Santos vs Pryce Gases

G.R. NO. 165122

Facts:
In the beginning of the year 2002, respondent noticed the decline in the return of its
LPG cylinders for refilling. Respondent's employees suspected that the LPG cylinders
had been removed from market circulation and refilled by respondent's competitors, one
of whom was Sun Gas, Inc. Petitioner Rowland Kim Santos is the manager of Sun Gas,
Inc.
Arnold T. Figueroa, respondent's sales manager for Panay, sought the assistance of the
Criminal Investigation and Detection Group (CIDG) to recover the LPG cylinders
allegedly in the possession of Sun Gas, Inc. Acting on Figueroa's complaint, CIDG
operatives conducted surveillance on the warehouse of Sun Gas, Inc. The CIDG
operatives requested the Bureau of Fire Protection (BFP) to conduct a routine fire
inspection at Sun Gas, Inc.'s warehouse with some of the CIDG operatives led by PO2
Vicente D. Demandara, Jr. posing as BFP inspectors. The CIDG operatives entered the
warehouse and were able to take photographs of the LPG cylinders.
On 4 June 2002, PO2 Vicente D. Demandara, Jr. applied before the RTC of Iloilo City
for a warrant to search the premises. The application alleged that petitioner was in
possession of Pryce LPG tanks, the Pryce logos of some of which were scraped off and
replaced with a Sun Gas, Inc. marking, and other materials used in tampering Pryce
gas tanks. It also averred that petitioner was illegally distributing Pryce LPG products
without the consent of respondent, in violation of Section 2 of Republic Act (R.A.) No.
623, as amended by R.A. No. 5700.
After conducting searching questions on witnesses PO1 Aldrin Ligan, a CIDG operative,
and Richard Oliveros, an employee of Pryce Gases, Inc., Hon. Rene B. Honrado, the
presiding judge of Branch 29, issued the corresponding search warrant.
On 7 June 2002, petitioner filed a Motion to Quash the search warrant on the grounds
of lack of probable cause as well as deception and fraud employed in obtaining evidence
in support of the application therefor, in violation of Article III, Section 2 of the
Constitution and Rule 126, Sections 4 and 5 of the Rules of Court. Respondent opposed
petitioner's Motion to Quash.
On the same day, the CIDG filed a criminal complaint before the Office of the City
Prosecutor of Iloilo against petitioner, charging the latter with violation of R.A. No. 623,
as amended.
After hearing, the trial court issued an Order dated 16 July 2002, granting petitioner's
Motion to Quash. The trial court upheld the validity of the surveillance conducted on
petitioner's warehouse in order to obtain evidence to support the application for a search
warrant and declared that based on the evidence gathered in support of the application
for search warrant, the CIDG was able to establish probable cause that petitioner was
tampering with Pryce LPG cylinders and making them appear to be those of Sun Gas,
Inc. This conclusion, notwithstanding, the trial court made a turnaround, stating that
the probable cause as found by it at the time of the application for search warrant fell
short of the requisite probable cause necessary to sustain the validity of the search
warrant.
Respondent filed a manifestation and motion to hold in abeyance the release of the
seized items. It also filed a motion for reconsideration of the 16 July 2002 Order but
was denied in an Order dated 9 August 2002.
Respondent elevated the matter to the Court of Appeals via a special civil action for
certiorari, arguing that the trial court committed grave abuse of discretion in quashing
the search warrant. The petition essentially questioned the quashal of the search
warrant despite a prior finding of probable cause and the failure of petitioner to prove
that he bought the seized items from respondent. It also challenged petitioner's
personality to file the motion to quash.
On 16 January 2004, the Court of Appeals rendered the assailed Decision, which set
aside the two orders of the trial court dated 16 January 2002 and 9 August 2002. The
appellate court also ordered the return of the seized items to respondent. Petitioner
sought reconsideration but was denied in an order dated 16 July 2004.

Issues:
(1) whether or not petitioner has authority to seek the quashal of the search warrant;
(2) who has proper custody of the seized items;

Ruling:
1. Yes.
Well-settled is the rule that the legality of a seizure can be contested only by the
party whose rights have been impaired thereby, and the objection to an unlawful
search and seizure is purely personal and cannot be availed of by third parties.
Petitioner is the real party-in-interest to seek the quashal of the search warrant
for the obvious reason that the search warrant, in which petitioner was solely
named as respondent, was directed against the premises and articles over which
petitioner had control and supervision. Petitioner was directly prejudiced or
injured by the seizure of the gas tanks because petitioner was directly
accountable as manager to the purported owner of the seized items. It is
noteworthy that at the time of the application for search warrant, respondent
recognized the authority of petitioner as manager of Sun Gas, Inc. when the
application averred that petitioner had in his possession and control the items
subject of the alleged criminal offense.
The Court of Appeals misapplied the ruling in Stonehill, et al. v. Diokno, et al.
that only a corporation has the exclusive right to question the seizure of items
belonging to the corporation on the ground that the latter has a personality
distinct from the officers and shareholders of the corporation. Assuming
arguendo that Sun Gas, Inc. was the owner of the seized items, petitioner, as the
manager of Sun Gas, Inc., had the authority to question the seizure of the items
belonging to Sun Gas, Inc. Unlike natural persons, corporations may perform
 physical actions only through properly delegated individuals; namely, their
officers and/or agents. As stated above, respondent cannot belatedly question
petitioner's authority to act on behalf of Sun Gas, Inc. when it had already
acknowledged petitioner's authority at the time of the application of the search
warrant.

2. Section 4, Rule 126 of the Revised Criminal Procedure expressly mandates the
delivery of the seized items to the judge who issued the search warrant to be kept
in custodia legis in anticipation of the criminal proceedings against petitioner.
The delivery of the items seized to the court which issued the warrant together
with a true and accurate inventory thereof, duly verified under oath, is mandatory
in order to preclude the substitution of said items by interested parties. The judge
who issued the search warrant is mandated to ensure compliance with the
requirements for (1) the issuance of a detailed receipt for the property received,
(2) delivery of the seized property to the court, together with (3) a verified true
inventory of the items seized. Any violation of the foregoing constitutes contempt
of court.
The CIDG operatives properly delivered the seized items to the custody of the trial
court which issued the search warrant. Thereafter, the trial court ordered their
return to petitioner after quashing the search warrant. When the Court of Appeals
reversed the trial court's quashal of the search warrant, it erred in ordering the
return of the seized items to respondent because it would seem that respondent
instituted the special civil action for certiorari in order to regain possession of its
LPG tanks. This cannot be countenanced. The seized items should remain in the
custody of the trial court which issued the search warrant pending the institution
of criminal action against petitioner.