Gordon vs. Veridiano II

The power to revoke a license is limited by the authority to grant it; thus, the FDA may revoke its license only for violation of national laws and policies, and the mayor may revoke his permit only for violation of local conditions. The FDA's license to operate a drug store is a condition precedent to the grant of a mayor's permit, but the mayor's permit is not mandatory once the FDA license is shown; the mayor must still ascertain compliance with local requirements such as zoning, building, health, sanitation, and safety regulations.

The petitioner was the City Mayor of Olongapo City, exercising powers under the city charter, R.A. No. 4645, which authorized him to grant, refuse, or revoke municipal licenses and permits. The Food and Drug Administration was created under R.A. No. 3720, the Food, Drug and Cosmetic Act, and was vested with drug inspection functions to regulate the production, sale, and traffic of food, drugs, and cosmetics to protect public health. P.D. No. 280 further authorized the FDA Administrator to order the closure, suspension, or revocation of licenses of drug establishments found guilty of violating the Food, Drug and Cosmetic Act, the Dangerous Drugs Act of 1972, or other laws regulating the sale or dispensation of drugs. The private respondents were spouses who owned two drug stores in Olongapo City, each requiring both an FDA license to operate and a mayor's permit.

Private respondent Rosalinda Yambao owned two drug stores, the San Sebastian Drug Store and the Olongapo City Drug Store, located a few meters from each other in the same building on Hospital Road, Olongapo City. Both were covered by Mayor's Permits Nos. 1954 and 1955, respectively, issued for the year 1980, and by licenses to operate issued by the FDA for the same year.

On March 21, 1980, at about 5:00 o'clock in the afternoon, a joint team composed of agents from the FDA and narcotics agents from the Philippine Constabulary conducted a "test buy" at the San Sebastian Drug Store and was sold 200 tablets of Valium 10 mg. worth P410.00 without a doctor's prescription. A report on the operation was submitted to the petitioner, as mayor of Olongapo City, on April 9, 1980. On April 17, 1980, the petitioner issued a letter summarily revoking Mayor's Permit No. 1954, effective April 18, 1980, "for rampant violation of R.A. 5921, otherwise known as the Pharmacy Law and R.A. 6425 or the Dangerous Drugs Act of 1972." Later, when the petitioner went to Singapore, Vice-Mayor Alfredo T. de Perio, Jr. caused the posting of a signboard at the San Sebastian Drug Store announcing its permanent closure.

Acting on the same investigation report of the "test-buy," and after hearing, FDA Administrator Arsenio Regala, on April 25, 1980, directed the closure of the drug store for three days and its payment of a P100.00 fine for violation of R.A. No. 3720. He also issued a stern warning to Yambao against a repetition of the infraction. On April 29, 1980, the FDA lifted its closure order after noting that the penalties imposed had already been discharged and allowed the drug store to resume operations. On April 30, 1980, Yambao, through her counsel, wrote a letter to the petitioner seeking reconsideration of the revocation of Mayor's Permit No. 1954. On May 7, 1980, having received no reply, she and her husband filed with the Regional Trial Court of Olongapo City a complaint for mandamus and damages, with a prayer for a writ of preliminary injunction, against the petitioner and Vice-Mayor de Perio.

On the same date, Yambao requested permission from the FDA to exchange the locations of the San Sebastian Drug Store and the Olongapo City Drug Store for reasons of "business preference." The request was granted. But when informed of this action, the petitioner, in a letter to the private respondent dated May 13, 1980, disapproved the transfers and suspended Mayor's Permit No. 1955 for the Olongapo City Drug Store. The Yambaos then filed on May 15, 1980, a supplemental complaint questioning the said suspension and praying for the issuance of a preliminary writ of prohibitory injunction. On the same day, the respondent judge issued an order directing the maintenance of the status quo with respect to the Olongapo City Drug Store pending resolution of the issues. On May 21, 1980, the petitioner wrote the FDA requesting reconsideration of its order of April 29, 1980, allowing resumption of the operation of the San Sebastian Drug Store. The request was denied by the FDA in its reply dated May 27, 1980.

