Republic Gas Corporation vs. Petron Corporation

The unauthorized use of a container bearing a registered trademark in connection with the sale, distribution, or advertising of goods or services, which is likely to cause confusion, mistake, or deception among buyers, constitutes trademark infringement under Section 155 of the Intellectual Property Code (R.A. No. 8293), and giving one’s goods the general appearance of those of another manufacturer through the use of such containers amounts to unfair competition under Section 168. Corporate officers who knowingly and intentionally cause the corporation to commit these acts are individually liable for the crime and cannot shield themselves behind the corporate entity.

LPG dealers associations reported to the National Bureau of Investigation (NBI) that certain entities were engaged in the unauthorized refilling, sale, and distribution of LPG cylinders bearing the registered trademarks of Petron Corporation (GASUL) and Pilipinas Shell Petroleum Corporation (SHELLANE). Acting on the complaint, the NBI conducted surveillance and a test-buy operation at the Republic Gas Corporation (REGASCO) refilling plant in Malabon. NBI operatives brought four empty branded cylinders and had them refilled by REGASCO employees alongside a regular customer’s purchase. Search warrants were subsequently issued, and a criminal complaint for trademark infringement and unfair competition was filed with the Department of Justice against REGASCO and its corporate officers.

• The Parties: Petron Corporation is the registered owner of the trademark “GASUL” and the sole entity authorized to allow refillers and distributors to use its LPG containers and marks. Pilipinas Shell Petroleum Corporation is the authorized user of the marks “SHELLANE” and the Shell device for LPG products. Republic Gas Corporation (REGASCO) is a duly licensed entity engaged in the refilling, buying, selling, and distribution of LPG. Its officers and directors are Arnel U. Ty (President), Mari Antonette N. Ty (Treasurer), Orlando Reyes (Corporate Secretary), Ferrer Suazo, and Alvin Ty.
• The NBI Investigation and Test-Buy: On February 5, 2004, LPG dealers associations filed a letter-complaint with the NBI regarding illegal trading and underfilling of LPG. NBI Senior Agent Marvin E. De Jemil conducted surveillance in Caloocan, Malabon, Novaliches, and Valenzuela, which indicated REGASCO was engaged in unauthorized refilling of branded cylinders. On February 19, 2004, De Jemil and a confidential asset, posing as customers, brought four empty LPG cylinders bearing the SHELLANE and GASUL marks to REGASCO’s Malabon refilling plant. They “rode on” the purchase of a regular customer, J&S, and REGASCO employees refilled the four branded cylinders together with the regular customer’s cylinders. Cash Invoice No. 191391 was issued covering the total amount. The refilled cylinders were later found to be underrefilled.
• The Search and Seizure: On March 5, 2004, De Jemil applied for and obtained Search Warrants Nos. 04-5049 and 04-5050 from the Regional Trial Court of Manila, Branch 24, for violation of Batas Pambansa Blg. 33, as amended. The NBI served the warrants and seized several empty and filled Shellane and Gasul cylinders and allied paraphernalia from REGASCO’s premises.
• The Criminal Complaint and DOJ Resolutions: On January 28, 2005, the NBI filed a complaint with the Department of Justice charging REGASCO’s officers with trademark infringement and unfair competition under Sections 155 and 168 of R.A. No. 8293. The Assistant City Prosecutor recommended dismissal, finding no evidence that REGASCO sold the products or imitated the trademarks, and no deception. The Secretary of Justice affirmed, reasoning that the NBI agent brought the empty cylinders for refilling, refilling them was REGASCO’s legitimate business, and no passing off occurred; the doctrine of separate corporate personality shielded the officers absent clear and convincing evidence of individual acts.

• Procedural Defect: Petitioners argued that the Court of Appeals should have dismissed the certiorari petition outright because respondents failed to file a motion for reconsideration of the Secretary of Justice’s resolution, a condition sine qua non for the special civil action.
• Insufficient Evidence of Infringement and Unfair Competition: Petitioners maintained that the mere refilling of empty LPG cylinders that the NBI agents themselves brought to the plant, in the ordinary course of REGASCO’s legitimate refilling business, did not constitute trademark infringement or unfair competition, as there was no unauthorized sale, imitation of marks, or deception of the public.
• Incidental Liability of Corporate Officers: Petitioners contended that there was no probable cause to hold the individual officers criminally liable, because the acts complained of were not shown to have been committed by them in their personal capacity by clear and convincing evidence, and the corporation has a separate legal personality.

