G.R. No. L-27810 December 14, 1981
Republic of the Philippines (For the Bureau of Public Highways), plaintiff-appellant, vs. Consolidated Terminals, Inc., defendant-appellee.

FACTS

The Republic, through the Bureau of Public Highways, imported bridge materials in 1962. The materials were unloaded and stored in the private customs bonded warehouse operated by Consolidated Terminals, Inc. The Republic later sought to withdraw these materials without paying the accrued storage charges, leading to the filing of a complaint for their immediate release. Consolidated Terminals counterclaimed for payment of the storage fees, totaling P95,319.72.
The parties submitted a Stipulation of Facts, agreeing that the sole legal issue for resolution was whether the government’s importations, stored in a private warehouse, were exempt from paying storage charges. The trial court ruled in favor of Consolidated Terminals, ordering the Republic to pay the storage fees. The Republic appealed, arguing for exemption under Section 3005(a) of the Tariff and Customs Code.

ISSUE

Whether the Republic of the Philippines is exempt from paying storage charges for its importations stored in a private customs bonded warehouse.

RULING

The Supreme Court ruled against the Republic and affirmed the lower court’s decision. The Court held that the exemption from storage charges under Section 3005(a) of the Tariff and Customs Code (Republic Act No. 1937) applies only to storage in government warehouses, not private ones. The legal logic is anchored on a harmonious reading of the Code’s provisions.
Section 3005(a) stated that government importations “shall be exempt from storage charges.” However, Section 3001 of the same Code defined “storage charge” specifically as the amount assessed for storage “in customs premises, cargo sheds and warehouses of the government.” Reading these sections together, the exemption is clearly limited to instances where the government uses its own storage facilities. To extend this exemption to private warehouses would unjustly compel a private entity to render services without compensation, constituting a deprivation of property without due process. The Court emphasized this would be tantamount to confiscation, contrary to the Rule of Law.
The Court noted that its interpretation was subsequently confirmed by the legislature through Presidential Decree No. 34 (1972), which amended Section 3005(a) to explicitly state that all government importations “shall be subject to storage charges,” thereby removing any ambiguity. Consequently, the Republic was liable to pay the stipulated storage fees to the private warehouseman.