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Palace plays the blame game, slams GMA for toll VAT ‘law’ non-implementation

SC hands TROs on toll VAT, expressways hikes

By Benjamin B. Pulta and Aytch S. de la Cruz

08/14/2010

Two restraining orders have been handed down by Supreme Court (SC) Chief Justice Renato Corona, effectively stopping the scheduled toll rate increases in the country’s expressways next week and the imposition of the 12 percent expanded value added tax (eVAT) on toll fares.

Malacañang did not hide its disappointment at the high court’s issuance of the Temporary Restraining Order (TRO) on the implementation of the eVAT on the toll fare, but quickly laid the blame on the Arroyo administration that had issued two Memorandum Circulars (MCs) in 2005 and 2009 on the implementation of the eVAT on toll fares.

Presidential spokesman Edwin Lacierda insinuated that President Aquino did the right thing, as his administration was merely implementing Arroyo’s MCs on the VAT imposition.

“Why they (Arroyo administration) haven’t

imposed the VAT on toll is the biggest question since it was very clear that the BIR said ‘let’s collect taxes on the VAT on toll’. So now that we are implementing it, we’re being perceived as being persistent on the imposition of these taxes when in fact it has been there since 2005,” Lacierda argued.

Lacierda insisted that the motorists and the general public should understand that the Aquino administration acted all the while in “good faith” in ordering the imposition of the 12-percent VAT on toll.

He explained that they are simply trying to put everything in its rightful perspective and the people should not mistake these revenue generation measures that they are striving to implement as something that will only add more burden to their lives.

Lacierda aped former President Gloria Arroyo’s spiel of preferring being unpopular but right in her decisions.

“In the short term, we’d rather be unpopular because in the long term we know the VAT that will be collected would be used for the social services that we have promised,” Lacierda stressed.

Lacierda said Malacañang will “respect and observe the interlocutory order” of the high court and will just get ready for an appeal in view of this TRO development.

“The Office of the Solicitor General (OSG) is prepared to discuss and argue the merits of the case (before the SC),” he said in a brief press statement sent to Palace reporters Friday afternoon immediately upon learning about the SC’s decision.

Earlier at a Malacañang news conference, Lacierda implied that an SC TRO may be disappointing on their part because they are counting on these taxes to be collected on toll ways to augment the funding for the social programs of Aquino.

“Our hands will be tied because we are expecting that this tax on the toll could be used to service other social programs of the government for the alleviation of poverty and all the other social services,” Lacierda said.

Bureau of Internal Revenue (BIR) Commissioner Kim Jacinto-Henares reportedly claimed that the high court’s TRO on the imposition of the VAT on toll is just a “temporary setback” for the Aquino administration.

In two separate orders signed by SC en banc Clerk of Court Ma. Luisa Villarama, Corona ordered the BIR to put off implementing the planned 12 percent eVAT on toll fees.

The second temporary restraining order on the other hand consolidated five separate petitions questioning the planned 250 percent increase in the toll rates in the South Luzon expressway ahead of the VAT imposition and stopped the increase in the meantime.

Aside from the BIR covered by the twin restraining orders were the secretary of transportation and communications,the Toll Regulatory Board (TRB),Manila Toll Expressway Systems Inc., South Luzon Tollway Corp., Philippine National Construction Corp., (PNCC),Manila North Tollways Corp., Benpres Holdings Corp., First Philippine Infrastructure Development Corp., Tollways Management Corp., MTD Manila Expressways Inc. and Citra Metro Manila Tollways Corp/, as well as “their agents,representatives or persons acting in your stead or place.”

Speaking with newsmen, spokesman Jose Midas Marquez said the TROs were handed down by Corona to prevent a complicated situation where the government may have to return the collected sums in case an unfavorable ruling is issued.

Marquez said the TRO will still be verified by the court en banc during its regular session next week.

The spokesman explained that while the high court has already upheld the constitutionality of the VAT law “where it will be imposed is another matter.”

