G.R. No. 202867 - People vs. Labiaga

Case Summary (G.R. No. 202867)

Procedural Posture and Relief Sought

Respondents filed a petition for prohibition and annulment in the Regional Trial Court (RTC) of Muntinlupa, Civil Case No. 08-124, challenging BFAD Circular Nos. 1 and 8, s. 1997, and seeking an injunction against their enforcement and an order directing issuance/revalidation of Certificates of Product Registration (CPR) without submission of satisfactory bioavailability/bioequivalence (BA/BE) test results. The RTC declared the circulars null and void, enjoined the FDA from implementing them, and ordered issuance of CPRs to respondents’ products. The FDA sought direct review by the Supreme Court via a petition for certiorari, and obtained a temporary restraining order from the High Court during pendency.

Core Legal Issue

Whether the FDA (then BFAD) validly issued and implemented Circular Nos. 1 and 8, s. 1997; specifically, whether those circulars constitute administrative rules requiring compliance with procedural requisites for rule issuance (notice, hearing, publication) and whether the FDA had authority to promulgate them under RA 3720 and related delegations of rule-making power.

Statutory Delegation and Administrative Roles

RA 3720 establishes the Food and Drug Administration within the Department of Health and assigns it powers to administer and supervise implementation of the Act and of rules and regulations issued pursuant to it. Section 26(a) of RA 3720 expressly authorizes the Secretary of Health, upon recommendation of the Director, to issue rules and regulations necessary to enforce the Act. AO 67, s. 1989 was issued by the Secretary pursuant to this delegated rule-making authority and set forth specific registration requirements for pharmaceutical products, including the BA/BE testing requirement for certain drugs.

Factual Background Relevant to Regulatory Application

AO 67 originally required BA/BE testing for certain classes of drugs but its enforcement was deferred because the country lacked local BA/BE testing facilities. In 1997, with the establishment of testing facilities and technological advances, the BFAD issued Circular No. 1, s. 1997 (ENFORCEMENT OF THE REQUIREMENT FOR BIO-AVAILABILITY STUDIES FOR REGISTRATION OF PRODUCTS INCLUDED IN THE LIST Bα (PRIME) UNDER DOH AO 67 S. 1989) and Circular No. 8, s. 1997 (IMPLEMENTATION DETAILS). Respondents had an existing CPR for Refam issued in 1996 and subsequently renewed several times with a continuing condition to submit satisfactory BA/BE test results; tests conducted by the University of the Philippines indicated that Refam was not bioequivalent to the reference drug, and the FDA later threatened non-revalidation absent satisfactory BA/BE results. Instead of submitting satisfactory BA/BE results, respondents challenged the circulars’ validity on the ground that rule-making authority under RA 3720 rested with the Secretary of Health and not with the FDA, and that the circulars lacked required prior hearing, consultation, and publication.

Legal Classification of Administrative Issuances

The Court reiterated the established taxonomy: administrative regulations may be legislative rules (subordinate legislation implementing primary legislation and affecting rights/obligations), interpretative rules (construing existing statutory regulations and not imposing new obligations), or contingent rules (issued upon the existence of certain facts necessary for enforcement). The Court observed that legislative rules generally require express delegation and are subject to procedural requisites, whereas purely interpretative rules may not require prior notice, hearing, and publication because they do not impose obligations beyond the statute.

Court’s Analysis of AO 67 vis-à-vis Circulars 1 and 8

The Court found that AO 67, s. 1989 is itself a legislative administrative regulation issued by the Secretary pursuant to the express statutory delegation in RA 3720 and that AO 67 had included the BA/BE testing requirement from the outset. The BA/BE requirement therefore predated the 1997 circulars. Circular Nos. 1 and 8, s. 1997 were examined not as primary rule-making instruments but as administrative issuances by the BFAD/FDA intended to resume and supervise enforcement of the BA/BE testing mandate already established in AO 67, given the changed factual circumstances (availability of testing facilities). The Court concluded that the circulars did not create new substantive obligations independent of AO 67, nor did they purport to alter statutory policy; their purpose was to administer and supervise the implementation of AO 67’s existing requirements.

