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Department of Health v. Phil. Pharmawealth, Inc. (2007) Carpio-Morales, J.

Petition for Review of CA decision which affirmed RTC order denying petitioners motion to dismiss the
pending Civil Case, as well as CA resolution which denied the petitioners motion for reconsideration

Facts:

- Phil. Pharmahealth Inc. is a domestic corporation engaged in the business of manufacturing and
supplying pharmaceutical products to government hospitals

- the DOH through then Sec. of Health Alberto G. Romualdez, Jr. issued Administrative Order (AO) No.
27, Series of 1998, which outlines the guidelines and procedures on the accreditation of government
suppliers

- this was later amended by AO No. 10, Series of 2000, which aimed at ensuring that only qualified
bidders can transact business with the DOH

- Only products accredited wby the Committee shall be allowed to be procured by the DOH

In May of 2000, respondent submitted to the DOH a request for the inclusion of additional items in its list
of accredited drug products

- this includes the antiobiotic Penicillin G Benzathine

The processing and release of the result were due to be out in September of that year Sometime in Sept
of that same year, DOH issued an Invitation for Bids for the procurement of 1.2 million units of vials of
Penicillin G Benzathine

- herein referred to as the Penicillin G Benzathine contract

Despite the lack of response regarding their pending accreditation, respondent submitted a bid for the
above contract Respondent submitted the lower bid among the two companies that participated

- Bid of 82.24 pesos per unit vs. Cathay/YSS Laboratoriess bid of 95.00 pesos

But in light of the non-accreditation of respondent, however, the contract was awarded to YSS
Respondent then filed a complaint for injunction, mandamus, and damages, and sought to nullify the
award of the contract and have them, the plaintiff, declared as the lowest complying responsible bidder
for the Benzathine contract

The Petitioners, the DOH as well as individual petitioners who are the Secretaries (different ones) and
Undersecretaries of the same, filed for a dismissal of the case on lack of merit
- based on the doctrine of state immunity, maintaining that the suit is against the State Motion for
dismissal denied by both the RTC and the

CA, hence the present petition

WON the CA erred in upholding the denial of petitioners motion to dismiss.

1.1. No, it did NOT

The judicial review of alleged grave abuse of discretion in their official capacity on the part of government
officials amounting to lack or excess of jurisdiction of authority is guaranteed in the constitution

- it is proper that they are impleaded as defendant or respondent in an appropriate suit

As to the DOH, the defense of immunity from suit will not avail

- Section 1, Rule 58 of the Rules of Court state that preliminary injunction may be directed against a party
or a court, agency, or a person

- moreover, the defense of state immunity does not apply in causes of action which do not seek to impose
a charge or financial lability against the State

Section 2, Article XVI of the 1987 Constitution

embodies the rule that a state may not be sued without its consent

- it is one of the generally accepted principles of international law, and has been adopted as part
of the law of the land

- The rule covers complaints against officials of the state for acts allegedly in the disharge of their
duties, for this will be regarded as one against the state, when:

- the 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 damages awarded against them

- However, there are limitations to this as articulated in Sharif vs. Court of Appeals

- Inasmuch as the State authorizes only legal acts by its officers, unauthorized acts of
government officials or officers are not acts of the State

- thus 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
- also does not apply as well when official is being sued in his personal capacity

For the alleged act of illegally abusing their offical postions in the Benzathine contract done in bad
faith, the present case is permissible

Ruling:

WHEREFORE, the petition is DENIED.

Farolan v. Court of Tax Appeals

Farolan v Court of Tax Appeals (1993) (Farolan (Commissioner of Customs) petitioner ; Bagong Buhay
Trading and CTA- respondent) Petition for Review on Certiorari FACTS The vessel Pacific Hawk
arrived at the port of Manila carrying, among others, 80 bales of screen net that was consigned to Bagong
Buhay Trading.

Upon examination, customs examiner saw that the importation was declared as 80 bales of screen net of
500 rolls with a gross weight of 12,777 kg under Tariff Heading no. 39.06-B (should be 39.02) at 35% ad
valorem.

However, upon re-examination, it was found that the bales of screen net totaled 1,600 rolls, valued at
$10.15/yard, not $.075/yard as previously declared. Moreover, the Collector of Customs said that the
shipment should be classified under Tariff Heading no. 51.04-B at 100% ad valorem.

Upon trial before the Court of Tax Appeals, it was decided that it should be classified as polyethlyene
plastic at the rate of 35% ad valorem instead of synthetic woven fabric at the rate of 100% ad valorem.
Bagong Buhay then filed a petition for the release of the questioned goods. However, of the 143, 454
yards released, only 116,950 were in good condition (26,504 were in bad condition). Bagong Buhay
ordered Customs to pay for damages.

RULINGS: Commissioner of Customs affirmed the Collector of Customs ; motion for reconsideration
denied Court of Tax Appeals reversed decision of Customs, ruling that fraud is not established upon
Bagong Buhay and that the classification should be polyethylene plastic at the rate of 35% ad valorem
and not the synthetic woven fabric at 100% ad valorem.

