Legal basis and related instruments
- BOC Memorandum Order No. 4-2003 is issued to implement customs concerns under Executive Order No. 156 (providing for a comprehensive industrial policy and directions for the motor vehicle development program and its implementing guidelines).
- Section I ties CKD importation rules to E.O. 156 and uses the terms defined in E.O. 156.
- Section II requires that specified motor vehicle parts/components and motorcycles be governed by Central Bank Circular (CBC) No. 1389, as amended, and require prior clearance from Board of Investments (BoI-DTI).
- Section II and Section III use import-authorization clearance roles involving DTI-Bureau of Import Services (DTI-BIS) and the Board of Investments (BoI-DTI).
- Section VII requires that violations be dealt with under the Tariff and Customs Code of the Philippines (TCCP) and additionally under E.O. 156.
Purpose and program coverage rules
- Section I establishes customs rules on CKD importations under the Motor Vehicle Development Program (MVDP).
- Section II governs specified importations of motor vehicle parts/components and motorcycles, imposing prior clearance requirements.
- Section III bans importation of used motor vehicles while creating enumerated exceptions and documentation requirements.
- Section IV liberalizes brand-new motor vehicles as importable without import authority, using a mileage and model-year standard.
- Section V imposes a monthly reporting requirement on importation of motor vehicles.
- Section VII authorizes seizure and establishes personnel/official accountability consequences for violations or gross negligence.
Core CKD importations—Section I
- Only brand-new CKD parts and components for assembly purposes are allowed for importation under the MVDP, and they must be sourced from a foreign Original Equipment Manufacturer (OEM) (Section I).
- Brand-new CKD parts and components imported by MVDP participants covered by a Certificate of Authority to Import CKD at CKD tariff rates issued by BoI-DTI on a per shipment basis are subject to CKD duty rates specific to MVDP importations in accordance with existing rules and regulations and/or as determined by BoI-DTI (Section I).
- Brand-new CKD parts and components imported without coverage by the Certificate of Authority to Import CKD at CKD tariff rates are subject to the regular rates applying the “essential character” principle, under classification rules in Section 103 of the Tariff and Customs Code of the Philippines (TCCP) (Section I).
- The Bureau of Customs must closely and continually coordinate with BOI to maintain an updated list of MVDP participants and their respective foreign OEMs (Section I).
- Section I adopts these definitions (also using the definitions in E.O. 156):
- “CKD” means completely knocked down parts and components, including sub-parts/parts and sub-assemblies/assemblies of motor vehicles for assembly into a complete unit.
- “Sub-assemblies/assemblies/components” means major parts and components such as engines, transmissions, axle assemblies, chassis, body assemblies and the like.
- “Sub-parts/parts” means parts necessary for producing sub-assemblies/assemblies/components and/or other parts forming part of the CKD pack.
- “Original Equipment Manufacturer” (OEM) means a producer of CKD parts/components, sub-assemblies/assemblies or sub-parts/parts to be supplied to an MVDP participant.
Motor vehicle parts and motorcycles clearance—Section II
- Importation of listed motor vehicle parts/components and motorcycles, parts and components is governed by CBC No. 1389, as amended and requires prior clearance from BoI-DTI (Section II).
- Import clearance is required for these specific items (Section II), including:
- Used reciprocating piston engines for tractors with cylinder capacity exceeding 50 cc.
- Used reciprocating piston engines for trucks and buses with cylinder capacity exceeding 250 cc.
- Used diesel and semi-diesel engines for tractors.
- Chassis fitted with engines for motor vehicles used to transport persons other than public transport type.
- Bodies (including cabs) for motor vehicles used to transport persons other than public transport type.
- Seats of a kind used for motor vehicles.
- Parts/accessories for transporting persons other than public transport type, including dashboards, plate brackets, doors, running boards, fenders, radiator cowlings, floor boards, trunk/trunk lids, grille, visors, hood, wings, luggage, compartments, mudguards, luggage racks (exterior), and floor mats (other than of textile material/rubber).
