In Arnel U. Ty, et al. v. NBI Supervising Agent Marvin E. De Jemil, et al., the Supreme Court clarified the extent of corporate officer liability under Batas Pambansa Blg. 33 (BP 33), as amended, which penalizes illegal trading and underfilling of petroleum products. The Court held that while a corporation can be held liable for violations, the responsibility does not automatically extend to all members of the board of directors. Instead, liability is specifically assigned to the president, general manager, managing partner, or any officer directly managing the business affairs, as well as employees responsible for the violation, ensuring that only those with direct control or involvement are held accountable.

Omni Gas Under Scrutiny: Who Bears the Brunt of Corporate Liability?

The case arose from allegations against Omni Gas Corporation (Omni) and its stockholders, who were accused of illegally refilling branded Liquefied Petroleum Gas (LPG) cylinders without authorization and underfilling them, violating BP 33. An investigation was initiated following a request by several petroleum dealers associations, which led to a test-buy operation by the National Bureau of Investigation (NBI). This operation revealed that Omni was indeed refilling branded cylinders without permission and that one cylinder was underfilled.

Following the NBI’s findings, search warrants were issued, and items were seized from Omni’s premises. A complaint was then filed with the Department of Justice (DOJ) against several of Omni’s officers. The Office of the Chief State Prosecutor initially found probable cause to charge the officers, but the Secretary of Justice later reversed this decision, leading to a petition for certiorari filed by the NBI Supervising Agent with the Court of Appeals (CA). The CA then revoked the Secretary of Justice’s resolutions and reinstated the finding of probable cause, which prompted the officers to appeal to the Supreme Court. The central question before the Supreme Court was whether there was sufficient probable cause to hold the petitioners liable for violating BP 33, and whether their positions as directors alone were enough to establish liability.

The Supreme Court began by addressing the procedural issue of whether the NBI agent properly availed of a petition for certiorari. The Court affirmed that judicial review is permissible when grave abuse of discretion taints the determination of probable cause by the Secretary of Justice. Citing Chan v. Secretary of Justice, the Court reiterated that an aggrieved party may seek judicial review via certiorari under Rule 65 if there is an allegation of grave abuse of discretion.

x x x [T]he findings of the Justice Secretary may be reviewed through a petition for certiorari under Rule 65 based on the allegation that he acted with grave abuse of discretion. This remedy is available to the aggrieved party.

Moving to the substantive issues, the Court addressed whether there was probable cause to believe that Omni violated Sec. 2 (a) of BP 33, which prohibits the illegal trading of petroleum products. The Court pointed to the test-buy conducted by the NBI agents, which showed that Omni illegally refilled branded LPG cylinders for a fee. Furthermore, written certifications from Pilipinas Shell, Petron, and Total confirmed that Omni lacked the necessary authorization to refill their branded cylinders. This was a critical point, as the Court emphasized that even if the branded cylinders were owned by customers, Omni still required written authorization from the brand owners to refill them legally.

The Court also addressed the issue of ownership of the LPG cylinders, clarifying that ownership is not a prerequisite for violating BP 33. The key factor is whether the refilling was done without the brand owner’s written consent. The Court cited Yao, Sr. v. People, noting that the unauthorized use of containers bearing a registered trademark in connection with the sale or distribution of goods can constitute trademark infringement. This principle extended to the unauthorized refilling of branded LPG cylinders, as it could cause confusion or deception among consumers.

Regarding the alleged violation of Sec. 2 (c) of BP 33 concerning the underfilling of LPG cylinders, the petitioners argued that the underfilling of a single cylinder during the test-buy was an isolated incident and did not constitute a deliberate practice. However, the Court rejected this argument, citing Perez v. LPG Refillers Association of the Philippines, Inc., which affirmed the validity of imposing penalties on a per-cylinder basis for violations such as underfilling. The Court emphasized that a single instance of underfilling is sufficient to constitute a violation of BP 33, as amended. Therefore, the findings of the LPG inspector were deemed sufficient to establish probable cause.

The Court then turned to the critical issue of individual liability for corporate violations. Sec. 4 of BP 33 specifies who can be held criminally liable when the offender is a corporation:

When the offender is a corporation, partnership, or other juridical person, the president, the general manager, managing partner, or such other officer charged with the management of the business affairs thereof, or employee responsible for the violation shall be criminally liable.

The petitioners argued that as mere directors, they were not involved in the day-to-day management of Omni and therefore could not be held liable for any violations. The Court agreed in part, explaining that the enumeration of liable individuals in Sec. 4 excludes members of the board of directors unless they also hold a management position or are directly involved in the violations. The Court applied the legal maxim expressio unius est exclusio alterius, stating that the mention of one thing implies the exclusion of another. Therefore, only those officers directly managing the business affairs or responsible for the violation could be held liable.

However, the Court made an exception for petitioner Arnel U. Ty, who was identified as the President of Omni. Because the president is directly responsible for managing the business affairs of the corporation, Arnel U. Ty could be held liable for the violations. As to the other petitioners, the Court found that they could not be held liable based solely on their positions as directors, unless evidence showed they were also directly involved in managing the business or responsible for the violations.

In summary, the Court clarified that while probable cause existed for violations of BP 33, liability was limited to those corporate officers directly involved in managing the business or responsible for the violations. This decision underscored the importance of distinguishing between the roles of directors and officers in determining liability for corporate actions, thereby setting a clear boundary for assigning responsibility in cases of illegal petroleum trading.

FAQs

This case provides crucial guidance on corporate accountability within the petroleum industry, particularly concerning the illegal refilling of branded LPG cylinders. By limiting liability to those with direct managerial roles or specific involvement in the violations, the Supreme Court has struck a balance between enforcing regulatory compliance and protecting individuals from undue liability based solely on their positions as directors. This clarification is essential for both corporate officers and regulatory bodies in ensuring fair and effective enforcement of BP 33.

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: Arnel U. Ty, et al. v. NBI Supervising Agent Marvin E. De Jemil, et al., G.R. No. 182147, December 15, 2010