ISSUE/HOLDING

WON shipment in question is subject to forfeiture under Section 2530-Msubparagraphs (3), (4) and (5) of
the Tariff and Customs Code - NO

Although there may be misdeclaration (i.e. 1,600 rolls instead of 500), it does not warrant forfeiture
because the act was not committed directly by owner, importer, exporter or consignee set forth in Section
2530, paragraph m, subparagraph (3), and (4). Its the fault of the supplier. Bagong Buhay cannot be
charged with the wrongful making because such entry or declaration merely restated faithfully the data
found in the corresponding certificate of origin, certificate of manager of the shipper, the packing lists and
the bill of lading which were all prepared by its suppliers abroad. Moreover, applying subparagraph (5),
Commissioner of Customs failed to show that fraud had been committed by the private respondent. The
fraud contemplated must be actual and not constructive. In the case at bar, Bagong Buhay Trading acted
in good faith.

2. WON the shipment falls under Tariff Heading no. 39.02B of the Tariff and Customs Code subject to ad
valorem duty of 35% instead of Tariff Heading no. 51.04B with ad valorem of 100% - YES

Relying on the laboratory findings of Bureau of Customs and Adamson University, they classified the
questioned shipment as polyethylene plastic taxable under Tariff Heading no. 39.02 instead of synthetic
polyethylene woven fabric under Tariff Heading 51.04

3. WON Collector of Customs may be held liable for the damages - NO

BOC cant be held liable for actual damages that the respondent sustained. To do so would contravene
the doctrine of sovereign immunity.

Since it demands that the Commissioner of Customs be ordered to pay for actual damages, it would
ultimately be the liability of the government. Thus it is converted technically into a suit against the state.

On this point, the political doctrine that the state may not be sued w/o its consent categorically applies.
The BoC is enjoys immunity from suit as it is an unincorporated govt agency without any separate
juridical personality of its own.
Lansang vs. Court of Appeals (Consti1)

Amado J. Lansang, petitioner, vs. Court of Appeals, General Assembly of the Blind, Inc., and Jose
Iglesias, respondents.

February 23, 2000

Quisumbing, J:

Facts:

Private respondent General Assembly of the Blind (GABI) were allegedly awarded a verbal contract of
lease in Rizal Park by the National Parks Development Committee (NPDC). However, this verbal contract
accommodation was unclear because there was no document or instrument involved. GABI was allegedly
given an office and library space as well as kiosks area for selling food and drinks. GABI was supposed to
remit to the NPDC 40% of the profits derived from operating the kiosks w/o anything shown in record who
received the shares of profits or how they were used/spent.

With the change of government, the new Chairman of NPDC, petitioner Amado J. Lansang, sought to
clean up Rizal Park and terminated the said verbal agreement with GABI and demanded that they vacate
the area.

The notice was signed by the president of GABI, private respondent Jose Iglesias, allegedly to indicate
his conformity to its contents but later on claimed that he was deceived into signing the notice.

On the day of the supposed eviction, GABI filed an action for damages and injunction in the RTC against
the petitioner but it was dismissed, ruling that the complaint was actually directed against the state which
could not be sued without its consent.

On appeal, the Court of Appeals reversed the decision of the trial court and ruled that a government
official being sued in his official capacity is not enough to protest such official from liability for acts done
without or in excess of his authority.

Issues:

Whether or not private respondents' complaint against petitioner Lansang, as Chairman of NPDC, is in
effect a suit against the state which cannot be sued without its consent.

Whether or not petitioner Lansang abused his authority in ordering the ejectment of private respondents
from Rizal Park.
Held:

No, the complaint is not a suit against the state.

No, Lansang did not abuse his authority.

Ratio:

The doctrine of state immunity from suit applies to complaints filed against public officials for acts done in
the performance of their duties. The rule is that the suit must be regarded as one against the state where
satisfaction of the judgment against the public official concerned will require the state itself to perform a
positive act.

Lansang was sued not in his capacity as NPDC Chairman but in his personal capacity. It is evident from
the complaint that Lansang was sued allegedly for having personal motives in ordering the ejectment of
GABI from Rizal Park. Par 4 of the complaint said that Lansang was acting under the spirit of revenge, ill-
will, evil motive, and personal resentment against Jose Iglesias.

The complaint filed by private respondents in the RTC merely identified petitioner as chairman of the
NPDC, but did not categorically state that he is being sued in that capacity. Also, it is evident from the
said complaint that petitioner was sued allegedly for having personal motives in ordering the ejectment of
GABI from Rizal.

There was no evidence of abuse of authority

WON RESPONDENT COURT ERRED IN NOT HOLDING THAT PETITIONER'S ACT OF


TERMINATING RESPONDENT GABI'S CONCESSION IS VALID AND DONE IN THE LAWFUL
PERFORMANCE OF OFFICIAL DUTY. YES

There is no evidence of such abuse of authority on record. As earlier stated, Rizal Park is beyond the
commerce of man and, thus, could not be the subject of a lease contract. Admittedly, there was no written
contract. That private respondents were allowed to occupy office and kiosk spaces in the park was only a
matter of accommodation by the previous administrator. This being so, also admittedly, petitioner may
validly discontinue the accommodation extended to private respondents, who may be ejected from the
park when necessary. Private respondents cannot and does not claim a vested right to continue to
occupy Rizal Park.