,....... REPUBLIC OF THE PHILIPPINES

SUPREME COURT MANILA

DEPARTMENT OF HEAL \H, Represented by Dr. Enrique C. Ona, In his official capacity as Department Secretary,

Petitioner,

vs.

HON. JUDGE ALEXANDER P. TAMAYO, in his official capacity as Presiding Judge of Branch 15, Regional Trial Court, Malolos, Bulacan and MIGHTY CORPORATION, represented by James Vincent C. Navarrete,

Respondents.

)(-----------------------------------------------------)(

G.R. No. 193414 Petition for Certiorari and Prohibition with prayer for Temporary Restraining Order and Preliminary Injunction

MANIFESTATION AND COMPLIANCE

RESPONDENT, MIGHTY CORPORATION, by counsel, most respectfully manifests:

1. That it received a copy of the Order from this Honorable Court dated 14 March

2011 requiring the Respondent to serve copies of the Comment (to the Petition-in-Intervention)

and Opposition to Motion for Leave to Intervene on the Counsel for Intervenors at his new

address at 6th Floor, Victoria Building 1670 Quezon A venue, Quezon City.

2. That copies of the said documents were sent by registered mail to Petitioner-

Intervenors and attached to Intervenor's copy of this Manifestation and Compliance as

Annex" A" and "B".

PRAYER

WHEREFORE, it is respectfully prayed that this Manifestation and Compliance be duly

noted by this Honorable Court.

Makati City for Manila, Philippines, 16 May 2011.

By:

OCAMPO & OCAMPO Counsel for Private Respondents

11th Floor Equitable Bank Tower 8751 Paseo de Roxas, Makati City

Roll No.31993 · a No. 99; Book No.XVIII IBP Life Roll No.O 8; 12. 9.03; Makati Chapter

COPY FURNISHED:

RAULC.PANGALANGAN 6th Floor, Victoria I Building 1670 Quezon Avenue, Quezon City

PTR No.2693764; 01.26.11; Makati City MCLE Compliance No.: III-000-09070;03.03.10

OFFICE OF THE SOLICITOR GENERAL 134 Amorsolo Street Legaspi Village, 1229 Makati City

JUDGEALEXANDERP. TAMAYO Regional Trial Court Branch 15, Malolos City 3000 Bulacan (Civil Case No. 393-M-2010)

DR. ENRIQUE T. ONA Secretary Department of Health San Lazaro Compound, Sta. Cruz Manila

EXPLANATION

The undersigned counsel in compliance with Section 11, Rule 13 of the 1997 Rules of

Civil Procedure, hereby explains that the foregoing pleading is being filed and served on the

Petitioner and to the Office of the Solicitor General by registered mail due to lack of personnel to

effect personal service.

_........ ...... -----------------------

REPUBLIC OF THE PHILIPPINES SUPREME COURT

MANILA

DEPARTMENT OF HEALTH, represented by DR. ENRIQUE C. ONA, in his official capacity as Department Secretary,

Petitioner,

And

Former Secretaries of the Department of Health, DR. ESPERANZA I. CABRAL, DR. FRANCISCO T. DUQUE III, DR. JAIME GALVEZ-TAN, DR. ALBERTO G. ROMUALDEZ, JR., and DR. ALFREDO R. A. BENGZON,

Petitioners-in-Intervention,

-versus-

HON. JUDGE ALEXANDER P. TAMAYO, In his official capacity as Presiding Judge of Branch 15, Regional Trial Court, Malolos, Bulacan; and MIGHTY CORPORATION, Represented by JAMES VINCENT C. NAVARRETE,

Respondents.

)C-------------------------------------------------------)C

G.R. No. 193414 Petition for Certiorari and Prohibition with Prayer for Issuance of Temporary Restraining Order and Writ of Preliminary Injunction

COMMENT (to Petition-in-Intervention)

RESPONDENT, MIGHTY CORPORATION, by counsel, unto this Honorable Court,

most respectfully states:

1. On 25 March 2011, it received a copy of this Honorable Court's order dated 2

February 2011, granting the motion for leave to intervene of the Petitioners-Intervenors and

giving the Private-Respondent ten (10) days from receipt of the order within which to file a

Comment to the Petition-in-Intervention.

2. The Private-Respondent therefore originally had until 4 April 2011 within which

to file its Comment.

' . : ~

3. On 29 March 2011, the Private-Respondent filed, within the ten-day period, a

motion for extension of time to file its Comment for an additional ten ( 1 0) days from 4 April

2011 or up to 14 April 2011 within which to file its Comment.

4. In comment to the Petition-in-Intervention, the Private-Respondent most

respectfully states:

FACTUAL ANTECEDENTS

5. On 23 June 2003, Republic Act No. 9211 (The Tobacco Regulation Act of 2003)

was signed into law and it took effect on 2 September 2003.

6. Under the said law, Congress declared that it is the policy of the state that while

protecting the populace from the hazards of smoking and promoting the right of health, the state

shall at the same time safeguard the interests of the workers and other stakeholders in the tobacco

industry. In line with this policy, Congress declared that the state shall institute a balanced policy

whereby the use, sale and advertisements of tobacco products shall be regulated in order to

protect the citizens from the hazards of tobacco smoke and at the same time ensuring that the

interests of tobacco farmers, growers and stakeholders are not adversely affected. (Sec.2, RA

9211).

