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Digest: Department of Health v. Philippine Pharmawealth, Inc. (518 SCRA 240, 2006)

Liability of Administrative Agencies and Officers
Digest: Department of Health v. Philippine Pharmawealth, Inc. (518 SCRA 240, 2006)
G.R. NO. 169304 : March 13, 2007

Facts:  Phil. Pharmawealth, Inc. (respondent) is a domestic corporation engaged in the business of manufacturing and supplying pharmaceutical products to government hospitals in the Philippines.

On December 22, 1998, then Secretary of Health Alberto G. Romualdez, Jr. issued Administrative Order (A.O.) No. 27, Series of 1998, outlining the guidelines and procedures on the accreditation of government suppliers for pharmaceutical products.

respondent submitted to petitioner DOH a request for the inclusion of additional items in its list of accredited drug products. petitioner DOH, through petitioner Antonio M. Lopez, chairperson of the pre-qualifications, bids and awards committee, issued an Invitation for Bids for the procurement of 1.2 million units vials of Penicillin G Benzathine (Penicillin G Benzathine contract).

Despite the lack of response from petitioner DOH regarding respondent's request for inclusion of additional items in its list of accredited products, respondent submitted its bid for the Penicillin G Benzathine contract.

Respondent thus filed a complaint.

Petitioners subsequently filed a Manifestation and Motion (motion to dismiss) praying for the outright dismissal of the complaint based on the doctrine of state immunity.

Issue: Whether or not motion to dismiss based on the doctrine of state immunity will prosper. 

Ruling: The suability of a government official depends on whether the official concerned was acting within his official or jurisdictional capacity, and whether the acts done in the performance of official functions will result in a charge or financial liability against the government. In the first case, the Constitution itself assures the availability of judicial review, and it is the official concerned who should be impleaded as the proper party.

In its complaint, respondent sufficiently imputes grave abuse of discretion against petitioners in their official capacity. Since judicial review of acts alleged to have been tainted with grave abuse of discretion is guaranteed by the Constitution, it necessarily follows that it is the official concerned who should be impleaded as defendant or respondent in an appropriate suit.

Moreover, part of the reliefs prayed for by respondent is the enjoinment of the implementation, as well as the nullification of the award to YSS, the grant of which may not be enforced against individual petitioners and their successors except in their official capacities as officials of the DOH.

As regards petitioner DOH, the defense of immunity from suit will not avail despite its being an unincorporated agency of the government, for the only causes of action directed against it are preliminary injunction and mandamus . Under Section 1, Rule 58 of the Rules of Court, preliminary injunction may be directed against a party or a court, agency or a person. Moreover, the defense of state immunity from suit does not apply in causes of action which do not seek to impose a charge or financial liability against the State.


The rule that a state may not be sued without its consent, now embodied in Section 3, Article XVI of the 1987 Constitution, is one of the generally accepted principles of international law, which we have now adopted as part of the law of the land.


While the doctrine of state immunity appears to prohibit only suits against the state without its consent, it is also applicable to complaints filed against officials of the state for acts allegedly performed by them in the discharge of their duties.The suit is regarded as one against the state where satisfaction of the judgment against the officials will require the state itself to perform a positive act, such as the appropriation of the amount necessary to pay the damages awarded against them


The rule, however, is not so all-encompassing as to be applicable under all circumstances. Shauf v. Court of Appeals elucidates:

It is a different matter where the public official is made to account in his capacity as such for acts contrary to law and injurious to the rights of plaintiff. As was clearly set forth by Justice Zaldivar in Director of the Bureau of Telecommunications, et al. v. Aligaen, etc., et al.,- Inasmuch as the State authorizes only legal acts by its officers, unauthorized acts of government officials or officers are not acts of the State, and an action against the officials or officers by one whose rights have been invaded or violated by such acts, for the protection of his rights, is not a suit against the State within the rule of immunity of the State from suit. In the same tenor, it has been said that an action at law or suit in 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 the plaintiff, under an unconstitutional act or under an assumption of authority which he does not have, is not a suit against the State within the constitutional provision that the State may not be sued without its consent.' The rationale for this ruling is that the doctrine of state immunity cannot be used as an instrument for perpetrating an injustice. (Emphasis and underscoring supplied)

Hence, the rule does not apply where the public official is charged in his official capacity for acts that are unauthorized or unlawful and injurious to the rights of others. Neither does it apply where the public official is clearly being sued not in his official capacity but in his personal capacity, although the acts complained of may have been committed while he occupied a public position


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