DOH v Phil Pharmawealth GR No. 182358
Department of Health, Secretary Alfredo Romualdez, USec. Margarita Galon, petitioner; Philippine Pharmawealth, Inc, respondent;
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February 20, 2013 Second Division Del Castillo, J. FACTS: 1.
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On December 22, 1998, Administrative Order (AO) No. 27 series of 1995 was issued by then Department of Health Secretary Alfredo G. Romualdez. AO 27 sets the guidelines and procedure for accreditation of government suppliers of pharmaceutical products for sale or distribution to the public, such accreditation to be valid for three years but subject to annual review. On January 25, 2000, Secretary Romualdez issued AO 10 series of 2006 which amended AO 27. Under Sec 7 of AO 10, accreditation period for government suppliers of pharmaceutical products was reduced to 2 years. Also, accreditation of Pharmaceutical companies may be recalled, suspended or revoked after due deliberation and proper notice by the DOH Accreditation Committee, Committee, through its Chairman. Sec 7 of AO 10 was later amended AO 66 series of 2008 which stated that the 2 year accreditation may be recalled, suspended or revoked only after due deliberation, hearing and notice by the DOH Accreditation Committee, through its Chairman. On August 28, 2000, the DOH issued Memorandum No. 171-C9 which provided for a list and category of sanctions to be imposed on accredited government suppliers. In line with Memorandum No. 171-C, the DOH, through former Undersecretary Ma. Margarita M. Galon, issued Memorandum No. 209 series of 2000 inviting representatives of 24 accredited drug companies, including herein respondent Phil Pharmawealth, Inc. (PPI) to a meeting on October 27, 2000. During the meeting, Undersecretary Galon handed them copies of a document entitled “R eport eport on Violative Products” issued by the Bureau of Food and Drugs (BFAD), which detailed violations or adverse findings relative to these accredited drug companies’ produ cts. PPI’s products were included as BFAD found that PPI’s products sold to the public were unfit for human consumption. The companies were directed to submit their respective explanations on the findings within 10 days. PPI did not submit its reply on time. Instead, it submitted a letter stating that it is referring the matter to its lawyers for preparation of a reply but with no indicated date of compliance, which DOH Usec Galon found untenable, thus she informed PPI thru letter that its accreditation had been suspended for two years in accordance with AO 10 and Memorandum No. 171-C. PPI thru letter, demanded that Usec Galon cease and desist from enforcing the suspension under pain of legal redress. PPI then filed a complaint to declare certain DOH issuances (Memorandum No. 171-C, AO 10, Series 2000, Usec Galon’s suspension order; and AO 14, Series 2001) null and void for being in violation of Section 26, Republic Act 3720, with prayer for injunction and damages against Usec Galon and later DOH S ecretary Dayrit. It claimed that its accreditation was suspended without due notice and hearing. It prayed that it be awarded moral damages, attorneys fees and costs of suit. The respondent DOH officials filed a motion to dismiss, alleging that it gave PPI the opportunity to explain but it did not do so in a timely manner. The suspension was necessary to stop the distribution and sale of substandard products. In a Manifestation and Motion, the DOH officials further moved to dismiss the case as it was a suit against the State; the complaint was improperly verified; and the corporate officer lacked the authority to file the suit. The
Regional Trial Court dismissed the case, holding that the suit is against the State, thus the principle of immunity form suit is applicable. On appeal to the CA, however, the latter reversed and set aside the RTC decision. According to the CA, it was premature for the RTC to have dismissed the case, as the cause of actions were sufficiently alleged in the complaint. Further, by filing a complaint, the DOH officials hypothetically admitted the allegations in the complaintthat they were being sued in their official and private capacities. Thus the DOH officials, herein petitioners, elevated the case to the Supreme Court, arguing that PPI’s prayer for damages should be considered a suit against the State for it would require the needed appropriation to satisfy PPI’s claim for damages should it win. In issuing the assailed DOH issuances, they acted within the scope of their authority, hence should not be made to account individually. Petition was granted.
ISSUE: Whether or not DOH, in this circumstance, is under the mantle of state immunity. HELD: As a general rule, a state may not be sued. However, if it consents, either expressly or impliedly, then it may be the subject of a suit. There is express consent when a law, either special or general, so provides. On the other hand, there is implied consent when the state “enters into a contract or it itself commences litigation.” However, it must be clarified that when a state enters into a contract, it does not automatically mean that it has waived its nonsuability. The State “will be deemed to have impliedly waived its non -suability [only] if it has entered into a contract in its proprietary or private capacity. [However,] when the contract involves its sovereign or governmental capacity, capacity, x x x no such waiver may be implied.” “Statutory provisions waiving state immunity are construed in strictissimi strictissimi juris. For, waiver of immunity is in derogation of sovereignty.”
