Department of Health V Pharmawealth
Department of Health V Pharmawealth
169304 March 13, 2007 Sometime in September 2000, petitioner DOH, through
petitioner Antonio M. Lopez, chairperson of the pre-
THE DEPARTMENT OF HEALTH, SECRETARY qualifications, bids and awards committee, issued an Invitation
MANUEL M. DAYRIT, USEC. MA. MARGARITA for Bids9 for the procurement of 1.2 million units vials of
GALON and USEC. ANTONIO M. LOPEZ, Petitioners, Penicillin G Benzathine (Penicillin G Benzathine contract).
vs.
PHIL. PHARMAWEALTH, INC., Respondent. Despite the lack of response from petitioner DOH regarding
respondent’s request for inclusion of additional items in its list
DECISION of accredited products, respondent submitted its bid for the
Penicillin G Benzathine contract. When the bids were opened
CARPIO MORALES, J.: on October 11, 2000, only two companies participated, with
respondent submitting the lower bid at ₱82.24 per unit,
compared to Cathay/YSS Laboratories’ (YSS) bid of ₱95.00 per
Assailed via petition for review are issuances of the Court of unit. In view, however, of the non-accreditation of respondent’s
Appeals in CA-G.R. SP No. 84457, to wit: a) Decision1 dated Penicillin G Benzathine product, the contract was awarded to
May 12, 2005 which affirmed the order issued by Judge YSS.
Leoncio M. Janolo, Jr. of the Regional Trial Court of Pasig
City, Branch 264 denying petitioners’ motion to dismiss Civil
Case No. 68208; and b) Resolution2 dated August 9, 2005 Respondent thus filed a complaint10 for injunction, mandamus
which denied petitioners’ motion for reconsideration. and damages with prayer for the issuance of a writ of
preliminary injunction and/or temporary restraining order with
the Regional Trial Court of Pasig City praying, inter alia, that
Phil. Pharmawealth, Inc. (respondent) is a domestic corporation the trial court "nullify the award of the Penicillin G Benzathine
engaged in the business of manufacturing and supplying contract (IFB No. 2000-10-11 [14]) to YSS Laboratories, Inc.
pharmaceutical products to government hospitals in the and direct defendant DOH, defendant Romualdez, defendant
Philippines. Galon and defendant Lopez to declare plaintiff Pharmawealth as
On December 22, 1998, then Secretary of Health Alberto G. the lowest complying responsible bidder for the Benzathine
Romualdez, Jr. issued Administrative Order (A.O.) No. contract, and that they accordingly award the same to plaintiff
27,3 Series of 1998, outlining the guidelines and procedures on company" and "adjudge defendants Romualdez, Galon and
the accreditation of government suppliers for pharmaceutical Lopez liable, jointly and severally to plaintiff, for [the therein
products. specified damages]."11
A.O. No. 27 was later amended by A.O. No. 10, 4 Series of In their Comment,12 petitioner DOH, Secretary Alberto
2000, providing for additional guidelines for accreditation of Romualdez, Jr. who was later succeeded by petitioner Secretary
drug suppliers aimed at ensuring that only qualified bidders can Manuel M. Dayrit, and individual petitioners Undersecretaries
transact business with petitioner Department of Health (DOH). Margarita Galon and Antonio Lopez argued for the dismissal of
Part V of A.O. No. 10 reads, in part: the complaint for lack of merit in view of the express
reservation made by petitioner DOH to accept or reject any or
1. Drug Manufacturer, Drug Trader and Drug Importer shall be all bids without incurring liability to the bidders, they positing
allowed to apply for accreditation. that government agencies have such full discretion.
2. Accreditation shall be done by the Central Office-Department Petitioners subsequently filed a Manifestation and
of Health. Motion13 (motion to dismiss) praying for the outright dismissal
of the complaint based on the doctrine of state immunity.
3. A separate accreditation is required for the drug suppliers and Additionally, they alleged that respondent’s representative was
for their specific products. not duly authorized by its board of directors to file the
complaint.
xxxx
To petitioners’ motion to dismiss, respondent filed its
12. Only products accredited by the Committee shall be allowed comment/opposition14 contending, in the main, that the doctrine
to be procured by the DOH and all other entities under its of state immunity is not applicable considering that individual
jurisdiction.5 (Underscoring supplied) petitioners are being sued both in their official and personal
capacities, hence, they, not the state, would be liable for
damages.