- Used motor scooters.
- Other used motorcycles.
- Parts of sidecars of all kinds.
- Saddles of motorcycles.
- Other parts of motorcycles excluding rubber tires, engines, electric parts, completely knocked-down parts, storage batteries, chassis and frames, including: brakes of all kinds, handle bars/handle bar grips, clutches, kick starter/levers, forks and parts thereof, luggage rack, fuel tanks, mud guards, gearing/gear boxes, shock absorbers, stands, transmission and parts thereof, and wheels and parts thereof (including hubs, rims, spokes, etc.).
Used motor vehicles—ban, exceptions, documents—Section III
Used motor vehicles are banned importations through all ports, including special economic zones and/or free ports (Section III).
The ban does not apply to enumerated used motor vehicle categories under conditions in Section III, including the following:
Personally owned motor vehicles imported by returning residents/immigrations for personal use under the No-Dollar Importation (NDI) Scheme:
- The vehicles must be covered by an Import Authority issued by DTI-BIS.
- The vehicles must not exceed GVW of 3 tons.
- The vehicles must not be sold within three years from date of importation (Section III).
Motor vehicles for officials of the Diplomatic Corps:
- Authorized for importation by the Department of Foreign Affairs (Section III).
Trucks, excluding pick-up trucks:
- Must have GVW of 2.5–6.0 tons and be covered by an import authority issued by DTI-BIS.
- Trucks with GVW of more than 6.0 tons do not require such authority (Section III).
Buses:
- Must have GVW of 6–12 tons and be covered by an import authority issued by DTI-BIS.
- Buses with GVW of more than 12 tons do not require such authority (Section III).
Special Purpose Vehicles:
- Do not require any import authority.
- Special purpose vehicles expressly include: Fire trucks, Ambulances, Funeral hearses/coaches, Crane lorries, Tractor heads or truck tractors, Boom trucks, Tanker trucks, Tank lorries with high pressure spray gun, Reefers or refrigerated trucks, Mobile drilling derricks, Transit/concrete mixers, Mobile radiological units, Wreckers or tow trucks, Concrete pump trucks, Aerial/bucket flatform trucks, Street sweepers, Vacuum trucks, Garbage compactors, Self loader trucks, Man lift trucks, Lighting trucks, Trucks mounted with special purpose equipment, and All other types of vehicles designed for a specific purpose (Section III).
The order imposes additional documentation conditions on used vehicle categories:
- Liberalized used motor vehicles (those whose importation does not require import authority from DTI-BIS under Section III) must be covered by a Certificate of Roadworthiness and a Certificate of Compliance to Emission Standards issued by the appropriate agency in the country of origin (Section III).
- Regulated used motor vehicles (those that require import authority from DTI-BIS under Section III) must also be covered by a Release Certificate issued by DTI-BIS (Section III).
- If the required documents (Release Certificate, or Certificate of Roadworthiness/Compliance of Emission Standard) are not present, the Certificate of Payment shall be withheld until compliance is made, or until a similar certification is issued by the competent authority (Section III).
Section III adopts these definitions for purposes of used vehicle classification:
- “Truck” means a motor vehicle whose body configuration is designed to carry heavy loads, general freight, or for special purposes regardless of gross vehicle weight, provided that pick-ups are not considered as trucks.
- “Bus” means a motor vehicle intended for mass transport or carrying of passengers.
- “Special Purpose Vehicles” means a range of motor vehicles specially constructed or adapted, equipped with various devices that enable them to perform certain non-transport functions.
- “Fire Truck” means a motor vehicle designed for fire fighting, equipped with a water pump usually driven by the vehicle’s engine.
- “Crane Lorry” means a vehicle consisting of a motor vehicle chassis on which a cab and a rotating crane are permanently mounted.
- “Mobile Drilling Derrick” means a lorry fitted with a derrick assembly, winches and other appliances for drilling.
- “Ambulance” means a vehicle equipped with medical equipment or facilities and used for transporting the injured or sick.
