563 Phil. 781

SECOND DIVISION

[ G.R. NO. 165122, November 23, 2007 ]

ROWLAND KIM SANTOS, PETITIONER, VS. PRYCE GASES, INC., RESPONDENT.

D E C I S I O N

TINGA, J.:

This is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure assailing the Decision dated 16 January 2004[1] and Resolution dated 26 July 2004 of the Court of Appeals in CA-G.R. SP No. 74563. The decision reversed the twin orders of the Regional Trial Court (RTC) of Iloilo City, Branch 29, quashing the search warrant it issued and ordering the return of liquefied petroleum gas (LPG) cylinders seized from petitioner, whereas the resolution denied petitioner’s motion for reconsideration of the said decision.

As culled from the records, the following antecedents appear:

Respondent Pryce Gases, Inc. is a domestic corporation engaged in the manufacture of oxygen, acetylene and other industrial gases as well as in the distribution of LPG products in the Visayas and Mindanao regions. Its branch in Iloilo City has been selling LPG products directly or through various dealers to hospitals, restaurants and other business establishments. The LPG products are contained in 11-kg, 22-kg or 50-kg steel cylinders that are exclusively manufactured for respondent’s use. The LPG cylinders are also embossed with the Pryce marking and logo.[2]

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.[3]

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. located at 130 Timawa Avenue, Molo, Iloilo. 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 described as No. 130, Timawa Avenue, Molo, Iloilo. 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.[4] 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,[5] as amended by R.A. No. 5700.[6]

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. The search warrant authorized the seizure of the following items:
  1. Assorted sizes of PRYCE LPG GAS TANKS CYLINDERS in different kilograms.
  2. Suspected LPG gas tanks cylinders with printed/mark SUN GAS INC., trademark and embossed Pryce Gas Trademark scrapped off.
  3. Other materials used in tampering the PRYCE LPG GAS TANKS cylinders.[7]
On the same day, CIDG agents served the search warrant on petitioner and were able to recover the following items:
- Five Hundred Forty Four (544) empty 11 Kgs[.] PRYCE LPG tank cylinders;
- Two (2) filled 11 Kgs. PRYCE LPG tank cylinders with seal;
- Seven (7) filled 11 Kgs. Pryce LPG tank cylinders without seal;
- Forty Four (44) empty 22 Kgs. PRYCE LPG tank cylinders;
- Ten (10) empty 50 Kgs. Pryce LPG tank cylinders; and
- One (1) filled 6 Kgs. PRYCE LPG tank cylinder without seal.[8]
On 7 June 2002, petitioner filed a Motion to Quash[9] 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[10] 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.

The dispositive portion of the Order reads:
WHEREFORE, the Motion To Quash is hereby GRANTED. PO2 Vicente Dernadara, Jr. and the Criminal Investigation and Detection Group, Region VI are hereby directed to return the “Pryce” LPG cylinders enumerated in Return of Search Warrant Seized by virtue of the invalid Search Warrant No. 02-16 to the Rowland Kim Santos immediately upon receipt of this Order.

SO ORDERED.[11]
Respondent filed a manifestation and motion to hold in abeyance the release of the seized items. It also filed a motion for reconsideration[12] of the 16 July 2002 Order but was denied in an Order[13] dated 9 August 2002.

Respondent elevated the matter to the Court of Appeals via a special civil action for certiorari,[14] 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,[15] 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.[16]

Hence, the instant petition for review on certiorari, raising the following issues:
I.

WHETHER PETITIONER ROWLAND KIM SANTOS HAS THE LEGAL PERSONALITY TO ASSAIL THE SEARCH WARRANT FOR HE WAS NAMED RESPONDENT THEREIN AND WAS SUBSEQUENTLY CHARGED FOR VIOLATION OF R.A. [No.] 623, AS AMENDED BY R.A. 5700, BEFORE THE OFFICE OF THE CITY PROSECUTOR OF ILOILO IN I.S. NO. 2015-2000 ENTITLED “PNP-CIDG V. ROWLAND KIM SANTOS.

