G.R. No. 207264 - Reyes vs. Commission on Elections

Case Summary (G.R. No. 207264)

Factual Background

The Bureau of Food and Drugs (then BFAD) administered regulation under RA 3720, which created an administrative apparatus to ensure the safety, efficacy, and quality of foods, drugs, and cosmetics. Pursuant to the Secretary of Health's rule-making authority under RA 3720, the Secretary promulgated AO 67, s. 1989, which required, among other things, satisfactory bioavailability/bioequivalence (BA/BE) testing as a condition for issuance of CPRs for certain pharmaceutical products; implementation was delayed because no local BA/BE testing facility existed. In 1997 the BFAD issued Circular No. 1, s. 1997 to resume enforcement of the BA/BE requirement given the emergence of local testing capacity, and Circular No. 8, s. 1997 to provide implementation details. Respondents manufactured a multisource rifampicin suspension branded Refam and secured an initial CPR on November 15, 1996. Respondents obtained successive renewals and revalidations, the later renewals conditioned upon submission of satisfactory BA/BE results; respondents submitted BA/BE tests conducted by the University of the Philippines which the BFAD found non-bioequivalent by letter dated July 31, 2006, but BFAD still revalidated the CPR twice more, warning that no further revalidations would be granted until satisfactory BA/BE results were supplied. Instead of submitting further BA/BE results, respondents petitioned the RTC to annul Circular Nos. 1 and 8, s. 1997 and to prohibit their implementation.

Trial Court Proceedings

Respondents filed a petition for prohibition and annulment of Circular Nos. 1 and 8, s. 1997 before the RTC of Muntinlupa City. The RTC found that RA 3720 vested the rule-making power in the Secretary of Health and that neither RA 3720 nor its delegation authorized the BFAD/ FDA to promulgate and implement the subject circulars; the RTC concluded that the circulars constituted an illegal exercise of legislative and administrative power, declared them null and void, and issued injunctive relief prohibiting the FDA from implementing the circulars and directing issuance or revalidation of respondents’ CPRs without BA/BE test compliance. The BFAD (now FDA) sought direct review by the Supreme Court and obtained a temporary restraining order from the Court on February 24, 2010.

Issues Presented

The primary legal question presented was whether the FDA had authority to issue and implement BFAD Circular Nos. 1 and 8, s. 1997. Resolution required determining whether the circulars constituted administrative regulations that must satisfy the formal requisites for rule-making under the law, and whether the Secretary's rule-making power under RA 3720 was exclusive such that the BFAD/FDA lacked authority to issue the subject circulars.

Parties’ Contentions

The Petitioner asserted that the FDA, being the agency charged by RA 3720 to administer and enforce laws on pharmaceutical registration, had authority to issue the circulars to supervise and implement existing registration rules, and that the circulars merely administered provisions already found in AO 67, s. 1989. The Respondents contended that RA 3720 lodged the rule-making power exclusively with the Secretary of Health and that the BFAD/FDA lacked authority to promulgate substantive rules; respondents further argued that the circulars were void for lack of prior hearing, consultation, and publication.

Ruling of the Supreme Court

The Court granted the petition. It set aside the RTC Order dated December 18, 2009 and the Writ of Permanent Injunction dated January 19, 2010, declared BFAD Circular Nos. 1 and 8, s. 1997 valid, and made the Court's temporary restraining order of February 24, 2010 permanent. The Court thereby confirmed the authority of the FDA to issue the circulars and permitted the agency to continue enforcing the BA/BE testing requirement as administered in the circulars.

Legal Basis and Reasoning

The Court applied the general rule that administrative agencies may exercise quasi-legislative powers only when a statute delegates such power and only within the confines of the enabling legislation, consistent with separation of powers and the nondelegability doctrine. The Court distinguished three classes of administrative regulations—legislative rules, interpretative rules, and contingent rules—and reiterated that non-interpretative rules that increase burdens on the governed ordinarily require compliance with procedural requisites under Executive Order No. 292, s. 1987 for prior notice, hearing, and publication unless they are merely interpretative. The Court observed that AO 67, s. 1989 was the original rule that introduced the BA/BE requirement and that it was promulgated by the Secretary pursuant to the express authority in Section 26(a) of RA 3720, which directed the Secretary, upon recommendation of the Director, to issue rules and regulations necessary to enforce the Act. The Court found that AO 67, s. 1989 contained the BA/BE requirement and that its issuance was not contested, warranting the presumption of regularity as to prior hearing, notice, and publication. The Court concluded that BFAD Circular Nos. 1 and 8, s. 1997 did not create new administrative regulations in the sense of altering or expanding substantive obligations; rather, their sole purpose was to administer and supervise enforcement of t

Case Syllabus (G.R. No. 207264)

Parties and Procedural Posture

REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE BUREAU OF FOOD AND DRUGS (NOW FOOD AND DRUG ADMINISTRATION), PETITIONER sought review by the Court of an RTC order that declared BFAD Circular Nos. 1 and 8, s. 1997 void and enjoined their enforcement.
DRUGMAKERS LABORATORIES, INC. AND TERRAMEDIC, INC., RESPONDENTS were manufacturers of the generic product Refam and petitioners below who obtained and sought renewal of Certificates of Product Registration.
The respondents filed a petition for prohibition and annulment of BFAD Circular Nos. 1 and 8, s. 1997 before the Regional Trial Court of Muntinlupa City, Branch 256, alleging lack of authority and procedural defects.
The RTC rendered an Order dated December 18, 2009 declaring the circulars null and void and later issued a Writ of Permanent Injunction dated January 19, 2010 directing issuance of the respondents' CPRs.
The BFAD/FDA filed a petition for review on certiorari directly to the Court and obtained a Temporary Restraining Order effective February 24, 2010, pending resolution of the petition.

Key Factual Allegations

The respondents manufactured and marketed a multisource pharmaceutical product with the generic name rifampicin branded as Refam.
The respondents were first issued a CPR for Refam on November 15, 1996, valid until November 15, 2001, and obtained successive renewals and revalidations thereafter conditioned on submission of satisfactory BA/BE test results.
The respondents commissioned BA/BE testing through the University of the Philippines, and the FDA informed them by letter dated July 31, 2006 that Refam was not bioequivalent with the reference drug.
The FDA nevertheless revalidated the respondents' CPR twice more, the last revalidation effective until November 15, 2008, with a warning that no further revalidations would be granted until satisfactory BA/BE results were submitted.
Instead of submitting satisfactory BA/BE results, the respondents challenged the authority and validity of BFAD Circular Nos. 1 and 8, s. 1997 before the RTC.

Statutory Framework

Republic Act No. 3720 provided the primary statutory regime requiring registration of drugs and authorizing the creation of the Food and Drug Administration to administer and supervise implementation of the Act.
Section 26(a) of RA 3720, as amended authorized the Secretary of Health, upon recommendation of the Director, to issue rules and regulations necessary to enforce the Act.
Section 4(a), (c), and (e) of RA 3720 vested the FDA with functions to administer and supervise implementation of the Act, to analyze and inspect products, and to issue certificates of compliance.
Administrative Order No. 67, s. 1989 (AO 67, s. 1989) was promulgated by the Secretary of Health to prescribe Revised Rules and Regulations on Registration of Pharmaceutical Products and included the BA/BE testing requirement.
BFAD Circular Nos. 1 and 8, s. 1997 resumed enforcement and provided implementation details for the BA/BE testing requirement following establishment of local testing facilities.
Executive Order No. 292, s. 1987 (Administrative Co