Warehousing is the act of storing goods that will be
sold or distributed later.
Basic elements includes:
1. Shelving and rack systems that offer
maximum storage capacity and easy
product access.
2. A climate control system for the product
being stored. This is particularly
important for frozen products or those
requiring refrigeration, including certain
pharmaceutical or laboratory products,
and others that degrade if exposed to
too much heat.
3. Inventory control software that tells the
product owner – who isn’t necessarily
the building owner – where all individual
units are in the system at all times.
4. Equipment that can move products from
point A to point B – forklifts, pallet jacks,
bins that hold products for orders, and
conveyor belts, for example.
5. Shipping supplies for order fulfilment.
6. People who load products into a
warehouse and others (“pickers”) who
fill orders in a true distribution center,
plus those who manage the facility and
operation.
7. Security to protect stored products.
8. Access to cost-effective transportation
to bring products in or move them out as
orders
Importance of Warehousing
Warehousing is a very important part of the
logistics management system. It provides storage for
the finished goods and also includes packing and
shipping of the order. Efficient warehousing provides
an important economic benefit to the business as well
as the customers.
Here is the list of the importance of warehousing
services in a logistics system:
1. Inventory Control
A warehouse helps manage a large
amount of inventory for a business. It assists in
matching the supply with the demand of a
rapidly changing environment.
2. Centralization Of Goods
Since all the goods are stored in a
central location, it becomes easier to receive,
store and distribute the products thus reducing
the transportation costs of a business. The
warehouse personnel are responsible to
identify, sort and dispatch the goods as soon as
the shipment arrives.
3. Value Adding Operation
The warehousing system helps in
increasing the utility value of the goods, as the
products are available at the right place at the
right time. Various other operations such as
order consolidation, order assembly, mixing of
the product, cross-docking etc. take place
under one building, thus adding value to the
overall logistics systems.
4. Economic Benefit
Through efficient operations, a
warehouse offers a wide range of economic
benefits to the businesses. Various costs
including outbound delivery costs, shipping
costs, transportation costs etc. are cut down.
The accumulation of the goods allows a
warehouse to act as a buffer and keep a
balance between the demand and supply of the
goods. This helps increase the profit of a
business in a number of ways.
5. Social Benefit
A warehouse also serves a wide range
of social benefits to the clients, it helps them
keep a safety stocking for the time of
emergency, such as delay in the transportation
and shipment having defective goods etc.
6. Cross- docking
It is a process of moving the goods
directly from receiving to shipping with little or
no inventory. It is a way to move the products
more efficiently and effectively.
The warehousing service is the most
important component of the supply chain and
the logistics system. It allows a firm to maintain
the inventory and the data analysis helps in
minimizing the risks of delay for the shipments.
Tracking the delivery times could become much
 easier with the warehousing management
system.
TYPES OF WAREHOUSES IN THE PHILIPPINES
1. Private warehouses
Private warehouses are usually
reserved for the exclusive use of the company that
owns it. This is ideal for already established
companies who have enough funds to build and
maintain a warehouse. Common industries that
make use of private warehouses are wholesalers
and retailers with stores located close by. Another
is manufacturers who need large storage spaces
for their finished products. For companies that
provide service for a number of areas, they could
set up multiple warehouses around the different
regions to more efficiently distribute their products
i.e. Zalora PH Warehouse.
2. Public warehouses
A public warehouse is one whose
services are available to anyone who is willing to
pay the charges and accept the warehouseman's
usual terms of storage. Warehouses which are
controlled by department stores, chain stores,
manufacturers or distributors are private storage
facilities, usually located at or near the main plant
with branch or field warehouses at various places
in areas of distribution to customers or branch
locations. Public warehouses cater to smaller
businesses in order to better encourage the
development of their trade. The rental service is
open to anyone interested, as long as they pay the
required fees. Aside from small businesses, large
businesses who have filled up the space of their
private warehouse can also avail of public
warehouse services to store their excess goods i.e.
Rhenus Logistics, Inc., Yusen Logistics .
3. Cooperative Warehouses
Cooperative warehouses are owned and
managed by multiple co-operative societies. It aims
to provide ample storage areas for its members
rather than to make a profit. These kinds of
warehouses can be joined by becoming a member
of the exclusive society. The fees needed to avail
this type of storage are relatively low as the cost is
split between multiple parties. This is ideal for those
with small businesses, as you will be able to store
your items without needing to spend too much.