7. RA 9211, in relevant part, provides:

"Section l3.Warnings on Cigarette Packages.- Under this Act:

a. All packages in which tobacco products are provided to consumers withdrawn from the manufacturing facility of all manufacturers or imported into the Philippines intended for sale to the market, starting 1 January 2004, shall be printed, in either English or Filipino, on a rotating basis or separately and simultaneously, with the following health warnings:

"GOVERNMENT WARNING: Cigarette Smoking is Dangerous to Your Health;"

"GOVERNMENT WARNING: Cigarettes are Addictive;"

"GOVERNMENT WARNING: Tobacco Smoke Can Harm Your Children;" or

"GOVERNMENT WARNING: Smoking Kills."

b. Upon effectivity of this Act until 30 June 2006, the health warning shall be located on one side panel of every tobacco product

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package and occupy not less than fifty percent (50%) of such side panel including any border or frame.

c. Beginning 1 July 2006, the health warning shall be located on the bottom portion of one (1) front panel of every tobacco product package and occupy not less than thirty percent (30%) of such front panel including any border or frame. The text with a black border in contrast by typography, layout or color to the other printed matters on the package. The health warning shall occupy a total area of not less than fifty percent (50%) of the total warning frame.

d. The warnings shall be rotated periodically, or separately and simultaneously printed, so that within twenty-four (24) month period, the four ( 4) variations of the warnings shall appear with proportionate frequency.

e. The warning shall not be hidden or obscured by other printed information or images, or printed in a location where tax or fiscal stamps are likely to be applied to the package or placed in a location where it will be damaged when the package is opened. If the warning to be printed on the package is likely to be obscured or obliterated by a wrapper on the package, the warning must be printed on both the wrapper and the package.

f. In addition to the health warning, all packages of tobacco products that are provided to consumers shall contain, on one side panel, the following statement in a clear, legible and conspicuous manner: "NO SALE TO MINORS" or "NOT FOR SALE TO MINORS." The statement shall occupy an area of not less than ten percent (10%) of such side panel and shall appear in contrast by color, typography or layout with all the other printed material on the side panel.

g. No other printed warnings, except the health warning and the message required in this Section, paragraph f. shall be placed on cigarette packages."(Underscoring Supplied)

8. On 12 May 2010, the Department of Health (DOH) issued Administrative Order

No. 2010-0013 (AO 2010-13), requiring, among others, the use of graphic health information on

tobacco product packages, adopting measures to ensure that tobacco product packaging and

labeling do not promote tobacco by any means that are false, misleading, deceptive or likely to

create an erroneous impression about the tobacco product's characteristics, health effects,

hazards or emissions. The administrative order likewise mandated the use of eight (8) different

pictographs that should be used by cigarette manufacturers in a rotating basis within the year.

9. Article V and VI of AO 2010-13, in pertinent part, provides:

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"V. Specific Provisions:

The Department hereby promulgates the following rules and regulations governing packaging and labeling of tobacco products:

A. Graphic Health Information

1. Scope of Graphic Health Information - Each unit packet and package of tobacco products including package insert and onserts, and any outside packaging and labeling of such products for sale, distribution or importation within the country, shall bear large, clear. visible. and legible full-color graphic health information. as attached in Annex 1. (Underscoring Supplied)

2. Size and Position of Graphic Health Information - The graphic health information shall occupy the upper portions of each tobacco product packet or package and no less than thirty percent (30%) of the front panel and sixty percent ( 60%) of the back panel (or all corresponding panels of the unit packet or package if in non-standard packaging) in a manner that ensures maximum visibility.

3. Rotation- There shall be a minimum of eight (8) variations of graphic health information that shall appear concurrently within a twenty four (24) month period. The variations shall appear on an equal number of retail tobacco product packages for each brand and for each package size and type.

xxxxx

"VI. Common Provisions

1. Compliance- Tobacco products that do not comply this Order shall be prohibited after ninety (90 days) from the effectivity of this Order. Non-compliant products must be withdrawn no later than such date. Absolutely no extensions of time to comply with the provisions of this Order shall be granted to tobacco manufacturers or any other affected party.(Underscoring Supplied)

Imported tobacco products meant to be sold in the Philippines, even if they are in product packages that carry graphic health information compliant with the country of origin shall comply with this Order within thirty (30) days from this Order's effectivity.

2. Duty Not to Sell/Display Non-compliant Products. -Manufacturers, importers, exporters, wholesalers, distributors, retailers, concessionaires and other sellers shall not sell and/or display tobacco products that do not comply with this Order.

3. Burden of Costs on Tobacco Companies. - All costs relative to the packaging and labeling of tobacco products shall be borne by the respective tobacco manufacturers, importers, and/or exporters responsible for packaging and labeling of the products."

4

10. AO 2010-13 mandates the use ofhealth warnings which are different from, and in

addition to, those required under Sec. 13 the Tobacco Regulation Act which merely requires the

use of textual warnings, namely: "GOVERNMENT WARNING: Cigarette Smoking is

Dangerous to Your Health" , "GOVERNMENT WARNING: Cigarettes are Addictive" ,

"GOVERNMENT WARNING: Tobacco Smoke Can Harm Your Children" or

"GOVERNMENT WARNING: Smoking Kills".

