G.R. No. L-47694 October 23, 1980
ALLIANCE SALES CO., INC., petitioner, vs. COURT OF APPEALS, RAFAEL SUMADCHAT, representing R. SUMADCHAT BONDED WAREHOUSE and the COLLECTOR OF CUSTOMS, Port of Manila, respondents.

FACTS

Alliance Sales Co., Inc. imported 300 drums of caustic soda, which were unloaded at the Port of Manila from November 28 to December 10, 1963. Pursuant to the Collector of Customs’s “flexible transfer system” to alleviate port congestion, the cargo was transferred on November 30, 1963, to the bonded warehouse of respondent Rafael Sumadchat. After paying duties and taxes, Alliance secured a delivery permit on December 14, 1963. However, upon demanding delivery on December 16, Sumadchat refused unless Alliance paid substantial storage fees. Alliance filed a replevin action on January 8, 1964. The writ was granted, but the sheriff could only take custody of the goods on May 11-12, 1964, after significant difficulty and delay allegedly caused by Sumadchat’s refusal to comply.

ISSUE

The primary issues were: (1) the legality of the “flexible transfer system” implemented by the Collector of Customs; and (2) whether Alliance Sales Co. is liable to pay storage fees to Sumadchat for the period the goods were in his warehouse.

RULING

The Supreme Court reversed the lower courts and held Alliance not liable for any storage fees. On the first issue, the Court ruled the “flexible transfer system” was lawful, being sanctioned by Section 1901 of the Tariff and Customs Code, which empowers the Collector to establish warehouses and impose conditions for revenue protection. Memorandum Order No. 44, implementing this system to obviate pier congestion, was a valid exercise of this power. However, on the second issue, the Court found no basis to charge Alliance. The transfer was effected by customs authorities for public convenience under their statutory power, not through any contract, express or implied, with Alliance. Consequently, Alliance could not be held to have consented to a warehousing contract with Sumadchat. Crucially, the Court emphasized that the major storage period claimed occurred after the writ of replevin was issued. Since a replevin bond was filed, Sumadchat had no justification to ignore the court’s writ and withhold the cargo. His dilatory tactics unduly prolonged the deposit, and it would be unjust to charge Alliance for storage fees during this period of litigation caused by Sumadchat’s own refusal to deliver. The claim for damages by Alliance was not addressed, as it raised factual issues beyond the scope of the appeal.