On May 9, 20006 and May 29, 2000,7 respondent submitted to
petitioner DOH a request for the inclusion of additional items in
its list of accredited drug products, including the antibiotic By Order of December 8, 2003, the trial court15 denied
"Penicillin G Benzathine." Based on the schedule provided by petitioners’ motion to dismiss.
petitioner DOH, it appears that processing of and release of the
result of respondent’s request were due on September 2000, the Their motion for reconsideration having been
last month of the quarter following the date of its filing.8 denied,16 petitioners filed a petition for certiorari 17 with the
Court of Appeals, before which they maintained that the suit is judgment against the officials will require the state itself to
against the state. perform a positive act, such as the appropriation of the amount
necessary to pay the damages awarded against them.27
By the assailed Decision18 of May 12, 2005, the Court of
Appeals affirmed the trial court’s Order. And by Resolution of The rule, however, is not so all-encompassing as to be
August 9, 2005, it denied petitioners’ motion for applicable under all circumstances. Shauf v. Court of
reconsideration. Appeals28 elucidates:
Hence, the instant petition for review which raises the sole issue It is a different matter where the public official is made to
of whether the Court of Appeals erred in upholding the denial of account in his capacity as such for acts contrary to law and
petitioners’ motion to dismiss. injurious to the rights of plaintiff. As was clearly set forth by
Justice Zaldivar in Director of the Bureau of
The petition fails. Telecommunications, et al. vs. Aligaen, etc., et al.,29 ‘ Inasmuch
as the State authorizes only legal acts by its
The suability of a government official depends on whether the officers, unauthorized acts of government officials or officers
official concerned was acting within his official or jurisdictional are not acts of the State, and an action against the officials or
capacity, and whether the acts done in the performance of officers by one whose rights have been invaded or violated by
official functions will result in a charge or financial liability such acts, for the protection of his rights, is not a suit against the
against the government. In the first case, the Constitution itself State within the rule of immunity of the State from suit. In the
assures the availability of judicial review, 19 and it is the official same tenor, it has been said that an action at law or suit in
concerned who should be impleaded as the proper party.20 equity against a State officer or the director of a State
department on the ground that, while claiming to act for the
State, he violates or invades the personal and property rights of
In its complaint, respondent sufficiently imputes grave abuse of the plaintiff, under an unconstitutional act or under an
discretion against petitioners in their official capacity. Since assumption of authority which he does not have, is not a suit
judicial review of acts alleged to have been tainted with grave against the State within the constitutional provision that the
abuse of discretion is guaranteed by the Constitution, it State may not be sued without its consent.’ The rationale for this
necessarily follows that it is the official concerned who should ruling is that the doctrine of state immunity cannot be used as an
be impleaded as defendant or respondent in an appropriate instrument for perpetrating an injustice. (Emphasis and
suit.21 underscoring supplied)1avvphi1
Moreover, part of the reliefs prayed for by respondent is the Hence, the rule does not apply where the public official is
enjoinment of the implementation, as well as the nullification of charged in his official capacity for acts that are unauthorized or
the award to YSS, the grant of which may not be enforced unlawful and injurious to the rights of others. Neither does it
against individual petitioners and their successors except in their apply where the public official is clearly being sued not in his
official capacities as officials of the DOH.22 official capacity but in his personal capacity, although the acts
complained of may have been committed while he occupied a
As regards petitioner DOH, the defense of immunity from suit public position.30
will not avail despite its being an unincorporated agency of the
government, for the only causes of action directed against it are In the present case, suing individual petitioners in their personal
preliminary injunction and mandamus. Under Section 1, Rule capacities for damages in connection with their alleged act of
5823 of the Rules of Court, preliminary injunction may be "illegal[ly] abus[ing] their official positions to make sure that
directed against a party or a court, agency or a person. plaintiff Pharmawealth would not be awarded the Benzathine
Moreover, the defense of state immunity from suit does not contract [which act was] done in bad faith and with full
apply in causes of action which do not seek to impose a charge knowledge of the limits and breadth of their powers given by
or financial liability against the State.24 law"31 is permissible, in consonance with the foregoing
principles. For an officer who exceeds the power conferred on
As regards individual petitioners’ suability for damages, the him by law cannot hide behind the plea of sovereign immunity
following discussion on the applicability of the defense of state and must bear the liability personally.32
immunity from suit is relevant.
It bears stressing, however, that the statements in the
The rule that a state may not be sued without its consent, now immediately foregoing paragraph in no way reflect a ruling on
embodied in Section 3, Article XVI of the 1987 Constitution, is the actual liability of petitioners to respondent. The mere
one of the generally accepted principles of international law, allegation that a government official is being sued in his
which we have now adopted as part of the law of the land.25 personal capacity does not automatically remove the same from
the protection of the doctrine of state immunity. Neither, upon
While the doctrine of state immunity appears to prohibit only the other hand, does the mere invocation of official character
suits against the state without its consent, it is also applicable to suffice to insulate such official from suability and liability for
complaints filed against officials of the state for acts allegedly an act committed without or in excess of his or her
performed by them in the discharge of their duties. 26 The suit is authority.33 These are matters of evidence which should be
regarded as one against the state where satisfaction of the presented and proven at the trial.
WHEREFORE, the petition is DENIED. The assailed Decision
dated May 12, 2005 and Resolution dated August 9, 2005
issued by the Court of Appeals are AFFIRMED.
SO ORDERED.