The trial court found that the revocation of the mayor's permit was communicated to Yambao in a letter that simply stated the basis as the report submitted by PC Major Virtus V. Gil, Chief 3 RFO, Dis. B, Task Force "Bagong Buhay," alleging rampant violation of R.A. 5921 and dispensing of regulated drugs contrary to R.A. 6425. The letter revoked Mayor's Permit No. 1954 effective April 18, 1980. The FDA Administrator noted that Valium is not even a prohibited drug, which is why the penalty imposed was only a 3-day closure of the drug store and a fine of P100.00. The criminal charges filed against the private respondent for the questioned transaction were dismissed by the fiscal's office. The San Sebastian Drug Store was penalized by the FDA only after a hearing held on April 25, 1980, at which private respondent Yambao, assisted by her lawyer-husband, appeared and testified.

• Conflict of Powers: The petitioner argued that while conceding the FDA possesses the power to grant and revoke licenses for drug stores, he may nevertheless, in the exercise of his own power as city mayor, prevent the operation of drug stores previously permitted by the FDA.
• Charter Authority: The petitioner traced his authority to the charter of Olongapo City, R.A. No. 4645, which empowers the city mayor under Section 10(k) to grant or refuse municipal licenses to operate or permits of all classes and to revoke the same for violation of the conditions upon which they were granted, or if acts prohibited by law or city ordinances are being committed under protection of such licenses, or for any other good reason of general interest.
• Violation of Permit Condition: The petitioner argued that the suspension of Mayor's Permit No. 1955 was valid because the permit, by its terms, was valid only at the place stated therein, and the transfer of the Olongapo City Drug Store to the site of the San Sebastian Drug Store without the mayor's permission violated that condition.

• Due Process Violation: The private respondents argued that the revocation of Mayor's Permit No. 1954 was arbitrary and violated due process because it was communicated through a letter that merely stated the basis without any prior hearing.
• FDA Jurisdiction: The private respondents maintained that the FDA had already penalized the San Sebastian Drug Store for the same infraction and had allowed it to resume operations, and the mayor had no authority to reverse the FDA's decision on a matter within its jurisdiction.
• Validity of Transfer: The private respondents argued that the FDA had approved the exchange of locations of the two drug stores, and the mayor's disapproval of the transfer and suspension of Mayor's Permit No. 1955 was improper.

• Revocation of Mayor's Permit No. 1954: Whether the mayor validly revoked Mayor's Permit No. 1954 on the ground of violation of the Pharmacy Law and the Dangerous Drugs Act after the FDA had already penalized the drug store for the same infraction and allowed it to resume operations.
• Suspension of Mayor's Permit No. 1955: Whether the mayor validly suspended Mayor's Permit No. 1955 for the transfer of the Olongapo City Drug Store to the site of the San Sebastian Drug Store without the mayor's permission.

• Revocation of Mayor's Permit No. 1954: No. The mayor acted invalidly in revoking Mayor's Permit No. 1954 after the FDA had authorized the resumption of operations of the San Sebastian Drug Store following the enforcement of the penalties imposed upon it. The infraction involved the pharmacy and drug laws which the FDA had the direct responsibility to execute, and the mayor had no authority to interpose his own findings on the matter and substitute them for the decision already made by the FDA.
• Suspension of Mayor's Permit No. 1955: Yes. It was competent for the petitioner to suspend Mayor's Permit No. 1955 for the transfer of the Olongapo City Drug Store in violation of the said permit. The condition violated related more to the location in Olongapo City of business establishments in general than to the regulation of drug stores in particular, and therefore came under the petitioner's jurisdiction. However, the suspension should be deemed valid only as the two drug stores have not returned to their original sites as specified in their respective permits, as indefinite suspension would amount to a permanent revocation, which would not be a commensurate penalty.