On Procedural Requisites and the Validity of the Circulars

Applying the Administrative Code of 1987 standards, the Court held that administrative rules that are merely interpretative in nature do not require prior notice, hearing, or publication to be binding. Because Circulars 1 and 8 merely implemented and supervised execution of an existing legislative rule (AO 67) and did not themselves constitute legislative rules creating new substantive obligations, they were not subject to the full procedural requisites applicable to legislative administrative rules. Consequently,

Case Syllabus (G.R. No. 202867)

Case Caption, Citation, and Court

Decision: 728 PHIL. 480, Second Division.
G.R. No.: 190837.
Date of Decision: March 05, 2014.
Ponent: Justice Perlas-Bernabe.
Concurring Justices: Carpio (Acting Chief Justice, designated per Special Order No. 1644 dated February 25, 2014), * (Chairperson), Brion, Del Castillo, and Perez, JJ.
Nature of Proceeding: Petition for review on certiorari raising a pure question of law, direct recourse to the Supreme Court from the Regional Trial Court (RTC) of Muntinlupa City, Branch 256, assailing the RTC Order dated December 18, 2009 in Civil Case No. 08-124 and related writ of permanent injunction dated January 19, 2010.

Procedural History

Original action filed by respondents (Drugmakeras Laboratories, Inc. and Terramedic, Inc.) before the RTC: petition for prohibition and annulment of BFAD Circular Nos. 1 and 8, s. 1997.
RTC Order dated December 18, 2009: declared BFAD Circular Nos. 1 and 8, s. 1997 null and void; ordered issuance of writs of permanent injunction and prohibition against the FDA (then BFAD) in implementing said circulars; directed FDA to issue Certificates of Product Registration (CPR) in favor of respondents.
RTC issued Writ of Permanent Injunction dated January 19, 2010, enjoining FDA and persons acting under it from enforcing Circular Nos. 1 and 8, s. 1997 and directing approval of renewal and revalidation of respondents' products without submission of satisfactory BA/BE test results.
FDA filed direct petition for review on certiorari with the Supreme Court, seeking immediate issuance of temporary restraining order (TRO) and/or writ of preliminary injunction against implementation of RTC orders.
Supreme Court granted FDA’s application and issued a TRO dated February 24, 2010, effective immediately and continuing until further orders.
Supreme Court’s final decision: granted the petition; set aside the RTC Order and Writ of Permanent Injunction; declared BFAD Circular Nos. 1 and 8, s. 1997 valid; made the TRO permanent.

Factual Background

Statutory creation and evolution:
- FDA created pursuant to Republic Act No. (RA) 3720 ("Food, Drug, and Cosmetic Act") to establish safety/efficacy standards and quality measures for foods, drugs/devices, and cosmetics.
- Executive Order No. 851 (1982) abolished the FDA and created the Bureau of Food and Drugs (BFAD) in its stead.
- RA 9711 (Food and Drug Administration Act of 2009) renamed BFAD back to FDA and amended RA 3720 in specified respects.
AO 67, s. 1989: Department of Health Administrative Order enacted March 15, 1989, entitled "Revised Rules and Regulations on Registration of Pharmaceutical Products," requiring certain drug products to undergo bioavailability/bioequivalence (BA/BE) testing as part of registration before market release.
Initial suspension of BA/BE enforcement: AO 67’s BA/BE testing requirement was not implemented at effectivity due to absence of local facilities capable of conducting BA/BE tests.
Establishment of local BA/BE facilities in 1997 enabled resumption of enforcement, prompting issuance of BFAD Circular No. 1, s. 1997 and BFAD Circular No. 8, s. 1997 providing implementation details.