11. Private-Respondent is a cigarette manufacturer whose principal office and factory

is located in Malolos, Bulacan and whose products are in compliance with the health warnings

required under the Tobacco Regulation Act. Facsimiles of Private-Respondent's cigarette

products were marked in evidence with the Regional Trial Court during the hearing for the

preliminary injunction.

12. AO 2010-13 in Article V Part (B) also provides:

"B. Misleading Descriptors

1. General Prohibition. - Each unit packet and package of tobacco products, including package inserts and onserts, and any outside packaging and labeling of such products for sale, distribution or importation within the country shall not promote a tobacco product by any means that are false, misleading, deceptive or likely to create an erroneous impression about the product's characteristics, health effects, hazards or emissions, including any term, descriptor, trademark, figurative or any other sign (including colors, images, or numbers) or any package or product design feature that directly or indirectly create or likely to create the false impression that a particular tobacco product or brand is less harmful than any other tobacco product or brand.

Use of misleading descriptors on tobacco product packages such as, but not limited to "low tar", "light", "ultra-light", "mild", "extra", "ultra", and similar terms in any language that might mislead consumers, is prohibited. Use of corresponding symbols or colors signifying the same is also prohibited. No misleading descriptors shall be used as part of a brand name or trademark for tobacco products introduced after the effectivity of this Order.

2. Prohibition on Misleading Information. - Information that may imply that one variant or brand is safer than the other is prohibited such as statements indicating that the tobacco product contains "reduced levels" of contents, substances, and emissions. Figures for emission yields such as for tar, nicotine

5

and carbon monoxide, shall be prohibited including when used as part of a brand name or trademark."

13. By virtue of Article V Part (B) of AO 2010-13, the DOH has prohibited and

outlawed the use of so-called "Descriptors" which are descriptive words used in tobacco product

labels and packaging that in the words of AO 2010-13 "are false, misleading, deceptive or likely

to create an erroneous impression about the product's characteristics, health effects, hazards or

emissions."

14. Private-Respondent has registered trademarks for its brands that use descriptive

words, some of which are in the Tagalog language, and form part of the trademarks for these

products. These trademarks have been in the market for several years. It has been validly and

legally using these trademarks and has spent millions of pesos for advertising and promoting

these trademarks. It is still uncertain whether or not these descriptive words will be considered as

"Descriptors" within the context of AO 2010-13 and/or whether or not the DOH can unilaterally

and arbitrarily make a determination of whether or not such words are "false, misleading,

deceptive or likely to create an erroneous impression about the product's characteristics, health

effects, hazards or emissions."

15. AO 2010-13 was published on 25 May 2010 and became effective on 9 June 2010

and pursuant thereto, cigarette manufacturers and distributors had until 7 September 2010 within

which to comply with its provisions.

16. On 5 July 2010, prior to the deadline set by the administrative order for

compliance, Private-Respondent exercised its right to seek redress from the courts in order to

protect its rights and filed a case for Declaratory Relief with Temporary Restraining Order

(TRO) and Preliminary Injunction with the Regional Trial Court of Malolos, Bulacan. The case

sought to restrain the DOH from implementing AO 2010-13 and to have a judicial adjudication

of its rights under the Tobacco Regulation Act and the questioned administrative order.

17. On 13 July 2010, the Public-Respondent, Hon. Alexander P. Tamayo, presiding

judge of Branch 15, Regional Trial Court of Malolos, Bulacan issued an order scheduling the

hearing for the issuance of a temporary restraining order on 15 July 2010 at 10:00 a.m.

6

18. On 15 July 2010, the counsel for Private-Respondent, Mighty Corporation

attended the hearing but the DOH failed to attend the hearing despite notice. The hearing

proceeded and Private-Respondent presented its evidence.

19. On 16 July 2010, the Public-Respondent issued an order granting the TRO and set

the hearing for the preliminary injunction on the 22"d and 29th of July 2010.

20. On the 22"d of July 2010 the DOH was represented in the hearing by the Office of

the Solicitor General (OSG). The parties argued their cases orally. On the same day, the court

issued an order for the DOH to file its comment/opposition to the application for preliminary

injunction no later than 26 July 2010 and for the Private-Respondent to reply to the

comment/opposition of the DOH no later than 28 July 2010, after which the incident shall be

deemed submitted for resolution.

21. On 26 July 2010, the DOH filed a motion for reconsideration of the order dated

22 July 2010 which contained as well arguments for why the preliminary injunction should not

be granted and why the case should be dismissed. On 28 July 2010, the Private Respondent filed

its Opposition/Reply Memorandum to DOH's motion for reconsideration/opposition.

22. On the 29th of July 2010, the Public-Respondent issued an order denying the

DOH's motion for reconsideration and granted the application for preliminary injunction and

ordering the Private-Respondent to post a bond in the amount ofP500,000.00.

23. The DOH then filed this instant Petition for Certiorari and Prohibition with

Preliminary Injunction seeking to annul the order of the Public-Respondent dated 29 July 2010

and to restrain the Public-Respondent from hearing the case.

ARGUMENTS

THE PUBLIC-RESPONDENT, IN ISSUING THE PRELIMINARY INJUNCTION,

HAS NOT PREJUDGED THE CASE.

AN ADMINISTRATIVE ORDER THAT IS CONTRARY TO LAW IS NULL AND VOID.

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THE GUIDELINES FOR THE IMPLEMENTATION OF ARTICLE 11 OF THE WHO FCTC DO NOT CONSTITUTE A TREATY AND THEREFORE

CANNOT TAKE PRECEDENCE OVER A DOMESTIC LAW OF THE PHILIPPINES.

