G.R. No.
190837 March 5, 2014 implementation details concerning the BA/BE testing requirement on
REPUBLIC OF THE PHILIPPINES, represented by the BUREAU OF
FOOD AND DRUGS (now FOOD AND DRUG ADMINISTRATION),
Petitioner,
vs.
DRUGMAKER'S LABORATORIES, INC. and TERRAMEDIC, INC.,
Respondents.
DECISION
PERLAS-BERNABE, J.:
This is a direct recourse to the Court from the Regional Trial Court of
Muntinlupa City, Branch 256 (RTC), through a petition for review on
certiorari,1 raising a pure question of law. In particular, petitioner
Republic of the Philippines, represented by the Bureau.of Food and
Drugs (BFAD), now Food and Drug Administration (FDA), assails the
Order2 dated December 18, 2009 of the RTC in Civil Case No. 08-124
which: (a) declared BF AD Circular Nos. 1 and 8, series of 1997
(Circular Nos. 1 and 8, s. 1997) null and void; (b) ordered the issuance
of writs of permanent injunction and prohibition against the FDA in
implementing the aforesaid circulars; and ( c) directed the FDA to issue
Certificates of Product Registration (CPR) in favor of respondents
Drugmaker's Laboratories, Inc. and Terrarriedic, Inc. (respondents).
The Facts
The FDA3 was created pursuant to Republic Act No. (RA) 3720,4
otherwise known as the "Food, Drug, and Cosmetic Act," primarily in
order "to establish safety or efficacy standards and quality measures
for foods, drugs and devices, and cosmetic product[s]."5 On March 15,
1989, the Department of Health (DOH), thru then-Secretary Alfredo
R.A. Bengzon, issued Administrative Order No. (AO) 67, s. 1989,
entitled "Revised Rules and Regulations on Registration of
Pharmaceutical Products." Among others, it required drug
manufacturers to register certain drug and medicine products with the
FDA before they may release the same to the market for sale. In this
relation, a satisfactory bioavailability6/bioequivalence7 (BA/BE) test
is needed for a manufacturer to secure a CPR for these products.
However, the implementation of the BA/BE testing requirement was
put on hold because there was no local facility capable of conducting
the same. The issuance of Circular No. 1, s. 19978 resumed the FDA’s
implementation of the BA/BE testing requirement with the
establishment of BA/BE testing facilities in the country. Thereafter,
the FDA issued Circular No. 8, s. 19979 which provided additional
drug products.10
Respondents manufacture and trade a "multisource pharmaceutical
product"11 with the generic name of rifampicin12 – branded as "Refam
200mg/5mL Suspension" (Refam) – for the treatment of adults and
children suffering from pulmonary and extra-pulmonary
tuberculosis.13 On November 15, 1996, respondents applied for and
were issued a CPR for such drug, valid for five (5) years, or until
November 15, 2001.14 At the time of the CPR’s issuance, Refam did
not undergo BA/BE testing since there was still no facility capable of
conducting BA/BE testing. Sometime in 2001, respondents applied for
and were granted numerous yearly renewals of their CPR for Refam,
which lasted until November 15, 2006, albeit with the condition that
they submit satisfactory BA/BE test results for said drug.15
Accordingly, respondents engaged the services of the University of the
Philippines’ (Manila) Department of Pharmacology and Toxicology,
College of Medicine to conduct BA/BE testing on Refam, the results of
which were submitted to the FDA.16 In turn, the FDA sent a letter
dated July 31, 2006 to respondents, stating that Refam is "not
bioequivalent with the reference drug."17 This notwithstanding, the
FDA still revalidated respondents’ CPR for Refam two (2) more times,
effective until November 15, 2008, the second of which came with a
warning that no more further revalidations shall be granted until
respondents submit satisfactory BA/BE test results for Refam.18
Instead of submitting satisfactory BA/BE test results for Refam,
respondents filed a petition for prohibition and annulment of Circular
Nos. 1 and 8, s. 1997 before the RTC, alleging that it is the DOH, and
not the FDA, which was granted the authority to issue and implement
rules concerning RA 3720. As such, the issuance of the aforesaid
circulars and the manner of their promulgation contravened the law
and the Constitution.19 They further averred that that the non-
renewal of the CPR due to failure to submit satisfactory BA/BE test
results would not only affect Refam, but their other products as well.20
During the pendency of the case, RA 9711,21 otherwise known as the
"Food and Drug Administration [FDA] Act of 2009," was enacted into
law.
The RTC Ruling
In an Order22 dated December 18, 2009, the RTC ruled in favor of
respondents, and thereby declared Circular Nos. 1 and 8, s. 1997 null
and void, ordered the issuance of writs of permanent injunction and
prohibition against the FDA in implementing the aforesaid circulars,
and directed the FDA to issue CPRs in favor of respondents’ products.
The RTC held that there is nothing in RA 3720 which granted either
the FDA the authority to issue and implement the subject circulars, or
the Secretary of Health the authority to delegate his powers to the FDA.
For these reasons, it concluded that the issuance of Circular Nos. 1
and 8, s.
1997 constituted an illegal exercise of legislative and administrative
powers and, hence, must be struck down.23
Accordingly, the RTC issued a Writ of Permanent Injunction24 dated
January 19, 2010, enjoining the FDA and all persons acting for and
under it from enforcing Circular Nos. 1 and 8, s. 1997 and directing
them to approve the renewal and revalidation of respondents’ products
without submitting satisfactory BA/BE test results.
Aggrieved, the FDA sought direct recourse to the Court through the
instant petition with an urgent prayer for the immediate issuance of a
temporary restraining order and/or a writ of preliminary injunction
against the implementation of the RTC’s Order dated December 18,
2009 and Writ of Permanent Injunction dated January 19, 2010.25
The Court granted FDA’s application and issued a Temporary
Restraining Order26 dated February 24, 2010, effective immediately
and continuing until further orders.
The Issue Before the Court
The primordial issue in this case is whether or not the FDA may validly
issue and implement Circular Nos. 1 and 8, s. 1997. In resolving this
issue, there is a need to determine whether or not the aforesaid
circulars partake of administrative rules and regulations and, as such,
must comply with the requirements of the law for its issuance.