II.

WHETHER THE PETITIONER SHOULD RETURN THE SUBJECT PRYCE LPG CYLINDER TO RESPONDENT DESPITE UNCONTROVERTED EVIDENCE THAT THE SAME WERE SOLD BY THE LATTER TO ITS CUSTOMERS.

III.

WHETHER THE PETITION FOR CERTIORARI FILED BY RESPONDENT PRYCE WITH THE COURT OF APPEALS SHOULD BE DISMISSED FOR NOT BEING THE PROPER REMEDY TO ASSAIL THE ORDERS OF THE TRIAL COURT.[17]
Briefly, the petition raises the following 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; and (3) whether or not respondent correctly availed of the special civil action for certiorari to assail the quashal of the search warrant.

As to the first issue, the Court of Appeals ruled against petitioner and reversed the trial court’s quashal of the search warrant solely on the ground that petitioner, being a mere manager of Sun Gas, Inc., failed to show his authority to act on behalf of the corporation and, therefore, had no legal personality to question the validity of the search warrant. Thus, it concluded that the trial court committed grave abuse of discretion in entertaining and subsequently granting petitioner’s motion to quash.

Petitioner takes exception to the Court of Appeals’ conclusion, contending that petitioner may assail the questioned search warrant because he was named as respondent in the application for search warrant and in the criminal complaint subsequently filed before the Office of the City Prosecutor of Iloilo.

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.[18]

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. Respondent should not be allowed thereafter to question petitioner’s authority to assail the search warrant. Moreover, the search warrant was directed against petitioner for allegedly using Pryce LPG cylinders without the authority of respondent.

The Court of Appeals misapplied the ruling in Stonehill, et al. v. Diokno, et al.[19] 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.[20] 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.

The resolution of the second issue as to who has legal custody of the seized items depends upon the determination of the existence of probable cause in the issuance of the search warrant. In the questioned Order dated 16 July 2002, the trial court reversed its earlier finding of probable cause on the ground that the failure of the CIDG agents to seize other materials and tools used by petitioner to tamper with the LPG cylinders invalidated the search warrant because “there would be nothing to show or prove that accused had committed the offense.”[21] The trial court elaborated that the mere possession of Pryce LPG cylinders seized from petitioner was not illegal per se, absent any showing that petitioner illegally used the same without the consent of respondent. Moreover, the trial court concluded that respondent had already parted ownership of its gas cylinders upon their sale to customers who paid not only for the contents but also for the value of the gas cylinders.

Although respondent advanced several arguments rebutting the aforementioned conclusions in its petition for certiorari, the Court of Appeals sidestepped those arguments and reversed the trial court’s quashal of the search warrant only on the ground of the lack of legal personality on the part of petitioner to assail the search warrant.

Supporting jurisprudence thus outlined the following requisites for a search warrant’s validity, the absence of even one will cause its downright nullification: (1) it must be issued upon probable cause; (2) the probable cause must be determined by the judge himself and not by the applicant or any other person; (3) in the determination of probable cause, the judge must examine, under oath or affirmation, the complainant and such witnesses as the latter may produce; and (4) the warrant issued must particularly describe the place to be searched and persons or things to be seized.[22]

The instant controversy pertains only to the existence of probable cause, which the trial court found wanting after evaluating the items seized from petitioner. Petitioner does not dispute that the items seized from him, consisting of Pryce LPG tanks of assorted weights, were particularly enumerated in the search warrant. Petitioner is neither assailing the manner by which the trial court conducted the determination of probable cause.

The trial court retracted its earlier finding of probable cause because the seized items were incomplete or insufficient to charge petitioner with a criminal offense, thus, negating its previous determination of probable cause.

We disagree. In quashing the search warrant, it would appear that the trial court had raised the standard of probable cause to whether there was sufficient cause to hold petitioner for trial. In so doing, the trial court committed grave abuse of discretion.

