The Supreme Court (SC) on Friday issued two separate orders stopping the government from imposing a 12 percent value-added tax (VAT) on tollway charges nationwide as well as the implementation of the 250-percent increase in toll rates at the South Luzon Expressway (SLEx).

Both the VAT on toll and the SLEx toll hike were scheduled to be implemented on Monday, August 16.

Court Administrator Jose Midas Marquez announced in a press conference that Chief Justice Renato C. Corona ordered the issuance of temporary restraining orders (TROs) in the two cases involving toll rates.

This is the second time the Chief Justice exercised his TRO powers since he assumed office in May. OnMay 24, or exactly one week after his appointment, Corona issued a status quo ante order stopping the sale of the 246-megawatt hydroelectric power plant component of Angat Dam in Bulacan.

Marquez explained that under the rules, the Chief Justice is authorized to issue a TRO on behalf of the entire Supreme Court when it is not in session.

He said a TRO issued by the Chief Justice is still “subject for confirmation by the en banc” during its next session day, which is on Tuesday, August 17.

On the VAT on toll case, the SC ordered respondents Finance Secretary Cesar Purisima and Commissioner Kim Jacinto Henares of the Bureau of Internal Revenue (BIR) to comment on the petition filed by former Nueva Ecija Rep. Renato Diaz and former Trade and Industry Assistant Secretary Aurora Ma. Timbol.

Purisima and Henares were given a “non-extendible period of 10 days” from receipt of the order to respond to the petition.

Marquez said the TROs were issued due to the “urgency of the matter” considering that the VAT on toll and toll rate increase in SLEx will be implemented on Monday.

He, however, clarified that there is still a possibility that the TRO will be lifted after hearing the side of the government through the comments of Purisima and Henares.

“The court knows that taxes are the lifeblood of the government that’s why we are very careful on restraining taxes,” Marquez pointed out. “But then again there are equally important arguments that we have to take into consideration,” he added.

Marquez explained that if the TROs are not issued, it would be “very difficult to refund the motorists” later on if the court finds out that there is actually no basis for the government to collect the VAT on toll charges and increase the rates at SLEx.

The BIR earlier directed the Toll Regulatory Board (TRB) to implement the VAT on toll rates starting August 16. It said the new tax measure will add P1 billion monthly to government coffers.

The tax collecting agency claimed the tax should have been collected since 2005.

But Marquez said the “government should be faulted for not implementing it right away.”

Concerning the SLEx toll hike, the SC resolved to consolidate various petitions against the rate increase, including those filed by Albay Gov. Joey Salceda and lawyer Ernesto Francisco, Jr.

In their petitions, Salceda and Francisco sought a restraining order directing TRB, South Luzon Tollway Corp. (SLTC), and Manila Toll Expressways, Inc. to desist from enforcing the new increase in toll rates at the SLEx.

They also sought to nullify the Supplemental Toll Operation Agreement (STOA) for the rehabilitation, widening, and expansion of SLEx.

Marquez said the SC is already deliberating on the petitions against the increase in toll rates at the SLEx and it is expected to resolve them “within a month or two.”

Last Wednesday, the SC was asked by Diaz and Timbol to stop the BIR and TRB from adjusting the toll rates to reflect the VAT beginning Monday.

The two urged the SC to declare that toll rates are not included in the sale or exchange of services under Republic Act (RA) 8424 or the Comprehensive Tax Reform Act of 1997 and whether or not it is covered by RA 7716, otherwise known as the Expanded VAT Law.

They also also want the High Court to declare that VAT cannot be imposed on toll without the approval of Congress, pointing out that the BIR’s act was an “invasion of legislative powers.

Palace to respect decision
Malacañang said it will respect the Supreme Court decision.

“We will respect and observe the interlocutory order of the Supreme Court. The Office of the Solicitor General is prepared to discuss and argue the merits of the case,” Presidential Spokesperson Edwin Lacierda said.

