrutinized by members of
the hospital administration or by a review committee set up by the hospital who either
accept or reject the application. x x x.
After a physician is accepted, either as a visiting or attending consultant, he is
normally required to attend clinico-pathological conferences, conduct bedside rounds
for clerks, interns and residents, moderate grand rounds and patient audits and
perform other tasks and responsibilities, for the privilege of being able to maintain a
clinic in the hospital, and/or for the privilege of admitting patients into the hospital. In
addition to these, the physicians performance as a specialist is generally evaluated
by a peer review committee on the basis of mortality and morbidity statistics, and
feedback from patients, nurses, interns and residents. A consultant remiss in his
duties, or a consultant who regularly falls short of the minimum standards acceptable
to the hospital or its peer review committee, is normally politely terminated.
In other words, private hospitals, hire, fire and exercise real control over their
attending and visiting consultant staff. While consultants are not, technically
employees, x x x, the control exercised, the hiring, and the right to terminate
consultants all fulfill the important hallmarks of an employer-employee relationship,
with the exception of the payment of wages. In assessing whether such a relationship
in fact exists, the control test is determining. Accordingly, on the basis of the
foregoing, we rule that for the purpose of allocating responsibility in medical
negligence cases, an employer-employee relationship in effect exists between
hospitals and their attending and visiting physicians. "

But the Ramos pronouncement is not our only basis in sustaining PSIs liability. Its
liability is also anchored upon the agency principle of apparent authority or agency by
estoppel and the doctrine of corporate negligence which have gained acceptance in
the determination of a hospitals liability for negligent acts of health professionals. The
present case serves as a perfect platform to test the applicability of these doctrines,
thus, enriching our jurisprudence.
Apparent authority, or what is sometimes referred to as the "holding
out" theory, or doctrine of ostensible agency or agency by estoppel,29 has its origin
from the law of agency. It imposes liability, not as the result of the reality of a
contractual relationship, but rather because of the actions of a principal or an
employer in somehow misleading the public into believing that the relationship or the
authority exists.30 The concept is essentially one of estoppel and has been explained
in this manner:
"The principal is bound by the acts of his agent with the apparent authority which he
knowingly permits the agent to assume, or which he holds the agent out to the public
as possessing. The question in every case is whether the principal has by his
voluntary act placed the agent in such a situation that a person of ordinary prudence,
conversant with business usages and the nature of the particular business, is justified
in presuming that such agent has authority to perform the particular act in question.31
The applicability of apparent authority in the field of hospital liability was upheld long
time ago in Irving v. Doctor Hospital of Lake Worth, Inc.32 There, it was explicitly
stated that "there does not appear to be any rational basis for excluding the concept
of apparent authority from the field of hospital liability." Thus, in cases where it can be
shown that a hospital, by its actions, has held out a particular physician as its agent
and/or employee and that a patient has accepted treatment from that physician in the
reasonable belief that it is being rendered in behalf of the hospital, then the hospital
will be liable for the physicians 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, PSIs 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 hospitals act of listing him and his
specialty in its lobby directory, as in the case herein. The high costs of todays
medical and health care should at least exact on the hospital greater, if not broader,
legal responsibility for the conduct of treatment and surgery within its facility by its
accredited physician or surgeon, regardless of whether he is independent or
employed."33
The wisdom of the foregoing ratiocination is easy to discern. Corporate entities, like
PSI, are capable of acting only through other individuals, such as physicians. If these
accredited physicians do their job well, the hospital succeeds in its mission of offering
quality medical services and thus profits financially. Logically, where negligence mars
the quality of its services, the hospital should not be allowed to escape liability for the
acts of its ostensible agents.
We now proceed to the doctrine of corporate negligence or corporate responsibility.
One allegation in the complaint in Civil Case No. Q-43332 for negligence and
malpractice is that PSI as owner, operator and manager of Medical City Hospital, "did
not perform the necessary supervision nor exercise diligent efforts in the supervision
of Drs. Ampil and Fuentes and its nursing staff, resident doctors, and medical interns
who assisted Drs. Ampil and Fuentes in the performance of their duties as
surgeons."34 Premised on the doctrine of corporate negligence, the trial court held
that PSI is directly liable for such breach of duty.
We agree with the trial court.
Recent years have seen the doctrine of corporate negligence as the judicial answer
to the problem of allocating hospitals liability for the negligent acts of health

