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SECRETARY OF HEALTH v. PHIL PHARMAWEALTH

FACTS:

The case involves the accreditation suspension of Philippine Pharmaceutical, Inc. (PPI), a government supplier of pharmaceutical products, by the Department of Health (DOH). PPI filed a complaint seeking to nullify the suspension and claim damages. PPI argued that it was not given proper notice and hearing before the suspension, and that the DOH administrative issuances are null and void for contravening the relevant law. The trial court initially dismissed the case, but the Court of Appeals reversed the decision and ordered the case to proceed. The DOH and individual petitioners filed a petition for review, arguing that the case should be dismissed as it is a suit against the State requiring appropriation of funds. They also argue that they should not be held personally liable as they acted officially and within their authority in issuing and implementing the issuances. The respondent insists that the case is a suit against the petitioners in their personal capacity for acts committed outside the scope of their authority.

ISSUES:

  1. Whether the Department of Health (DOH) can invoke state immunity.

  2. Whether the Complaint seeks to impose a charge or financial liability against the state.

  3. Whether or not the doctrine of state immunity extends its protection to state officials for acts done in the discharge and performance of their duties.

  4. Whether or not the acts imputed against Secretaries Romualdez and Dayrit, as well as Undersecretary Galon, were done in their official capacities.

  5. Whether or not there was showing of bad faith on the part of Secretaries Romualdez and Dayrit, as well as Undersecretary Galon.

  6. Whether or not PPI was denied due process when its accreditation was suspended without due notice and hearing.

  7. Whether the issuances of AO 27 series of 1998 and AO 10 series of 2000, requiring the inclusion of drugs in the list of accredited drugs, are null and void.

RULING:

  1. The DOH can validly invoke state immunity. The DOH, being an unincorporated agency of the government, can invoke the defense of immunity from suit as it has not consented to be sued. The DOH performs functions of a governmental character, and unincorporated government agencies without separate juridical personality enjoy immunity from suit because they are invested with an inherent power of sovereignty. The distinction must be made between unincorporated government agencies performing governmental functions and those performing proprietary functions.

  2. The Complaint seeks to impose a charge or financial liability against the state. The Complaint specifically prays for the DOH, along with other defendants, to be held jointly and severally liable for damages. If the Complaint succeeds, it would impose a financial charge on the state, thus invoking the doctrine of state immunity.

  3. Yes. The doctrine of state immunity extends its protection to state officials for acts done in the discharge and performance of their duties. Public officials can only be held personally accountable for acts claimed to have been performed in connection with their official duties if they have acted ultra vires or there is a showing of bad faith. If a judgment against such officials will require the state itself to perform an affirmative act to satisfy the same, the suit must be regarded as against the state and may be dismissed on the ground that it has been filed without the state's consent.

  4. Yes. The acts imputed against Secretaries Romualdez and Dayrit, as well as Undersecretary Galon, were done in their official capacities as they were being charged with issuing and implementing the assailed orders, which were well within the scope of their authority.

  5. No. There was no showing of bad faith on the part of Secretaries Romualdez and Dayrit, as well as Undersecretary Galon. The acts they performed were within the scope of their authority and were not directed solely against PPI. The suspension of PPI's accreditation came about after it failed to submit its comment as directed.

  6. No. PPI was not denied due process when its accreditation was suspended without due notice and hearing. PPI was given the opportunity to submit comment or explanation but instead chose to inform the DOH that the matter had been referred to its lawyers without specifying when the appropriate reply would be submitted. The opportunity to explain or seek reconsideration is the essence of due process in administrative proceedings, and as long as parties are given the opportunity to be heard before judgment is rendered, the demands of due process are sufficiently met.

  7. The Court granted the Petition and dismissed the Civil Case No. 68200.

PRINCIPLES:

  • The doctrine of non-suability recognizes the sovereign character of the state and affirms its immunity from the jurisdiction of courts. The state may not be sued without its consent.

  • The state's consent to be sued may be given expressly or impliedly; express consent is through a general or special law, while implied consent is conceded when the state commences litigation or enters into a contract.

  • Contracts entered into by the government may not automatically waive its non-suability; distinction must be made between contracts executed in the exercise of its sovereign function and those done in its proprietary capacity.

  • Unincorporated government agencies without separate juridical personality enjoy immunity from suit, particularly those performing governmental functions. The immunity does not apply to agencies performing proprietary functions that are essentially business-related.

  • If a Complaint seeks to impose a charge or financial liability against the state, the defense of non-suability may be invoked. The doctrine aims to protect the state from financial charges or impositions that require an appropriation from the national treasury.

  • The doctrine of state immunity extends its protection to state officials for acts done in the discharge and performance of their duties, unless they have acted ultra vires or there is a showing of bad faith.

  • Public officials can be held personally accountable for acts performed in connection with their official duties if there is a showing of bad faith or if the judgment against them will require the state to perform an affirmative act to satisfy the damages awarded.

  • The opportunity to explain one's side or seek reconsideration is the essence of due process in administrative proceedings. Parties who choose not to avail themselves of the opportunity to answer charges against them cannot complain of a denial of due process.

  • The Court has the power to declare a law or administrative regulation null and void if it finds that it contravenes the Constitution.

  • An administrative agency, like the Department of Health, has the authority to promulgate rules and regulations to effectively implement the provisions of a law.