Respondents’ Product, Registration, and BA/BE Testing History

Respondents (Drugmakeras Laboratories, Inc. and Terramedic, Inc.) manufacture and trade a multisource pharmaceutical product with generic name rifampicin, branded as Refam 200mg/5mL Suspension, indicated for pulmonary and extra-pulmonary tuberculosis in adults and children.
Initial issuance of CPR: On November 15, 1996, respondents were issued a CPR for Refam, valid five years until November 15, 2001. At issuance, Refam did not undergo BA/BE testing because no testing facility existed then.
Renewals: From 2001 respondents obtained numerous yearly CPR renewals for Refam until November 15, 2006, subject to condition that they submit satisfactory BA/BE test results for the drug.
BA/BE testing engagement: Respondents engaged the University of the Philippines (Manila) Department of Pharmacology and Toxicology, College of Medicine to conduct BA/BE testing on Refam and submitted the results to FDA.
FDA’s communication and revalidations:
- FDA sent letter dated July 31, 2006 to respondents stating that Refam is "not bioequivalent with the reference drug."
- Despite this, FDA revalidated respondents’ CPR for Refam two more times, effective until November 15, 2008. The second revalidation came with warning that no further revalidations would be granted until satisfactory BA/BE results were submitted.
Respondents did not submit satisfactory BA/BE results and instead sought judicial relief challenging the circulars authorizing the BA/BE requirement and the FDA’s implementation.

Administrative and Statutory Framework (RA 3720, AO 67, RA 9711, and FDA Functions)

RA 3720:
- Purpose: ensure safety and purity of foods, drugs, and cosmetics and create the Food and Drug Administration to administer and enforce pertinent laws.
- Prohibitions and registration requirements (Sections 11(j) and 21-B): manufacture, sale, distribution, transfer of drugs/devices not registered with Bureau/FDA is prohibited; no drugs/devices shall be manufactured or sold unless registered in accordance with rules and regulations promulgated by the Secretary pursuant to RA 3720.
- Functions of FDA (Section 4): to administer and supervise implementation of the Act and rules/regulations; to analyze and inspect products; to issue certificates of compliance as basis for licenses and perform spot-checks for compliance.
- Rulemaking delegation (Section 26(a)): Secretary of Health shall, upon recommendation of the Director, issue rules and regulations necessary to enforce the Act, including registration requirements.
AO 67, s. 1989:
- Issued by Secretary of Health pursuant to rule-making power under RA 3720 to provide comprehensive registration guidelines.
- Contains Annex I and II specifying BA/BE testing requirement as component in applications for CPRs for certain categories of pharmaceutical products.
RA 9711 (2009):
- Strengthened and rationalized regulatory capacity of BFAD, renamed BFAD to FDA, and amended certain sections of RA 3720; relevant in chronology but enacted during pendency of RTC case.
Presumption of regularity:
- AO 67’s compliance with requirements for issuance (prior hearing, notice, publication) was not contested; Court deems AO 67 complied and presumes regularity in government acts.

Contents and Purpose of BFAD Circular Nos. 1 and 8, s. 1997

Circular No. 1, s. 1997 (full text excerpted in the source):
- Recites that Annex 1 of AO 67, s. 1989 entitled "Requirement for Registration" provides BA/BE studies for certain drugs as determined by BFAD.
- Explains prior non-enforcement due to lack of bioavailability testing unit in the country and states the "supervening factor" (lack of units) no longer exists.
- Points to an instance where a registered product tested by University of Sto. Tomas Bioavailability Testing Unit failed to meet bioavailability standards.
- Advises that all manufacturers/traders/distributor-importers of products in List B (Prime) shall henceforth be required to submit BA/BE tests with satisfactory results for pending initial and renewal registrations, conducted by any BA testing units here or abroad duly recognized by BFAD under DOH.
Circular No. 8, s. 1997:
- Issued to supplement Circular No. 1, s. 1997 and to reiterate the BA/BE testing requirement or