REPUBLIC OF THE PHILIPPINES
HOUSE OF REPRESENTATIVES
Batasan Complex, Quezon City

FIFTEENTH CONGRESS
Second Regular Session

»_ 5172

House Bill

Introduced by 1-UTAK Party-List Representative
ENGR. HOMER MERCADO

EXPLANATORY NOTE

On 05 May 1994, the Congress of the Philippines enacted Republic Act No. 7716 (the
1994 Expanded VAT Law or E-Vat Law), From the time of its enactment, the imposition
of the Value-Added Tax on toll fees was never implemented until sometime in 2009,
during the incumbency of Former President Gloria Macapagal-Arroyo, when the Bureau
of Internal Revenue (BIR) attempted to impose VAT on toll fees, However, due to strong,
opposition from motorists and other affected sectors, the imposition of VAT on toll fees
was deferred,

Upon assumption of office by President Benigao C. Aquino LIK in June 2010, the BIR
revived the idea and set to impose the tax on toll fees starting 15 August 2010. A petition
for declaratory relief was then filed before the Supreme Court assailing the validity of the
impending imposition of VAT on the collections of tollway operators. Thereafter, the
Supreme Court, on 13 August 2010, issued a Temporary Restraining Order (TRO)
enjoining the implementation of the VAT on toll fees, However, in a decision
promulgated on 19 July 2011, the Supreme Court dismissed the afore-stated petition for
lack of merit and set aside the afore-stated TRO issued on 13 August 2010,

There is now a mounting opposition to the implementation of VAT on toll fees and thus,
the need to further defer its implementation despite the recent ruling by the Supreme
Court. Several groups have likewise called the BIR and the Toll Regulatory Board (TRB)
to conduct further consultations to include also stakeholders in provinces who will be
directly affected by the impact of VAT-inclusive toll fees that would consequently push
up the costs of agricultural produce, bus fares, and basic goods being transported through
the major expressways from the nearby provinces, Recent pronouncements by the BIR
indicate their intention to impose the VAT on toll fees starting on 01 October 2011,

The issue at hand is impressed with public interest as it will not only affect the hundreds
of thousands of motorists who directly use the major expressways but potentially millions
who will be indirectly affected by the huge increase in VAT-inclusive toll fees


‘As such, in these times of economic hardship, not to mention the advent of typhoons
affecting the capital region and the nearby provinces, in order to ensure that no further
unnecessary burden be permitted by the government to aggravate and worsen the already
poor conditions of the majority of our people, there should be an amendment to the
pertinent provisions of the National Intenal Revenue Code and the EVAT Law, to the
effect that tollway operations be excluded from, and hence, not covered within, the
meaning of “sale of services” and that the tollway operators be excluded from the
coverage of “franchise grantees” under Section 108 of the National Intemal Reveme
Code (NIRC).

(

Engf. Homer A. Mercado
1-UTAK Party list

Adopt


REPUBLIC OF THE PHILIPPINES
HOUSE OF REPRESENTATIVES
Batasan Complex, Quezon City

FIFTEENTH CONGRESS
Second Regular Session

5171

Introduced by 1-UTAK Party-List Representative
ENGR. HOMER MERCADO.

EXEMPTING TOLL FEES COLLECTED BY TOLLWAY OPERATORS FROM THE
COVERAGE OF REPUBLIC ACT 7716 (THE 1994 EXPANDED VAT LAW OR
EVAT LAW) AND REPUBLIC ACT 8284 (THE 1997 NATIONAL INTERNAL
REVENUE CODE OR THE NIRC)

Be it enacted by the Senate and House of Representatives in Congress assemble:

SECTION 1, The tollway operations are excluded from, and hence, not covered within,
the meaning of “sale of services” that are subject to VAT under Section 108 of the
‘National Internal Revenue Code (NIRC).

SECTION 2. The tollway operators are excluded from the coverage of “franchise
grantees” under Section 108 of the National Internal Revenue Code (NIRC).

SECTION 3. Repealing Clause — All other laws, decrees, orders, issuances, rules and
regulations which are inconsistent with the provisions of this Act are hereby repealed,
amended or modified accordingly

SECTION 4. Separability Clause - Af, for any reason, any provision of this Act, or any
part thereof, is dectared invalid or unconstitutional, all other sections or provisions not
affected thereby shall remain in force and effect.

SECTION 5. Effectivity - This Act shall take effect fifteen (15) days after publication in
two (2) newspaperg’9f national circulation.

Approve

Engr. HOMER A. MERCADO
1-UTAK Party-list