REPUBLIC OF THE PHILIP­PINES (FOR THE BUREAU OF PUBLIC HIGHWAYS), PLAINTIFF-APPELLANT, VS. CONSOLIDATED TERMINALS, INC., DEFENDANT-APPELLEE.

Civil Case No. 57711 of the Court of First Instance of Manila,
Branch XXIV, was initiated by the Republic of the Philippines against
Consolidated Terminals, Inc. in order to obtain the immediate re­lease of
imported bridge materials even without prior payment of storage charges. The defendant answered with a counterclaim
for the payment of storage charges plus legal interest thereon.

After the parties had submitted a Stipulation of Facts, the trial
court rendered the following judgment:

“WHEREFORE, judgment is hereby rendered dis­missing
plaintiff’s complaint and ordering plaintiff to pay unto the defendant the
amount of Ninety Five Thousand Three Hundred Nineteen Pesos and Seventy Two
Centavos (P95,319.72) with legal interests thereon computed from the time this
judgment becomes final, until full satisfaction thereof.

“The writ of preliminary mandatory injunction issued on July
20, 1964 is hereby dissolved.”

The Republic of the
Philippines appealed the judgment and since it involves a purely legal
question, it was sent to this Court for re­solution.

If the instant case had
been brought before Us on a petition for review on certiorari under R.A.
No. 5440, We would have summarily dismissed it for utterly lacking in
merit. But the appeal was perfected on
May 26, 1966, and at that time R. A. No. 5440 had not yet been enacted. Hence, We shall resolve the appeal in a
signed decision instead of issuing a minute resolution.

The Stipulation of Facts
reads as follows:

“A. THE PARTIES ADMIT:

1.    Their respective capacities to sue and be
sued;

2.    During all times material to this action,
defendant was and still is operating, under its Customs Bonded Warehouse Permit
issued by the Collector of Customs, Port of Manila, a customs bonded warehouse
located inside the Lusteveco Terminal, Second Street, Port Area, Manila;

3.    Sometime in 1962, the Bureau of Public
Highways imported Development Loan Fund fi­nanced bridge materials, consisting
of 368 pack­ages of structural steel and miscellaneous items, earmarked for the following government pro­jects,
to wit:

Palagao Bridge
at Cagayan Province

Bonot Diut
Bridge at Zamboanga del Norte

Dequis Bridge at
Zamboanga del Norte

Baracbac Bridge
at Pangasinan

Lintukan Bridge
at Cotabato

Butalo Bridge at
Cotabato

Manguto Bridge
at Cebu;

4.    That said bridge materials arrived in the
Port of Manila on November 23, 1962 on board the vessel S/S ‘MELAMPUS’, Reg. No. 1686, landed
ship-side and transferred to defendant’s warehouse for storage and safekeeping;

5.    That since November 24, 1962, said bridge
materials remained in storage in defendant’s ware­house until July 27, 1964
when the Bureau of Public Highways succeeded in having the same withdrawn
without paying storage charges therefor by reason of that Writ of Preliminary
Mandatory Injunction dated July 20, 1964 issued by the Honorable, Judge Jose L.
Moya, and after posting a bond in the amount of P80, 000.00 pursuant to the
order of the same Court dated July 25, 1964;

6.    That prior to the withdrawal of the said bridge
materials, the defendant has been charging, as it continues to charge, a
storage fee of P0. 50 per revenue ton on cargoes transferred to it under the
flexible and/or selective system or for deposit under warehousing entries, a
transfer fee of P2.00, and a flat rate of P2.00 per ton for handling in and out
of its warehouse even before the adoption by the Bureau of Customs on December
26, 1963 of the rules and rates prescribed under Customs Memorandum Order No.
130-63, a thermofax copy of which is hereto attached as Annex “A”;

7.    That the plaintiff had been billed by the
defendant in accordance with the aforesaid rates as evidenced by the attached
true copies of ware­housing charges marked as Annexes ‘B’, ‘B-1’, ‘B-2’, ‘B-3’, ‘B-4’, ‘B-5’ & ‘B-6’, all in
the total amount of P95, 319. 74;

8.    That plaintiff’s reluctance to pay defendant
its storage charges on the former’s importations for its uses and purposes is
supported by the opinion of the Acting Collector of Customs as expressed in said official’s letters to the defendant
dated April 17, 1963 and July 3, 1963, true copies of which are hereto attached
as Annexes “C” and “C-1”, respectively. A copy of another corres­pondence by the
Commissioner of Public High­ways addressed to the Collector of Customs dated
April 5, 1963 is hereto attached as Annex “C-2” and made an integral
part hereof; and,

9.    That the request of the Acting Collector of
Customs as expressed in his letter to the de­fendant dated April 17, 1963 which
is Annex “C” hereof, was declined by the latter in a letter to the
former dated May 16, 1963 for the reasons stated therein, a true copy thereof
being hereto attached as Annex “D”.

“B. THE PARTIES AGREE:

That the only issue left for the determination of this Honorable
Court is whether or not the im­portation of the plaintiff for its uses and
purposes, which were stored in the private warehouse of the defendant, is
exempt from the payment of storage charges.”

The Republic of the
Philippines claims that it is exempt from paying storage charges to the
defendant by virtue of the provisions of Section 3005 (a) of the Tariff and
Customs Code of the Philippines (R. A. No. 1937) which stipulates:

“Section 3005. General Provision. –

a.  Articles, supplies or materials imported by
any branch of the Philippine Government, except those imported by Philippine
government entities which are intended for commercial or profit-making
purposes, shall be exempt from storage charges: Provided, That whenever such
consignments shall have been imported by other than the Philippine Government
or branches thereof, or for sale there­to, storage shall be charged thereon as
herein-before provided. “

While it is true that the
above-quoted provision appears to support the contention of the plaintiff, its
full meaning can be understood only if it is related to Section 3001 of the
same Code which defines “storage charge” as follows:

“Section 3001. Definition. – Storage charge is the
amount assessed on articles for storage in customs premises, cargo sheds and
warehouses of the govern­ment. The
owner, consignee or agent of either, of the articles, is liable for this
charge.”

Accordingly, the
exemption of government importations from storage charges obtains only where
such importations are stored in government warehouses. Upon the other hand, the defendant’s
business is warehousing for profit and it must necessarily impose storage
charges on articles deposited with it. If the Republic of the Philippines were to be exempted from paying
storage charges to the defendant, the result will be deprivation of property
without due process of law or naked confiscation. This is not the Rule of Law.

To remove any doubt that
Our interpretation is correct, Section 3005 (a) of R.A. No. 1937 has been
amended by P. D. No. 34 [1972] so that it now reads as follows:

“Section 3005. General Provisions.
–

a.  Articles, supplies or materials imported by
any branch of the Philippine Government shall be subject to storage
charges.”

WHEREFORE, the appeal is hereby dismissed and the
judgment of the lower court is affirmed in toto. No costs.

SO ORDERED.

Aquino, Concepcion, Jr., De Castro, Ericta, and Escolin, JJ., concur.

Barredo, (Chairman), J., no
part.