ANY ARGUMENT REGARDING THE PROHIBITION IN AO 2010-13, WITH REGARD TO THE USE OF DESCRIPTORS,

IS PREMATURE AT THIS TIME, THERE BEING AS YET NO JUSTICIABLE CONTROVERSY REGARDING THE DESCRIPTORS

THE PETITION-IN-INTERVENTION GOES INTO THE MERITS OF THE CASE ITSELF AND DEPRIVES

THE TRIAL COURT THE AUTHORITY TO DECIDE A JUSTICIABLE CONTROVERSY.

THE CONSTITUTIONAL MANDATE OF THE GOVERNMENT TO PROTECT AND PROMOTE THE PEOPLE'S HEALTH

SHOULD BE DONE IN ACCORDANCE WITH ESTABLISHED CONSTITUTIONAL PROCESSES

DISCUSSION

The Public-Respondent, in Issuing the Preliminarylnjunction, Has Not Prejudged the Case.

24. The Petitioners-Intervenors argue that the Public-Respondent has already

prejudged the constitutionality of AO 2010-13 by simply issuing the preliminary injunction.

They further argue that an administrative order by a government agency, like the DOH,should

never be enjoined because of the presumption of regularity of government acts.

25. If this were so then the rights of private citizens would be helpless against

tyrannical, abusive or erroneous acts of government agencies and there would never be anytime

when a private citizen can seek protection from the court. But, this we know is not the case for J

precisely the Constitution and the Rules of Court allow immediate, albeit provisional, relief to

citizens whose rights are being trampled upon, or as in this case will be trampled upon, if no

relief is provided by the courts.

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26. Sec. 3 of the Rules of Court provides:

"Sec. 3. Grounds for issuance of preliminary injunction. - a preliminary injunction may be granted when it is established:

(a) That the applicant is entitled to the relief demanded, and the whole or part of such relief consists in restraining commission or continuance of the act or acts complained of, or in requiring the performance of an act or acts, either for a limited period of perpetually;

(b) That the commission, continuance or non-performance of the act or acts complained of during the litigation would probably work injustice to the applicant; or

(c) That a party, court, agency or a person is doing, threatening, or is attempting to do, or is procuring or suffering to be done, some act or acts probably in violation of the rights of the applicant respecting the subject of the action or proceeding, and tending to render the judgment ineffectual."

27. It is well-settled that whenever the two requisites for the issuance of a preliminary

prohibitory injunction are shown, namely: 1 ). the existence of a right to be protected, and 2). The

act against which the injunction is to be directed is a violation of such right, then the courts are

duty-bound to issue the injunction. (Buayan Cattle Co. vs. Quintillian, 128 SCRA 276; Sales

vs. Securities and Exchange Commission, G.R. 54330, 13 Jan. 1989; National Power

Corporation vs. Vera, G.R. 83558, 27 Feb. 1989; Searth Commodities Corp. vs. Court of

Appeals, 207 SCRA 622 (1992); Saulog vs. Court of Appeals, G.R. No. 119769, Sept. 18,

1996; and Arcega vs. Court of Appeals, G.R. No. 122206, July 7, 1997). In the instant case,

the Public-Respondent correctly ruled that there was an apparent conflict between AO 2010-13

and RA 9211 which will directly affect, and will likely damage, the Private-Respondent's

business if the implementation of AO 2010-13 is not restrained. Article VI par. 1 of AO 2010-13

provides that all non-compliant products must be withdrawn from the market after the 90-day

deadline for compliance, under pain of penalty in relation to Article VII. Moreover, absolutely

no extensions shall be granted.

28. The Private-Respondent in this case, being a cigarette manufacturer, has been

complying dutifully with its obligations under the Tobacco Regulation Act (RA 9211) with

regard to the selling, marketing and labeling of its cigarette products, in general and with the use

of textual health warnings on its cigarette products, in particular. AO 2010-13 has changed the

rules as mandated by the said law and therefore the Private-Respondent has the right to seek

9

relief from the courts and to continue to conduct its business lawfully under the provisions of the

Tobacco Regulation Act.

29. Petitioners-Intervenors argue that given the binding force of AO 2010-13 and the

presumption of its validity and constitutionality, the Public-Respondent should have deferred to

the DOH's exercise of its' quasi-legislative powers and denied the issuance of the preliminary

injunction. We object to this argument and submit that in this instant case, the DOH exceeded the

limits of its authority as clearly seen from the face of AO 2010-13 and Sec. 13 (g) of RA 9211.

Although the Public-Respondent has yet to rule on this particular issue, we submit that, in this

case, the DOH has exceeded its authority. It is well-established that in our system of government,

it is the duty of the executive to implement the law but not to make the law or amend the law.

Although administrative agencies have rule-making authority, such authority should be exercised

within constitutional limitations. It is well-established that administrative or executive acts,

orders and regulations shall be valid only when they are not contrary to the laws or to the

Constitution. (Eastern Shipping Lines, Inc. vs. Court of Appeals, 291 SCRA 485).

30. Well-settled as well is the principle that administrative agencies may not make

rules and regulations which are inconsistent with the provisions of the Constitution or a statute,

particularly the statute it is administering or which created it. Neither can administrative agencies

issue orders, rules and regulations which are in derogation of, or defeat, the purpose of a statute.

