PROFESSIONAL SERVICES, INC.

(PSI) VS
THE COURT OF APPEALS and NATIVIDAD and ENRIQUE AGANA
GR NO. 126297 FEBRUARY 02 2010
J CORONA

Topic: Rights and Obligations of Corporations

FACTS: Spouses Agana filed an administrative case in the PRC against Dr. Miguel Ampil and
Dr. Juan Fuentes; and complaint for damages against PSI as the owner, operator, and manager
of the Medical City General Hospital. The complaint was relative to the injuries suffered by
Natividad when the doctors neglected to remove two (2) gauzes during the former’s major
surgery. On its decision dated March 17, 1993, the RTC held PSI solidarily liable with Dr.
Ampil and Dr. Fuentes. On appeal, the CA absolved Dr. Fuentes but affirmed the liability of Dr.
Ampil and PSI, subject to the right of PSI to claim reimbursement from Dr. Ampil.

ISSUE: Whether or not a hospital may be held liable for the negligence of physicians-
consultants allowed to practice in its premises.

HELD: Yes. The Court held that PSI is liable to the Aganas, under the principle of ostensible
agency and corporate negligence for its failure to perform its corporate duties as a hospital.
While in theory a hospital as a juridical entity cannot practice medicine, in reality it utilizes
doctors, surgeons and medical practitioners in the conduct of its business of facilitating medical
and surgical treatment. It was emphasized that the PSI exercised control over respondents’
gains from the undisputed fact that in the emergency room, the operating room, or any
department or ward for that matter, respondents' work is monitored through its nursing
supervisors, charge nurses and orderlies. Without the approval or consent of petitioner or its
medical director, no operations can be undertaken in those areas. It is not essential for the
employer to actually supervise the performance of duties of the employee, it being enough that
it has the right to wield the power.

As such, PSI was ordered to pay P15, 000,000 to Natividad, subject to 12% interest from the
finality of the resolution.

NOTES:
The decision of SC was based on the following:
1. Doctrine of apparent authority: there existed between PSI and Dr. Ampil an employer-
employee relationship which provided for responsibility in medical negligence cases;
2. PSI created and affirmed a public impression that Dr. Ampil was its PSI agent through its
public directory; and
3. PSI committed a breach of its corporate duty when it failed to initiate an investigation into
the reported missing gauzes. As owner and operator of Medical City General Hospital,
PSI was bound by its duty to provide comprehensive medical services to Natividad
Agana, to exercise reasonable care to protect her from harm, and to oversee or
supervise all persons who practiced medicine within its wall.
4. Look into: Article 2176 in relation to Article 1431 and Article 1869 of the CCP.