III. NATURE AND ATTRIBUTES OF A CORPORATION (4.

Liability for Torts)

PNB v. CA, G.R. No. L-27155, May 18, 1978

Facts:
 PNB executed its bond with Rita Gueco Tapnio as principal, in favor of PNB to guarantee the payment of Tapnio’s account
with PNB
 Indemnity agreement with 12% interest and 15% attorney’s fees
 September 18, 1957: PNB sent a letter of demand for Tapnio to pay the reduces amount of 2,379.91
 PNB demanded both oral and written but to no avail
 Tapnio mortgaged to the bank her lease agreement with Jacobo Tuazon for her unused export sugar quota at ₱2.80 per
picular or a total of ₱2,800 which was more than the value of the bond
 PNB insisted on raising it to ₱3.00 per picular so Tuazon rejected the offer

Issue: WON PNB should be liable for tort.

Held: YES. Affirmed.

 While Tapnio had the ultimate authority of approving or disapproving the proposed lease since the quota was mortgaged to
the bank, it certainly CANNOT escape its responsibility of observing, for the protection of the interest of Tapnio and Tuazon,
that degree of care, precaution and vigilance which the circumstances justly demand in approving or disapproving the lease
of said sugar quota
 Article 21 of the Civil Code: any person who willfully causes loss or injury to another in a manner that is contrary to morals,
good customs or public policy shall compensate the latter for the damage

Naguiat v. NLRC, G.R. No. 116123, March 13, 1997

Facts:
1. Clark Field Taxi Inc., a family-owned corporation (by the family of Sergio Naguiat; they also own another company, Naguiat
Enterprises), held a concessionaire’s contract with the Army Air Force Exchange Services (AAFES) for the operation of taxi services
within Clark Air Base.
-Leonardo Galang et.al. were among those hired as taxicab drivers.
-They worked at least 3-4 times a week, and are required to pay boundary fee of US$26.50 (if woking from 1AM to 12NN) or US$27
(if working from 12NN to 12MN).
-They earned US$15.00 daily. The excess of that amouont is deposited to the company, which they can withdraw every 15 days.

2. Due to the phase out of the US military bases in the Philippines, AAFES was dissolved and the services of the taxicab drivers were
terminated.

3. AAFES Taxi Drivers Association (union) held a negotiation with CFTI for their separation benefits. It was agreed that they will
receive P500 for every year of service as severance pay. Galang et.al., however, refused to accept the said amount.

4. Galang et.al disaffiliated themselves from the union and instead joined the National Organization of Workingmen. They filed a
complaint against Naguiat Enterprises, AAFES, and the union, for payment of separation pay due to termination/phase out.
-They alleged that they were regular employees of the Naguiat Enterprises, although it was CFTI who approved and supervised their
employment (Naguiat as their indirect employer, therefore liable with CFTI)
-They also alleged that CFTI closed business due to great financial losses and lost business opportunity (roads impassable due to Mt.
Pinatubo eruption; lost business due to phase out of US bases), hence they should be entitled to half month salary for every year of
service rendered as separation pay (or $120 every month, based on the $240 which is the minimum monthly earnings as taxi driver
of CFTI)

5. Labor Arbiter: ordered payment of P1,200 ($120 x5) for every year of service “for humanitarian consideration.” Galang et.al
appealed to the NLRC.

6. NLRC: ruled that the drivers were entitled to the separation pay in the amount of $120 for every year of service, and that Sergio
Naguiat and Antolin Naguiat, father and son and President and VP of Naguiat Enterprises, should be held jointly and severally liable
with CFTI for the payment of separation pay.

7. Their MR being denied, hence this petition by Naguiat.

Issue: WON officers of corporations are ipso facto liable jointly and severally with the companies they represent for the payment of
separation pay – YES

Held:
1. NAGUIAT ENTERPRISES NOT SOLIDARILY LIABLE. The findings of the labor arbiter, which is binding in this court, is that the
respondents were regular employees of CFTI who received wages on a boundary or commission basis. There is no evidence to show
that Naguiat Enterprises is an indirect employer nor a labor-only contractor of the drivers.
-They submitted documents such as drivers’ applications for employment with CFTI
-SSS remittances and payroll of Naguiat Enterprises show that none of them were its employees
2. The drivers’ claims only signify their confusion on the personalities of Sergio Naguiat as an individual who was president of CFTI,
and Sergio Naguiat Enterprises, as a separate corporate entity with a separate business. The truth of the matter is, Sergio Naguiat, in
supervising the taxi drivers and determining their employment terms, was rather carrying out his responsibilities as president of
CFTI. Naguiat Enterprises as a separate corporation does not appear to be involved at all (although Sergio Naguiat is also a
stockholder and the director of said firm).

