Supreme Court ruling on EVAT boosts share prices

Share prices closed 0.26 percent higher yesterday in cautious trade pending a final outcome to political and economic challenges facing President Arroyo, dealers said.

They said a Supreme Court ruling that a crucial expanded value added (EVAT) law was legal provided a little boost, ahead of a final congressional vote on impeachment complaints against Mrs. Arroyo on Monday.

The composite index rose 4.97 points to 1,946.38, its high for the day. It hit a low of 1,940.13. Turnover reached 1.79 billion shares worth P1.2 billion.

The all-shares index gained 5.17 points to 1,181.56.

Gainers beat losers 58 to 23, while 43 stocks were unchanged.

"The political overhang remains and investors do not want to be caught off guard," said Jose Vistan of AB Capital Securities Inc.

While the House of Representatives’ justice committee has dismissed all three impeachment complaints against Mrs. Arroyo alleging vote fraud, the full House still has to meet on Monday to ratify the rulings.

The opposition said it will try to gather the support of 79 lawmakers, a third of the House, to reject the committee’s findings and endorse the complaint to the Senate for trial.

Vistan said while the Supreme Court has removed the constitutional question surrounding the EVAT law, the centerpiece of Mrs. Arroyo’s fiscal reform program, it remains to be seen whether the government will be able to collect the tax.

The court gave parties opposed to its ruling 15 days to contest the decision.

"Anything can still happen as far the EVAT is concerned. Its implementation remains uncertain," Vistan said.

Lawmaker Joey Salceda, who has been advising Mrs. Arroyo on economic issues, said he would file a resolution asking Congress to suspend the implementation of a provision in the EVAT law which removes the exemption enjoyed by the oil and power sectors, amid rising crude prices.

Another major concern is whether Mrs. Arroyo will exercise her authority under the law to raise the EVAT rate to 12 percent from 10 percent come January, Standard and Poor’s Ratings Services credit analyst Agost Benard said.

"The test will come when the painful measures must be implemented, specifically the removal of exemptions for the oil and gas sectors that would see consumer prices rise sharply," ING Financial Markets said in a note to clients.

Philippine Long Distance Telephone Co. (PLDT) added P5 to 1,615.

Ayala Land retreated 20 centavos to P7.80, while parent Ayala Corp. gained P5 to P297.50. Bank of the Philippine Islands ended unchanged at P53.50. – AFP