• Propriety of Certiorari: Respondents argued that the petition for certiorari was properly filed despite the absence of a motion for reconsideration, because the questions raised were the very same issues already argued and passed upon by the Secretary of Justice, rendering a motion for reconsideration useless under settled exceptions.
• Probable Cause for Infringement and Unfair Competition: Respondents contended that REGASCO’s unauthorized refilling of LPG containers bearing their registered trademarks constituted trademark infringement under Section 155, because it was likely to cause confusion among consumers, who would be misled into believing the cylinders contained genuine Petron or Shell products. It similarly constituted unfair competition under Section 168, because it gave REGASCO’s goods the general appearance of respondents’ goods, amounting to the passing off of its LPG as that of the trademark owners.
• Individual Criminal Liability: Respondents asserted that the corporate officers could be held individually liable because they were in direct control and supervision of the corporation’s affairs and must have knowingly caused or permitted the unauthorized refilling; the corporate fiction does not shield officers who are the actual, present, and efficient actors in the commission of the crime.

• Procedural Requirement of Motion for Reconsideration: Whether the petition for certiorari should have been denied outright for failure to first file a motion for reconsideration of the Secretary of Justice’s resolution.
• Probable Cause for Trademark Infringement and Unfair Competition: Whether probable cause exists to hold petitioners liable for trademark infringement under Section 155 and unfair competition under Section 168, in relation to Section 170 of the Intellectual Property Code.
• Personal Liability of Corporate Officers: Whether probable cause exists to hold the individual corporate officers of REGASCO liable for the offenses charged.

• Procedural Requirement of Motion for Reconsideration: The absence of a prior motion for reconsideration did not bar the certiorari petition. The case fell under the recognized exception that a motion for reconsideration may be dispensed with when the questions raised in the certiorari proceedings are the same as those already squarely argued and passed upon by the lower body. Since the Secretary of Justice had fully addressed the issues of trademark infringement, unfair competition, and the officers’ liability in her assailed resolution, requiring a motion for reconsideration would have been a useless formality.
• Probable Cause for Trademark Infringement and Unfair Competition: Probable cause existed to charge petitioners with both offenses. Under Section 155 of R.A. No. 8293, the mere unauthorized use of a container bearing a registered trademark in connection with the sale, distribution, or advertising of goods, which is likely to cause confusion, mistake, or deception, constitutes trademark infringement. By refilling, without consent, LPG cylinders bearing the registered GASUL and SHELLANE marks, REGASCO inevitably confused the consuming public, who had no way of knowing that the gas inside was not the genuine product of the trademark owners; the public would be led to believe that REGASCO was an authorized refiller and distributor. As to unfair competition, Section 168.3(a) deems guilty any person who sells his goods with the general appearance of another manufacturer’s goods in a way that would likely influence purchasers to believe they are buying the other’s goods. Refilling and selling branded cylinders gave REGASCO’s LPG the general appearance of Petron’s and Shell’s products, which constitutes passing off and falls squarely within the statutory definition of unfair competition.
• Personal Liability of Corporate Officers: The individual petitioners could not evade criminal liability by invoking the separate corporate personality of REGASCO. A corporation possesses a personality distinct from its officers, but corporate officers, directors, or stockholders through whose act, default, or omission the corporation commits a crime may themselves be individually held answerable. Being in direct control and supervision of the management and affairs of the corporation, the officers must have known or were aware that the corporation was engaged in unauthorized refilling of branded cylinders, an act that could probably constitute the crimes charged. The corporate entity does not shield from prosecution the corporate agent who knowingly and intentionally caused the corporation to commit a crime; a corporate officer cannot protect himself behind a corporation where he is the actual, present, and efficient actor.

• Trademark Infringement by Unauthorized Use of Branded Containers — Under Section 155 of the Intellectual Property Code, the mere unauthorized use of a container bearing a registered trademark in connection with the sale, distribution, or advertising of goods or services, which is likely to cause confusion, mistake, or deception among buyers or consumers, constitutes trademark infringement. The doctrine applies even if the goods inside were not imitated and the container itself is genuine, because the unauthorized refilling creates the false impression that the goods originate from the trademark owner.
• Unfair Competition as Passing Off by General Appearance — Unfair competition under Section 168.3(a) of the Intellectual Property Code encompasses the act of selling one’s goods while giving them the general appearance of another manufacturer’s goods, with the end and probable effect of deceiving the public. This passing off (or palming off) occurs when the defendant, by imitative devices on the general appearance of the goods, misleads prospective purchasers into buying his merchandise under the impression that they are buying that of his competitor. Refilling and selling LPG in branded cylinders of another gives the goods the general appearance of the trademark owner’s products.
• Exceptions to the Requirement of a Motion for Reconsideration Before Certiorari — The general rule requires a motion for reconsideration before filing a petition for certiorari to allow the court or tribunal to correct its error. Recognized exceptions include, among others, where the questions raised in the certiorari proceedings have been duly raised and passed upon by the lower court or tribunal, rendering a motion for reconsideration useless.
• Personal Criminal Liability of Corporate Officers — A corporate officer, director, or stockholder through whose act, default, or omission the corporation commits a crime may be individually held criminally answerable. The separate corporate personality does not shield from prosecution the corporate agent who knowingly and intentionally caused the corporation to commit the crime. The test is whether the officer was the actual, present, and efficient actor in the prohibited conduct.

