SC defers anew decision on lifting of restraining order on EVAT

The Supreme Court deferred anew yesterday its decision on lifting the temporary restraining order (TRO) against the implementation of the controversial expanded value-added tax (EVAT) law.

At a press conference, Supreme Court assistant administrator Ismael Khan Jr. said the SC justices agreed during their regular session yesterday to reset final deliberation on the EVAT law to Oct. 18 "because they want to study all the consolidated comments of the parties" in the case, "and after that we could expect a decision."

The Supreme Court earlier said final deliberations on the law would be held yesterday.

The EVAT law was in effect for only a few hours on July 1 when the Supreme Court issued the TRO after five petitions were filed by petroleum dealers, motorists’ associations and opposition lawmakers.

On the other hand, Presidential Spokesman Ignacio Bunye and Finance Secretary Margarito Teves expressed hope that the Supreme Court would lift the TRO.

They said President Arroyo would fully implement the EVAT once the TRO is lifted despite moves in both chambers of Congress to suspend provisions imposing the EVAT on power and oil sectors.

"Let’s wait for the final decision, but there will be full implementation of the EVAT," Teves assured The STAR after a Cabinet meeting presided over by Mrs. Arroyo at the Metropolitan Manila Development Authority’s main office in Makati City.

He said he hopes the Supreme Court’s final decision would be consistent with its earlier pronouncement that the EVAT is constitutional.

In a press briefing, Bunye said there is no reason to suspend or postpone the implementation of the EVAT law once the TRO is lifted.

"We have fought long and hard for this fiscal reform measure... what’s important is that we have safety nets to protect the poor," he said.

Those against the EVAT law — opposition congressmen led by House Minority Leader Francis Escudero, Bataan Gov. Enrique Garcia, the Abakada Guro party-list group, various oil dealers’ associations and Senate Minority Leader Aquilino Pimentel Jr. — questioned its constitutionality because of the discretionary powers given to the President to increase the EVAT rate from 10 to 12 percent by Jan. 1 next year.

"There are many comments submitted by the opponents of the EVAT law. All these comments were consolidated and the Supreme Court justices want to study all of them carefully and thoroughly. The Supreme Court has required the Bureau of Internal Revenue, Department of Foreign Affairs (DFA), Bureau of Customs (BOC) and the Executive Secretary to submit their own interpretations of the rules. The are many motions filed and they want to study it. This means that the TRO stays," Khan said.

Executive Secretary Eduardo Ermita, the DOF, BIR and the BOC asked the High Tribunal, through the Office of the Solicitor General (OSG), to lift the freeze on the EVAT.

In a 92-page consolidated comment, Solicitor General Alfredo Benipayo said the petitioners’ arguments in their respective motions for reconsideration were a mere rehash of the arguments they had raised in original petitions, which had been resolved by the high court in its Sept. 1 ruling upholding the constitutionality of the EVAT law.

Benipayo belied petroleum dealers’ claims that any limitation on their right to freely utilize the input VAT credits violates their property right under Article III, Section 1 of the Constitution.

He said the petroleum dealers are confusing "input VAT credits" earned by a business entity with the "right of a business to credit input tax against its output tax."

The SC, according to Benipayo, "recognized the vested rights of dealers’ earned input VAT credits, but this does not mean that such vested right may not be limited or regulated by Congress. The House minority bloc failed to support their argument that the authority given to the president to increase EVAT from 10 percent to 12 percent amounts to an invalid delegation."

Escudero earlier said that the provision for standby authority given to the President in RA 9337 should be struck down for being invalid and unconstitutional, particularly the recommendatory authority of the finance secretary to use the gross domestic product as a benchmark in determining tax rates. GDP is the local output of a country’s economy.

Benipayo said the High Tribunal already ruled that the President’s standby authority is not a case of delegation of legislative power to tax, adding that it is only a "discretion as to the execution of a law."

"In making a recommendation to the President for tax rates, the DOF secretary is acting as the agent of Congress and not of the President," he said.

In an 81-page en banc resolution penned by Associate Justice Ma. Alicia Austria-Martinez dated Sept. 1, the SC dismissed all five petitions questioning the constitutionality of the EVAT law.

The ruling would have been final if the petitioners had not filed motions for reconsideration within 15 days after the ruling was passed. — With Paolo Romero