SC may decide on TRO vs VAT on toll fees


Posted at Aug 13 2010 12:30 AM | Updated as of Aug 13 2010 08:40 PM

MANILA, Philippines – The Supreme Court (SC) may immediately act on a petition questioning the legality of a 12% value-added tax (VAT) on toll fees in superhighways before it is implemented Monday. 

SC administrator and spokesman Jose Midas Marquez said Thursday that the high Court could decide on the petition to block the implementation of VAT on tolls before August 16.

Marquez said the court may no longer wait for its next en banc meeting on August 17 to determine if there is a need to slap a temporary restraining order (TRO) on the plan. 

"The petition was raffled off last Wednesday and is now assigned to a justice,” he said. “I would like to think that the justice handling the case would come up with a recommendation until Friday and the Chief Justice Renato Corona would likely come up with an order upon the submission of the recommendation to him." 

Former Nueva Ecija Rep. Renato Diaz and former Trade and Industry official Aurora Ma. Timbol argued in their petition that the planned VAT on toll fees is “unconstitutional” and is an "invasion of legislative powers." 

Citing a previous case involving the Manila International Airport Authority and the City of Parañaque, the petitioners said the SC has already ruled that toll fees are considered as user's taxes.

Thus, imposing VAT on user's tax “is imposing a tax on a tax,” and not “a tax on sale of services," the petitioners said. 

"To impose VAT on a user's tax is tantamount to a tax on public services. This (violates) the provisions of the Constitution that taxes must be equitable," the petitioners stressed. 

They also claimed that the proposed tax on toll fees will affect the income of the government's private partners in the tollway projects. 

Palace, BIR: All systems go

Malacañang and the Bureau of Internal Revenue both said Thursday that barring any court intervention, it is all systems go for the implementation of the VAT on the use of expressways starting next week. 

It would appear that the VAT on the toll would still be a go, unless otherwise directed,” presidential spokesperson Edwin Lacierda said, noting that the SC has not yet issued a TRO.

Lacierda's statement came after senators grilled BIR chief Kim Henares over the agency's plan to impose the 12% VAT on toll beginning 10 p.m. Monday.

Lacierda maintained that Malacañang remains firm on its stand to tax tollway operations, a move he said should have been done in 2005, when the Expanded VAT Law was enacted.

The presidential spokesman insisted that the VAT is necessary to raise additional funds for vital government social services.

"Itong VAT na ito, bagama't ay masasabi nating makakasakit sa mga motorista, ito pong makokolekta po natin ay magagamit po natin sa mga programang pangkalahatan po. So, that is the purpose why we are collecting all these taxes, for a greater good,” Lacierda said.

Senate ways and means committee chair Ralph Recto said that the E-VAT, the law he authored and now being cited by the BIR to justify its plan, never imposed VAT on tollways.

"Never did we say that toll is 'VATable' because it's an essential government service provided, and a government service should not be 'VATable.' That is our contention," explained Recto.

Senate President Juan Ponce Enrile, for his part, said the BIR should review its proposal to tax tollway operations as such move has no legal basis.