4. Distribution Centers
Distribution centers are facilities meant to
quickly move large quantities of items out of the
warehouse and into the hands of the customers. It
is a large space that houses an intricately designed
distribution system to package and ship goods out
as fast as possible. Digital systems are utilized to
ensure that everything goes smoothly as to prevent
any form of pile-up. They are also positioned near
transportation centers in order to easily deliver
packaged goods.
This kind of warehouse is ideal for those who
have a constant demand from their customers to
deliver at the quickest pace, such as the e-
commerce industry. Other industries that make use
of distribution centers are those that sell perishable
items such as vegetables and meat. Time is of the
essence when it comes to these kinds of goods,
which makes the job of the warehouse
management crucial. (Robinsons Distribution
Center, Inc., Del Monte Philippines.,Inc., Lazada.)
5. Customs Bonded Warehouses
A bonded warehouse is one in which
imports are stored, pending payment by the owner
of an import duty. Control of the goods in bonded
storage is jointly shared by the warehouseman and
Customs authorities. The latter's control is
dominant and Customs officers retain keys to those
sections of the warehouse which store bonded
goods. Goods are said to be in bond while they are
held in storage under the foregoing conditions. The
use of bonded warehouses permits an owner or
importer to store goods without paying the entire
duty or tax at once but only be liable to payment as
goods are withdrawn. Paircargo, UPS Delbros,
Cargohaus, PSI, Philippine Airlines Inc.
OBLIGATIONS OF THE DEPOSITARY
a. To store the property of another party, through
taking the possession of the property. The
contractual agreement shall contain the following
aspects:
 The depositary is responsible for the
surveillance to prevent loss or damage
  Preserve the property in accordance
with the nature
 Can employ and/or use auxiliary staff
and employees if necessary
 Not obliged to insure the property
deposited.
 Obligation of diligent activity
b. To maintain the condition it was in prior to
delivery
Starting from the moment that they first enter
into a contractual relationship, maintaining the
conditions and security measures in order to ensure
the fulfilment of their warehousing obligations- even if
the property has not yet been delivered, is an
independent obligation that is imposed on the
depositary by virtue of their status as professional
entity and owner of the establishment.
c. To supervise the property deposited
The duty of supervision starts when depositary
first takes receipt of the property. The obligation to
warehouse can be demanded from that receipt. Keen
supervision on the goods shall be ensured to
guarantee a high degree of security for the property
with respect to the dangers of loss, damage or theft.
More so, it includes setting up a proper supervisory
system that will enable preservation measures to be
adopted as necessary in each case. Depositary must
provide the supervisory mechanisms considered
necessary and sufficient, taking into account the
particular circumstances, the professional nature of the
activity undertaken and the nature of the property
being deposited.
Depositary should enjoy a certain degree of
autonomy when it comes to selecting the material
resources (alarms, fire detectors, cctv) and the staff
that they consider appropriate. The absence of the
surveillance mechanisms that could be considered to
be required could constitute a breach of warehousing
obligation, with resulting consequences, without it
being necessary to expect that this may be attributed
to the effective loss, theft or deterioration of the
property being deposited.
D. To notify the depositor of any shrinkage and
damage that the property may suffer
“immediately when they appear”.
The basic principle, in view of any unexpected
event, is that providing due notice to the depositor, so
that the latter can adopt to the measures that it
considers to be most appropriate. Only in the absence
of this possibility will the depositary have the duty and
even the obligation to take measures that go beyond
the scope of its normal undertaking
E. To preserve the goods deposited
Depositary is bound to preserve the property in
accordance with its nature, with respect to any internal
or external prejudicial agents that may likely to cause
detriment. Not only the property deposited remains
within the depository’s sphere of control, but also the
physical and economic integrity of the property for the
period of time in its storage. Depositary is obliged to
undertake all preservation measures that are
appropriate to the circumstances. Depositary
undertakes to provide the resources necessary in
order to avoid any deterioration of the property being
deposited due to the influence of external agents ( for
example, maintaining a specific temperature or degree
of humidity or implementing mechanisms to prevent or
fight the danger of fires and floods.
Sample Situations
1. Example in a contract for a garage, the
company is bound to undertake a
surveillance activity and to protect the
vehicles parked at its establishment
from any damage influenced by external
agents. As a rule, unless there is
agreement to the contrary, the company
is not obliged tom provide the
maintenance and preservation of the
vehicles in respect to any form of
damage that could arise from their
particular nature, even in the case that
there is material possibility of having
known of the condition of each vehicle
and acting accordingly.