The FDA contends that it has the authority to issue Circular Nos. 1
and 8, s. 1997 as it is the agency mandated by law to administer and
enforce laws, including rules and regulations issued by the DOH, that
pertain to the registration of pharmaceutical products.27
For their part, respondents maintain that under RA 3720, the power
to make rules to implement the law is lodged with the Secretary of
Health, not with the FDA.28 They also argue that the assailed circulars
are void for lack of prior hearing, consultation, and publication.29
The Court’s Ruling
The petition is meritorious.
Administrative agencies may exercise quasi-legislative or rule-making
powers only if there exists a law which delegates these powers to them.
Accordingly, the rules so promulgated must be within the confines of
the granting statute and must involve no discretion as to what the law
shall be, but merely the authority to fix the details in the execution or
enforcement of the policy set out in the law itself, so as to conform with
the doctrine of separation of powers and, as an adjunct, the doctrine
of non-delegability of legislative power.30
An administrative regulation may be classified as a legislative rule, an
interpretative rule, or a contingent rule. Legislative rules are in the
nature of subordinate legislation and designed to implement a primary
legislation by providing the details thereof.31 They usually implement
existing law, imposing general, extra-statutory obligations pursuant to
authority properly delegated by Congress32 and effect a change in
existing law or policy which affects individual rights and obligations.33
Meanwhile, interpretative rules are intended to interpret, clarify or
explain existing statutory regulations under which the administrative
body operates. Their purpose or objective is merely to construe the
statute being administered and purport to do no more than interpret
the statute. Simply, they try to say what the statute means and refer
to no single person or party in particular but concern all those
belonging to the same class which may be covered by the said rules.34
Finally, contingent rules are those issued by an administrative
authority based on the existence of certain facts or things upon which
the enforcement of the law depends.35
In general, an administrative regulation needs to comply with the
requirements laid down by Executive Order No. 292, s. 1987, otherwise
known as the "Administrative Code of 1987," on prior notice, hearing,
and publication in order to be valid and binding, except when the same
is merely an interpretative rule. This is because "[w]hen an
administrative rule is merely interpretative in nature, its applicability
needs nothing further than its bare issuance, for it gives no real
consequence more than what the law itself has already prescribed.
When, on the other hand, the administrative rule goes beyond merely
providing for the means that can facilitate or render least cumbersome
the implementation of the law but substantially increases the burden
of those governed, it behooves the agency to accord at least to those
directly affected a chance to be heard, and thereafter to be duly
informed, before that new issuance is given the force and effect of
law."36
In the case at bar, it is undisputed that RA 3720, as amended by
Executive Order No. 175, s. 198737 prohibits, inter alia, the
manufacture and sale of pharmaceutical products without obtaining
the proper CPR from the FDA.38 In this regard, the FDA has been
deputized by the same law to accept applications for registration of
pharmaceuticals and, after due course, grant or reject such
applications.39 To this end, the said law expressly authorized the
Secretary of Health, upon the recommendation of the FDA Director, to
issue rules and regulations that pertain to the registration of
pharmaceutical products.40
In accordance with his rule-making power under RA 3720, the
Secretary of Health issued AO 67, s. 1989 in order to provide a
comprehensive set of guidelines covering the registration of
pharmaceutical products. AO 67, s. 1989, required, among others, that
certain pharmaceutical products undergo BA/BE testing prior to the
issuance of CPR, contrary to respondents’ assertion that it was
Circular Nos. 1 and 8, s. 1997 that required such tests.41
Despite the fact that the BA/BE testing requirement was already in
place as early as the date of effectivity of AO 67, s. 1989, its
implementation was indefinitely shelved due to lack of facilities capable
of conducting the same. It was only sometime in 1997 when
technological advances in the country paved the way for the
establishment of BA/BE testing facilities, thus allowing the rule’s
enforcement. Owing to these developments, the FDA (then, the BFAD)
issued Circular No. 1, s. 1997, the full text of which reads:
In Annex 1 of A.O. 67 s. 1989 which is entitled Requirement for
Registration provides that "Bioavailability/Bioequivalence study for
certain drugs as determined by BFAD" is required for [(i)] Tried and
Tested Drug, (ii) Established Drug, and (iii) Pharmaceutical Innovation
of Tried and Tested or Established Drug.
Drugs requiring strict precaution in prescribing and dispensing
contained in the List-B (Prime) were the drugs identified by BFAD in
the process of registration that will be required
"Bioavailability/Bioequivalence" studies. However, due to the
supervening factor that there had yet been no bioavailability testing
unit in the country when the A.O. 67 s. 1989 became effective, the
Bureau did not strictly enforce the said requirement.
The supervening factor no longer exist [sic] as of date. As a matter of
fact, one of the registered products tested by the Bioavailability Testing
Unit at the University of Sto. Tomas under the NDP Cooperation Project
of the Philippines and Australia failed to meet the standard of
bioavailability. This finding brings forth the fact that there may be
registered products which do not or may no longer meet bioavailability
standard.
Wherefore, all drugs manufacturers, traders, distributor-importers of
products contained or identified in the list b’ (prime) provided for by
BFAD, a copy of which is made part of this circular, are advised that
all pending initial and renewal registration of the products
aforementioned, as well as all applications for initial and renewal
registration of the same, shall henceforth be required to submit
bioavailability test with satisfactory results on the products sought to
be registered or renewed conducted by any bioavailability testing units
here or abroad, duly recognized by the BFAD under the Dept. of
Health.1âwphi1 (Emphases and underscoring supplied)
The FDA then issued Circular No. 8, s. 1997 to supplement Circular
No. 1, s. 1997 in that it reiterates the importance of the BA/BE testing
requirement originally provided for by AO 67, s. 1989.1âwphi1
A careful scrutiny of the foregoing issuances would reveal that AO 67,
s. 1989 is actually the rule that originally introduced the BA/BE
testing requirement as a component of applications for the issuance of
CPRs covering certain pharmaceutical products. As such, it is
considered an administrative regulation – a legislative rule to be exact
– issued by the Secretary of Health in consonance with the express
authority granted to him by RA 3720 to implement the statutory
mandate that all drugs and devices should first be registered with the
FDA prior to their manufacture and sale. Considering that neither
party contested the validity of its issuance, the Court deems that AO
67, s. 1989 complied with the requirements of prior hearing, notice,
and publication pursuant to the presumption of regularity accorded to
the government in the exercise of its official duties.42
On the other hand, Circular Nos. 1 and 8, s. 1997 cannot be considered
as administrative regulations because they do not: (a) implement a
primary legislation by providing the details thereof; (b) interpret,
clarify, or explain existing statutory regulations under which the FDA
operates; and/or (c) ascertain the existence of certain facts or things
upon which the enforcement of RA 3720 depends. In fact, the only
purpose of these circulars is for the FDA to administer and supervise
the implementation of the provisions of AO 67, s. 1989, including those
covering the BA/BE testing requirement, consistent with and pursuant
to RA 3720.43 Therefore, the FDA has sufficient authority to issue the
said circulars and since they would not affect the substantive rights of
the parties that they seek to govern – as they are not, strictly speaking,
administrative regulations in the first place – no prior hearing,
consultation, and publication are needed for their validity.
