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The Automotive Assembly Industry Tripartite Council (AAITC) today (20 February 2013) issued a resolution giving commendation to the Supreme Court for its 07 January 2013 ruling that upheld the constitutionality of Executive Order No. 156 titled “Providing for a Comprehensive Industrial Policy and Directions for the Motor Vehicle Development Program and its Implementing Guidelines.” The adoption of the Resolution took place at the Occupational Safety and Health Center.

The said Executive Order was issued by President Gloria Macapagal-Arroyo in 2002. It aims to make the automotive industry competitive through the following policies: (1) prohibition of used vehicles importation with some exemptions; (2) restructuring the Most Favored Nation (MFN) tariff rates for motor vehicles, parts, components and raw materials in a scheme that encourages the development of the domestic motor vehicle industry; (3) restructuring the existing excise tax system for motor vehicles making the structure simple, fair and stable; (4) advocacy for the continuous application of the ASEAN Industrial Cooperation Agreement (AICO) which fosters closer collaboration among companies in ASEAN countries to increase regional trade; and (5) grant incentives to assemblers and parts component makers for the export of Completely Built Units (CBUs), parts and components as may be allowed by law and international commitments.

Among the contentious issues surrounding the Executive Order is its ban on the importation of secondhand vehicles. Section 3 of E.O. 156 explicitly states that importation of used motor vehicles is prohibited except those used by Diplomatic Corps, trucks and special purpose vehicles. In 2007, Forerunner Multi-Resources, Inc., a company engaging in the importation of used motor vehicles in Aparri, Cagayan and San Fernando, La Union questioned the legality of E.O. 156 and initially filed a case to declare the said Executive Order invalid before the Aparri Regional Trial Court (RTC). The RTC upheld the constitutionality of E.O. 156. The case reached the Supreme Court which reversed the decision of the Court of Appeals and reinstated the decision of the Aparri RTC.

AAITC Resolution titled “Commending the Supreme Court in its Decision to Uphold the Constitutionality of Executive Order 156” is the second resolution adopted by the Council this year. They support the decision of the Supreme Court and commend the judicial body in upholding the Constitutionality of Executive Order 156. The resolution also called for the Bureau of Customs and the Land Transportation Office to fully enforce the provisions of the Executive Order.

Executive Order 156 if properly implemented, rationalizes the importation of used motor vehicles in order to make the local manufacturers of cars competitive. Local suppliers of auto parts will also benefit if there are locally produced cars in the country. E.O. 156 is seen as a mitigating factor that helps reduce the issue on importation of secondhand vehicles.

The AAITC is a tripartite body composed of representatives from the labor, employer and government sectors. The Council aims to use social dialogue mechanisms to promote effective consultations in the formulation and review of government policies directly affecting the industry. The Resolution on supporting the Supreme Court decision to uphold E.O. 156 is the second resolution approved by the Council this 2013.