• “From the foregoing provision, the Court in a very similar case, made it categorically clear that the mere unauthorized use of a container bearing a registered trademark in connection with the sale, distribution or advertising of goods or services which is likely to cause confusion, mistake or deception among the buyers or consumers can be considered as trademark infringement.” — This encapsulates the ratio that unauthorized refilling alone, without need for proof of imitation or actual sale of counterfeit goods, infringes the trademark when confusion is likely.
• “… by refilling and selling LPG cylinders bearing their registered marks, petitioners are selling goods by giving them the general appearance of goods of another manufacturer.” — The Court of Appeals’ statement, adopted by the Supreme Court, directly links the act to the definition of unfair competition as passing off.
• “A corporate officer cannot protect himself behind a corporation where he is the actual, present and efficient actor.” — This reiterates the piercing principle in a criminal context, holding individual officers liable for their direct participation in the offense.

• Ty v. De Jemil, G.R. No. 182147, December 15, 2010, 638 SCRA 671 — A substantially identical case involving the same underlying facts and legal issues. The Supreme Court relied on this precedent for the categorical rule that the unauthorized use of a trademarked container in commerce is trademark infringement.
• HPS Software and Communication Corporation, et al. v. Philippine Long Distance Telephone Company (PLDT), et al., G.R. Nos. 170217 & 170694, December 10, 2012 — Cited for the enumeration of exceptions to the requirement of a motion for reconsideration before filing a certiorari petition.
• Superior Commercial Enterprises, Inc. v. Kunnan Enterprises Ltd. and Sports Concept & Distributor, Inc., G.R. No. 169974, April 20, 2010, 618 SCRA 531 — Cited for the definition of unfair competition as the passing off or attempting to pass off of one’s goods as those of another.
• McDonald’s Corporation and McGeorge Food Industries, Inc. v. L.C. Big Mak Burger, Inc., et al., 480 Phil. 402 (2004) — Cited for the elements of passing off, where the defendant by imitative devices on the general appearance of the goods misleads prospective purchasers.
• Kukan International Corporation v. Hon. Amor Reyes, et al., G.R. No. 182729, September 29, 2010, 631 SCRA 596 — Cited for the principle that a corporation possesses a personality separate and distinct from its officers and stockholders, yet officers may be held individually liable for acts committed through them.
• Ching v. Secretary of Justice, 517 Phil. 151 (2006) — Cited for the rule that corporate officers through whose act, default, or omission the corporation commits a crime may themselves be individually held answerable.

• Section 155, Republic Act No. 8293 (Intellectual Property Code of the Philippines) — Defines trademark infringement and enumerates the acts that constitute it, including the unauthorized use in commerce of a reproduction, counterfeit, copy, or colorable imitation of a registered mark in a manner likely to cause confusion, mistake, or deception. Applied to the act of refilling branded LPG cylinders without the trademark owner’s consent, which was deemed a use likely to cause confusion.
• Section 168, in relation to Section 170, Republic Act No. 8293 — Defines unfair competition and its penalties. Subsection 168.3(a) specifically deems guilty any person who sells goods and gives them the general appearance of goods of another manufacturer in a manner likely to deceive the public. Applied to the sale of refilled LPG in containers bearing another’s marks, which gave the goods the general appearance of Petron’s and Shell’s products.
• Section 170, Republic Act No. 8293 — Prescribes the criminal penalty of imprisonment from two to five years and a fine of ₱50,000 to ₱200,000 for violations of Sections 155 and 168, among others. Served as the penal basis for the criminal complaint.

Associate Justice Presbitero J. Velasco, Jr. (Chairperson), Associate Justice Roberto A. Abad, Associate Justice Jose Catral Mendoza, and Associate Justice Marvic Mario Victor F. Leonen.