In sum, the Court holds that Circular Nos. 1 and 8, s. 1997 are valid
issuances and binding to all concerned parties, including the
respondents in this case.
As a final note, while the proliferation of generic drugs and medicines
is indeed a welcome development as it effectively ensures access to
affordable quality drugs and medicines for all through their lower
prices, the State, through the FDA, which is the government
instrumentality tasked on this matter, must nevertheless be vigilant in
ensuring that the generic drugs and medicines released to the market
are safe and effective for use.
WHEREFORE, the petition is GRANTED. The Order dated December
18, 2009 and the Writ of Permanent Injunction dated January 19,
2010 of the Regional Trial Court of Muntinlupa City, Branch 256 in
Civil Case No. 08-124 are hereby SET ASIDE. BFAD Circular Nos. 1
and 8, series of 1997 are declared VALID. Accordingly, the Court's
Temporary Restraining Order dated February 24, 2010 is hereby made
PERMANENT.
SO ORDERED.
G.R. No. 182358 February 20, 2013
DEPARTMENT OF HEALTH, THE SECRETARY OF HEALTH, and MA.
MARGARITA M. GALON, Petitioners,
vs.
PHIL PHARMA WEALTH, INC., Respondent.
DECISION
DEL CASTILLO, J.:
The state may not be sued without its consent. Likewise, public
officials may not be sued for acts done in the perfom1ance of their
official functions or within the scope of their authority.
This Petition for Review on Certiorari1 assails the October 25, 2007
Decision2 of the Court of Appeals (CA) in CA-G.R. CV No. 85670, and
its March 31, 2008 Reso1ution3 denying petitioners' Motion for
Reconsideration.4
Factual Antecedents
On December 22, 1998, Administrative Order (AO) No. 27 series of
19985 was issued by then Department of Health (DOH) Secretary
Alfredo G. Romualdez (Romualdez). AO 27 set the guidelines and
procedure for accreditation of government suppliers of pharmaceutical
products for sale or distribution to the public, such accreditation to be
valid for three years but subject to annual review.
On January 25, 2000, Secretary Romualdez issued AO 10 series of
20006 which amended AO 27. Under Section VII7 of AO 10, the
accreditation period for government suppliers of pharmaceutical
products was reduced to two years. Moreover, such accreditation may
be recalled, suspended or revoked after due deliberation and proper
notice by the DOH Accreditation Committee, through its Chairman.
Section VII of AO 10 was later amended by AO 66 series of 2000,8
which provided that the two-year accreditation period may be recalled,
suspended or revoked only after due deliberation, hearing and notice
by the DOH Accreditation Committee, through its Chairman.
On August 28, 2000, the DOH issued Memorandum No. 171-C9 which
provided for a list and category of sanctions to be imposed on
accredited government suppliers of pharmaceutical products in case of
adverse findings regarding their products (e.g. substandard, fake, or
misbranded) or violations committed by them during their
accreditation.
In line with Memorandum No. 171-C, the DOH, through former
Undersecretary Ma. Margarita M. Galon (Galon), issued Memorandum
No. 209 series of 2000,10 inviting representatives of 24 accredited drug
companies, including herein respondent Phil Pharmawealth, Inc. (PPI)
to a meeting on October 27, 2000. During the meeting, Undersecretary
Galon handed them copies of a document entitled "Report on Violative
Products"11 issued by the Bureau of Food and Drugs12 (BFAD), which
detailed violations or adverse findings relative to these accredited drug
companies’ products. Specifically, the BFAD found that PPI’s products
which were being sold to the public were unfit for human consumption.
During the October 27, 2000 meeting, the 24 drug companies were
directed to submit within 10 days, or until November 6, 2000, their
respective explanations on the adverse findings covering their
respective products contained in the Report on Violative Products.

Instead of submitting its written explanation within the 10-day period
as required, PPI belatedly sent a letter13 dated November 13, 2000
addressed to Undersecretary Galon, informing her that PPI has
referred the Report on Violative Products to its lawyers with
instructions to prepare the corresponding reply. However, PPI did not
indicate when its reply would be submitted; nor did it seek an
extension of the 10-day period, which had previously expired on
November 6, 2000, much less offer any explanation for its failure to
timely submit its reply. PPI’s November 13, 2000 letter states:
Madam,
This refers to your directive on 27 October 2000, on the occasion of
the meeting with selected accredited suppliers, during which you made
known to the attendees of your requirement for them to submit their
individual comments on the Report on Violative Products (the "Report")
compiled by your office and disseminated on that date.
In this connection, we inform you that we have already instructed
our lawyers to prepare on our behalf the appropriate reply to the Report
furnished to us. Our lawyers in time shall revert to you and furnish
you the said reply.
Please be guided accordingly.
Very truly yours,
(signed)
ATTY. ALAN A.B. ALAMBRA
Vice-President for Legal and Administrative Affairs14
In a letter-reply15 dated November 23, 2000 Undersecretary Galon
found "untenable" PPI’s November 13, 2000 letter and therein informed
PPI that, effective immediately, its accreditation has been suspended
for two years pursuant to AO 10 and Memorandum No. 171-C.