In case of conflict between a statute and an administrative order, the statute must prevail. (Conte

vs. Commission on Audit, 332 Phil 20 36; 264 SCRA 19; Smart Communications, Inc. vs.

National Telecommunications Commission).

31. The provisions of sec.l3 (g) of The Tobacco Regulation Act (RA 9211) are

crystal clear and leave no room for interpretation that ''No other printed warnings except the

health warnings required in this Section, paragraph F shall be placed on cigarette packages.".

These health warnings are as follows and no other: "GOVERNMENT WARNING: Cigarette

Smoking is Dangerous to Your Health", "GOVERNMENT WARNING: Cigarettes are

Addictive" , "GOVERNMENT WARNING: Tobacco Smoke Can Harm Your Children" , or

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"GOVERNMENT WARNING: Smoking Kills". The Public-Respondent therefore correctly

ruled that the questioned administrative order poses an additional and/or new warning on tobacco

products which will directly affect the plaintiffs business resulting in injury to the Private-

Respondent and should therefore be restrained.

An Administrative Order that is Contrary to Law is Null and Void.

32. Although the following matters still have to be ruled upon by the Public-

Respondent, we submit that under our system of government, as enshrined in the constitution,

there are three branches of government, namely: the executive, the judiciary and the legislature.

In the words of Prof. Sinco: "In the exercise of the functions allotted to it, each department is

supreme. Each is not lower or higher than the other in the manner of a hierarchical system; it is

rather coordinate or coequal with the others. The act of one in usurpation of the powers of the

other or in excess of the powers granted to it by the Constitution are invalid." (Sinco, Philippine

Political Law, 11th ed., p.128)

33. Legislative power or the power to make laws and to amend the laws, is lodged

with Congress as provided for in Sec. 1 Article VI of the Constitution. Neither the judiciary nor

the executive department may encroach on the legislature's power to legislate and any act

committed by the executive or by the judiciary in contravention of this mandate shall be struck

down as unconstitutional and therefore void.

34. Although admittedly, an agency of government such as the DOH has the power to

issue rules and regulations, the exercise of such rule-making power is subject to well-established

limitations which should be strictly complied with and one of these limitations is that an

administrative order, rule or regulation cannot amend an act of Congress. It has been held that:

"As early as 1970, in the case of Teoxon vs. Members of the Board of Adminstrators (PVA), we ruled that the power to promulgate rules in the implementation of a statute is necessarily limited to what is provided for in the legislative enactment. Its terms must be followed for an administrative agency cannot amend an Act of

11

Congress. "The rule-making power must be confined to details for regulating the mode or proceedings to carry into effect the law as it has been enacted, and it cannot be extended to amend or expand the statutory requirements or to embrace matters not covered by the statute."(citing Land Bank of the Philippines vs. Court of Appeals, 285 SCRA 404, 407 [1996])(Underscoring Supplied)If a discrepancy occurs between the basic law and an implementing rule or regulation, it is the former that prevails. (citing Nasipit Lumber Company, Inc. vs. National Wages and Productivity Commission, 289 SCRA 667, 681 {1998))."

35. The Petitioners-Intervenors argue that the DOH draws its rule-making authority to

issue AO 2010-13 not only from RA 9211 but also from the Revised Administrative Code and

the Consumer Act of 1992. Petitioners-Intervenors argue by implication that the provisions of the

Revised Adminstrative Code and that of the Consumer Protection Act prevail over the provisions

of RA 9211 (The Tobacco Regulation Act). It is well-settled however that in the event of a

conflict between two statutes, it is the special law that prevails over a general law. (Ponce de

Leon vs. Rehabilitation Finance Corporation, et. al. 36 SCRA 289 [1970]; Commissioner of

Internal Revenue vs. Hagan Electric & Ice Plant, Inc., 29 SCRA 634 [1969]). The Tobacco

Regulation Act, a law that governs the use, sale and advertisement of tobacco products, is a

special law.

36. It is also well-settled that an administrative agency, in issuing an administrative

order, rule or regulation in the exercise of its delegated authority, cannot overstep its authority

and exceed the limitations as provided for in the law that delegated such authority. If the DOH

indeed issued AO 2010-13, pursuant to the Consumer Protection Act (RA 7394), as the

Petitioners-Intervenors argue, then it had overstepped its authority since Article 6 of the

Consumer Protection Act provides that the DOH may issue rules and regulations only with

respect to food, drugs, cosmetics, devices and substances. There is no mention whatsoever of

tobacco products under RA 7394. It had been held that the rule-making authority of an

administrative agency should not be used to enlarge its authority beyond the scope intended and

that the statutes control what rules and regulations may be promulgated by administrative

agencies. The court ruled that:

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"The rule-making power of a public administrative body is a delegated legislative power, which it my not use either to abridge the authority given it by Congress or the Constitution or to enlarge its power beyond the scope intended. Constitutional and statutory provisions control what rules and regulations may be promulgated by such a body, as well as with respect to what fields are subject to regulation by it. It may not make rules and regulations which are inconsistent with the provisions of the Constitution or a statue, particularly the statute it is administering or which created it, or which are in derogation of, or defeat the purpose of a statute. (citing Conte vs. Commission on Audit, 264 SCRA 19 {1996})

