Exemption of Diplomatic Vehicles from Extra Duty

The State policy recognizes the need to maintain a balance between development and environmental protection.
The Executive Order is intended to mitigate the impact of used motor vehicle trading on air quality and road safety.
Executive Order No. 418, dated April 4, 2005, imposed an additional specific duty of PHP 500,000.00 for certain motor vehicles.
The Executive Order targets circumstances where subsequent sale or transfer would not increase the environmental risk that Executive Order No. 418 aims to curb.

The exemption covers motor vehicles of embassy officials, members of the diplomatic corps, and international organizations.
The exemption covers Filipino diplomats.
The exemption covers recalled personnel of the Department of Foreign Affairs (DFA).
The exemption covers any officer or employee returning from a regular assignment for re-assignment to the DFA home office.
The exemption covers motor vehicles of government offices acquired tax and duty free under relevant international agreements, including foreign loans and donations.
The exemption covers “other similarly situated individuals” who were given the privilege to import motor vehicles tax and duty free under relevant laws and international agreements.

Executive Order No. 491 exempts covered vehicles from the imposition of the additional specific duty of PHP 500,000.00 under Executive Order No. 418, s. 2005.
The exemption applies upon the subsequent sale or transfer of the vehicles to non-tax exempt individuals in the local market.
The exemption is tied to the fact that the vehicles were imported tax and duty free due to privileges granted by law and international agreements.
The exemption recognizes that some vehicles were brand new when withdrawn from customs warehouses and first operated on Philippine roads, so subsequent transfer does not increase the environmental risk that Executive Order No. 418 curbs.

Section 401 of the Tariff and Customs Code of 1978, as amended, empowers the President to increase, reduce, or remove existing rates of import duty.
Section 401 also empowers the President to modify the form of duty and the tariff nomenclature under Section 104 of the Tariff and Customs Code of 1978.
Executive Order No. 418 imposed the additional duty for articles classified under Section 104 of the Tariff and Customs Code of 1978.
Executive Order No. 491 is issued under the President’s authority to modify or remove an existing duty rate.

All other Presidential issuances, administrative rules and regulations, or parts thereof that are inconsistent with Executive Order No. 491 are revoked or modified accordingly.
Executive Order No. 491 specifically modifies the operation of Executive Order No. 418, s. 2005 by removing the PHP 500,000.00 additional specific duty for the covered vehicles upon sale or transfer to non-tax exempt individuals.