2. In other cases as in the safekeeping of
fur coats, carpets and furniture, the
activity that the depositary has to
undertake is restricted to maintaining
the objects deposited in the conditions
of cleanliness, packaging, etc. that may
be required for their subsequent
preservation, by means of maintaining
the static environmental conditions.
Exoneration of liability - the warehouse is
liable in the event of misrepresentation, blame
or negligence, with the exception of cases
wherein loss or damage comes about as the
consequence of
 i. An unexpected circumstance or
force majeure
ii. A fault on the part of the
depositing party
iii. The nature and particular defect
of the merchandise, but only
provided that :
1. Everything necessary
was done to prevent the
damage and
2. The client was
immediately notified.
Personnel
Legal Framework (International)
The Directive On Approximation Of The Laws
Of The Member States Relating To The Safeguarding
Of Employee’s Rights In The Event Of Transfers Of
Undertakings, Business Or Parts Of Businesses –
European Union.
It has been regulated in order to protect the
rights of the workers who were transferred from one
employed to another as a result of privatization,
contracting out, compulsory competitive tendering,
private finance initiative or merger.
The following is a list of the major principles of the
directive.
1. Employees employed by the previous
employed when the undertaking changes
hands automatically become employees of the
new employer on the same terms and
conditions. It is as if their contracts of
employment had originally been made with the
new employer. Thus, employees’ continuity of
employment is preserved, as their terms and
conditions of employment under their contracts
of employment.
2. Employees have the right to be informed and
consulted about the transfer though elected
representatives or as recognized trade union.
3. Employees are protected against dismissal for
any reason relating to the transfer unless the
dismissal was for economic, technical, or
organizational reason entailing changes in the
workforce.
Transfer of Undertaking
A transfer of undertakings occurs when a
business or part of a business is taken over by another
employer as a result of a merger or transfer. When a
transfer takes place there is a legal obligation on the
new employer to take on the existing staff of the
business or the part of the business concerned. The
employee's accrued service with his or her original
employer is deemed to have been with the new
employer.
The Employer’s Position in a Transfer
When an undertaking is transferred, the position of
the previous employer and the new employer is as
follows
 The new employer takes over the contracts
of employment of all employees who were
employed in the undertaking immediately
before the transfer, or who would have been
so employed if they had not been unfairly
dismissed for a reason connected with the
transfer. An employer cannot just pick and
choose which employees to take on.
 The new employer takes over the rights and
obligations arising from the contracts of
employment, except criminal liabilities and
rights and obligations relating to provisions
about benefits of old age, invalidity or
supervisors in employees’ occupational
pension schemes.
 The new employer takes over any collective
agreements made on behalf of the
employees and in force immediately before
the transfer. The transferee is obliged to
observe the terms and conditions of the
collective agreements until the date of
termination or expiry of the collective
agreement, or the entry into a force or
application of another collective agreement.
 Neither the new employer nor the previous
one may fairly dismiss an employee
because of the transfer connected with it,
unless the reason is an economic,
technical;, or organizational reason entailing
changes in the workforce. If there is such
no reason, the dismissal will be unfair.
 The new employer may not, unless the
contract of employment so provides,
unilaterally worsen the terms and conditions
of employment of any transferred employee.
  The previous and new employers must
inform and consult representatives of the
employees.
The Employee’s Position in a Transfer:
When an undertaking is transferred, the
position of the employees of the previous or new
employers is as follows:
 Employees employed in the undertaking
immediately before the transfer (or who
have been so employed had they not been
unfairly dismissed for a reason connected
with the transfer) automatically become
employees of the new employer, unless
they inform either the new or previous
employer that they object to being
transferred.
 An employee’s period of continuous
employment is not broken by a transfer, and
for the purpose of calculating the
entitlement t statutory employment rights,
the date on which the period of continuous
employment started is the date on which the
employees started to work with their new
employer.
 Transferred employees retain all the rights
and obligations existing under their
contracts of employment with the previous
employer.
 An employee claiming to have been unfairly
dismissed because of a transfer has the
right to complain to an employment tribunal
 Transferred employees who find that there
has been a fundamental change for the
worse in their terms and conditions of
employment as a result of the transfer may
generally have the right t terminate their
contract and claim unfair dismissal before
an employment tribunal, on the grounds that
actions of the employer have forced them to
resign.
