G.R. No. 190837, March 5, 2014.
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.

FACTS

The Food and Drug Administration (FDA), created under Republic Act No. 3720 (the Food, Drug, and Cosmetic Act), is mandated to establish safety and efficacy standards for drugs. On March 15, 1989, the Department of Health (DOH) Secretary issued Administrative Order No. 67, s. 1989, which required, among other things, that certain drug products undergo bioavailability/bioequivalence (BA/BE) testing as a prerequisite for obtaining a Certificate of Product Registration (CPR). The implementation of this BA/BE testing requirement was initially suspended due to a lack of local testing facilities. In 1997, with facilities established, the FDA (then BFAD) issued Circular No. 1, s. 1997, which resumed the implementation of the BA/BE testing requirement as stated in AO 67, and Circular No. 8, s. 1997, which provided additional implementation details.
Respondents manufacture a multisource pharmaceutical product called “Refam.” They were issued a CPR for Refam in 1996, valid for five years, and were granted several renewals thereafter, conditioned on their eventual submission of satisfactory BA/BE test results. In 2006, the FDA informed respondents that their submitted BA/BE test results showed Refam was “not bioequivalent with the reference drug.” The FDA nonetheless revalidated the CPR until November 15, 2008, with a warning that no further renewals would be granted without satisfactory BA/BE results.
Instead of submitting new test results, respondents filed a petition before the Regional Trial Court (RTC) seeking the annulment of Circular Nos. 1 and 8, s. 1997, and prohibition against their implementation. They argued that the FDA had no authority to issue the circulars, as the rule-making power under RA 3720 was vested in the Secretary of Health. The RTC ruled in favor of respondents, declaring the circulars null and void, ordering the issuance of writs of injunction and prohibition, and directing the FDA to issue CPRs for respondents’ products. The FDA filed a direct petition for review on certiorari with the Supreme Court.

ISSUE

Whether or not the FDA may validly issue and implement Circular Nos. 1 and 8, s. 1997.

RULING

The petition is meritorious. The Supreme Court reversed the RTC’s order. The FDA had the authority to issue the assailed circulars. The BA/BE testing requirement originated from Administrative Order No. 67, s. 1989, which was validly issued by the Secretary of Health pursuant to his explicit rule-making power under Section 26(a) of RA 3720. Circular Nos. 1 and 8, s. 1997 did not impose a new obligation but merely implemented and provided operational details for the enforcement of the existing BA/BE testing requirement under AO 67, following the establishment of local testing facilities. The circulars were interpretative and contingent rules designed to execute the policy of the primary legislation (RA 3720) and the legislative rule (AO 67). As such, they did not require further hearing, consultation, or publication to be valid, as they gave no real consequence more than what the law and the valid administrative order had already prescribed. The Court held that the FDA, as the agency mandated to administer and enforce RA 3720 and its implementing rules, acted within its authority in issuing the circulars to effectively carry out its functions.