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DOH v Phil Pharmawealth GR No.

182358 Regional Trial Court dismissed the case, holding that the
suit is against the State, thus the principle of immunity
Department of Health, Secretary Alfredo Romualdez, USec. form suit is applicable.
Margarita Galon, petitioner; 9. On appeal to the CA, however, the latter reversed and set
Philippine Pharmawealth, Inc, respondent; 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.
February 20, 2013 Further, by filing a complaint, the DOH officials
Second Division hypothetically admitted the allegations in the complaint-
Del Castillo, J. that they were being sued in their official and private
capacities. Thus the DOH officials, herein petitioners,
FACTS: elevated the case to the Supreme Court, arguing that PPIs
prayer for damages should be considered a suit against the
1. On December 22, 1998, Administrative Order (AO) No. 27 State for it would require the needed appropriation to
satisfy PPIs claim for damages should it win. In issuing
series of 1995 was issued by then Department of Health the assailed DOH issuances, they acted within the scope of
Secretary Alfredo G. Romualdez. AO 27 sets the guidelines their authority, hence should not be made to account
and procedure for accreditation of government suppliers of individually. Petition was granted.
pharmaceutical products for sale or distribution to the
public, such accreditation to be valid for three years but ISSUE:
subject to annual review.
2. On January 25, 2000, Secretary Romualdez issued AO 10 Whether or not DOH, in this circumstance, is under the mantle of
series of 2006 which amended AO 27. Under Sec 7 of AO state immunity.
10, accreditation period for government suppliers of
pharmaceutical products was reduced to 2 years. Also, HELD:
accreditation of Pharmaceutical companies may be
recalled, suspended or revoked after due deliberation and As a general rule, a state may not be sued. However, if it consents,
proper notice by the DOH Accreditation Committee, either expressly or impliedly, then it may be the subject of a suit.
through its Chairman. There is express consent when a law, either special or general, so
3. Sec 7 of AO 10 was later amended AO 66 series of 2008 provides. On the other hand, there is implied consent when the state
which stated that the 2 year accreditation may be recalled, enters into a contract or it itself commences litigation. However, it
suspended or revoked only after due deliberation, hearing must be clarified that when a state enters into a contract, it does not
and notice by the DOH Accreditation Committee, through automatically mean that it has waived its nonsuability. The State
its Chairman. will be deemed to have impliedly waived its non-suability [only] if
4. On August 28, 2000, the DOH issued Memorandum No. it has entered into a contract in its proprietary or private capacity.
171-C9 which provided for a list and category of sanctions [However,] when the contract involves its sovereign or governmental
to be imposed on accredited government suppliers. In line capacity, x x x no such waiver may be implied. Statutory
with Memorandum No. 171-C, the DOH, through former provisions waiving state immunity are construed in strictissimi juris.
Undersecretary Ma. Margarita M. Galon, issued For, waiver of immunity is in derogation of sovereignty.
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.
5. During the meeting, Undersecretary Galon handed them
copies of a document entitled Report on Violative
Products issued by the Bureau of Food and Drugs
(BFAD), which detailed violations or adverse findings
relative to these accredited drug companies products. PPIs
products were included as BFAD found that PPIs products
sold to the public were unfit for human consumption.
6. 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.
7. PPI then filed a complaint to declare certain DOH
issuances (Memorandum No. 171-C, AO 10, Series 2000,
Usec Galons 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 Secretary 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.
8. 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