SC suspends EVAT law

The Supreme Court (SC) suspended indefinitely the implementation of the expanded value-added tax (EVAT) law after opposition congressmen led by House Minority Leader Francis Escudero and dealers’ associations of the three major oil firms sought to block it.

Voting 13-2 in favor of the issuance of a temporary restraining order (TRO) on the controversial measure, the high tribunal yesterday issued a five-page en banc resolution stopping the implementation of Republic Act 9337, which took effect yesterday.

Malacañang expressed surprise and disappointment over the SC order but said it would respect the TRO though it remains firm in its stand that the EVAT is the best prescription for the country’s fiscal ills.

Press Secretary Ignacio Bunye said the solicitor general would file a motion for reconsideration next week.

Finance Secretary Cesar Purisima also said the executive branch would work for the immediate lifting of the suspension.

"This law is of grave importance to our fiscal reform program," Purisima said.

Budget Secretary Emilia Boncodin said they are hoping that the TRO will be lifted quickly as the EVAT is important to the economy.

Presidential consultant for investor relations Cora Guidote said the TRO would not affect government deficit targets but the move would send a bad signal to investors and would delay social and infrastructure projects.

A jubilant opposition, however, hailed the move as a triumph of the Filipino people.

"Tagumpay ito ng sambayanan laban sa mapang-aping mga polisiya ng administrasyon na magpapahirap lamang sa mga mamamayan. Pinapatunayan nito na mali ang ginawa ng administrasyon na pagpasa ng VAT (This is a triumph of the public against abusive polices of the administration that add burden to the Filipino people. This only proves that passing the VAT law is wrong)," Escudero said.

Chief Justice Hilario Davide Jr. and Justice Reynato Puno, voted against the issuance of the TRO, saying that the collection of taxes cannot be prohibited, as revenues are the lifeblood of the nation.

On the other hand, Justices Angelina Sandoval-Gutierrez, Renato Corona and Antonio Carpio called long-distance from Madrid to convey their votes for the issuance of the TRO. Justices Consuelo Ynares-Santiago and Alicia Austria-Martinez conveyed their votes through their cell phones.

"Effective immediately and continuing until further orders from this court, you, respondents Executive Secretary Eduardo Ermita, Secretary of Finance Cesar Purisima and Commissioner of Internal Revenue Guillermo Parayno Jr., your agents, representatives, or persons acting in your place or stead, are hereby enjoined from enforcing and implementing RA 9337, otherwise known as the EVAT," the High Court ruling signed by Ma. Luisa Villarama, acting clerk of court, read.

The tribunal also ordered Ermita, Purisima and Parayno to submit their comment within ten days. The oral argument for the case was set on July 26.

Earlier, opposition congressmen led by Escudero filed a petition before the SC to stop the EVAT’s implementation, saying that the law was unconstitutional.

Members of the Pilipinas Shell Dealers Inc., Petron Dealers Association and the Association of Caltex Dealers of the Philippines cited the same reason in a separate petition.

Senate Minority Leader Aquilino Pimentel Jr. had suggested a tax boycott if the SC failed to act favorably on the petitions.

Surge In Fuel Prices

The EVAT, which took effect on July 1, ended VAT exemptions enjoyed by some industries, such as power, electricity, air and sea transport.

On the first day of its implementation, fuel prices surged as oil companies adjusted prices to reflect the 10-percent VAT.

Caltex Philippines Inc. raised its pump prices effective 12 midnight on Thursday. Its Vortex Gold is up by P2.67 per liter or from P31.20 to P33.87. The increase for Vortex Silver is slightly less at P2.01 per liter or from P30.64 to P33.25. There were also smaller increases for "socially sensitive" products like diesel, kerosene and liquefied petroleum gas (LPG). Diesel was higher by 55 centavos at P29.50 while the price of kerosene is up by P1.74 per liter. An 11-kilogram LPG tank is now priced at P413, after an increase of P30 per tank.

For its part, Petron Corp. raised its pump price for super unleaded gas by P2.61 per liter to P33.10; XCS Plus by P2.68 per liter or to P33.80; and diesel by 55 centavos to P29.40.

Pilipinas Shell Petroleum Corp.’s new fuel prices are as follows: diesel, P29.45; super unleaded gasoline, P33.10; super premium gasoline, P33.71; Velocity, P34.54; and LPG, P475.20.

Fernando Martinez, chairman of the Independent Philippine Petroleum Companies Association (IPPCA), said the smaller oil players also raised their prices based on simulations made earlier by the Department of Energy (DOE).

The DOE insisted that the hike in fuel prices should be less than 10 percent since mitigating measures, such as a cut in excise taxes and import duties, reduced in part increases on certain products.

Energy Secretary Raphael Lotilla explained that the actual impact of EVAT will vary from one gas station to another even for the same product as competition will also play a major role in capturing a larger market.

As a result of the initial implementation of the EVAT, travelers also braced to pay more for local or overseas travel.

Leoncio Dakila "Oni" Nakpil II, chairman of the Airline Operators Council, an organization of station managers of the international airlines operating in the country, said they are waiting for the EVAT guidelines before imposing the 10-percent tax on air tickets.

"Definitely, the price of air tickets will increase because it (the VAT) will be passed on to consumers," Nakpil told The STAR in an interview.

While tollway companies such as the North Luzon Expressway (NLEX), the Manila-Cavite toll Expressway, and the Star Tollway in Batangas have started imposing the 10-percent VAT on their toll rates, the South Luzon Expressway (SLEX) and the Skyway delayed the VAT implementation for a week to allow owners of vehicles using the expressway to adjust and for SLEX to properly disseminate the information. — Jose Rodel Clapano, Paolo Romero, Aurea Calica, Rocel Felix, Marianne Go, Rainier Allan Ronda, Sandy Araneta, Marvin Sy, AFP