Moreover, where the legislature has delegated to an executive or administrative officers and board of authority to promulgate rules to carry out an express legislative purpose, the rules of administrative officers and boards, which have the effect of extending, or which conflict with the authority-granting statute, do not represent a valid exercise of the rule-making power but constitute an attempt by an administrative body to legislate. (citing People vs. Maceren,79 SCRA 450 {1977]) "A statutory grant of powers should not be extended by implication beyond what may be necessary for their just and reasonable execution." (citing Nasipit Lumber Company, Inc. vs. National Wages and Productivity Commission, 289 SCRA 667). It is axiomatic that a rule or regulation must bear upon, and be consistent with, the provisions of the enabling statute if such rule or regulation is to be valid. (Citing Lina, Jr. vs. Carina, 221 SCRA 515 {1993]). (United BF Homeowner's Association vs. BF Homes, Inc., 310 SCRA 304, 315 [1999])

37. In the instant case, the legislative intent of Congress to limit the power of the

DOH in regulating the tobacco industry is also self-evident by referring to another piece of

legislation, namely, RA 9711 (An Act Strengthening and Rationalizing the Regulatory Capacity

of the Bureau of Food and Drugs), which was approved on August 18, 2009. It provides:

"Sec. 25. Coverage. - This Act shall govern all health products: Provided, That nothing in this Act shall be deemed to modify the sole and exclusive jurisdiction of other specialized agencies and special laws only insofar as the acts covered by these specialized agencies and laws, including, but not limited to, those covered by Republic Act No. 9211, Executive Order No. 245, Executive Order No. 18, and Presidential Decree No. 1468" (Emphasis Supplied)

38. It is a principle in statutory construction that statutes which relate to the same

matters or purpose are in pari materia. Assuming that the DOH draws its rule-making or

regulatory power from the Administrative Code, the Consumer Protection Act, RA 9711 as well

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as RA 9211 (in relation to the Inter-Agency Committee), then these pieces of legislation must be

read and construed together. In one case the court explained:

"On the presumption that whenever the legislature enacts a provision it has in mind the previous statutes relating to the same subject matter, it is held that in the absence of any express repeal or amendment therein, the new provision was enacted in accord with legislative policy embodied in those prior statutes, and they all should be construed together. Provisions in an act which are omitted in another act relating to the same subject matter will be applied with its purpose. Prior statutes relating to the same subject matter are to be compared with the new provisions; and if possible by reasonable construction, both are to be construed that effect is given to every provision, of each. Statutes in pari materia, although in apparent conflict, are so far as reasonably possible construed to be in harmony with each other." (C& C Commercial Corp. vs. National Waterworks and Sewerage Authority, 21 SCRA 984, 992 [1967] citing Sutherland & Statutory Construction, Vol. II, pp. 530-532)

39. The Petitioners-Intervenors also argue that the principle of lex posterior derogate

priori applies in this case; that AO 2010-13 was issued by the DOH in compliance with the

WHO FCTC Treaty; that the Treaty has the same standing in international law as a domestic law;

and that therefore the said Treaty has given the administrative order validity because the treaty

took effect subsequent to the RA 9211 and is deemed to have superseded RA 9211. We humbly

disagree.

40. The WHO FCTC Treaty itself is merely permissive as regards the use of

pictographs or graphic warnings on cigarette labels but clearly mandates the use of textual

warnings in much the same way that RA 9211 mandates the use of textual health warnings. All

the provisions of the WHO FCTC in Article 11 on textual warnings including the size of the

warning, the rotation of use of the different variations of the warnings, the fact that the warnings

have to be large, clear, visible and legible are all in RA 9211. Therefore the Treaty itself is not in

conflict with RA 9211. However, even assuming that there is an irreconcilable conflict between

the said Treaty and RA 9211, it had been held in a line of decisions that where there is a

irreconcilable conflict between a rule of international law and a municipal law, jurisprudence

dictates that municipal law should be upheld by the municipal courts for the reason that

municipal courts are organs of municipal law and are accordingly bound by it in all

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circumstances. (Inchong vs. Hernandez, 101 Phil. 1155 [1957]; Gonzales vs. Hechanova, 9

SCRA 230 (1963]; In re: Garcia, 2 SCRA 984 [1961]; also cited in Secretary of Justice vs.

Lantion, 322 SCRA 160 [2000]).

41. Moreover, the Petitioners-Intervenors argue that the WHO FCTC Treaty only sets

a minimum standard and that it encourages parties to implement measures beyond those required

by the treaty itself and its protocols. Unfortunately, the treaty, its protocols and guidelines are

limited by the provisions of our Constitution and no treaty regardless of its binding obligations

can violate our Constitution. It had been held that: "In states where the constitution is the highest

law of the land, such the Republic of the Philippines, both statutes and treatise may be

invalidated if they are in conflict with the constitution." (Secretary of Justice vs. Lantion, 322

SCRA 160 [2000]; Lim vs. Executive Secretary, 380 SCRA 739 [2002)).

The Guidelines for the Implementation of Article 11 of the WHO FCTC, on which AO 2010-13 is Based, Do Not Constitute a Treaty and Therefore Cannot Take Precedence Over a Domestic Law of the Philippines.

