G.R. No. 169304 - Department of Health vs. Phil. Pharmawealth, Inc.

Petitioners are the Department of Health (DOH), Secretary Manuel M. Dayrit, Usec. Ma. Margarita Galon, and Usec. Antonio M. Lopez.
Respondent is Phil. Pharmawealth, Inc., a domestic corporation engaged in manufacturing and supplying pharmaceutical products to government hospitals.
The case originated from the denial of petitioners' motion to dismiss a civil complaint filed by respondent related to a government procurement contract.

On December 22, 1998, DOH issued Administrative Order (A.O.) No. 27, Series of 1998, providing guidelines on the accreditation of government suppliers of pharmaceutical products.
A.O. No. 10, Series of 2000, amended A.O. No. 27 with additional accreditation guidelines to ensure only qualified bidders transact business with DOH.
Part V of A.O. No. 10 states that only products accredited by the Committee shall be procured by the DOH and its jurisdictions.

On May 9 and May 29, 2000, respondent submitted requests for the inclusion of additional items (including "Penicillin G Benzathine") into its list of accredited drug products.
According to DOH’s schedule, the processing and release of the accreditation decision were expected by September 2000.
In September 2000, DOH issued an Invitation for Bids (IFB) for the procurement of 1.2 million units of Penicillin G Benzathine.
Despite no formal response on the accreditation request, respondent submitted a bid for the contract.

On October 11, 2000, bids were opened: respondent submitted the lower bid at P82.24 per unit, while Cathay/YSS Laboratories (YSS) bid P95.00 per unit.
The contract was awarded to YSS because respondent’s Penicillin G Benzathine product was not accredited.

To nullify the award to YSS and declare respondent as the lowest, complying, responsible bidder;
To order DOH and officials to award the contract to respondent; and
To hold officials liable for damages.

Petitioners filed a motion to dismiss citing government’s discretion to accept or reject bids without liability and invoking state immunity.
Petitioners also questioned the authority of respondent's representative to file the complaint.

On December 8, 2003, the Regional Trial Court denied petitioners’ motion to dismiss.
Petitioners’ motion for reconsideration was denied on March 15, 2004.
Petitioners filed a petition for certiorari with the Court of Appeals.
By decision dated May 12, 2005, the Court of Appeals affirmed the trial court’s denial of the motion to dismiss.
The Court of Appeals denied petitioners’ motion for reconsideration on August 9, 2005.

Petitioners filed a petition for review with the Supreme Court, raising the sole issue of whether the Court of Appeals erred in upholding the denial of their motion to dismiss.

Whether the Court of Appeals erred in denying petitioners’ motion to dismiss the complaint filed by respondent.
Whether petitioners, particularly the DOH and its officials, are immune from suit under the doctrine of state immunity.
Whether respondent may sue individual DOH officials in their personal capacity for damages arising from alleged illegal acts in awarding the procurement contract.