G.R. No. 165122 ; November 23, 2007
Rowland Kim Santos, Petitioner, vs. Pryce Gases, Inc., Respondent.

FACTS

Respondent Pryce Gases, Inc., a distributor of LPG products, suspected a decline in the return of its proprietary embossed cylinders. Its investigation pointed to competitor Sun Gas, Inc., managed by petitioner Rowland Kim Santos. With the assistance of the CIDG, surveillance was conducted on Sun Gas’s warehouse, including a covert entry by agents posing as fire inspectors who photographed Pryce cylinders. Based on this, an application for a search warrant was filed before the RTC, alleging possession of tampered Pryce cylinders in violation of R.A. No. 623 , as amended. The RTC issued the warrant, leading to the seizure of numerous Pryce LPG cylinders from the warehouse.
Petitioner moved to quash the warrant, arguing lack of probable cause and that the evidence supporting the application was obtained through deception. The RTC initially found that the CIDG had established probable cause for tampering but, in a turnaround, held this finding insufficient to sustain the warrant’s validity. It quashed the warrant and ordered the return of the seized cylinders to petitioner. The Court of Appeals reversed the RTC, reinstating the warrant and ordering the cylinders returned to respondent Pryce. Petitioner elevated the case to the Supreme Court.

ISSUE

Whether the Court of Appeals erred in reversing the trial court’s order quashing the search warrant.

RULING

The Supreme Court denied the petition and affirmed the Court of Appeals, with modification. The Court held that the search warrant was validly issued. Probable cause for a search warrant requires such facts and circumstances that would lead a reasonably prudent man to believe an offense has been committed and the objects sought are in the place to be searched. Here, the applicant’s witnesses, a CIDG operative and a Pryce employee, provided personal knowledge based on the surveillance and photographs showing Pryce cylinders in petitioner’s warehouse, some with logos scraped off. This was sufficient to establish probable cause for violating R.A. No. 623 , which protects proprietary marked containers.
The Court rejected the argument that the covert surveillance and photography violated petitioner’s rights, as these were mere pre-application investigative acts not yet covered by the exclusionary rule. The RTC’s contradictory finding—first acknowledging probable cause then denying it—constituted grave abuse of discretion. However, the Supreme Court modified the appellate decision regarding the disposition of the seized property. Instead of returning the cylinders directly to respondent Pryce, they must be held in custodia legis by the court pending the final outcome of the related criminal case for violation of R.A. No. 623 . This ensures the property is preserved as potential evidence.