42. Although the Public-Respondent has yet to rule on the following matters, we

submit that AO 2010-13 was actually issued pursuant to the subsequent Guidelines for the

Implementation of Article 11 of the WHO FCTC Treaty. However, the guidelines themselves,

where the matter of graphic warnings on cigarettes was mentioned in great detail and made

mandatory, do not have the status of an international treaty. Otherwise, the Guidelines

themselves should have likewise been ratified by at least two-thirds of all the members of the

Senate in accordance with Sec. 21 Article VII of the Constitution. In fact, Article ll.l(b) (v) of

the WHO FCTC Treaty itself is merely permissive, with regard to the use of pictograms, and not

mandatory, as is apparent from the wording of its provisions. Article 11.1(b) (v) of the treaty

merely provides that the health warnings on tobacco products "may be in the form of or include

pictures or pictograms". Article 11 (1) (b) of the WHO FCTC Treaty provides:

"Artcile 11 Packaging and labelling of tobacco products

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1. Each party shall, within a period of three years after entry into force of this Convention for that Party, adopt and implement, in accordance with its national law, effective measures to ensure that:

xxxxxx

(b) each unit packet and package of tobacco products and any outside packaging and labelling of such products also carry health warnings describing the harmful effects of tobacco use, and may include other appropriate messages. These warnings and messages:

(i) shall be approved by competent national authority, (ii) shall be rotating, (iii) shall be large, clear, visible and legible, (iv) should be 50% or more of the principal display areas but

shall be no less that 30% of the principal display areas (v) may be in the form of or include pictures or pictograms."

(Underscoring Supplied)

It has been held that the use of the word "may" when used in a statute is permissive only and

operates to confer discretion (Bersabal vs. Hon. Judge Serafin Salvador, 84 SCRA 176

[1978], citing the case of Dizon vs. Encarnacion, 9 SCRA 714 {1963]) In another case, this

Court likewise held that the use of the word "may" is indicative of a mere possibility, an

opportunity or an option. (Munoz vs. Commission on Elections, 495 SCRA 407 [2006]). We

submit that these cases are applicable by way of analogy.

43. On the other hand, the Guidelines for the Implementation of Article 11 of the

WHO FCTC Treaty mandates the use of culturally appropriate pictograms in the packaging of

cigarettes and therefore the Guidelines, in effect, amended Article 11 of the Treaty. The

Guidelines on Article 11 of the WHO FCTC Treaty in pertinent part provides:

"Use of pictorials

Article 11.1 (b)( v) of the Convention specifies that health warnings and messages on tobacco product packaging and labelling may be in the form of or include pictures or pictograms. Evidence shows that health warning and messages that contain both pictures and text are far more effective than those people with low levels of literacy and those who cannot read the language(s) in which the text of the health warning or message is written. Parties should mandate culturally appropriate pictures or pictograms, in full colour, in their packaging and labelling requirements. Parties should consider the use of pictorial health warnings on both principal display areas (or on all main faces if there are more than two) of the tobacco products packaging. (Underscoring Supplied)

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44. Clearly, the Treaty that was ratified by the Senate under the WHO FCTC

Convention is totally different from the Guidelines from which AO 2010-13 was based insofar as

the use of graphic warnings on cigarette labels are concerned. In this jurisdiction, implementing

guidelines, rules or regulations issued by administrative agencies should never go beyond the

provisions of the law that they seek to implement. Otherwise, the implementing guidelines, rules

or regulations will be invalid. (Land Bank of the Philippines vs. Court of Appeals, 285 SCRA

404, [1996])

45. We reiterate that the provisions of RA 9211 when compared to the provisions of

the WHO FCTC Treaty itself show that the Philippines is compliant with its obligation under

Article 11 ofthe Treaty, insofar as health warnings are concerned, which is the subject matter of

AO 2010-13.

Any Argument Regarding the Prohibition in AO 2010-13, with Regard to the Use of Descriptors, Is Premature at This Time, There Being As Yet No Justiciable Controversy Regarding the Descriptors.

46. Petitioners-Intervenors argue that the Private-Respondent has not complained

about the provisions of AO 2010-13 with regard to the prohibition on the use of Descriptors and

that the silence of the Private-Respondent on the matter is a sign of its acceptance of the

provisions. We submit that the Petitioners-Intervenors are mistaken. The reason why the issue of

the Descriptors has not arisen, so far, is simply because no justiciable controversy has yet arisen

on this matter. The action of the Private-Respondent will still depend on how the DOH will

implement the provisions of AO 2010-13 on the matter of the Descriptors. Suffice it to say at this

time that it is well-established that a company's trademark is a form of property within the

context of law and is therefore entitled to protection. It has been held that:

"A "trademark" is defined R.A. 166, the Trademark Law, as including "any word, name, symbol, emblem, sign or device or any combination thereof adopted and used by a manufacturer or merchant to identify his good and distinguish them from those manufactured, sold or dealt in by others." This definition has been

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simplified in R.A. No. 8293, the Intellectual Property Code of the Philippines, which defines a "trademark" as "any visible sign capable distinguishing goods." In Philippine jurisprudence, the function of a trademark is to point out distinctly the origin of ownership of the goods to which it is affixed; to secure him, who has been instrumental in bringing into the market a superior article of merchandise, the fruit of his industry and skill; to assure the public that they are procuring the genuine article; to prevent fraud and imposition; and to protect the manufacturer against substitution and sale of an inferior and different article as his product.

Modem authorities on trademark law view trademarks as performing three distinct functions: ( 1) they indicate origin or ownership of the articles to which they are attached; (2) they guarantee that those articles come up to a certain standard of quality; and (3) they advertise the articles they symbolize.

