Second-hand vehicles can be imported only through Subic freeport – SC

Second-hand vehicles can only be imported through the Subic Bay Freeport Zone, the Supreme Court has stressed.

But Cagayan Economic Zone Authority (CEZA) administrator Jose Mari Ponce stressed that the importation of used cars in Port Irene in Santa Ana, Cagayan is not covered by Executive Order No. 156, banning its importation in the country.

Court spokesman Midas Marquez cited the Court’s 26-page decision penned on Feb. 20, 2006 by Justice Consuelo Ynares-Santiago that voided the inclusion of the Subic Bay Freeport Zone in Article 2, Section 3.1 of EO 156, prohibiting the importation of used motor vehicles into the country.

“Based on the decision, it is only permitted in Subic,” Marquez said.

The Court ruled that used motor vehicles coming into the Philippine territory via the secured fenced-in former Subic Naval Base area may be stored, used, or traded or exported out of the Philippine territory, but they cannot be imported into the Philippine territory outside of the secured fenced-in former Subic Naval Base area.

The Court said EO 156 ran afoul of two of the requisites of a valid administrative order – that it is issued within the scope of authority given by the legislature and that it is reasonable.

The Court said it found no logic in the all-encompassing application of the assailed provision to the Freeport, which is outside the customs territory.

The Court noted that RA 7227’s Implementing Rules and Regulations specifically defines the territory comprising the Subic Bay Freeport as “a separate customs territory consisting of the City of Olongapo and the Municipality of Subic, Province of Zambales, the lands occupied by the Subic Naval Base and its contiguous extensions, among others.”

RA 7227 allows the free flow of goods and capital within the Freeport in order to attract investors to invest their capital in a business climate with the least government intervention.

The High Court also held that EO 156 satisfied the first requisite of a valid administrative order, and as such, has constitutional and statutory bases.

In a fighting mood

However, Sen. Juan Ponce Enrile earlier said that the Supreme Court erred in upholding EO 156, claiming that the directive of President Arroyo was unconstitutional.

He said it is only Congress that can ban the importation of used items.

Marquez said that while the Court respects the senator’s view, the Court’s decision has long become final and has already formed part of the law of the land.

“The considered view of the good senator is respected. However, the SC decision has long become final. It forms part of the law of the land, unless later revoked or amended,” he said.

Enrile came to the defense of the CEZA and vowed to support the importers in any court battle with those who want to stop the importation and re-sale of second-hand cars in the freeport.

He even dared critics to sue him or the CEZA officials to settle the issue once and for all.

“Anybody who wants to try to file a case, we will welcome them. If they want to file, anybody who wants to file, we will welcome them, we will provide them with hotels in Cagayan,” Enrile said.

He said he did not mind his colleagues opposing his position that EO156 did not cover CEZA but only Subic Bay Freeport Zone.

“I agree to that proposition but you have to bear in mind that the CEZA started operating only in June 2005 and the case was pending in the Supreme Court and CEZA is not within the jurisdiction of the SC. The SC does not acquire jurisdiction over CEZA, it acquired jurisdiction over Subic and there was EO 418 that implicitly allows the importation of used cars, only you have to pay a higher tax. So there was no reason for the Bureau of Customs, in my personal opinion, to enforce that decision of SC,” Enrile said.

CEZA administrator Ponce said they are now considering other business opportunities in the Freeport just in case the court would eventually affirm that it is covered by the EO. – By Mike Frialde, Perseus Echeminada, Charlie Lagasca, Aurea Calica, Christina Mendez - PhilStar

Used car sellers liable for hidden defects, says CA

The Court of Appeals has ruled that vendors of second-hand motor vehicles are responsible for the seller’s warranty against hidden defects of their sold vehicles.

In a 16-page resolution penned by Presiding Justice Ruben Reyes, chairman of the appellate court’s First Division, the CA affirmed the June 1, 2004 decision of the Tarlac City Branch 1 Municipal Trial Court in Cities (MTCC) and the April 22, 2005 decision of the Tarlac City Branch 65 Regional Trial Court.

The lower court decisions ruled in favor of respondent Jesus Concepcion in the action for breach of warranty and damages he had filed against petitioners Wilson Dy, Marianne Dy and Andrew Dy, who are engaged in the importation of used right-hand drive motor vehicles under the business name Micro-Kinetics Inc. which is based at the Subic Bay Freeport in Olongapo City.

Accoding to court records, Concepcion went to Micro-Kinetics on Dec. 2, 2002 to buy a secondhand vehicle. Concepcion was shown by Andrew Dy a secondhand Silver White Mitsubishi Pajero which he had agreed to buy for P650,000.

After inspecting the vehicle, Concepcion paid P100,000 as downpayment and paid the balance of P550,000 on Jan. 18, 2003. Upon payment of the balance, Concepcion also signed an acknowledgment receipt which read that "above unit is in used condition and has no guarantee but it is in good running condition with accessories listed on the checklist." The receipt also stated that "unit listed above is not yet insured, any accident arising from the use or misuse of the said vehicle will be the sole responsibility of the user. Micro Kinetics Inc. will not be liable for any damage caused by the accident."

On June 23, 2003, a deed of sale was executed by Marianne Dy in which she assured that the Pajero is free from any liens and encumbrances and that she will "defend the title and rights of the vendee from any claims of whatever kind or nature from third persons."

On May 17, 2003 or after four months from its delivery to Concepcion, the Pajero broke down due to a faulty automatic transmission while traversing the North Luzon Expressway.

Concepcion then invoked the seller’s implied warranty against hidden defects and asked the Dys to replace the broken transmission. The demand meanwhile went unheeded and Concepcion was forced to have the transmission replaced at his own expense for P67,000.

Reiterating the seller’s warranty against hidden defects, Concepcion asked the Dys to reimburse his repair expenses but the petitioners refused. Feeling aggrieved, Concepcion then filed a complaint against the Dys for breach of warranty and damages before the MTCC.

Concepcion argued that the Pajero that he had bought is covered by the seller’s warranty against hidden defects. He also argued that the Dys are also liable to pay him the expenses that he had incurred for the replacement of the vehicle’s faulty automatic transmission.

The Dys as argued that since the vehicle is secondhand, it is not covered by the said warranty. They referred to the acknowledgment receipt signed by Concepcion where it was declared that the vehicle has no guarantee. They also countered that because of the filing of the unfounded action, it should be Concepcion who should be the one to pay them damages.

On June 1, 2004, the MTCC decided in favor of Concepcion explaining that there is implied warranty in the sale of secondhand articles where the buyer makes known to the seller the particular purpose for which the articles are acquired and it appears that the buyer relies on the seller’s skill. The MTCC also ruled that "there is nothing in the corresponding acknowledgment receipt that would show that the warranty against hidden defects was expressly waived by respondent." The MTCC also ordered the Dys to pay Concepcion P67,000 and P20,000 in litigation expenses.
By MIKE FRIALDE - The Philippine Star