Car dealers appeal Port Irene import ban

BAYOMBONG, Nueva Vizcaya–The government is reportedly set to lose P100 million every year from taxes derived from the industry of second-hand vehicles should it insist on banning the importation of used cars at the Cagayan Special Economic Zone and Freeport (CSEZF).

Lawyer Alexis Medina, representing the Automotive Rebuilding Industry of Cagayan (Aric), said the government, which at present is the biggest beneficiary of the used-car industry, will also be the “biggest loser” due to lost Customs duties if Executive Order (EO) 156 will be fully enforced.

“This (data) is borne by the records of the Bureau of Customs. If the implementation of EO 156 continues, this income (of government) would be wiped out almost immediately,” he said.

Medina said this was one of the arguments they presented in the petition filed by Aric, a group of dealers of second-hand vehicles operating at CSEZF in Santa Ana, Cagayan, which sought the revocation of President Arroyo’s order banning the importation of used vehicles in the country.

Aric, led by its president, Jaime Vicente of Forerunner Multi-Resources, Inc., on Oct. 2 filed the petition before the Regional Trial Court Branch 6 in Aparri, Cagayan, alleging that the order was unconstitutional.

The Cagayan RTC has earlier granted the group’s plea for a three-day temporary restraining order, which it subsequently extended for another 17 days on Monday, or until Oct. 28. This allowed CSEZF’s car dealers to proceed with their trade, amid threats of confiscations by the customs bureau.

The group filed the petition after officials of the Bureau of Customs and the Cagayan Economic Zone Authority (Ceza) said they were stopping the approval of import permits for imported second-hand vehicles at Port Irene, by virtue of a Supreme Court ruling declaring the used-car trade in the country as illegal.

But aside from losses for the government, the implementation of EO 156 will also force legitimate companies to go out of business and will render hundreds jobless, said Medina, one of two lawyers from the Pecabar Law office who are assisting used-car importers at CSEZF in the case.

Pecabar is founded and headed by Sen. Juan Ponce Enrile, who authored the law creating Ceza and the CSEZF.

Medina said Forerunner stands to lose around P300-million worth of investments in the form of imported vehicles, with about 1,000 units still in stock at the CSEZF car depot awaiting approval of their application for registration.

“This investment would be wiped out also if this ban continues because (the vehicles) cannot be taken out (of the freeport zone), they cannot be sold and they would just rot and depreciate until they become useless in value,” the lawyer said.

Medina said EO 156 is unlawful because it supposedly violated “substantive due process” set forth by the Constitution, saying it was approved without prior consultations with affected sectors.

“We have evidence to show that no less than Sec. Ralph Recto admitted that no public hearings were conducted before the Tariff Commission (which he heads) recommended for the approval of EO 156,” he said.

The government itself has also recognized the contribution of the car-import industry at Port Irene in generating revenues, Medina said, as proven by the issuance by President Arroyo of an order creating an additional Bureau of Customs collection office in nearby Aparri town.

EO 707, signed by the President on February 18, 2008, declared the Port of Aparri as a principal port of entry and created Customs Collections District 15 with jurisdiction over the provinces of Batanes, Cagayan, Isabela, Nueva Vizcaya and Quirino, but excluding the area covered by CSEZF.

According to another Aric lawyer, Litzell Arthur Magdaong, the group contends that the upholding of EO 156 may lead to “absurdity and inconsistency” because later issuances by President Arroyo, such as EO 707 and EO 418, supposedly contradict the policy of banning car importation.

“EO 156 is said to prohibit importation, but then there’s EO 418 which is a later law and allows importation of vehicles, and EO 707, which opens a new Customs collection office for (CSEZF). It all boils down to show (car importation) as a revenue-collecting industry,” he added.


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