Dismissal because of relevant transfer will be
fair unless an employment tribunal decides that an
economic, technical, or organizational reason entailing
changes to the workforce was the main cause of
dismissal, and that the employer acted reasonably in
the circumstances in treating that reason as sufficient
to justify dismissal. Even if the dismissal is considered
fair, employees may still be entitled to redundancy
payment.
The right and obligation of consultation and
information
Employers are obliged to consult either the
recognized trade union or selected representatives.
Consultation should be undertaken by the employer to
seek the agreement of employee’s representatives to
the proposed transfer. Employee representatives are
entitled to the following information from the original
and new employer.
 Fact that the relevant transfer is to take
place,
 Reason of transfer,
 Date or approximate date of transfer
 Legal and social implications of the transfer
for the employees
 Measures proposed by the old and new
employer in connection with the transfer.
Failure to comply will not diminish validity of the
transfer, but may result to a complaint brought against
the employer by any of the following people:
1. Employee who has been dismissed or who has
resigned on circumstances in which they
consider they were entitled to resign because of
the consequence of the transfer.
2. Elected or trade union representatives, if
employer does not comply with information and
consultation requirements,
3. Representative or candidate for election who
has been dismissed or suffer detriment short of
dismissal
4. Representative who has been unreasonably
refused time off by an employer, or whose
employer has refused to make appropriate
payment for time off, may also complain to an
employment tribunal,
5. Affected employee whose employer has not
complied with the information or consultation
requirement other than to a recognized trade
union or an elected representative.
6. Employee who wishes to claim redundancy
payment.
Labor Code of the Philippines
The Labor Code of the Philippines stands as
the law governing employment practices and labor
relations in the Philippines. It was enacted on Labor
day of 1974 by President Ferdinand Marcos, in the
exercise of his then extant legislative powers. It
prescribes the rules for hiring and termination of private
employees; the conditions of work including maximum
work hours and overtime; employee benefits such as
holiday pay, thirteenth month pay and retirement pay;
and the guidelines in the organization and membership
in labor unions as well as in collective bargaining.
The Labor Code contains several provisions
which are beneficial to labor. It prohibits termination
from employment of Private employees except for just
or authorized causes as prescribed in Article 282 to
284 of the Code. The right to trade union is expressly
recognized, as is the right of a union to insist on a
closed shop.
Moreover, Philippine jurisprudence has long
applied a rule that any doubts in the interpretation of
law, especially the Labor Code, will be resolved in
favor of labor and against management.
Labor Unions in the Philippines
Is there any legislation mandating or allowing
the establishment of employees’ representatives in the
workplace?
The Labor Code provides for and regulates the
creation of legitimate labor organizations, or unions or
associations of employees in the private sector that
exist in whole or in part for the purpose of collective
bargaining, mutual aid, interest, cooperation, protection
or other lawful purposes. In particular, unions are
organized for collective bargaining as well as other
legitimate purposes, while workers’ associations are
organized for mutual aid and protection or any
legitimate purpose other than collective bargaining.
The Labor Code also provides that employees
may form labor-management councils to allow
employees to participate in policy and decision-making
processes of the establishment where they are
employed, insofar as said processes will directly affect
their rights, benefits and welfare, except those that are
covered by collective bargaining agreements (CBAs) or
are traditional areas of bargaining.
The country’s labor unions may have been
more unified than ever in recent years, but their ranks
represent a mere fraction of the country’s 43 million
workers.
One notable achievement was in 2012, when
over 40 of the biggest local labor federations like the
moderate Associated Labor Union (ALU) and the
Federation of Free Workers (FFW) formed the
Nagkaisa (United) labor coalition to push for reforms in
government policies on contractualization and wages.
Temporary Employment Agencies
Specializes in hiring workers and “leasing them out”
temporarily to other firms
Two main categories
1. Employees of staffing companies or temporary
employment agencies who take short assignments
at other user firms where they actually carry out
the work,
2. Direct-hire employees of the company itself who
may have fixed contract or form part of an in house
labor pool, i.e. they are on call indefinitely and
change jobs within the company as needed.
Three types of individual workers who could work for a firm
without being considered legally and as a result, fiscally to
be employees of that firm
1. Freelancer who renders his professional service
to the company
2. Employees of a temporary employment agency
working on the firm’s premises performing a
variety of tasks,
3. Employees of a company that was contracted
to perform a specific task in the client firm
business.