In another December 14, 2000 letter16 addressed to Undersecretary
Galon, PPI through counsel questioned the suspension of its
accreditation, saying that the same was made pursuant to Section VII
of AO 10 which it claimed was patently illegal and null and void
because it arrogated unto the DOH Accreditation Committee powers
and functions which were granted to the BFAD under Republic Act (RA)
No. 372017 and Executive Order (EO) No. 175.18 PPI added that its
accreditation was suspended without the benefit of notice and hearing,
in violation of its right to substantive and administrative due process.
It thus demanded that the DOH desist from implementing the
suspension of its accreditation, under pain of legal redress.
On December 28, 2000, PPI filed before the Regional Trial Court of
Pasig City a Complaint19 seeking to declare null and void certain DOH
administrative issuances, with prayer for damages and injunction
against the DOH, former Secretary Romualdez and DOH
Undersecretary Galon. Docketed as Civil Case No. 68200, the case was
raffled to Branch 160. On February 8, 2002, PPI filed an Amended and
Supplemental Complaint,20 this time impleading DOH Secretary
Manuel Dayrit (Dayrit). PPI claimed that AO 10, Memorandum No. 171-
C, Undersecretary Galon’s suspension order contained in her
November 23, 2000 letter, and AO 14 series of 200121 are null and
void for being in contravention of Section 26(d) of RA 3720 as amended
by EO 175, which states as follows:
SEC. 26. x x x
(d) When it appears to the Director [of the BFAD] that the report of the
Bureau that any article of food or any drug, device, or cosmetic secured
pursuant to Section twenty-eight of this Act is adulterated,
misbranded, or not registered, he shall cause notice thereof to be given
to the person or persons concerned and such person or persons shall
be given an opportunity to be heard before the Bureau and to submit
evidence impeaching the correctness of the finding or charge in
question.
For what it claims was an undue suspension of its accreditation, PPI
prayed that AO 10, Memorandum No. 171-C, Undersecretary Galon’s
suspension order contained in her November 23, 2000 letter, and AO
14 be declared null and void, and that it be awarded moral damages of
₱5 million, exemplary damages of ₱1 million, attorney’s fees of ₱1
million, and costs of suit. PPI likewise prayed for the issuance of
temporary and permanent injunctive relief.
In their Amended Answer,22 the DOH, former Secretary Romualdez,
then Secretary Dayrit, and Undersecretary Galon sought the dismissal
of the Complaint, stressing that PPI’s accreditation was suspended
because most of the drugs it was importing and distributing/selling to
the public were found by the BFAD to be substandard for human
consumption. They added that the DOH is primarily responsible for
the formulation, planning, implementation, and coordination of
policies and programs in the field of health; it is vested with the
comprehensive power to make essential health services and goods
available to the people, including accreditation of drug suppliers and
regulation of importation and distribution of basic medicines for the
public.
Petitioners added that, contrary to PPI’s claim, it was given the
opportunity to present its side within the 10-day period or until
November 6, 2000, but it failed to submit the required comment/reply.
Instead, it belatedly submitted a November 13, 2000 letter which did
not even constitute a reply, as it merely informed petitioners that the
matter had been referred by PPI to its lawyer. Petitioners argued that
due process was afforded PPI, but because it did not timely avail of the
opportunity to explain its side, the DOH had to act immediately – by
suspending PPI’s accreditation – to stop the distribution and sale of
substandard drug products which posed a serious health risk to the
public. By exercising DOH’s mandate to promote health, it cannot be
said that petitioners committed grave abuse of discretion.
In a January 8, 2001 Order,23 the trial court partially granted PPI’s
prayer for a temporary restraining order, but only covering PPI’s
products which were not included in the list of violative products or
drugs as found by the BFAD.
In a Manifestation and Motion24 dated July 8, 2003, petitioners moved
for the dismissal of Civil Case No. 68200, claiming that the case was
one against the State; that the Complaint was improperly verified; and
lack of authority of the corporate officer to commence the suit, as the
requisite resolution of PPI’s board of directors granting to the
commencing officer – PPI’s Vice President for Legal and Administrative
Affairs, Alan Alambra, – the authority to file Civil Case No. 68200 was
lacking. To this, PPI filed its Comment/Opposition.25
Ruling of the Regional Trial Court
In a June 14, 2004 Order,26 the trial court dismissed Civil Case No.
68200, declaring the case to be one instituted against the State, in
which case the principle of state immunity from suit is applicable.
PPI moved for reconsideration,27 but the trial court remained
steadfast.28
PPI appealed to the CA.
Ruling of the Court of Appeals
Docketed as CA-G.R. CV No. 85670, PPI’s appeal centered on the issue
of whether it was proper for the trial court to dismiss Civil Case No.
68200.
The CA, in the herein assailed Decision,29 reversed the trial court
ruling and ordered the remand of the case for the conduct of further
proceedings. The CA concluded that it was premature for the trial court
to have dismissed the Complaint. Examining the Complaint, the CA
found that a cause of action was sufficiently alleged – that due to
defendants’ (petitioners’) acts which were beyond the scope of their
authority, PPI’s accreditation as a government supplier of
pharmaceutical products was suspended without the required notice
and hearing as required by Section 26(d) of RA 3720 as amended by
EO 175. Moreover, the CA held that by filing a motion to dismiss,
petitioners were deemed to have hypothetically admitted the
allegations in the Complaint – which state that petitioners were being
sued in their individual and personal capacities – thus negating their
claim that Civil Case No. 68200 is an unauthorized suit against the
State.
The CA further held that instead of dismissing the case, the trial court
should have deferred the hearing and resolution of the motion to
dismiss and proceeded to trial. It added that it was apparent from the
Complaint that petitioners were being sued in their private and
personal capacities for acts done beyond the scope of their official
functions. Thus, the issue of whether the suit is against the State could
best be threshed out during trial on the merits, rather than in
proceedings covering a motion to dismiss.
The dispositive portion of the CA Decision reads:
WHEREFORE, the appeal is hereby GRANTED. The Order dated June
14, 2004 of the Regional Trial Court of Pasig City, Branch 160, is
hereby REVERSED and SET-ASIDE. ACCORDINGLY, this case is
REMANDED to the trial court for further proceedings.
