Warehousing Contract Philippines: Rules for Storage and Logistics

A warehousing contract in the Philippines is a storage agreement in which one party (the warehouseman) receives goods for safekeeping and returns them to the depositor on demand. It is a form of deposit governed by the Civil Code of the Philippines, and where the goods are imported and held in a customs warehouse, the Customs Modernization and Tariff Act (CMTA) also applies. The contract fixes who bears the risk of loss, how goods are released, and what happens when storage fees go unpaid. This article explains the rules in plain language.

What a warehousing contract covers

A warehousing contract is essentially a contract of deposit: the depositor delivers movable goods to the warehouseman, who is obliged to keep them and return them. The Civil Code requires every person, in the exercise of rights and performance of duties, to act with justice, give everyone his due, and observe honesty and good faith (Article 19). That good-faith standard runs through every warehousing arrangement.

For logistics and e-commerce businesses, the contract typically covers:

• The goods to be stored and their condition on receipt;
• Storage fees, handling charges, and payment terms;
• The storage period and how the contract may be terminated;
• Liability for loss, damage, or deterioration;
• Procedures for releasing goods to the depositor or its authorized representative.

Obligations of the warehouseman

The warehouseman must keep the goods with the care of a good father of a family and return them in the same condition, ordinary wear and tear excepted. If the warehouseman, contrary to law, willfully or negligently causes damage to the depositor, it must indemnify the latter for the same (Article 20). A person who acquires or comes into possession of something at the expense of another without just or legal ground must return it (Article 22).

In practice, this means the warehouseman cannot commingle goods carelessly, release them to the wrong party, or use them for its own purposes. Where a party is at a disadvantage due to ignorance or other handicap, courts must be vigilant for that party's protection (Article 24).

Customs rules for imported goods in storage

When goods are imported and placed in a customs warehouse, the CMTA governs the process. Importation is defined as the act of bringing goods from a foreign territory into Philippine territory, whether for consumption, warehousing, or admission (Section 102(z)).

Importation is deemed terminated only when:

• The duties, taxes, and other charges due on the goods have been paid or secured, and a legal permit for withdrawal has been granted; or
• Where the goods are free of duties and taxes, they have legally left the jurisdiction of the Bureau of Customs (Section 103).

A warehouse is one of the customs procedures under which goods may be cleared (Section 102(k)). This matters for logistics operators: goods in a customs warehouse are not yet fully released, and duties and taxes remain due until the conditions above are met.

When duties and taxes attach

Except as otherwise provided, all goods imported into the Philippines are subject to duty upon importation, including goods previously exported from the country (Section 104). Unpaid duties, taxes, and other charges incur legal interest of twenty percent (20%) per annum, computed from the date of final assessment, and the same interest accrues on any fine or penalty (Section 104).

The applicable duty rate is the rate in effect at the date of importation or upon withdrawal from the warehouse for consumption (Section 105). For goods withdrawn from free zones into the customs territory, the duty rate at the time of withdrawal applies.

Who is responsible for the goods declaration

The declarant may be the consignee or a person who has the right to dispose of the goods, and may be the importer (holder of the bill of lading), the exporter, a customs broker acting under authority of the importer, or a duly empowered agent (Section 106).

The declarant is responsible for the accuracy of the goods declaration and for payment of all duties, taxes, and other charges. A licensed customs broker is likewise responsible for the accuracy of the declaration but is not responsible for payment of the duties, taxes, and other charges (Section 107). Warehousing and logistics contracts should therefore be clear on which party acts as declarant and who funds the duties.

Frequently asked questions

Is a warehousing contract the same as a lease? No. A lease grants use of property, while a warehousing contract involves the safekeeping of goods that must be returned to the depositor. The warehouseman generally does not acquire the right to use the goods.

Who pays customs duties on goods kept in a customs warehouse? The declarant is responsible for payment of duties, taxes, and other charges (Section 107 of the CMTA). The contract should state which party assumes this role.

What happens if storage fees are not paid? The contract should provide for this. Philippine law allows parties to agree on remedies, provided the arrangement is not contrary to law, public order, public policy, morals, or good customs (Article 6 of the Civil Code).

Practical takeaways

• Treat a warehousing contract as a deposit: the warehouseman must keep and return the goods in good faith (Article 19).
• The warehouseman is liable to indemnify for damage caused willfully or negligently (Article 20).
• For imported goods, importation ends only when duties are paid or secured and a permit to withdraw is granted (Section 103, CMTA).
• Unpaid duties and taxes incur 20% annual interest from final assessment (Section 104, CMTA).
• Name the declarant clearly in the contract, since the declarant—not the customs broker—pays the duties (Section 107, CMTA).

Primary sources

The rules discussed above are drawn from the following primary sources, as published in the Official Gazette and the national statute book.

• REPUBLIC ACT NO. 386 - AN ACT TO ORDAIN AND INSTITUTE THE CIVIL CODE OF THE PHILIPPINES

• REPUBLIC ACT NO. 11232 - AN ACT PROVIDING FOR THE REVISED CORPORATION CODE OF THE PHILIPPINES

• REPUBLIC ACT NO. 10863 - AN ACT MODERNIZING THE CUSTOMS AND TARIFF ADMINISTRATION

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.