practitioners, absent facts to support the application of respondeat superior or

apparent authority. Its formulation proceeds from the judiciarys acknowledgment that
in these modern times, the duty of providing quality medical service is no longer the
sole prerogative and responsibility of the physician. The modern hospitals have
changed structure. Hospitals now tend to organize a highly professional medical staff
whose competence and performance need to be monitored by the hospitals
commensurate with their inherent responsibility to provide quality medical care.35
The doctrine has its genesis in Darling v. Charleston Community Hospital.36 There,
the Supreme Court of Illinois held that "the jury could have found a hospital negligent,
inter alia, in failing to have a sufficient number of trained nurses attending the patient;
failing to require a consultation with or examination by members of the hospital staff;
and failing to review the treatment rendered to the patient." On the basis of Darling,
other jurisdictions held that a hospitals corporate negligence extends to permitting a
physician known to be incompetent to practice at the hospital.37 With the passage of
time, more duties were expected from hospitals, among them: (1) the use of
reasonable care in the maintenance of safe and adequate facilities and equipment;
(2) the selection and retention of competent physicians; (3) the overseeing or
supervision of all persons who practice medicine within its walls; and (4) the
formulation, adoption and enforcement of adequate rules and policies that ensure
quality care for its patients.38 Thus, in Tucson Medical Center, Inc. v. Misevich,39 it
was held that a hospital, following the doctrine of corporate responsibility, has the
duty to see that it meets the standards of responsibilities for the care of patients.
Such duty includes the proper supervision of the members of its medical staff. And in
Bost v. Riley,40 the court concluded that a patient who enters a hospital does so with
the reasonable expectation that it will attempt to cure him. The hospital accordingly
has the duty to make a reasonable effort to monitor and oversee the treatment
prescribed and administered by the physicians practicing in its premises.
In the present case, it was duly established that PSI operates the Medical City
Hospital for the purpose and under the concept of providing comprehensive medical
services to the public. Accordingly, it has the duty to exercise reasonable care to
protect from harm all patients admitted into its facility for medical treatment.
Unfortunately, PSI failed to perform such duty. The findings of the trial court are
convincing, thus:
x x x PSIs liability is traceable to its failure to conduct an investigation of the matter
reported in the nota bene of the count nurse. Such failure established PSIs part in
the dark conspiracy of silence and concealment about the gauzes. Ethical
considerations, if not also legal, dictated the holding of an immediate inquiry into the
events, if not for the benefit of the patient to whom the duty is primarily owed, then in
the interest of arriving at the truth. The Court cannot accept that the medical and the

healing professions, through their members like defendant surgeons, and their
institutions like PSIs hospital facility, can callously turn their backs on and disregard
even a mere probability of mistake or negligence by refusing or failing to investigate a
report of such seriousness as the one in Natividads case.
It is worthy to note that Dr. Ampil and Dr. Fuentes operated on Natividad with the
assistance of the Medical City Hospitals staff, composed of resident doctors, nurses,
and interns. As such, it is reasonable to conclude that PSI, as the operator of the
hospital, has actual or constructive knowledge of the procedures carried out,
particularly the report of the attending nurses that the two pieces of gauze were
missing. In Fridena v. Evans,41 it was held that a corporation is bound by the
knowledge acquired by or notice given to its agents or officers within the scope of
their authority and in reference to a matter to which their authority extends. This
means that the knowledge of any of the staff of Medical City Hospital constitutes
knowledge of PSI. Now, the failure of PSI, despite the attending nurses report, to
investigate and inform Natividad regarding the missing gauzes amounts to callous
negligence. Not only did PSI breach its duties to oversee or supervise all persons
who practice medicine within its walls, it also failed to take an active step in fixing the
negligence committed. This renders PSI, not only vicariously liable for the negligence
of Dr. Ampil under Article 2180 of the Civil Code, but also directly liable for its own
negligence under Article 2176. In Fridena, the Supreme Court of Arizona held:
x x x In recent years, however, the duty of care owed to the patient by the hospital
has expanded. The emerging trend is to hold the hospital responsible where the
hospital has failed to monitor and review medical services being provided within its
walls. See Kahn Hospital Malpractice Prevention, 27 De Paul . Rev. 23 (1977).
Among the cases indicative of the emerging trend is Purcell v. Zimbelman, 18 Ariz.
App. 75,500 P. 2d 335 (1972). In Purcell, the hospital argued that it could not be held
liable for the malpractice of a medical practitioner because he was an independent
contractor within the hospital. The Court of Appeals pointed out that the hospital had
created a professional staff whose competence and performance was to be
monitored and reviewed by the governing body of the hospital, and the court held that
a hospital would be negligent where it had knowledge or reason to believe that a
doctor using the facilities was employing a method of treatment or care which fell
below the recognized standard of care.
Subsequent to the Purcell decision, the Arizona Court of Appeals held that a hospital
has certain inherent responsibilities regarding the quality of medical care furnished to
patients within its walls and it must meet the standards of responsibility
commensurate with this undertaking. Beeck v. Tucson General Hospital, 18 Ariz.
App. 165, 500 P. 2d 1153 (1972). This court has confirmed the rulings of the Court of

Appeals that a hospital has the duty of supervising the competence of the doctors on
its staff. x x x.
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 that such
general allegations of negligence, along with the evidence produced at the trial of this
case, are sufficient to support the hospitals liability based on the theory of negligent
supervision."
Anent the corollary issue of whether PSI is solidarily liable with Dr. Ampil for
damages, let it be emphasized that PSI, apart from a general denial of its
responsibility, failed to adduce evidence showing that it exercised the diligence of a
good father of a family in the accreditation and supervision of the latter. In neglecting
to offer such proof, PSI failed to discharge its burden under the last paragraph of
Article 2180 cited earlier, and, therefore, must be adjudged solidarily liable with Dr.
Ampil. Moreover, as we have discussed, PSI is also directly liable to the Aganas.
One final word. Once a physician undertakes the treatment and care of a patient, the
law imposes on him certain obligations. In order to escape liability, he must possess
that reasonable degree of learning, skill and experience required by his profession. At
the same time, he must apply reasonable care and diligence in the exercise of his
skill and the application of his knowledge, and exert his best judgment.
WHEREFORE, we DENY all the petitions and AFFIRM the challenged Decision of
the Court of Appeals in CA-G.R. CV No. 42062 and CA-G.R. SP No. 32198.
Costs against petitioners PSI and Dr. Miguel Ampil.
SO ORDERED.