Lacierda earlier Friday said they would respect the Supreme Court if it decides to stop the implementation of the VAT on toll on Monday, and would just look for other measures to fund the government's programs.

But this does not mean new taxes, Lacierda stressed as Aquino remains true on his campaign promise of not implementing new tax measures.

“We intend to plug the leakages in the revenue agencies concerned and to do some savings plus the fact that we're doing zero based budgeting to make sure that the rpograms are all workable and doable," Lacierda said citing one way of increasing government revenues.

The Palace had downplayed the effects of the impending imposition VAT on toll rates on the cost of goods, saying that it would only result to “very very minimal” half a centavo increase for every kilogram of commodities.

Senate lauds TRO
At the Senate, senators lauded the Supreme Court.

“Mabuti naman at nag isyu ng TRO at least mapag-usapan ng husto, makapag ruling ang supreme court dahil marami talagang nagdududa kung ito’y tama (It’s good that a TRO has been issued at least this can be discussed and the SC can rule on this decisively because a lot of people really has doubts if this is right),” Sen. Franklin Drilon said in a text message.

Drilon also said that the decision only shows that the Palace should heed the Senate on these kind of issues.

“Ito po’y nagpapakita na ang Senado ay dapat pakinggan ng Malacañang sa mga isyung ganito,” he said.

Senator Francis Escudero, on the other hand said, the TRO should serve as a warning to BIR Commissioner Henares.

“I hail the SC for their populist decision. I fully agree with the decision of the court. Let this be a fair warning to Commissioner Henares to sometimes listen and heed the counsel and words of my colleagues in the Senate,” Escudero said.

Senators on Friday insisted that the planned imposition of the 12-percent Value Added Tax (VAT) on road toll by the BIR has no legal basis and should be scraped.

Escudero said he would personally advise Henares to first study the VAT law “really well” to avoid putting President Benigno Aquino III in a bad light.

During Thursday’s hearing at the Senate, Henares said the implementation of the 12 percent VAT would push through on Monday.

“I would advise the BIR Commissioner to study the VAT law really well to avoid putting the President in a possible awkward situation if she is reversed by the courts,” Escudero said.

Senators have earlier insisted that imposing an increase in toll fees is a form of a new tax. They also said the move by the BIR is clearly a “tax on a tax” and thus is illegal.

“It is clearly a tax on a tax which is not allowed by law. Besides, (presidential spokesperson Edwin) Lacierda is hair-splitting when he claimed it is not a new tax because it is. Pabigat ito sa taombayan (This is an added burden to the people),” Escudero said.

BIR to comply
The BIR said it will suspend the collection of the 12-percent VAT from motorists passing through expressways in compliance with the TRO.

Commissioner Henares said, “I have yet to see the copy of the TRO and heard it only through the media.”

“But if it is true, then we will comply with the SC order, otherwise we will be held in contempt,” she added.

She clarified, however, that the TRO is just a small part of the ballgame and “we will defend and pursue our position that the collection of the VAT from tollways is right.”

The BIR chief said earlier that only the court can stop the BIR from imposing the VAT from five toll roads, including the North and South Luzon Expressways.

The Provincial Bus Operators of the Philippines (PBOAP) served notice it will seek a fare increase to cover the additional expense.

Traders also said they will also increase the prices of foodstuffs like vegetables, meat and poultry products transported to Metro Manila via the expressways when the VAT is finally imposed.

In Memorandum Circular No. 63-2010 signed by Henares, the tax will be collected from all types of vehicles using the highways.

Henares said the collection of the tax is prescribed under the Tax Code. She said it is not one of those items excluded from the payment of the VAT like schools and agricultural products.

She said the BIR will insist in the collection of the VAT unless Congress comes out with a law abolishing it, adding that the government needs more funds to finance President Aquino's pro-poor program. (With reports from JC Bello Ruiz, Hannah L. Torregoza, and Jun Ramirez)