3. BUT, CFTI PRESIDENT SOLIDARILY LIABLE. Sergio Naguiat, in his capacity as president of CFTI, cannot be exonerated from joint
and several liability in the payment of separation pay to individual respondents. He falls within the meaning of an “employer” as
contemplated by the Labor Code, who may be held jointly and severally liable for the obligations of the corporation to its dismissed
employees.

4.Moreover, there is a corporate tort in this case. Tort is a breach of a legal duty: the violation of a right given or the omission of a
duty imposed by law. In this case, because CFTI failed to comply with the law-immposed duty to grant separation pay to employees
in case of closure of establishment, the stockholder who was actively engaged in the management or operation of the business
should be held personally liable.

-Purusant to Corporation Code, Title XII (Close Corporations), Section 100, par. 5. To the extent that the stockholders are actively
engage(d) in the management or operation of the business and affairs of a close corporation, the stockholders shall be held to strict
fiduciary duties to each other and among themselves. Said stockholders shall be personally liable for corporate torts unless the
corporation has obtained reasonably adequate liability insurance."

5. However, Antolin Naguiat, as the VP of CFTI, cannot be held liable. Although he was the general manager, it was not shown that
he acted in such capacity. There was no evidence on the extent of his participation in the management or operation of the business.

Professional Services, Inc. vs CA, G.R. No. 126297, February 2, 2010

Facts:
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 diagnosed her to be suffering from “cancer of the
sigmoid.” Dr. Ampil, assisted by the medical staff 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 Natividad’s husband, Enrique Agana, to permit Dr. Juan Fuentes, respondent in G.R. No.
126467, to perform hysterectomy on her. Thereafter, Dr. Ampil took over, completed the operation and closed the incision. However,
based on the record of the hospital, the attending nurses indicated nota bene that 2 sponges were missing. The same was reported to
Dr. Ampil but were not found after “diligent seach”.

After 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. Natividad went to the United States for
four months but she was only declared free of cancer. In Natividad’s return to the Philippines, 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. But 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.
Natividad underwent another surgical operation to remedy the damage. Civil and administrative complaints, for damages and gross
negligence respectively, were filed against Professional Services Inc., owner of Medical City Hospital, Dr. Ampil and Dr. Fuentes.

Issues:
Are the following liable?

(1) Professional Services Inc., based on

(a) “employer-employee relationship”;
(b) “doctrine of apparent authority”;
(c) “corporate negligence”;

(2) Dr. Ampil,

(a) for medical negligence;
(b) under the “captain of the ship doctrine”;

(3) Dr.Fuentes, under the doctrine of res ipsa loquitor;

Held:
(1)

(a) YES.
[P]rivate 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.

(b) YES.
Apparent authority, or what is sometimes referred to as the “holding out” theory, or doctrine of ostensible agency or agency by
estoppel, has its origin from the law of agency. It imposes liability, not as the result of the reality of a contractual relationship, but
rather because of the actions of a principal or an employer in somehow misleading the public into believing that the relationship or
the authority exists. xxx In this case, PSI publicly displays in the lobby of the Medical City Hospital the names and specializations of the
physicians associated or accredited by it, including those of Dr. Ampil and Dr. Fuentes. We concur with the Court of Appeals’
conclusion that it “is now estopped from passing all the blame to the physicians whose names it proudly paraded in the public
directory leading the public to believe that it vouched for their skill and competence.” Indeed, PSI’s act is tantamount to holding out to
the public that Medical City Hospital, through its accredited physicians, offers quality health care services. By accrediting Dr. Ampil and
Dr. Fuentes and publicly advertising their qualifications, the hospital created the impression that they were its agents, authorized to
perform medical or surgical services for its patients. As expected, these patients, Natividad being one of them, accepted the services
on the reasonable belief that such were being rendered by the hospital or its employees, agents, or servants.

(c) YES.
Hospital’s corporate negligence extends to permitting a physician known to be incompetent to practice at the hospital. xxx [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.

(2)

(a) YES.
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. 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 Natividad’s 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. Ampil’s negligence is the proximate cause of Natividad’s 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 Natividad’s vagina established the causal link between Dr. Ampil’s
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.

(b) YES.
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. 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 Natividad’s body. Clearly, the control and management of the thing which
caused the injury was in the hands of Dr. Ampil, not Dr. Fuentes.

(3) NO.

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 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.”

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.