SO ORDERED.30
Petitioners sought, but failed, to obtain a reconsideration of the
Decision. Hence, they filed the present Petition.
Issue
Petitioners now raise the following lone issue for the Court’s resolution:
Should Civil Case No. 68200 be dismissed for being a suit against the
State?31
Petitioners’ Arguments

Petitioners submit that because PPI’s Complaint prays for the award of
damages against the DOH, Civil Case No. 68200 should be considered
a suit against the State, for it would require the appropriation of the
needed amount to satisfy PPI’s claim, should it win the case. Since the
State did not give its consent to be sued, Civil Case No. 68200 must be
dismissed. They add that in issuing and implementing the questioned
issuances, individual petitioners acted officially and within their
authority, for which reason they should not be held to account
individually.
Respondent’s Arguments
Apart from echoing the pronouncement of the CA, respondent insists
that Civil Case No. 68200 is a suit against the petitioners in their
personal capacity for acts committed outside the scope of their
authority.
Our Ruling
The Petition is granted.
The doctrine of non-suability.
The discussion of this Court in Department of Agriculture v. National
Labor Relations Commission32 on the doctrine of non-suability is
enlightening.
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 nonsuability. 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. Ramos40 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. Based on the foregoing considerations, and
regardless of the merits of PPI’s case, this case deserves a dismissal.
Evidently, the very foundation of Civil Case No. 68200 has crumbled
at this initial juncture.
PPI was not denied due process.
However, we cannot end without a discussion of PPI’s contention that
it was denied due process when its accreditation was suspended
"without due notice and hearing." It is undisputed that during the
October 27, 2000 meeting, Undersecretary Galon directed
representatives of pharmaceutical companies, PPI included, to submit
their comment and/or reactions to the Report on Violative Products
furnished them within a period of 10 days. PPI, instead of submitting
its comment or explanation, wrote a letter addressed to Undersecretary
Galon informing her that the matter had already been referred to its
lawyer for the drafting of an appropriate reply. Aside from the fact that
the said letter was belatedly submitted, it also failed to specifically
mention when such reply would be forthcoming. Finding the foregoing
explanation to be unmeritorious, Undersecretary Galon ordered the
suspension of PPI’s accreditation for two years. Clearly these facts
show that PPI was not denied due process. It was given the opportunity
to explain its side. Prior to the suspension of its accreditation, PPI had
the chance to rebut, explain, or comment on the findings contained in
the Report on Violative Products that several of PPI’s products are not
fit for human consumption. However, PPI squandered its opportunity
to explain. Instead of complying with the directive of the DOH
Undersecretary within the time allotted, it instead haughtily informed
Undersecretary Galon that the matter had been referred to its lawyers.
Worse, it impliedly told Undersecretary Galon to just wait until its
lawyers shall have prepared the appropriate reply. PPI however failed
to mention when it will submit its "appropriate reply" or how long
Undersecretary Galon should wait. In the meantime, PPI’s drugs which
are included in the Report on Violative Products are out and being sold
in the market. Based on the foregoing, we find PPI’s contention of
denial of due process totally unfair and absolutely lacking in basis. At
this juncture, it would be trite to mention that "[t]he essence of due
process in administrative proceedings is the opportunity to explain
one’s side or seek a reconsideration of the action or ruling complained
of. As long as the parties are given the opportunity to be heard before
judgment is rendered, the demands of due process are sufficiently met.
What is offensive to due process is the denial of the opportunity to be
heard. The Court has repeatedly stressed that parties who chose not
to avail themselves of the opportunity to answer charges against them
cannot complain of a denial of due process."50
Incidentally, we find it inieresting that in the earlier case of Department
q( Health v. Phil Pharmawealth, Inc. 51 respondent filed a Complaint
against DOH anchored on the same issuances which it assails in the
present case. In the earlier case of Department of Health v. Phil
Pharmawealth, Jnc., 52 PPI submitted to the DOH a request for the
inclusion of its products in the list of accredited drugs as required by
AO 27 series of 1998 which was later amended by AO 10 series of 2000.
In the instant case, however, PPI interestingly claims that these
issuances are null and void.
WHEREFORE, premises considered, the Petition is GRANTED. Civil
Case No. 68200 is ordered DISMISSED.
SO ORDERED.
G.R. No. 165622 October 17, 2008
MERCURY DRUG CORPORATION and AURMELA GANZON,
petitioners,
vs.
RAUL DE LEON, respondents.
DECISION
REYES, R.T., J.:
IN REALITY, for the druggist, mistake is negligence and care is no
defense.1 Sa isang parmasyutika, ang pagkakamali ay kapabayaan at
ang pagkalinga ay hindi angkop na dipensa.
This is a petition for review on certiorari2 of two Resolutions3 of the
Court of Appeals (CA). The first Resolution granted respondent’s
motion to dismiss while the second denied petitioner’s motion for
reconsideration.
The Facts
Respondent Raul T. De Leon was the presiding judge of Branch 258,
Regional Trial Court (RTC) in Parañaque.4 On October 17, 1999, he
noticed that his left eye was reddish. He also had difficulty reading.5
On the same evening, he met a friend for dinner at the Foohyui
Restaurant. The same friend happened to be a doctor, Dr. Charles
Milla, and had just arrived from abroad.6
Aside from exchanging pleasantries, De Leon consulted Dr. Milla about
his irritated left eye.7 The latter prescribed the drugs "Cortisporin
Opthalmic" and "Ceftin" to relieve his eye problems.8 Before heading
to work the following morning, De Leon went to the Betterliving,
Parañaque, branch of Mercury Drug Store Corporation to buy the
prescribed medicines.9 He showed his prescription to petitioner
Aurmela Ganzon, a pharmacist assistant.10 Subsequently, he paid for
and took the medicine handed over by Ganzon.11
At his chambers, De Leon requested his sheriff to assist him in using
the eye drops.12 As instructed, the sheriff applied 2-3 drops on
respondent’s left eye.13 Instead of relieving his irritation, respondent
felt searing pain.14 He immediately rinsed the affected eye with water,
but the pain did not subside.15 Only then did he discover that he was
given the wrong medicine, "Cortisporin Otic Solution."16
De Leon returned to the same Mercury Drug branch, with his left eye
still red and teary.17 When he confronted Ganzon why he was given
ear drops, instead of the prescribed eye drops,18 she did not apologize
and instead brazenly replied that she was unable to fully read the
prescription.19 In fact, it was her supervisor who apologized and
informed De Leon that they do not have stock of the needed Cortisporin
Opthalmic.20
De Leon wrote Mercury Drug, through its president, Ms. Vivian K.
