TRO vs toll VAT stays - Supreme Court

MANILA, Philippines - The Supreme Court (SC) has junked the bid of the government to proceed with the planned toll increase at the North Luzon and South Luzon expressways due to the collection of a 12-percent value-added tax (VAT).

In a resolution released yesterday, the SC did not grant a motion of the Department of Finance (DOF) and the Bureau of Internal Revenue (BIR) seeking to lift the temporary restraining order (TRO) the Court issued on the toll hike in the North Luzon Expressway (NLEX) and the South Luzon Expressway (SLEX) and other major superhighways last August.

Instead, the SC resolved to “give due course” to the petition questioning the constitutionality of the VAT on toll jointly filed by former Nueva Ecija Rep. Renato Diaz and former Assistant Secretary Aurora Maria Timbol of the Department of Trade and Industry.

The SC did not lift the TRO after considering “allegations, issues and arguments” in the petition of Diaz and Timbol and in the comment filed by respondents Finance Secretary Cesar Purisima and BIR Commissioner Kim Jacinto-Henares.

The Court also required the parties to submit their respective memoranda expounding their positions within a non-extendible period of 10 days from receipt of notice before submitting the case for resolution.

In their petition filed last August, Diaz and Timbol argued that the imposition of VAT on toll is unconstitutional and can be considered as an “invasion of legislative powers.”

They also stressed 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.