In Republic Gas Corporation v. Petron Corporation, the Supreme Court affirmed that refilling LPG containers bearing registered trademarks without the owner’s consent constitutes both trademark infringement and unfair competition. This decision clarifies that even without directly selling counterfeit products, unauthorized use of branded containers can mislead consumers and harm trademark owners, leading to potential criminal liability for corporate officers involved. This ruling protects the integrity of trademarks and ensures consumers are not deceived about the source and quality of the products they purchase.

LPG Wars: When Refilling Becomes Infringing

The case originated from a complaint filed by Petron Corporation and Pilipinas Shell Petroleum Corporation against Republic Gas Corporation (REGASCO) for allegedly engaging in the unauthorized refilling and sale of LPG cylinders bearing their registered trademarks. Acting on this complaint, the National Bureau of Investigation (NBI) conducted a test-buy operation, which revealed that REGASCO was indeed refilling LPG cylinders bearing the trademarks of SHELLANE and GASUL without authorization. Following the operation, the NBI lodged a complaint against REGASCO and its officers for violations of the Intellectual Property Code of the Philippines, specifically Sections 155 and 168, which pertain to trademark infringement and unfair competition.

Initially, the Department of Justice (DOJ) dismissed the complaint, reasoning that REGASCO was merely refilling the cylinders brought to them and not passing off the goods as those of the complainants. However, the Court of Appeals (CA) reversed the DOJ’s decision, leading REGASCO to elevate the matter to the Supreme Court. The central legal question before the Supreme Court was whether probable cause existed to hold REGASCO and its officers liable for trademark infringement and unfair competition under the Intellectual Property Code.

The Supreme Court, in its analysis, focused on the specific provisions of the Intellectual Property Code related to trademark infringement. Section 155 of R.A. No. 8293 defines trademark infringement as using a reproduction, counterfeit, copy, or colorable imitation of a registered mark without the consent of the owner. This use must be in connection with the sale, offering for sale, distribution, or advertising of any goods or services and is likely to cause confusion, mistake, or deception among consumers. The Court emphasized that the unauthorized use of a container bearing a registered trademark in connection with the sale or distribution of goods is sufficient to constitute trademark infringement.

Section 155. Remedies; Infringement. – Any person who shall, without the consent of the owner of the registered mark:

155.1 Use in commerce any reproduction, counterfeit, copy or colorable imitation of a registered mark of the same container or a dominant feature thereof in connection with the sale, offering for sale, distribution, advertising of any goods or services including other preparatory steps necessary to carry out the sale of any goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive; or

155.2 Reproduce, counterfeit, copy or colorably imitate a registered mark or a dominant feature thereof and apply such reproduction, counterfeit, copy or colorable imitation to labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be used in commerce upon or in connection with the sale, offering for sale, distribution, or advertising of goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive, shall be liable in a civil action for infringement by the registrant for the remedies hereinafter set forth: Provided, That the infringement takes place at the moment any of the acts stated in Subsection 155.1 or this subsection are committed regardless of whether there is actual sale of goods or services using the infringing material.

Building on this principle, the Court stated that REGASCO’s act of refilling LPG containers bearing the registered marks of Petron and Shell without their consent constituted trademark infringement. The Court reasoned that consumers would be misled into believing that the gas contained in these refilled tanks was indeed the product of Petron and Shell. This deception undermines the trademark owners’ rights and misleads the public regarding the source and quality of the LPG product.

Regarding the charge of unfair competition, the Supreme Court referenced Section 168.3 of the Intellectual Property Code. This section identifies the acts that constitute unfair competition, including giving goods the general appearance of goods of another manufacturer or dealer. This can relate to the goods themselves, the packaging, or any other feature of their appearance that would likely influence purchasers to believe they are buying the goods of a different manufacturer or dealer. The key element of unfair competition is the attempt to pass off one’s goods as those of another, deceiving the public and defrauding a competitor of legitimate trade.

In this context, the Court agreed with the CA’s observation that by refilling and selling LPG cylinders bearing the registered marks of Petron and Shell, REGASCO was effectively selling goods that gave the general appearance of being the products of those companies. This act created a likelihood that consumers would be misled into believing that the LPG contained in the cylinders was the product of Petron and Shell, leading to unfair competition. The Court emphasized that the mere use of LPG cylinders bearing trademarks like “GASUL” and “SHELLANE” would inherently give REGASCO’s LPG the appearance of being the products of Petron and Shell.

The Court also addressed the liability of the corporate officers of REGASCO. It clarified that a corporation has a separate and distinct personality from its officers, directors, and stockholders. However, corporate officers who directly participate in or authorize the commission of a crime by the corporation can be held individually liable. In this case, the Court found that the officers of REGASCO, being in direct control and supervision of the company’s operations, were aware of the unauthorized refilling of LPG cylinders bearing the trademarks of Petron and Shell. Therefore, they could not hide behind the corporate veil to escape criminal liability.

The Supreme Court ultimately ruled that there was sufficient evidence to warrant the prosecution of REGASCO and its officers for trademark infringement and unfair competition. The Court affirmed the CA’s decision, which reversed the DOJ’s dismissal of the complaint. This ruling underscores the importance of protecting intellectual property rights and preventing deceptive practices that harm both trademark owners and consumers. The decision serves as a reminder that corporate officers cannot shield themselves from liability when they knowingly cause the corporation to commit a crime.

FAQs

What was the key issue in this case?	The key issue was whether refilling LPG cylinders bearing registered trademarks without the owner’s consent constitutes trademark infringement and unfair competition under the Intellectual Property Code.
What did the NBI investigation reveal?	The NBI investigation revealed that REGASCO was engaged in the unauthorized refilling of LPG cylinders bearing the trademarks of SHELLANE and GASUL.
What was the initial decision of the Department of Justice?	The Department of Justice initially dismissed the complaint, reasoning that REGASCO was merely refilling cylinders and not passing off the goods as those of the complainants.
How did the Court of Appeals rule?	The Court of Appeals reversed the DOJ’s decision, finding that there was probable cause to hold REGASCO liable for trademark infringement and unfair competition.
What does trademark infringement entail according to the Supreme Court?	The Supreme Court clarified that trademark infringement includes the unauthorized use of a container bearing a registered trademark in connection with the sale or distribution of goods, likely causing consumer confusion.
How did the Court define unfair competition in this case?	The Court defined unfair competition as giving goods the general appearance of goods of another manufacturer, deceiving the public into believing they are buying the products of that manufacturer.
Can corporate officers be held liable for crimes committed by the corporation?	Yes, the Court stated that corporate officers who directly participate in or authorize the commission of a crime by the corporation can be held individually liable.
What was the final ruling of the Supreme Court?	The Supreme Court affirmed the CA’s decision, ruling that there was sufficient evidence to warrant the prosecution of REGASCO and its officers for trademark infringement and unfair competition.

This case reinforces the importance of protecting intellectual property rights and preventing deceptive practices that harm both trademark owners and consumers. It clarifies the scope of trademark infringement and unfair competition in the context of unauthorized refilling of branded containers. This ruling underscores that corporate officers cannot shield themselves from liability when their actions contribute to these violations.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: REPUBLIC GAS CORPORATION vs. PETRON CORPORATION, G.R. No. 194062, June 17, 2013