Askuna, about the day’s incident.21 It did not merit any response.22
Instead, two sales persons went to his office and informed him that
their supervisor was busy with other matters.23 Having been denied
his simple desire for a written apology and explanation,24 De Leon filed
a complaint for damages against Mercury Drug.25
Mercury Drug denied that it was negligent and therefore liable for
damages.26 It pointed out that the proximate cause of De Leon’s
unfortunate experience was his own negligence.27 He should have first
read and checked to see if he had the right eye solution before he used
any on his eye.28 He could have also requested his sheriff to do the
same before the latter applied the medicine on such a delicate part of
his body.29
Also, Mercury Drug explained that there is no available medicine
known as "Cortisporin Opthalmic" in the Philippine market.30
Furthermore, what was written on the piece of paper De Leon
presented to Ganzon was "Cortisporin Solution."31 Accordingly, she
gave him the only available "Cortisporin Solution" in the market.
Moreover, even the piece of paper De Leon presented upon buying the
medicine can not be considered as proper prescription.32 It lacked the
required information concerning the attending doctor’s name and
license number.33 According to Ganzon, she entertained De Leon’s
purchase request only because he was a regular customer of their
branch.34
RTC Disposition
On April 30, 2003, the RTC rendered judgment in favor of respondent,
the dispositive portion of which reads:
WHEREFORE, the court finds for the plaintiff.
For pecuniary loss suffered, Mercury Drug Store is to pay ONE
HUNDRED FIFTY-THREE PESOS AND TWENTY-FIVE CENTAVOS
(Php 153.25), the value of the medicine.
As moral damages defendants is (sic) ordered to pay ONE HUNDRED
THOUSAND PESOS (Php 100,000.00).
To serve as a warning to those in the field of dispensing medicinal
drugs discretion of the highest degree is expected of them, Mercury
Drug Store and defendant Aurmila (sic) Ganzon are ordered to pay
plaintiff the amount of THREE HUNDRED THOUSAND PESOS (Php
300,000.00) as exemplary damages.
Due to defendants callous reaction to the mistake done by their
employee which forced plaintiff to litigate, Defendant (sic) Mercury
Drug Store is to pay plaintiff attorney’s fees of ₱50,000.00 plus
litigation expenses.
SO ORDERED.35
In ruling in favor of De Leon, the RTC ratiocinated:
The proximate cause of the ill fate of plaintiff was defendant Aurmila
(sic) Ganzon’s negligent exercise of said discretion. She gave a
prescription drug to a customer who did not have the proper form of
prescription, she did not take a good look at said prescription, she
merely presumed plaintiff was looking for Cortisporin Otic Solution
because it was the only one available in the market and she further
presumed that by merely putting the drug by the counter wherein
plaintiff looked at it, paid and took the drug without any objection
meant he understood what he was buying.36
The RTC ruled that although De Leon may have been negligent by
failing to read the medicine’s label or to instruct his sheriff to do so,
Mercury Drug was first to be negligent.37 Ganzon dispensed a drug
without the requisite prescription.38 Moreover, she did so without fully
reading what medicine was exactly being bought.39 In fact, she
presumed that since what was available was the drug Cortisporin Otic
Solution, it was what De Leon was attempting to buy.40 Said the court:
When the injury is caused by the negligence of a servant or
employee, there instantly arises a presumption of law that there was
negligence on the part of the employer or employer either in the
selection of the servant or employee, or in the supervision over him
after the selection or both.
xxxx
 The theory bases the responsibility of the master ultimately on his
own negligence and not on that of his servant.41
Dissatisfied with the RTC ruling, Mercury Drug and Ganzon elevated
the matter to the CA. Accordingly, they filed their respective briefs.
Raising technical grounds, De Leon moved for the appeal’s dismissal.
CA Disposition
On July 4, 2008, the CA issued a resolution which granted De Leon’s
motion and dismissed the appeal. Said the appellate court:
As pointed out by the plaintiff-appellee, the Statement of Facts,
Statement of the Case, Assignment of Errors/issues, Arguments/
Discussions in the Brief make no references to the pages of the records.
We find this procedural lapse justify the dismissal of the appeal,
pursuant to Section 1(f), Rule 50 of the 1997 Rules of Civil Procedure
x x x.42
xxxx
"The premise that underlies all appeals is that they are merely rights
which arise form a statute; therefore, they must be exercised in the
manner prescribed by law. It is to this end that rules governing
pleadings and practice before the appellate court were imposed. These
rules were designed to assist the appellate court in the
accomplishment of its tasks, and overall, to enhance the orderly
administration of justice."
xxxx
x x x If the statement of fact is unaccompanied by a page reference
to the record, it may be stricken or disregarded all together.43
On October 5, 2004, the CA denied Mercury Drug’s and Ganzon’s joint
motion for reconsideration. Although mindful that litigation is not a
game of technicalities,44 the CA found no persuasive reasons to relax
procedural rules in favor of Mercury Drug and Ganzon.45 The CA
opined:
In the case under consideration, We find no faithful compliance on
the part of the movants that will call for the liberal application of the
Rules. Section 1(f) of Rule 50 of the 1997 Rules of Civil Procedure
explicitly provides that an appeal may be dismissed by the Court of
Appeals, on its own motion or on that of the appellee, for want of page
references to the records as required in Section 13 of Rule 44 of the
same rules46
Issues
Petitioner has resorted to the present recourse and assigns to the CA
the following errors:
I
THE HONORABLE COURT OF APPEALS ERRED IN DISMISSING
PETITIONER’S APPEAL BASED ON THE CASES OF DE LIANA VS. CA
(370 SCRA 349) AND HEIRS OF PALOMINIQUE VS. CA (134 SCRA
331).
