There may be a few questions raised about this point; first of which is that Japan uses a right-hand drive traffic system and the Philippine government bans the importation of right-hand drive cars. Japan's locally-produced cars are indeed RHD but, strangely enough, their government does allow the import and use of left-hand drive cars. In fact, LHDs are considered to be the ultimate automotive status symbol because of their higher cost, as would always be the case whenever a premium is applied. Inspite of this premium, a visit to any major city will reveal a huge number of American and European LHD cars on the road. I remember all this information from a long-ago trip to Tokyo in which I was hosted by my Filipino expat friend driving a LHD Mercedes Benz.
In due course, most of these imports (and local cars as well) will be discarded because of the very high cost of maintenance in Japan. Those which are no longer roadworthy will be sold off for parts while those still in running condition get exported, at a discount, to other countries. This makes perfect sense in the Phillipines where the cost of labor is cheap and as long as the problems are manageable, it is not too difficult to get a car back to pristine condition. What I am doing with Sergio is simply not economically viable in Japan or any other first-world country.
Which brings us to the even more important question about imports and this pertains to the legality of documents and tax payments. Right off the bat, let me point out that I am neither a lawyer nor tax accountant, so this is not intended to be considered as definitive legal advice. The information I have gathered is from people with expertise and experience in the field and also through my personal research and understanding of the regulations.
Its common knowledge that there are a lot of cars running around with doubtful documentation. The large majority of problems arises from the underpayment of taxes rather than outright illegal importation. In my searches, I have come across some units worth well into seven figures with taxes paid at only a few tens of thousands. There are also those which have had numerous owners yet the documents show no transfers of ownership at all (the blank Deed of Sale phenomena). In all likelihood, this is because of questions which can be raised during the change of ownership process, in effect making the car non-transferrable.
As a general rule, stick to cars which are in the name of the current owner and those which have complete documentation, the most important of which is the Certificate of Tax Payment (CP) from the Bureau of Customs (BOC). Unlike locally purchased vehicles, a copy of the CP must always be carried in an imported car together with the usual OR/CR. The CP should show an amount of tax paid which corresponds to the value of the car; although this is never easy for the ordinary buyer to determine due to a sliding depreciation scale imposed by the BOC. Because the basis of valuation are internationally accepted sources such as Kelley Blue Book, the age of the car upon entering the Philippines plays a big role in the computation of taxes. In other words, a 1992 model which came in '06 will have a lower amount of tax in the CP versus one imported in '96, as a result of the additional 10 years of depreciation. But using my earlier example, a token tax payment for a car worth millions should immediately raise a red flag. By the way, there is a common, but mistaken, notion that the tax is based on the selling price of the car. Tax is based on the depreciated value, which is fixed at the time of entry, and not market value, which is by nature arbitrary. The market price of any car is determined by supply and demand and includes all taxes, if properly paid. Problems arise when it is discovered later on that there was a shortfall because of underdeclarations or misrepresentations. If a car interests you enough but involves arrangements which are out of the ordinary, ask for a copy of the relevant documents and do your research by visiting the LTO branch where the car is registered or the BOC in Port Area. Be aware though that most owners will hesitate in handing out documents for the sake of their own security and understandably so. Don't be greedy by jumping in without a closer look because of a below-market price. Its that way for a reason. When in doubt, let common sense be your guide.
The Highway Patrol Group is tasked with going after such kind of vehicles. It is easy for them to distinguish between local and imported cars because of the first letter of the plate number. They lurk in most of the main roads and if you get stopped, the complete papers have to be presented. There should be no problems if the documents are in order, but if not, they have authority to impound the vehicle immediately. If you do get stuck with a car like this, the good thing is that all is not yet lost. Applying for a tax amnesty is possible and subsequently paying the correct amount will set things right. Most who took "shortcuts" refuse to do this, preferring to just take their chances on the road, because the tax plus compounded penalties can be more than what the car is worth now. This is particularly true for older models. Others like the prestige which goes with ownership but refuse to pay for the corresponding obligation. Problems which could have been avoided from the start become worse because of this kind of short-sightedness. To find out if there is any deficiency, the BOC can verify if the amount paid in the CP is correct and they will provide a certificate, if so.
Not all problems arise from the fault of importers. Constantly changing government regulations and the spread of rumours regarding what is or is not allowed adds to the confusion too.
In the case of Sergio, I believe I have properly done my due diligence. The documents from the time the car left Japan to the the time it arrived in the Phillipines are in my hands, including the original BOC gate release markings. It is not absolutely necessary to have these but it adds to the layer of legitmacy in tracing the history of the transaction. I can even go so far as to say which city it came from (Yokohama) as well as the two other vehicles it was shipped with (a Mercedes Benz sedan and a Toyota van). The worksheet showing how the tax was computed is also with me. Above all, I have a CP showing the amount of tax which accurately corresponds to the import value and the icing on the cake is a BOC verification that the tax is fully paid. I did not encounter any problems during the transfer of ownership and as I mentioned in an earlier post, the registration is already in my name. One of the things which really stood out during the acquisition of Sergio was this level of complete documentation which I did not see in the others I was considering. It seems that the previous owner who did the importation was just as fastidious in making sure that everything was above board.
With all the things that can go wrong in acquiring an import, the final question then would be: is it worth it? IMHO, yes. Bear in mind that there was no local BMW dealer network until the mid-'90s and almost all prior BMWs were imports. The biggest incentive of all, is that they will still be cheaper because of all the accumulated depreciation coming in as a used car. But just like anything else in life, it becomes a matter of judging risk versus reward. I understand that there is now a ban on the importation of second-hand BMWs upon the insistence of the local BMW authorized distributor. I think this says enough about the advantage of going this route. I will add that I did not set out with a goal of landing an import but it turned out that way because almost all of the older models in the market at the time were such.
Back to the topic at hand. I had requested the paint shop to buff a small portion of the car body in order to sample how the final finish will be. What I saw was this:
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