I. CASE TITLE | G.R. No.

169304 | March 13, 2007

THE DEPARTMENT OF HEALTH, SECRETARY MANUEL M. DAYRIT, USEC.
MA. MARGARITA GALON and USEC. ANTONIO M. LOPEZ , petitioners,
vs.
PHIL. PHARMAWEALTH, INC., respondent.
II. PARTIES
Petitioners DOH Officials named above, in their official capacities
Respondents PHIL. PHARMAWEALTH (Domestic Corp. engaged in the manufacture and
supply of pharmaceutical products to government hospitals in the Ph)
III. NATURE OF THE PETITION
Petition for Review
IV. DISPUTED MATTER
1. CA’s Decision dated May 12, 2005 affirming RTC order denying petitioner’s motion to
dismiss Civil Case No. 68208
2. CA Resolution dated August 9, 2005 denying the petitioner’s motion for reconsideration.
V. ANTECEDENT FACTS
 Admin Order (AO) No. 27, Series of 1998, as amended by AO No. 10, Series of 2000, is
issued to provide guidelines for the accreditation of government’s supplier of
pharmaceutical products. It required that only accredited products shall be allowed to be
procured by the DOH and other entities (e.g. government hospitals) under its jurisdiction.
 Pharmawealth requested for the accreditation of certain products in 2000, including
Penicillin G Benzathine. The DOH did not respond.
 Despite not receiving response from DOH, Pharmawealth still participated when the
DOH issued an Invitation for Bid for the procurement of 1.2 million of aforementioned
drug.
 Only two companies participated, YSS Laboratories and Pharmawealth, the latter being
one with the lower price offer. However, it did not get the contract as said drug has not
been accredited by DOH.
 Pharmawealth filed a case against the RTC praying for the (1) nullification of the contract
with YSS, (2) awarding of the contract to them, and (3) holding named DOH Secretary
and Undersecretaries liable jointly and severally for damages.
 The DOH filed for a motion to dismiss arguing that (1) it has full discretion to accept or
reject any bid, and (2) the complaint cannot prosper under the doctrine of state
immunity from suit (Sec. 3, Art. XVI).The motion was denied. DOH filed a motion for
reconsideration. This is again denied.
 The CA affirmed the RTC decisions, hence the disputed matter above.
 Thus this petition for review:
VI. SC RULING
Petition denied. Suing individual petitioners in their personal capacities for damages in
connection with their alleged act of "illegally abusing their official positions to make sure that
Pharmawealth would not be awarded the contract done in bad faith and with full knowledge of the limits
and breadth of their powers given by law is permissible.”
VII. DOCTRINES
The suability of a government official depends on: (1) whether the official concerned was
acting within his official or jurisdictional capacity; and (2) whether the acts done in the
performance of official functions will result in a charge or financial liability against the
government.

Under the first determinative element, Pharmwealth’s imputation of grave abuse of

discretion against the DOH officials under their official capacities is a proper subject of
judicial review. It is then follows that the officials concerned be impleaded as respondents
in an appropriate suit.

Under the second element, 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. In the instant case, the only causes of action directed against the DOH (as an
unincorporated agency of the government) are preliminary injunction and mandamus.

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. Although there is a claim
for damages in the present case, state immunity still cannot be invoked as there is an
assertion that the concerned officials acted in excess of the granted authority. An officer
who exceeds the power conferred on him by law cannot hide behind the plea of sovereign
immunity and must bear the liability personally.
VIII. DISPOSITIVE PORTION
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.