II
THE HONORABLE COURT OF APPEALS COMMITTED GRAVE
ABUSE OF DISCRETION IN DISMISSING PETITIONER’S APPEAL
DESPITE SUBSTANTIAL COMPLIANCE WITH SECTION 1(F), RULE 60
AND SECTION 13, RULE 44 OF THE RULES OF COURT.
III
THE HONORABLE COURT OF APPEALS ERRED WHEN IT
FAVORED MERE TECHNICALITY OVER SUBSTANTIAL JUSTICE
WHICH WILL CERTAINLY CAUSE GRAVE INJUSTICE AND GREAT
PREJUDICE TO PETITIONER CONSIDERING THAT THE ASSAILED
DECISION ON APPEAL IS CLUSTERED WITH ERRORS AND IN
CONTRAST with the DECISIONS OF THIS HONORABLE SUPREME
COURT.47 (Underscoring supplied)
Our Ruling
The appeal succeeds in part.
Dismissal of an appeal under Rule 50 is discretionary.
In several cases,48 this Court stressed that the grounds for dismissal
of an appeal under Section 1 of Rule 5049 are discretionary upon the
appellate court. The very wording of the rule uses the word "may"
instead of "shall." This indicates that it is only directory and not
mandatory.50 Sound discretion must be exercised in consonance with
the tenets of justice and fair play, keeping in mind the circumstances
obtaining in each case.51
The importance of an appellant’s brief cannot be gainsaid. Its purpose
is two-fold: (1) to present to the court in coherent and concise form the
point and questions in controversy; and (2) to assist the court in
arriving at a just and proper conclusion.52 It is considered a vehicle of
counsel to convey to the court the essential facts of a client’s case, a
statement of the questions of law involved, the law to be applied, and
the application one desires of it by the court.53
The absence of page reference to the record is a ground for dismissal.
It is a requirement intended to ultimately aid the appellate court in
arriving at a just and proper conclusion of the case.54 However, as
earlier discussed, such dismissal is not mandatory, but discretionary
on the part of the appellate court.
This Court has held that the failure to properly cite reference to the
original records is not a fatal procedural lapse.55 When citations found
in the appellant’s brief enable the court to expeditiously locate the
portions of the record referred to, there is substantial compliance with
the requirements of Section 13(c), (d), and (f) of Rule 44.56
In De Leon v. CA,57 this Court ruled that the citations contained in
the appellant’s brief sufficiently enabled the appellate court to
expeditiously locate the portions of the record referred to. They were in
substantial compliance with the rules. The Court said:
Nothing in the records indicate that it was exercised capriciously,
whimsically, or with a view of permitting injury upon a party litigant.
For the same reasons, we hold that the respondent Court of Appeals
did not err when it did not dismiss the appeal based on the allegation
that appellant’s brief failed to comply with the internal rules of said
court.58
Similar to the instant case, the appellant’s brief in Yuchengco v. Court
of Appeals59 contained references to Exhibits and Transcript of
Stenographic Notes and attachments. These were found to have
substantially complied with the requirements of Section 13(c) and (d)
of Rule 44.
x x x The Appellant’s brief may not have referred to the exact pages
of the records, however, the same is not fatal to their cause since the
references they made enabled the appellate court to expeditiously
locate the portions referred to. x x x60
It is true that in De Liano v. Court of Appeals,61 this Court held that
a statement of facts unaccompanied by a page reference to the record
may be presumed to be without support in the record and may be
stricken or disregarded altogether. However, the instant case is not on
all fours with De Liano.
In De Liano, the appellant’s brief lacked a Subject Index and a Table of
Cases and Authorities.62 Moreover, the Statement of the Case,
Statements of Facts, and Statements of Arguments had no page
references to the record.63 When notified of such defects, defendants-
appellants failed to amend their brief to conform to the rules.64
Instead, they continued to argue that their errors were harmless.65 All
these omissions and non-compliance justified the dismissal of the
appeal by the CA.66
In the case under review, although there were no page references to
the records, Mercury Drug and Ganzon referred to the exhibits, TSN,
and attachments of the case. Despite its deficiencies, the brief is
sufficient in form and substance as to apprise the appellate court of
the essential facts, nature of the case, the issues raised, and the laws
necessary for the disposition of the same.
Reliance on Heirs of Palomique v. Court of Appeals67 is likewise
misplaced. In Heirs of Palomique, the appellant’s brief did not at all
contain a separate statement of facts.68 This critical omission,
together with the failure to make page references to the record to
support the factual allegations, justified the dismissal of the appeal.69
Rules of procedure are intended to promote, not to defeat, substantial
justice. They should not be applied in a very rigid and technical
sense.70 For reasons of justice and equity, this Court has allowed
exceptions to the stringent rules governing appeals.71 It has, in the
past, refused to sacrifice justice for technicality.72
However, brushing aside technicalities, petitioners are still liable.
Mercury Drug and Ganzon failed to exercise the highest degree of
diligence expected of them.
Denying that they were negligent, Mercury Drug and Ganzon pointed
out that De Leon’s own negligence was the proximate cause of his
injury. They argued that any injury would have been averted had De
Leon exercised due diligence before applying the medicine on his eye.
Had he cautiously read the medicine bottle label, he would have known
that he had the wrong medicine.