- “Hearse” means a vehicle for conveying the dead.
- “Truck Tractor/Tractor Head” means a vehicle constructed essentially for hauling or pushing another vehicle, appliance or load.
- “Concrete-Mixer Lorry” means a vehicle consisting of a cab and a chassis on which a concrete mixer is permanently mounted, capable of use for both making and transporting concrete.
- “Mobile Radiological Unit” means a vehicle fitted with an examination room, dark room and complete radiological equipment.
- “Pick-up Truck” means a light truck having an enclosed cab and an open body with low sides and tailgate; for this order, a pick-up truck has a gross weight of up to three (3) tons.
Brand-new motor vehicles—liberalized importation—Section IV
- Brand-new motor vehicles of whatever type/kind are liberalized importations and do not require any import authority under E.O. 264 s. 1995 and Monetary Board Circular No. 92, s. 1995 (Section IV).
- Brand-new motor vehicles are defined as current/advance year models or immediately preceding year models, provided the latter have 200-km. or less mileage and were acquired from the dealer by the importer as the first owner (Section IV).
- Motor vehicles that fall outside the definition of brand-new vehicles are treated as used and thus banned, subject only to the exceptions in Section III (Section IV).
Reporting and operational accountability
- The District/Port Collector must submit a monthly report on the 15th of the succeeding month to the Office of the Secretary, DTI, with a copy furnished to the Office of the Customs Commissioner (Section V).
- The monthly report must contain: Name of importer, Importer's address, Make, model and identification numbers of vehicles, Tariff classification and rate of duty per vehicle, Quantity and invoice values of vehicles, Assessed values of the vehicles, Total amount of taxes and duties paid on the shipment, Date of importation, and Other relevant information on the importation of the vehicles (Section V).
- Customs officers and personnel must perform their responsibilities as required herein; violations expose them to administrative/criminal sanctions as mandated by law (Section VI).
- The District Collectors must ensure efficient implementation of the order (Section VI).
- The examiners/appraisers are liable for any error caused by or emanating from their examination/appraisal (Section VI).
- All signatories to any certificate/report required under the order are liable for any flaw/defect found therein (Section VI).
Penalties and seizure consequences
- Violations of BOC Memorandum Order No. 4-2003 are handled in accordance with the TCCP and additionally under E.O. 156 (Section VII).
- The motor vehicle involved in a violation is subject to seizure by the Bureau of Customs, without benefit of redemption (Section VII).
- Any person, entity, government instrumentality or institution found violating or grossly negligent in executing E.O. 156 results in expulsion from office of personnel, including:
- the chief executive,
- responsible directors,
- responsible rank and file, and
- other responsible operating officers (Section VII).
- Those expelled are prohibited from holding any government position for at least two (2) years, notwithstanding any provision of law to the contrary (Section VII).
Continuity, repeals, separability, and effectivity limits
- Existing rules and regulations, including their documentary requirements, governing importation, assessment, and clearance of motor vehicles remain in force and effect except as provided (Section VIII).
- Motor vehicles allowed to be imported under E.O. 156 and this order are subject to payment of taxes, duties and other applicable charges unless otherwise exempted by law (Section VIII).
- Right hand vehicles (RHD), brand-new or used, remain banned importations as mandated by R.A. 8506 (Section VIII).
- Rules and regulations inconsistent with the order are deemed repealed, superseded or modified accordingly (Section VIII).
- The order is separable under Section 3, Article 7 of E.O. 156; unconstitutional provisions do not affect the other provisions that remain in force and effect (Section IX).
- The order’s effectivity is immediate, but it does not cover used motor vehicles imported prior to 01 January 2003 if they fall under any of these situations (Section X):
- already in transit,
- covered by L/Cs already opened (and amendments must not increase the quantity of used vehicles prohibited or regulated under E.O. 156),
- covered by B/Ls already issued,
- whose payments have been effected as evidenced by bank certifications (Section X).