G.R. No. 86720 September 2, 1994
MHP GARMENTS, INC., and LARRY C. DE GUZMAN, petitioners, vs. THE HONORABLE COURT OF APPEALS, AGNES VILLA CRUZ, MIRASOL LUGATIMAN, and GERTRUDES GONZALES, respondents.

FACTS

Petitioner MHP Garments, Inc. held an exclusive franchise from the Boy Scouts of the Philippines to sell official scouting items and to prosecute illegal sources. In October 1983, petitioners received information that private respondents were selling Boy Scouts items without authority. Petitioner Larry de Guzman, an employee, conducted surveillance and reported to the Philippine Constabulary (PC). On October 25, 1983, without a warrant, de Guzman, a PC Captain, and other constabulary men went to the private respondents’ stalls at the Marikina Public Market, seized displayed scout items, caused a commotion, and embarrassed the respondents. Receipts were issued, and the seized items were turned over to petitioner corporation for safekeeping. Petitioners filed a criminal complaint for unfair competition. During its pendency, de Guzman exacted P3,100 from respondent Lugatiman to be dropped from the complaint. The Provincial Fiscal later dismissed the complaint and ordered the return of the seized items. The items were not immediately returned; when returned, some were missing and others were of inferior quality. Private respondents filed a civil case for damages. The trial court ruled in their favor, awarding actual, moral, and exemplary damages and attorney’s fees. The Court of Appeals affirmed with modifications, leading to this petition.

ISSUE

Whether petitioners are liable for damages for the warrantless search and seizure conducted against private respondents.

RULING

Yes, petitioners are liable. The Supreme Court affirmed the Court of Appeals’ decision with modification on interest rates. The warrantless search and seizure were illegal as there was sufficient time to obtain a judicial warrant and no probable cause was shown, evidenced by the dismissal of the criminal complaint. While the PC conducted the raid, petitioners are not exculpated. Under Article 32 of the Civil Code, any public officer or private individual who directly or indirectly violates constitutional rights, including the right against unreasonable searches and seizures, is liable for damages. Petitioners’ indirect involvement—reporting, participating in surveillance, and taking custody of the seized goods—made them liable. The seizure caused embarrassment and shame to the respondents, justifying awards for moral and exemplary damages. The Court imposed a 6% interest per annum on the P2,000 award for unreturned items from January 9, 1987, and 12% interest upon finality of the decision until payment.