Mercury Drug and Ganzon can not exculpate themselves from any
liability. As active players in the field of dispensing medicines to the
public, the highest degree of care and diligence is expected of them.73
Likewise, numerous decisions, both here and abroad, have laid
salutary rules for the protection of human life and human health.74 In
the United States case of Tombari v. Conners,75 it was ruled that the
profession of pharmacy demands care and skill, and druggists must
exercise care of a specially high degree, the highest degree of care
known to practical men. In other words, druggists must exercise the
highest practicable degree of prudence and vigilance, and the most
exact and reliable safeguards consistent with the reasonable conduct
of the business, so that human life may not constantly be exposed to
the danger flowing from the substitution of deadly poisons for harmless
medicines.76
In Fleet v. Hollenkemp,77 the US Supreme Court ruled that a druggist
that sells to a purchaser or sends to a patient one drug for another or
even one innocent drug, calculated to produce a certain effect, in place
of another sent for and designed to produce a different effect, cannot
escape responsibility, upon the alleged pretext that it was an
accidental or innocent mistake. His mistake, under the most favorable
aspect for himself, is negligence. And such mistake cannot be
countenanced or tolerated, as it is a mistake of the gravest kind and of
the most disastrous effect.78
Smith’s Admrx v. Middelton79 teaches Us that one holding himself out
as competent to handle drugs, having rightful access to them, and
relied upon by those dealing with him to exercise that high degree of
caution and care called for by the peculiarly dangerous nature of the
business, cannot be heard to say that his mistake by which he
furnishes a customer the most deadly of drugs for those comparatively
harmless, is not in itself gross negligence.80
In our own jurisdiction, United States v. Pineda81 and Mercury Drug
Corporation v. Baking are illustrative.82 In Pineda, the potassium
chlorate demanded by complainant had been intended for his race
horses. When complainant mixed with water what he thought and
believed was potassium chlorate, but which turned out to be the
potently deadly barium chlorate, his race horses died of poisoning only
a few hours after.
The wisdom of such a decision is unquestionable. If the victims had
been human beings instead of horses, the damage and loss would have
been irreparable.83
In the more recent Mercury Drug, involving no less than the same
petitioner corporation, Sebastian Baking went to the Alabang branch
of Mercury Drug84 and presented his prescription for Diamicron,
which the pharmacist misread as Dormicum.85 Baking was given a
potent sleeping tablet, instead of medicines to stabilize his blood
sugar.86 On the third day of taking the wrong medicine, Baking figured
in a vehicular accident.87 He fell asleep while driving.88
This Court held that the proximate cause of the accident was the gross
negligence of the pharmacist who gave the wrong medicine to Baking.
The Court said:
x x x Considering that a fatal mistake could be a matter of life and
death for a buying patient, the said employee should have been very
cautious in dispensing medicines. She should have verified whether
the medicine she gave respondent was indeed the one prescribed by
his physician. The care required must be commensurate with the
danger involved, and the skill employed must correspond with the
superior knowledge of the business which the law demands.89
This Court once more reiterated that the profession of pharmacy
demands great care and skill. It reminded druggists to exercise the
highest degree of care known to practical men.
In cases where an injury is caused by the negligence of an employee,
there instantly arises a presumption of law that there has been
negligence on the part of the employer, either in the selection or
supervision of one’s employees. This presumption may be rebutted by
a clear showing that the employer has exercised the care and diligence
of a good father of the family.90 Mercury Drug failed to overcome such
presumption.91
Petitioners Mercury Drug and Ganzon have similarly failed to live up
to high standard of diligence expected of them as pharmacy
professionals. They were grossly negligent in dispensing ear drops
instead of the prescribed eye drops to De Leon. Worse, they have once
again attempted to shift the blame to their victim by underscoring his
own failure to read the label.
As a buyer, De Leon relied on the expertise and experience of Mercury
Drug and its employees in dispensing to him the right medicine.92 This
Court has ruled that in the purchase and sale of drugs, the buyer and
seller do not stand at arms length.93 There exists an imperative duty
on the seller or the druggist to take precaution to prevent death or
injury to any person who relies on one’s absolute honesty and peculiar
learning.94 The Court emphasized:
x x x The nature of drugs is such that examination would not avail
the purchaser anything. It would be idle mockery for the customer to
make an examination of a compound of which he can know nothing.
Consequently, it must be that the druggist warrants that he will deliver
the drug called for.95
Mercury Drug and Ganzon’s defense that the latter gave the only
available Cortisporin solution in the market deserves scant
consideration. Ganzon could have easily verified whether the medicine
she gave De Leon was, indeed, the prescribed one or, at the very least,
consulted her supervisor. Absent the required certainty in the
dispensation of the medicine, she could have refused De Leon’s
purchase of the drug.
The award of damages is proper and shall only be reduced considering
the peculiar facts of the case. Moral damages include physical
suffering, mental anguish, fright, serious anxiety, besmirched
reputation, wounded feelings, moral shock, social humiliation, and
similar injury. Though incapable of pecuniary computation, moral
damages may be recovered if they are the proximate result of
defendant’s wrongful act or omission.96
It is generally recognized that the drugstore business is imbued with
public interest. This can not be more real for Mercury Drug, the
country’s biggest drugstore chain. This Court can not tolerate any form
of negligence which can jeopardize the health and safety of its loyal
patrons. Moreover, this Court will not countenance the cavalier
manner it treated De Leon. Not only does a pharmacy owe a customer
the duty of reasonable care, but it is also duty-bound to accord one
with respect.
WHEREFORE, the petition is PARTIALLY GRANTED. The Decisions of
the CA and the RTC in Parañaque City are AFFIRMED WITH
MODIFICATION, in that the award of moral and exemplary damages is
reduced to ₱50,000.00 and ₱25,000.00, respectively.
SO ORDERED.

Moral damages are not intended to impose a penalty to the wrongdoer

or to enrich the claimant at the expense of defendant.97 There is no
hard and fast rule in determining what would be a fair and reasonable
amount of moral damages since each case must be governed by its
peculiar circumstances.98 However, the award of damages must be
commensurate to the loss or injury suffered.99

Taking into consideration the attending facts of the case under review,
We find the amount awarded by the trial court to be excessive.
Following the precedent case of Mercury Drug, We reduce the amount
from ₱100,000.00 to ₱50,000.00 only.100 In addition, We also deem it
necessary to reduce the award of exemplary damages from the
exorbitant amount of ₱300,000.00 to ₱25,000.00 only.

This Court explained the propriety of awarding exemplary damages in

the earlier Mercury Drug case:

x x x Article 2229 allows the grant of exemplary damages by way of

example or correction for the public good. As mentioned earlier, the
drugstore business is affected by public interest. Petitioner should
have exerted utmost diligence in the selection and supervision of its
employees. On the part of the employee concerned, she should have
been extremely cautious in dispensing pharmaceutical products. Due
to the sensitive nature of its business, petitioner must at all times
maintain a high level of meticulousness. Therefore, an award of
exemplary damages in the amount of ₱25,000.00 is in order.101
(Emphasis supplied)