VAT exemption for Skyway toll sought

The Philippine National Construction Co. (PNCC) wants the government to exempt its Skyway toll from the value added tax (VAT), warning of adverse public reaction should the toll be subjected to the tax.

PNCC has asked the Department of Finance (DOF) to consider the exemption of Skyway tolls from VAT, arguing that its charter exempts the company from all taxes except income and real property taxes.

Documents revealed that the PNCC was invoking Presidential Decree 1113 issued by the late President Ferdinand E. Marcos which accorded PNCC the exemptions.

PNCC argued in its presentation that since PD 1113 was a special law, it would require another special law to amend its provisions and remove its exemptions. The company argued that the VAT law, being a general law, does not suffice to amend the special law.

PNCC explained that the VAT was not included in the formulation of its tollway fee for the Metro Manila Skyway Project.

The company said the existing tollway fee is based on the formula under the supplemental toll operations agreement between PNCC, the government and the Citra Metro Manila Tollways Corp.

According to PNCC, the application of the VAT on the Skyway toll which is already the most expensive toll fee in the country, would raise a howl among users.

PNCC, however, will be going against the momentum of the Bureau of Internal Revenue (BIR) which is under pressure to increase its collections by plugging the loopholes in the VAT implementation.

The company is also under pressure to clear the path for the resumption of the Metro Manila Skyway Project as the Indonesian firm P.T. Citra Lamtoro Gung Persada has renewed talks with its investors and creditors for funding Stage 2 and Stage 3 of the elevated highway system.

PT Citra Lamtoro Gung Persada has begun looking into new strategies that would allow its joint venture company to resume and eventually complete the project.

According to sources, the Indonesian company wants to resume the construction of Stage 2 and Stage 3 of the Skyway System but this would entail a fresh infusion of capital.

PNCC had formed a joint-venture company with PT Citra Lamtoro, known as the Citra Metro Manila Tollways Corp. (CMMTC), which is in charge of the project’s financing, design and construction.

The Skyway facility itself, however, is maintained and operated by PNCC Skyway Corp. (PSC), a subsidiary of the PNCC which formed the company in compliance with a stipulation in the Supplemental Toll Operations Agreement (STOA) signed between the PNCC and P.T. Citra Lamtoro.

Thus far, the joint venture has only completed the first 4.7-kilometer Stage 1 of the project from Sen. Gil J. Puyat Ave. (formerly Buendia) in Makati City to the Bicutan exit of the South Super Highway in Parañaque City.

Stage 1 which was opened to the motoring public on Dec. 17, 1998, cost a total of $419 million. However, sources said Stage 2 and 3 would have to be reevaluated in order to update the project cost estimate based on current assumptions.

Sources said the Indonesian company was eager to resume the project because Stage 1 cannot be maximized if the Skyway is not extended from Bicutan to Alabang (Stage 2) and from Sen. Gil J. Puyat Ave. to Balintawak (Stage 3).

When completed, the Skyway system will cover 37 kilometers and connect to the Alabang viaduct which also has to undergo a major rehabilitation before it is allowed for use by the general public.

The Alabang viaduct rehabilitation, however, is not part of the Skyway project but another PNCC undertaking that would also include the extension of the South Luzon Expressway (SLEX) from Calamba to Sto. Tomas, Batangas where it would link to the Batangas Port.

The project was made critical by the component that requires the immediate rehabilitation of the Alabang Viaduct which has been closed to large vehicles for years.

The project is to be funded by the PNCC out of a loan from the National Development Co. (NDC), the state investment arm, under a build-lease-own scheme where PNCC will build and then lease the facility.