In a 54-page motion yesterday, one of the petitioners in the toll hike cases reasserted his plea for the tribunal to hold in abeyance the implementation of the supplemental toll operation agreement (STOA) covering the South Luzon expressway pending determination of the regularity of the participation of Mark Dumol in the execution an implementation of said agreement on behalf of said agreement on behalf of the investor in view of clear conflict of interest.

Lawyer Francisco pointed out that the Manila Toll Expressway Systems INc. (MATES) was represented by its president Mark Dumol.”The investor / operator of the South Luzon Expressway, SLTC and MATES were both represented in the said STOA by Mark Dumol in his capacity as common president of said corporations.

“This is highly irregular considering the very prominent role which Mark Dumol, a former official of the Department of Public Works and Highways once played in the proceedings of the TRB, particularly its deliberations on the tollway contracts,” Francisco said.

Dumol, the petitioner claimed was the “right hand man” of DPWH Secretary Gregorio Vigilar at the time the tollway contracts were being deliberated by the Tollways Regulatory Board (TRB). Secretary Vigilar was then concurrently ex-officio chairman of the TRB. Dumol was the chief of staff of Vigilar at the time.

“In such capacity, he was appointed to the DPWH Technical Working Group that effectively usurped TRB’s role and function of studying adn examining the tollway contracts.” Francisco said adding that the TRB acted in excess of its jurisdiction and with grave abuse of discretion in entering into the tollway contracts without public bidding.

“The Ramos administration awarded the tollway contracts to a select group of foreign and local investors without any public bidding. The minutes of the TRB meetings will show that it was former President Fidel V.Ramos himself who chose the lucky investors. The one who carried out his wishes was DPWH Secretary Vigilar

“There was no public bidding,no direct negotiation, and no unsolicited proposal before TRB. The investor did not even undergo the process of pre-qualification before TRB. The award of the tollway contracts to a select group of foreign and local investors came from Malacanang,” Francisco said.

While these tollway projects were earlier represented to the public as BOT projects, it is actually the public,not the investor, who will finance the completion of the tollway projects by way of exorbitant toll fees. The net cash flow generated from toll revenue will accrue to the project until it is fully operational, Francisco pointed out.

Aquino’s allies in the Senate yesterday led in chiding BIR Commissioner Kim Henares for insisting on the imposition of the toll fare tax.

“Let this be a fair warning to Henares to sometimes listen and heed the counsel and words of my colleagues in the Senate,” said Sen. Francis “Chiz” Escudero.

“I hail the SC for its populist decision. I fully agree with the decision of the Court,” Escudero saud.

Sen. Ralph Recto, who conducted an inquiry into the VAT on toll Thursday, as chairman of the ways and means committee, said the high court’s restraining order will give the government time to do some legislative archeology and search for a section in past VAT laws.

Recto, who sponsored the passage in the Senate few years back the eVAT expressed doubts as to whether tax experts in government will manage to dig up any provision that clearly stipulates that such tax will be imposed on toll on road.

“Good luck on that expedition. In so far as the 2005 eVAT law is concerned, there is no line there which authorizes the collection of VAT from toll road users. You can only implement a tax if it’s based on legislation, not on one agency’s imagination. The river cannot rise above the source,” he said.

Minority Leader Alan Peter Cayetano and Sen. Ramon Revilla Jr. likewise welcomed the relief to motorists as this will prove to be burdensome to the public.

“I join those who have been opposing VAT on toll road as well as increases in toll road fees. We laud the SC for its timely issuance of a TRO and the importance they place on the issue,” said Cayetano.

Revilla, for his part, said the hearing conducted by the Recto committee already established the fact that there is no legal basis in the policy wanted enforced by the BIR.

“These TROs although preliminary in nature, are good indications that the SC finds merit in the claims of the public. I hope it will become permanent, discarding such policy for the benefit of the public,” he said.

With Angie Rosales

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