An unincorporated government agency without any separate juridical personality of its own enjoys immunity from suit because it is invested with an inherent power of sovereignty.

The basic postulate enshrined in the constitution that ‘(t)he State may not be sued without its consent,’ reflects nothing less than a recognition of the sovereign character of the State and an express affirmation of the unwritten rule effectively insulating it from the jurisdiction of courts.  It is based on the very essence of sovereignty.  x x x [A] sovereign is exempt from suit, not because of any formal conception or obsolete theory, but on the logical and practical ground that there can be no legal right as against the authority that makes the law on which the right depends.  True, the doctrine, not too infrequently, is derisively called ‘the royal prerogative of dishonesty’ because it grants the state the prerogative to defeat any legitimate claim against it by simply invoking its non-suability.  We have had occasion to explain in its defense, however, that a continued adherence to the doctrine of non-suability cannot be deplored, for the loss of governmental efficiency and the obstacle to the performance of its multifarious functions would be far greater in severity than the inconvenience that may be caused private parties, if such fundamental principle is to be abandoned and the availability of judicial remedy is not to be accordingly restricted.

The rule, in any case, is not really absolute for it does not say that the state may not be sued under any circumstance.  On the contrary, as correctly phrased, the doctrine only conveys, ‘the state may not be sued without its consent;’ its clear import then is that the State may at times be sued.  The State’s consent may be given either expressly or impliedly.  Express consent may be made through a general law or a special law.  x x x Implied consent, on the other hand, is conceded when the State itself commences litigation, thus opening itself to a counterclaim or when it enters into a contract.  In this situation, the government is deemed to have descended to the level of the other contracting party and to have divested itself of its sovereign immunity.  This rule, x x x is not, however, without qualification.  Not all contracts entered into by the government operate as a waiver of its non-suability; distinction must still be made between one which is executed in the exercise of its sovereign function and another which is done in its proprietary capacity.^[33]

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.^[34]  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.”^[35]  However, it must be clarified that when a state enters into a contract, it does not automatically mean that it has waived its non-suability.^[36]  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[,] x x x no such waiver may be implied.”^[37]  “Statutory provisions waiving [s]tate immunity are construed in strictissimi juris.  For, waiver of immunity is in derogation of sovereignty.”^[38]

The DOH can validly invoke state immunity.  

a) DOH is an unincorporated agency which
performs sovereign or governmental functions.

In this case, the DOH, being an “unincorporated agency of the government”^[39] can validly invoke the defense of immunity from suit because it has not consented, either expressly or impliedly, to be sued.  Significantly, the DOH is an unincorporated agency which performs functions of governmental character.

The ruling in Air Transportation Office v. Ramos^[40] is relevant, viz:

An unincorporated government agency without any separate juridical personality of its own enjoys immunity from suit because it is invested with an inherent power of sovereignty.  Accordingly, a claim for damages against the agency cannot prosper; otherwise, the doctrine of sovereign immunity is violated.  However, the need to distinguish between an unincorporated government agency performing governmental function and one performing proprietary functions has arisen.  The immunity has been upheld in favor of the former because its function is governmental or incidental to such function; it has not been upheld in favor of the latter whose function was not in pursuit of a necessary function of government but was essentially a business.^[41]

b) The Complaint seeks to hold the DOH
solidarily and jointly liable with the
other defendants for damages which
constitutes a charge or financial liability
against the state.

Moreover, it is settled that if a Complaint seeks to “impose a charge or financial liability against the state,”^[42] the defense of non-suability may be properly invoked.  In this case, PPI specifically prayed, in its Complaint and Amended and Supplemental Complaint, for the DOH, together with Secretaries Romualdez and Dayrit as well as Undersecretary Galon, to be held jointly and severally liable for moral damages, exemplary damages, attorney’s fees and costs of suit.^[43]  Undoubtedly, in the event that PPI succeeds in its suit, the government or the state through the DOH would become vulnerable to an imposition or financial charge in the form of damages.  This would require an appropriation from the national treasury which is precisely the situation which the doctrine of state immunity aims to protect the state from.

The mantle of non-suability extends to complaints
filed against public officials for acts done in the
performance of their official functions.

As regards the other petitioners, to wit, Secretaries Romualdez and Dayrit, and Undersecretary Galon, it must be stressed that the doctrine of state immunity extends its protective mantle also to complaints filed against state officials for acts done in the discharge and performance of their duties.^[44] “The suability of a government official depends on whether the official concerned was acting within his official or jurisdictional capacity, and whether the acts done in the performance of official functions will result in a charge or financial liability against the government.”^[45] Otherwise stated, “public officials can be held personally accountable for acts claimed to have been performed in connection with official duties where they have acted ultra vires or where there is showing of bad faith.”^[46] Moreover, “[t]he rule is that if the judgment against such officials will require the state itself to perform an affirmative act to satisfy the same, such as the appropriation of the amount needed to pay the damages awarded against them, the suit must be regarded as against the state x x x.  In such a situation, the state may move to dismiss the [C]omplaint on the ground that it has been filed without its consent.” ^[47]

It is beyond doubt that the acts imputed against Secretaries Romualdez and Dayrit, as well as Undersecretary Galon, were done while in the performance and discharge of their official functions or in their official capacities, and not in their personal or individual capacities. Secretaries Romualdez and Dayrit were being charged with the issuance of the assailed orders. On the other hand, Undersecretary Galon was being charged with implementing the assailed issuances.  By no stretch of imagination could the same be categorized as ultra vires simply because the said acts are well within the scope of their authority.  Section 4 of RA 3720 specifically provides that the BFAD is an office under the Office of the Health Secretary.  Also, the Health Secretary is authorized to issue rules and regulations as may be necessary to effectively enforce the provisions of RA 3720.^[48]  As regards Undersecretary Galon, she is authorized by law to supervise the offices under the DOH’s authority,^[49] such as the BFAD.  Moreover, there was also no showing of bad faith on their part.  The assailed issuances were not directed only against PPI.  The suspension of PPI’s accreditation only came about after it failed to submit its comment as directed by Undersecretary Galon.  It is also beyond dispute that if found wanting, a financial charge will be imposed upon them which will require an appropriation from the state of the needed amount.  Thus, based on the foregoing considerations, the Complaint against them should likewise be dismissed for being a suit against the state which absolutely did not give its consent to be sued.

SECOND DIVISION

[ G.R. No. 182358, February 20, 2013 ]

THE SECRETARY OF HEALTH, AND MA. MARGARITA M. GALON, PETITIONERS, VS. PHIL PHARMAWEALTH, INC., RESPONDENT.