• Revocation of Mayor's Permit No. 1954: The Court applied the policy of harmonizing apparently conflicting statutes rather than declaring outright the invalidity of one as against the other. A study of the laws showed that the authorization to operate issued by the FDA is a condition precedent to the grant of a mayor's permit to the drug store seeking to operate within the limits of the city. The power to determine if the opening of the drug store is conformable to the national policy and the laws on the regulation of drug sales belongs to the FDA. The power to approve a license includes by implication the power to revoke it, but the power to revoke is limited by the authority to grant the license from which it is derived. Thus, if the FDA grants a license upon its finding that the applicant drug store has complied with the requirements of the general laws, it is only for their violation that the FDA may revoke the said license. By the same token, having granted the permit upon his ascertainment that the conditions thereof as applied particularly to Olongapo City have been complied with, it is only for the violation of such conditions that the mayor may revoke the said permit. The mayor may not revoke his own permit on the ground that the compliance with the conditions laid down and found satisfactory by the FDA when it issued its license is in his own view not acceptable. In the present case, the closure of the San Sebastian Drug Store was ordered by the FDA for violation of its own conditions, which it certainly had the primary power to enforce. By revoking the mayor's permit on the same ground for which the San Sebastian Drug Store had already been penalized by the FDA, the mayor was in effect reversing the decision of the latter on a matter that came under its jurisdiction. The Court also noted that the factual findings of administrative authorities are accorded great respect because of their acknowledged expertise in the fields of specialization to which they are assigned, and the petitioner could not claim superior aptitudes of the FDA in the enforcement of the pharmacy and drug addiction laws. The Court further found that the revocation violated due process, as the letter of April 17, 1980 summarily revoked the permit without any prior hearing, whereas the FDA had conducted a hearing on April 25, 1980 at which Yambao, assisted by her lawyer-husband, appeared and testified.
• Suspension of Mayor's Permit No. 1955: The Court held that the final decision on the transfer of the drug store's location rested with the mayor. The condition violated related more to the location in Olongapo City of business establishments in general than to the regulation of drug stores in particular, and therefore came under the petitioner's jurisdiction. The FDA would have the right to disapprove the site of the drug store only if it would impair the health or other interests of the customers in contravention of the national laws or policies, but the local executive would have reason to object to the location, even if approved by the FDA, where it does not conform to, say, a zoning ordinance intended to promote the comfort and convenience of the city residents. The reason given by the petitioner in disapproving the transfer was violation of Mayor's Permit No. 1955, which by its terms was valid only at the place stated therein. The Court found that reason valid enough, as the permit clearly allowed the drug store to operate in the address given and not elsewhere. No hearing was necessary because the transfer without the mayor's permission was not disputed and was in fact impliedly admitted by the private respondent. However, the Court held that the suspension should be deemed valid only as the two drug stores have not returned to their original sites as specified in their respective permits, as indefinite suspension will amount to a permanent revocation, which will not be a commensurate penalty with the degree of the violation being penalized. The Court added that denial of the request for transfer, if properly made by the private respondents, may not be validly denied by the judge in the absence of a clear showing that the transfer sought will prejudice the residents of the city, as the two drug stores are only a few meters from each other and in the same building.

• Harmonization of Conflicting Statutes — Courts of justice, when confronted with apparently conflicting statutes, should endeavor to reconcile the same instead of declaring outright the invalidity of one as against the other. The wise policy is for the judge to harmonize them if this is possible, bearing in mind that they are equally the handiwork of the same legislature, and so give effect to both while at the same time also according due respect to a coordinate department of the government. The Court applied this doctrine to reconcile the powers of the FDA under R.A. No. 3720 and P.D. No. 280 with the powers of the city mayor under R.A. No. 4645.
• Limits on the Power to Revoke — The power to approve a license includes by implication, even if not expressly granted, the power to revoke it. By extension, the power to revoke is limited by the authority to grant the license, from which it is derived in the first place. Thus, if the FDA grants a license upon its finding that the applicant drug store has complied with the requirements of the general laws and the implementing administrative rules and regulations, it is only for their violation that the FDA may revoke the said license. By the same token, having granted the permit upon his ascertainment that the conditions thereof as applied particularly to Olongapo City have been complied with, it is only for the violation of such conditions that the mayor may revoke the said permit.
• Condition Precedent: FDA License Before Mayor's Permit — The authorization to operate issued by the FDA is a condition precedent to the grant of a mayor's permit to the drug store seeking to operate within the limits of the city. This requirement is imperative. The power to determine if the opening of the drug store is conformable to the national policy and the laws on the regulation of drug sales belongs to the FDA. Hence, a permit issued by the mayor to a drug store not previously cleared with and licensed by the said agency will be a nullity. However, the issuance of the mayor's permit is not mandatory once it is shown that the FDA has licensed the operation of the applicant drug store, as compliance with local conditions like zoning, building, health, sanitation, and safety regulations must still be ascertained by the mayor.
• Respect for Factual Findings of Administrative Authorities — Settled is the rule that the factual findings of administrative authorities are accorded great respect because of their acknowledged expertise in the fields of specialization to which they are assigned. Even the courts of justice, including the Supreme Court, are concluded by such findings in the absence of a clear showing of a grave abuse of discretion.