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Today, the trademark is not merely a symbol of origin and goodwill; it is often the most effective agent for the actual creation and protection of goodwill. It imprints upon the public mind an anonymous and impersonal guaranty of satisfaction, creating a desire for further satisfaction. In other words, the mark actually sells the goods. The mark has become the "silent salesman," the conduit through which direct contact between the trademark owner and the consumer is assured. It has invaded popular culture in ways never anticipated that it has become a more convincing selling point than even the quality of the article to which it refers. In the last half century, the unparalleled growth of industry and the rapid development of communications technology have enabled trademarks, trade names and other distinctive signs of a product to penetrate regions where the owner does not actually manufacture or sell the product itself. Goodwill is no longer confined to the territory of actual market penetration; it extends to zones where the marked article has been fixed in the public." (Mirpuri vs. Court of Appeals, 318 SCRA 516 [1999]).

47. Private-Respondent has been using words descriptive words (some in the Tagalog

language) in describing and designating the trademarks for some of its' products. It has been

using these trademarks for many years and has invested several millions in promotional,

marketing and advertising expenses in order to make these trademarks known to signify its'

products. It is not yet certain at this point whether or not, the DOH will consider these

descriptive words as "Descriptors" within the context of AO 2010-13 and what action the DOH

will take. These matters, of course, present factual issues and are subject to the presentation of

evidence.

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48. The DOH thru AO 2010-13 has announced that the use of "descriptors" (words

that it considers misleading, or which are likely to create a false impression about a products

characteristics, health effects, hazards or emissions) are prohibited including the use of

corresponding symbols or colors signifying the same. Private-Respondent has taken note of the

fact that there is, however, no provision in the administrative order for the procedure on how

such determination will be made. Neither is there any provision in the administrative order

giving the cigarette manufacturer the right to contest any adverse findings by the DOH nor of

any provision that allows the cigarette manufacturer the right to present evidence on its behalf.

Should the DOH simply issue an order to the Private-Respondent to cease and desist from using

the aforementioned words in their cigarette brands, without any notice and hearing, then it may

be possible that Private-Respondent's constitutional rights to due process will be violated.

49. We submit that the right of property protected under the Due Process Clause of

the Constitution is not merely the right to own and hold property but also to use property for any

lawful purpose and to acquire property by any lawful means. (Allgeyer vs. Louisiana, 165 US

578). It includes all property rights recognized in any lawful society, including backward tribal

communities governed merely by tradition and customary rules. (Carino vs. Insular

Government, 212 US 449). The right to use a particular trademark with the words "low tar",

"light", "ultra-light", "mild", "extra", "ultra" and other similar terms is a right that is protected

under the Due Process Clause of the Constitution.

50. The Due Process Clause covers not only the acts of the executive and of the

judiciary but also that of the legislature to such an extent that when the legislature passes a law

that violates the fundamental right of citizens to due process, the courts will declare the law

unconstitutional. (Sinco, Philippine Political Law, 11th ed., pg. 563). Hence, if a legislative

enactment can be nullified for violating the Due Process Guarantee in the Constitution, then with

more reason can a rule, regulation or order of an administrative agency be likewise set aside for

the same reason.

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51. Furthermore, in some instances cigarette manufacturers, including the Private-

Respondent, have entered into long term toll-packing arrangements with third parties for the

manufacture and delivery of cigarette brands, some of which contain the prohibited descriptors.

Some of these contracts go beyond the 90-day limit within which cigarette manufacturers should

comply with the administrative order. In such cases, if the DOH were to summarily order the

cigarette manufacturers to stop producing such brands, we likewise submit, that AO 2010-13

may impair the obligation of contracts and possibly violate Sec. 10 Article III of the

Constitution, which provides:

"Sec. I 0. No law impairing the obligation of contracts shall be passed."

The Petition-in-Intervention Goes into the Merits of the Case Itself And Deprives the Trial Court of its Authority to Decide a Justiciable Case.

52. The arguments and issues brought out in the instant Petition-in-Intervention goes

into the merits of the case in effect depriving the Trial Court of its authority to decide a

justiciable controversy, when the only issue in this Petition should be limited to deciding whether

or not the Trial Court committed grave abuse of discretion in granting the preliminary injunction.

In the case of Municipality of Dinan, Laguna vs. Court of Appeals, 219 SCRA 69, the court

held that the merits of the case cannot be considered in a special civil action for certiorari under

Rule 65 which is limited only to challenges against errors of jurisdiction of the lower court.

53. As previously discussed this petition should be limited to determining whether or

not the Trial Court acted unreasonably, whimsically or in a biased manner in issuing the

preliminary injunction. It is well-settled that in order for the extra-ordinary writ of certiorari to be

issued against a tribunal or quasi-judicial body or officer, such tribunal or quasi-judicial body or

officer should have acted without or in excess of jurisdiction or with grave abuse of discretion.

Likewise well-settled is the principle that grave abuse of discretion is a capricious and whimsical

exercise of judgment that is equivalent to lack of jurisdiction - it must be shown that the

discretion was exercised arbitrarily or despotically. (Marahomsalic vs. Cole, 547 SCRA 98; Uy

vs. Office of the Ombudsman, 556 SCRA 73; Feliciano vs. Villasin, 556 SCRA 348).

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