Can BOC hold, inspect, and seize the luxury automobile you already own?

Short answer: Yes they can

So, how well have you kept updated with the whole flood control project issue?

As we speak, the executive and legislative branches of the national government are busy trying to show the public that they can investigate themselves and the contractors and the anomalies that led up to the flood control project scandal. Right now, they’re also busy handing out subpoenas for hearings, checking possible conflicts of interest with politicians, inspecting the actual project sites, and even conducting a raid on the motorpool of very expensive vehicles of one contractor couple.

Initially, the vehicles that were shown off by two prominent media personalities in separate “lifestyle” online video interviews were not present when the Bureau of Customs executed their raid, but later in the day the vehicles were returned after a warning was issued. And so the BOC was able to secure one Rolls-Royce Cullinan (complete with umbrella, presumably), one Cadillac Escalade, one Bentley Bentayga, one Toyota Tundra, one Toyota Sequoia TRD Pro, one Mercedes-Benz G Class, another Mercedes-Benz G Class that may or may not be a Brabus-customized one, and several more.

The motorpool truly is an impressive collection of big and expensive SUVs and trucks that can cross floods if need be. But the incident also brings up the question: Can the authorities -in this case the Bureau of Customs- hold and seize your vehicle for inspection and investigation, even if you may have bought it in good faith with your hard earned money?

We asked our attorneys who prefer to remain anonymous, and the answer is: Yes, the BOC can. It matters not if the attention regarding the collection of automobiles came about after being called out by the mayor of a city, nor does it matter if said vehicles were not involved in the actual case. So long as the BOC suspects some kind of impropriety or unusual circumstances regarding the vehicles, they can step in, hold, investigate, and seize if need be.

“BOC like BIR [Bureau of Internal Revenue] always has right to inspect and even do seizure and search if warranted. Of course with proper document like mission order and ID of personnel,” said Attorney EE. “BOC may inspect how the car was imported and if duties were properly paid.”

“Yes BOC can still seize goods brought here in violation of customs laws, even if sold to another and bought by the latter in good faith,” said Attorney PC. “The disposition to an innocent purchaser does not cure the grounds for seizure that have arisen prior.”

Import duty and taxes will not be a problem for automobiles imported by national sales companies of OEMs (e.g. Toyota, Mitsubishi, Nissan), as well as authorized distributor partners (e.g. Inchcape for Mercedes-Benz, PGA for Bentley) as these companies have to make sure they cross every T, dot every i, and pay proper taxes in order to do long term business in the country. The lawyers of these companies would be up in arms if there was some kind of tax noncompliance going on because these are usually straightforward cases if discovered. 

What we are not sure of, however, is the gray market. And judging by the vehicles, most are from the gray market. Toyota Motor Philippines does not offer the American-made Tundra or the Sequoia; these models only come in via gray importers. Same goes for the Cadillac Escalade as there is no Cadillac dealership here. The 2 G-Class units, the Bentayga, and the Cullinan could be either from the official importer or from the gray importer; on that only the BOC can tell in their investigation.

Some are also wondering: How can vehicles that are suspect when it comes to import duty payments can be registered with the Land Transportation Office? The answer is this: the LTO is not the responsible agency for import duties. Some say that so long as they can be shown a legal papertrail of ownership and transfer, the vehicle can be registered. But another Attorney chimed in, with another snippet of information.

"If I remember correctly, [there needs to be a] certificate of payment from BOC before imported cars can be registered at LTO," said the third Attorney. That would mean the car had to be cleared by BOC when it was imported, and that would be what they need to verify in the inspection. 

So if you bought a gray market vehicle in good faith and BOC suddenly finds you in their sights, what do you do? The answer is simple: make sure you have the proof (certificate of payment of duties) to show that the vehicle was indeed tax-paid when it came in the country.

“The gray market dealer should also be able to produce payment of import duties. If it is a luxury vehicle where the source is abroad, the buyer should now make sure [there are] import docs and duties [are] paid,” said Atty. EE.

If there is no proof of payment of taxes and duties on hand, and if the owner cannot contact the original dealer to secure such proof, then BOC will likely seize.

“The innocent purchaser can claim damages against the seller instead, but cannot use [that] as a defense [that] the BOC cannot seize. Otherwise people will just sell off cars to avoid customs seizure. That was never the intention of the law,” said Attorney PC.

So, the lesson here is if you’re buying a luxury automobile from any company that may not be the official dealer or importer or distributor, do your own due diligence. It will be prudent to secure the proof of payment of all taxes and duties before putting down your hard-earned cash.

In the case of some, should it be our hard-earned cash?