Probable cause for a search warrant is defined as such facts and circumstances which would lead a reasonably discrete and prudent man to believe that an offense has been committed and that the objects sought in connection with the offense are in the place sought to be searched.[23] A finding of probable cause needs only to rest on evidence showing that, more likely than not, a crime has been committed and that it was committed by the accused. Probable cause demands more than bare suspicion; it requires less than evidence which would justify conviction.[24] The existence depends to a large degree upon the finding or opinion of the judge conducting the examination. However, the findings of the judge should not disregard the facts before him nor run counter to the clear dictates of reason.[25]

The application for a search warrant was based on the alleged violation by petitioner of certain provisions of R.A. No. 623, as amended by R.A. No. 5700. Respondent claimed that petitioner was illegally using or distributing its LPG cylinders without its authority. The amended provisions of R.A. No. 623 state:
Sec. 2. It shall be unlawful for any person, without the written consent of the manufacturer, bottler, or seller, who has successfully registered the marks of ownership in accordance with the provisions of the next preceding section, to fill such bottles, boxes, kegs, barrels, steel cylinders, tanks, flasks, accumulators, or other similar containers so marked or stamped, for the purpose of sale, or to sell, dispose of, buy or traffic in, or wantonly destroy the same, whether filled or not to use the same for drinking vessels or glasses or drain pipes, foundation pipes, for any other purpose than that registered by the manufacturer, bottler or seller. Any violation of this section shall be punished by a fine of not more than one thousand pesos or imprisonment of not more than one year or both.

Sec. 3. The use by any person other than the registered manufacturer, bottler or seller, without written permission of the latter of any such bottler, cask, barrel, keg, box, steel cylinders, tanks, flasks, accumulators, or other similar containers, or the possession thereof without written permission of the manufacturer, by any junk dealer or dealer in casks, barrels, kegs, boxes, steel cylinders, tanks, flasks, accumulators, or other similar containers, the same being duly marked or stamped and registered as herein provided, shall give rise to a prima facie presumption that such use or possession is unlawful.
Section 3 of R.A. No. 623, as amended, clearly creates a prima facie presumption of the unlawful use of gas cylinders based on two separate acts, namely, the unauthorized use of the cylinder by a person other than the registered manufacturer and the possession thereof by a dealer. The trial court’s conclusion that the mere possession by petitioner of the seized gas cylinders was not punishable under Section 2 of R.A. No. 623, as amended, is not correct. The trial court failed to consider that petitioner was not only in possession of the gas cylinders but was also distributing the same, as alleged by PO1 Aldrin Ligan in his answer to the searching questions asked by the trial court.[26]

As pointed out by respondent in its petition for certiorari, the failure of the CIDG operatives to confiscate articles and materials used in tampering with the Pryce marking and logo did not negate the existence of probable cause. The confluence of these circumstances, namely: the fact of possession and distribution of the gas cylinders and the claim by respondent that it did not authorize petitioner to distribute the same was a sufficient indication that petitioner is probably guilty of the illegal use of the gas cylinders punishable under Section 2 of R.A. No. 623, as amended.

More importantly, at the hearing of the application for the search warrant, various testimonies and documentary evidence based on the surveillance by the CIDG operatives were presented. After hearing the testimonies and examining the documentary evidence, the trial court was convinced that there were good and sufficient reasons for the issuance of the same. Thus, it issued the search warrant. The trial court’s unwarranted turnabout was brought about by its notion that the seized items were not sufficient to indict petitioner for the crime charged.

In La Chemise Lacoste, S.A. v. Fernandez,[27] it was held:
True, the lower court should be given the opportunity to correct its errors, if there be any, but the rectification must, as earlier stated be based on sound and valid grounds. In this case, there was no compelling justification for the about face.

x x x x

Moreover, an application for a search warrant is heard ex parte. It is neither a trial nor a part of the trial. Action on these applications must be expedited for time is of the essence. Great reliance has to be accorded by the judge to the testimonies under oath of the complainant and the witnesses.[28]
A word of caution, though. In affirming the sufficiency of probable cause in the issuance of the search warrant, this Court is not preempting the subsequent determination by the investigating prosecutor if there is cause to hold the respondent for trial. After all, the investigating prosecutor is the person tasked to evaluate all the evidence submitted by both parties.

