MANILA, Philippines?The Supreme Court on Friday stopped the government from imposing Value Added Tax on toll rates as well as the implementation of the more than 250 percent toll increase in the South Luzon Expressway (SLEx).

At a press conference, the high court gave Finance Secretary Cesar Purisima and Bureau of Internal Revenue (BIR) Commissioner Kim Henares 10 non-extendible days to comment on the petition filed by former Nueva Ecija 1st District Representative Renato Diaz and former Trade and Industry assistant secretary Aurora Ma. F. Timbol who argued that the imposition of VAT on toll fees can be considered ?invasion of legislative powers.?

?If the Court finds out that the VAT is improperly issued [and there was no TRO], it will be difficult for the government to refund collected tax,? Court Administrator and High Court Spokesman Jose Midas Marquez said.

Diaz, principal author in the House of Representatives of Republic Act 8424 or the Comprehensive Tax Reform Act of 1997 and RA 7716 or the Expanded Value Added Tax Law said the toll fees are not included in the coverage of sale on services subject to VAT.

?If the lawmakers did not include toll fees as subject to VAT, the BIR, therefore, should not by implication nor interpretation expand what the legislators enumerated under the law. To include matters which the legislators did not intend to include is considerably dangerous, as it is in effect, invading the legislative field,? the petitioners said.

Following the high court ruling on Manila International Airport Authority v. Court of Tax Appeals (CTA), Diaz said toll fees are ?user?s tax.?

Being a ?user?s tax,? he said, the imposition of VAT on user?s tax is in effect ?imposing tax on a tax and not a tax on sale of services.?

On the other hand, the high court issued a temporary restraining order on the toll hike increase at SLEx.

Marquez said the petitions filed by lawyer Ernesto Francisco and Albay Governor Joey Salceda seeking to stop the toll increase has been consolidated.

He added that the case is already for decision and since the high court cannot promulgate the decision before Monday or the scheduled start of SLEx toll hike, the high court opted to issue the TRO.

Francisco, in his petition, said the Toll Regulatory Board (TRB) committed grave abuse of discretion in entering into the tollways contract without public bidding.

He added that the tollways contract also provided for the initial toll rates as well as periodic toll rate increase using a built-in automatic toll rate adjustment formula that guarantees the investors fixed returns but negate the statutory requirement for the conduct of a public hearing.

Under Supplemental Toll Operation Agreement (STOA), from P30.00 rate for Class 1 vehicle at elevated portion Buendia to Bicutan; Class 2 of P60 and Class 3 of P90 per entry in 1997, it increased to P55, P110 and P165 per entry in 1998. Here the government can no longer back out because the rate is fixed in the STOA.

Through the STOA, there will also be more and higher toll rate increases every other year, says Francisco as well as interim toll rate adjustments in between.

Francisco also asked the high court to declare as unconstitutional Section 3 paragraph A of the Toll Operation Decree that grants TRB the power to enter into contracts in behalf of the government for the construction, operation and maintenance of toll facilities.

He also asked that Section 3 (h) of the same law be declared unconstitutional because the giving of the President of the Philippines the power to approve the transfer or grant of usufruct of the franchise of a tollway operator, particularly PNCC is an encroachment of the power of Congress.

Meanwhile, Salceda last June asked the Supreme Court told the high court that ?toll fees should not be increased by mere contract between the Toll Regulatory Board (TRB) and its contracting parties thru the Supplemental Toll Operation Agreement (STOA). Without notice and hearing which are mandatory twin requisites of Section 3(d), P.D. 1112 (Toll Operation Decree), the increase in toll fees is null and void for the reason that such action violates a mandatory provision of law.?

Under the STOA, the South Luzon Tollways Corp. (SLTC) which holds the 25-year concession on the 30-kilometer SLEx, to raise toll rates by 250 percent beginning 12:01 a.m. on June 30 but moved to July 7 in deference to the inauguration of President Benigno Aquino III.

With the 250-percent increase, private passenger vehicles would be paying P2.73 per kilometer over the current 82 centavos per kilometer.

But Salceda said under PD 1112, the authority of TRB to enter into contracts in behalf of the Republic of the Philippines extends only to construction, operation and maintenance of toll facilities.

?Clearly, the TRB has committed a grave abuse of discretion amounting to lack or excess of jurisdiction when it entered into a contract which includes, as part of its contractual provisions, the determination and fixing of toll rates, including its increase, in clear violation of its express and limited authority under PD 1112,? Salceda explained.

Salceda added that such massive increase ?will prompt substantial negative consequences in the lives of ordinary citizens of the Bicol region.?