• "The power to approve a license includes by implication, even if not expressly granted, the power to revoke it. By extension, the power to revoke is limited by the authority to grant the license, from which it is derived in the first place." — This passage articulates the core doctrine limiting the power to revoke licenses to the grounds within the granting authority's jurisdiction, and is central to the Court's reasoning on the mayor's invalid revocation of Mayor's Permit No. 1954.
• "By revoking the mayor's permit on the same ground for which the San Sebastian Drug Store had already been penalized by the FDA, the mayor was in effect reversing the decision of the latter on a matter that came under its jurisdiction." — This passage states the ratio decidendi for the first issue, explaining why the mayor's revocation was invalid as an encroachment on the FDA's exclusive jurisdiction over national pharmacy and drug laws.
• "If only for the violation of due process which is manifest from this letter, the mayor's arbitrary action can be annulled." — This passage identifies the due process violation inherent in the summary revocation of the mayor's permit without prior hearing, providing an independent ground for annulling the mayor's action.
• "The condition violated related more to the location in Olongapo City of business establishments in general than to the regulation of drug stores in particular. It therefore came under the petitioner's jurisdiction." — This passage distinguishes the second issue from the first, explaining why the mayor validly suspended Mayor's Permit No. 1955 for the unauthorized transfer of the drug store's location.

• Tagum Doctors Enterprises vs. Gregorio Apsay, et al., G.R. No. 81188, August 30, 1988 — Cited as authority for the rule that factual findings of administrative authorities are accorded great respect because of their acknowledged expertise in their fields of specialization.
• Antonio de Leon vs. Heirs of Gregorio Reyes, et al., 152 SCRA 584 — Cited in support of the doctrine of respect for administrative findings.
• Liangga Bay Logging Co., Inc. vs. Hon. Enage, et al., 152 SCRA 80 — Cited in support of the doctrine of respect for administrative findings.
• Packaging Products Corp. vs. NLRC, 152 SCRA 210 — Cited in support of the doctrine of respect for administrative findings.
• Ateneo de Manila University vs. CA, 145 SCRA 100 — Cited in support of the doctrine of respect for administrative findings.

• Section 5(e), R.A. No. 3720 — The Food, Drug and Cosmetic Act empowers the FDA to issue certificates of compliance with technical requirements to serve as basis for the issuance of license and spotcheck for compliance with regulations regarding operation of food, drug and cosmetic manufacturers and establishments. This provision was the basis of the FDA's authority over drug stores.
• Section 1, P.D. No. 280 — The Food and Drug Administrator is authorized to order the closure, or suspend or revoke the license of any drug establishment which after administrative investigation is found guilty of selling or dispensing drugs medicines and other similar substances in violation of the Food, Drug and Cosmetic Act, and Dangerous Drugs Act of 1972, or other laws regulating the sale or dispensation of drugs. This provision gave more teeth to the powers of the FDA.
• Section 2, P.D. No. 280 — The administrative investigation shall be summary in character, and the owner of the drug store shall be given an opportunity to be heard. This provision established the due process requirement for FDA actions.
• Section 10(k), R.A. No. 4645 — The charter of Olongapo City empowers the city mayor to grant or refuse municipal licenses to operate or permits of all classes and to revoke the same for violation of the conditions upon which they were granted, or if acts prohibited by law or city ordinances are being committed under protection of such licenses or in the premises in which the business for which the same have been granted is carried on, or for any other good reason of general interest. This provision was the basis of the mayor's authority over local permits.
• Section 6(k), R.A. No. 4645 — The city health officer and his representatives shall have the power to arrest violators of health laws, ordinances, rules and regulations and to recommend the revocation or suspension of the permits of the different establishments to the City Mayor for violation of health laws, ordinances, rules and regulations. This provision was cited in connection with the mayor's powers over local permits.
• R.A. No. 5921 — The Pharmacy Law, which the mayor alleged was violated by the San Sebastian Drug Store, and which was the basis of the mayor's revocation of Mayor's Permit No. 1954.
• R.A. No. 6425 — The Dangerous Drugs Act of 1972, which the mayor alleged was violated by the San Sebastian Drug Store, and which was the basis of the mayor's revocation of Mayor's Permit No. 1954.
• Administrative Order No. 60, series of 1968 — Issued by the Department of Health, this order laid down the requirements for the application to be filed with the FDA for authorization to operate or establish a drug establishment, and provided that upon approval, the FDA shall issue a "License to Operate" which shall be renewed within the first 3 months of each year upon payment of the required fees. The license contains a reservation that it shall be subject to suspension or revocation for violation of the Food, Drug and Cosmetic Act and/or the regulations issued thereunder.

Narvasa (Chairman), Gancayco, Griño-Aquino, and Medialdea, JJ., concurred.