Facts:

The case involves Alliance Sales Co., Inc. (Petitioner) against Rafael Sumadchat, representing R. Sumadchat Bonded Warehouse, and the Collector of Customs, Port of Manila (Respondents). The events leading to the case began in October 1963 when Alliance Sales Co., Inc. ordered 300 drums of solid caustic soda from Dow Chemical International, Inc. in San Francisco, California. The cargo was unloaded at the Port of Manila on November 28, 1963, and the discharge was completed by December 10, 1963. On November 30, 1963, the cargo was transferred to a bonded warehouse owned by Rafael Sumadchat, where the company paid P918.03 to the Bureau of Customs for the transfer. After paying the necessary duties and taxes, the Bureau of Customs issued a delivery permit on December 14, 1963. However, when a representative of Alliance Sales Co. demanded delivery on December 16, 1963, Sumadchat refused unless the company paid P2,516.16 in alleged storage fees. The company contested this amount, le...

Facts:

Shipment and Discharge of Cargo

• In October 1963, Alliance Sales Co., Inc. ordered 300 drums of solid caustic soda (each drum weighing 735 pounds) from Dow Chemical International, Inc. of San Francisco, California.
• The cargo was unloaded at the Port of Manila from the SS Philippine Jose Abad Santos on November 28, 1963, with the discharge process being completed on December 10, 1963.

Transfer from Customs Sheds to Bonded Warehouse

• On November 30, 1963, the unloaded cargo was transferred from the Bureau of Customs’ sheds to a bonded warehouse located at Eulogio Rodriguez, Jr. Avenue, Pasig, Rizal, owned by Rafael Sumadchat.
• Army trucks were used to haul the cargo, and Alliance Sales Co., Inc. paid an amount of P918.03 for the transfer service without protest.

Issuance of Delivery Permit and Subsequent Dispute

• On December 14, 1963, after paying the necessary duties and taxes, the Bureau of Customs issued a delivery permit to the company.
• On December 16, 1963, a representative of the company demanded the delivery of the cargo, but Sumadchat refused to release the goods unless an additional sum of P2,516.16 (alleged storage fees at P51.56 per day plus other charges) was paid.
• The company requested clarification and an opportunity to negotiate, but Sumadchat was not amenable, leading to a dispute.

Initiation of Legal Action

• Due to Sumadchat’s refusal to deliver the cargo, the company filed an action for replevin and damages (claiming actual and exemplary damages) on January 8, 1964, in the Court of First Instance of Rizal, Caloocan City.
• The lower court granted the writ of replevin on January 9, 1964, and the deputy sheriff eventually took custody of the cargo on May 11–12, 1964, turning it over to the company on May 18, 1964.

Counterclaims and Third-Party Complaint

• In his answer, Sumadchat filed a counterclaim for storage fees and other incidental charges amounting to P8,475.76 (as of April 6, 1964) and additional daily storage fees thereafter.
• Sumadchat also initiated a third-party complaint against the Collector of Customs for the Port of Manila, alleging that under a memorandum circular and the flexible transfer system, the cargo was transferred to his warehouse without first securing his warehouseman’s lien under section 31 of the Warehouse Receipts Law.

Administrative Policies and the Flexible Transfer System

• The discretionary transfer of cargo from the pier to bonded warehouses was executed pursuant to Memorandum Order No. 44, issued on May 13, 1963, by the Collector of Customs, as part of the flexible transfer system designed to decongest the piers.
• The acting harbor superintendent and the Acting Collector of Customs had instructed the transfer of cargoes to suburban warehouses in anticipation of heavy volumes during the Christmas season.
• The company contended that the flexible transfer system amounted to a contractual arrangement requiring its express consent, whereas Sumadchat argued it was a policy measure or a quasi-contractual mechanism.

Dispute on the Computation of the Free Storage Period

• Alliance Sales Co., Inc. argued that the six-working-day free storage period should be reckoned from the “last day of discharge” (December 10, 1963) of the vessel’s cargo, implying the free period would expire on December 17, 1963.
• The Court of Appeals, however, had computed the period from November 28, 1963—the actual landing date of the cargo—leading to charges accruing from an earlier date.

Efforts to Secure Delivery and Incurred Expenses

• The company made repeated efforts—both judicial and extrajudicial—to obtain delivery of the cargo by engaging its forwarding broker, coordinating with customs officials, and meeting with Sumadchat or his representatives.
• Despite demonstrations of readiness to take delivery (including mobilizing 50 men and 10 trucks on December 16, 1963, within the free storage period), Sumadchat repeatedly refused release of the cargo.
• Due to Sumadchat’s dilatory tactics and avoidance of amicable settlement, the company incurred additional expenses and was eventually forced to litigate for replevin and damages.

Issue:

Validity of the Flexible Transfer System

• Whether the flexible transfer system, which mandated the transfer of cargo from the pier to a bonded warehouse without the importer’s prior express consent, is a valid and enforceable policy under the applicable customs laws.
• Whether such a system can be classified as a contract or must be considered a policy or quasi-contractual mechanism under administrative regulation.

Computation of the Six-Working-Day Free Storage Period

• Whether the free storage period provided in the Tariff and Customs Code should be computed from the date the cargo was actually discharged (November 28, 1963) or from the day on which all cargo was fully discharged (December 10, 1963).
• The proper starting point for counting the six-working-day period, particularly in view of the statutory language under Section 3002 of the Tariff and Customs Code.

Liability for Storage Fees and Other Charges

• Whether Alliance Sales Co., Inc. is liable to pay the storage fees, handling charges, and other incidental expenses as demanded by Sumadchat.
• Whether the computation of the storage fees by the lower courts, particularly the starting date for accrual, is legally sustainable.

Validity of the Issuance of the Delivery Permit

• Whether the Bureau of Customs acted appropriately in issuing the delivery permit without first satisfying the warehouseman’s lien as provided under the Warehouse Receipts Law.
• How the issuance of the delivery permit affected the rights and obligations of the parties under the flexible transfer system.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)