The Court of Appeals, however, erred in ordering the return of the seized items to respondent. Section 4, Rule 126[29] 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.[30]

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.

Last, the special civil action for certiorari was the proper recourse availed by respondent in assailing the quashal of the search warrant. As aforementioned, the trial court’s unwarranted reversal of its earlier finding of probable cause constituted grave abuse of discretion. In any case, the Court had allowed even direct recourse to this Court[31] or to the Court of Appeals[32] via a special civil action for certiorari from a trial court’s quashal of a search warrant.

WHEREFORE, the instant petition is DENIED and the Decision of the Court of Appeals in CA-G.R. SP No. 74563 is AFFIRMED with the MODIFICATION that the seized items should be kept in custodia legis. Costs against petitioner.

SO ORDERED.

Quisumbing, (Chairperson), Carpio, Carpio Morales, and Velasco, Jr., JJ., concur.



[1] Rollo, pp. 44-57. Penned by Court of Appeals Justice Buenaventura J. Guerrero, Chairperson of the Second Division, and concurred in by Justices Andres B. Reyes, Jr. and Regalado E. Maambong.

[2] CA rollo, p. 5.

[3] Id.

[4] Id. at 6.

[5] Entitled “An Act to Regulate the Use of Duly Stamped or marked Bottles, Boxes, Casks, Kegs, Barrels and Other Similar Containers,” effective 5 June 1951.

[6] Entitled “An Act Amending Certain Sections of Republic Act Numbered Six Hundred Twenty Three as to Include the Contaners of Compressed Gases within the Purview of the said Act,” effective 21 June 1969.

[7] Rollo, p. 66.

[8] Id. at 72.

[9] CA rollo, pp. 37-51.

[10] Rollo, pp. 161-165.

[11] Id. at 165.

[12] CA rollo, pp. 63-73.

[13] Id. at 77-80.

[14] Id. at 93-116.

[15] Supra note 1.

[16] Supra note 2.

[17] Id. at 21-22.

[18] Uy v. Bureau of Internal Revenue, 397 Phil. 892, 924 (2000).

[19] 126 Phil. 738 (1967).

[20] Expertravel & Tours, Inc. v. Court of Appeals, G.R. No. 152392, 26 May 2005, 459 SCRA 147.

[21] Rollo, p. 163.

[22] Del Rosario v. People, 410 Phil. 642, 662 (2001).

[23] Columbia Pictures, Inc. v. Court of Appeals, 329 Phil. 875, 903 (1996).

[24] Sarigumba v. Sandiganbayan, G.R. Nos. 154239-41, 16 February 2005, 451 SCRA 533, 550.

[25] La Chemise Lacoste, S.A. v. Hon. Fernandez, etc. et al., 214 Phil. 332, 349 (1984).

[26] Rollo, p. 307.

[27] 214 Phil. 332 (1984).

[28] Id. at 350.

[29] Sec. 12. Delivery of property and inventory thereof to the court; return and proceedings thereon, - (a) The officer must forthwith deliver the property seized to the judge who issued the warrant, together with a true inventory thereof duly verified under oath.

[30] People v. Benny Go, 451 Phil. 885, 912-913 (2003).

[31] See Columbia Pictures, Inc. v. Flores, G.R. No. 78631, 29 June 1993, 2223 SCRA 761.

[32] See Washington Distillers, Inc. v. Court of Appeals, 329 Phil. 650 (1996), 20th Century 3Fox Film Corporation v. Court of Appeals, Nos. L-76649-51, 19 August 1988, 164 SCRA 655.



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