In a 26-page en banc decision penned by Justice Consuelo Ynares-Santiago, the SC declared as constitutionally invalid a provision of President Arroyo’s Executive Order 156 which prohibits the importation of used motor vehicles into the country even at the Subic Bay Freeport.
The high court said a problem exists with the application of the import ban to the Subic Bay Freeport Zone. It said there is no logic in the "all-encompassing" application of Article 2, Section 3.1 of EO 156 to the freeport, which is outside the territory of the Bureau of Customs.
"Hence, used motor vehicles that come into the Philippine territory via the secured, fenced-in former Subic Naval Base area may be stored, used or traded therein, or exported out of the Philippine territory, but they cannot be imported into the Philippine territory outside the secured fenced-in former Subic Naval Base area," the High Tribunal said.
Article 2, Section 3.1 of EO 156 provides that the importation into the country of all types of used motor vehicles is prohibited, except in the following cases: if the vehicle is owned by a returning resident or immigrant and covered by an authority to import issued under the No-Dollar Importation Program; if the vehicle is for the use of an official of the diplomatic corps and authorized to be imported by the Department of Foreign Affairs (DFA); and if the vehicle falls under the category of "special purpose vehicles" such as ambulances, fire trucks, reefers, tanker trucks and crane lorries.
The SC overruled the decision handed down by the Olongapo City regional trial court and the Court of Appeals that had declared the entirety of EO 156 as unconstitutional.
The high court gave weight to the argument of the Office of the Executive Secretary, the Department of Transportation and Communications (DOTC), Bureau of Customs, Land Transportation Office and the Subic Bay Freeport Zone that EO 156 was put in place to prevent the erosion of the already depressed market base of the local motor vehicle industry and to curtail the harmful effects of increased importation of used motor vehicles.
The government claimed there had been a decline in the sales of new vehicles and a remarkable growth of sales of imported used vehicles.
"In issuing EO 156, the President envisioned to rationalize the importation of used motor vehicles and to enhance the capabilities of the Philippine motor manufacturing firms to be globally competitive producers of completely built-up units and their parts and components for local and export markets," the SC said.
It added that the objective of EO 156 to protect the domestic motor industry is a reasonable exercise of police power.
"The deterioration of the local motor manufacturing firms due to the influx of imported used motor vehicles is an urgent national concern that needs to be swiftly addressed by the President. In the exercise of delegated police power, the executive can therefore validly prescribe the importation of these vehicles," the Supreme Court said.
EO 156 resulted in three separate actions for declaratory relief before the Olongapo regional trial court filed by the Southwing Heavy Industries Inc., United Auctioneers Inc. and Microvan Inc., all members of the Motor Vehicle Importers Association of Subic Bay Freeport Inc., represented by its president Alfredo Galang.
In its Feb. 14, 2005 ruling, the CA affirmed the decision of Olongapo City Judge Eliodoro Ubiadas granting declaratory relief and the temporary restraining order sought by those against EO 156.
The CA said the prohibition of importation of used motor vehicles was arbitrary, unfair, unjust, unreasonable and offensive to substantive due process.
The CA said Mrs. Arroyo, through Executive Secretary Alberto Romulo, usurped legislative power in banning the shipment of used vehicles.
The government argued though that the issuance of EO 156 was well within the authority of the President in order to spur the growth of the local motor vehicle industry, which significantly contributes to the country’s economic output, employment, investment and exports.
The High Tribunal, for its part, said the importation of used motor vehicle is a legitimate business that should also be allowed to thrive.
"Competition is still existent among the local manufacturers of different kinds of motor vehicles and to a limited extent this may redound to the benefit of consumers of motor vehicles," the SC said.
However, it stressed that the President was delegated with legislative powers under Article VI of the Constitution in matters like fixing and imposing within specified limits and restrictions the tariff rates, import and export quotas, tonnage and wharfage dues and other duties within the framework of the national development program of government.