MANILA -- Militant groups said the Supreme Court (SC) decision barring the 12 percent tollway tax and toll fee increase at South Luzon Expressway (SLEx) is a huge setback to the Aquino administration.

George San Mateo, secretary general of the Pinag-Isang Samahan ng mga Tsuper at Opereytors Nationwide (Piston), said the High Court's ruling on Friday was a "big slap" on President Benigno Aquino III, who did not use his executive powers to stop the imposition of 12-percent value-added tax (VAT) on toll fees and toll fee increases.

Updates on President Benigno Aquino III's presidency

San Mateo said the drivers' group is still prepared to mount protest actions once the 10-day temporary restraining orders (TROs) of the court lapse.

Renato Reyes, secretary general of Bayan, said the Aquino administration should focus on giving "economic relief" to commuters rather than imposing higher toll fees to meet revenue targets.

"It should instead withdraw plans for increasing the planned VAT on toll fees as a response to public clamor against new economic burdens. The government should provide some economic relief for commuters and motorists," he said.

Sonny Africa, research head of think-tank Ibon Foundation, said President Aquino is following the "unjust" policies set out by former President Gloria Macapagal-Arroyo.

"It appears that the Aquino administration is going the way of the Arroyo administration in dealing with the fiscal crisis -- new taxes, higher fees, privatization, with likely cuts in social and economic services to come. All these can mean higher prices of goods and services of consumers down the line," he said.

"The TRO is welcome and it shows that the public still has remedies before them as well as highlights of public mobilization and pressure. These could be the start of public disappointment with the Aquino administration which promised so much," Africa added.

For his part, Senator Ralph Recto said the TROs will give the government time to do some legislative archeology and search for a section in past VAT laws that clearly stipulates that such will be imposed on toll fees.

"In so far as the 2005 eVAT law is concerned, there is no line there which authorizes the collection of VAT from toll road users. You can only implement a tax if it's based on legislation, not on one agency's imagination," he said.

The Supreme Court issued the TROs on the petitions of former Nueva Ecija first district representative Renato Diaz and former Trade and Industry official Aurora Maria Timbol, and the consolidated complaints of Albay Governor Joey Salceda and lawyer Ernesto Francisco Jr.

Restraining orders

At a press conference Friday, SC Administrator and spokesman Jose Midas Marquez announced that Chief Justice Renato Corona ordered the issuance of TROs in the two cases involving toll rates.

But he explained that the orders issued by the Chief Justice are still "subject for confirmation by the en banc" on its next session day, which is on Tuesday, August 17.

Marquez explained that under the rules, the Chief Justice is authorized to issue a TRO on behalf of the entire SC when it is not in session.

On the VAT on toll case, the SC ordered respondents Finance Secretary Cesar Purisima and Commissioner Kim Jacinto Henarez of the Bureau of Internal Revenue (BIR) to comment on the petition filed by Diaz and Timbol.

Purisima and Henarez were given a "non-extendible period of 10 days" from receipt of the order to respond to the petition.

Marquez said the TROs were issued due to the "urgency of the matter" considering that the VAT on toll and toll rate increase in SLEx will be implemented on Monday.

He, however, clarified that there is still a possibility that the TRO will be lifted after hearing the side of the government through the comments of Purisima and Henares.

"The court knows that taxes are the lifeblood of the government, that's why we are very careful on restraining taxes. But then again, there are equally important arguments that we have to take into consideration," he said.

Marquez explained that if the TROs are not issued, it would be "very difficult to refund the motorists" later on if the court finds out that there is actually no basis for the government to collect the VAT on toll charges and increase the rates at SLEx.

As regards the SLEx toll hike, the SC resolved to consolidate various petitions against the SLEx toll hike, including those filed by Salceda and Francisco.

In their petitions, Salceda and Francisco sought a restraining order directing TRB, South Luzon Tollway Corp. (SLTC) and Manila Toll Expressways Inc. to desist from enforcing the new increase in toll rates at the SLEx.

They also sought to nullify the Supplemental Toll Operation Agreement (STOA) for the rehabilitation, widening and expansion of SLEx.

Marquez said the SC is already deliberating on the petitions against the increase in toll rates at the SLEx and it is expected to resolve them "within a month or two."

Before the order came out Friday, despite being subjected to an intense grilling at the Senate, BIR Commissioner Henares said there are no stopping on the imposition of toll tax.

Ready for legal battle

But the Aquino government is prepared to argue the decision of the SC which, it said, could affect the social and anti-poverty programs of the administration.

"We will respect and observe the interlocutory order of the Supreme Court. The Office of the Solicitor General is prepared to discuss and argue the merits of the case," Presidential Spokesman Edwin Lacierda said in a text statement Friday.

Lacierda reiterated that the VAT on toll is not a new tax, stressing that it dates back to 2005, which the Arroyo government had declined to implement despite a reminder from the BIR in 2005 and again in 2009.

"During the Arroyo administration, the BIR issued two revenue memorandum circulars -- one in 2005 and one in 2009. For one reason or another, they refused to enforce their own orders," he said.

"Now, that was a very arbitrary move on the part of the Arroyo administration to suspend those circulars. As far as the executive branch is concerned, even during the previous administration, there was recognition of the VAT on toll," he added.

He said the Arroyo administration did not give any explanation why it arbitrarily decided not to heed the two revenue circular issued by the BIR then.

He, however, speculated that it could be due to the growing unpopularity of former president.

"I believe so, they were already not popular at baka magalit ang tao pag nagtaas pa," Lacierda said.

He said President Aquino is not afraid of the backlash, citing they are not a populist government.

Lacierda said VAT on toll would have a minimal impact on the cost of goods but would raise additional revenues the Aquino administration intends to use on its social and anti-poverty programs.

He said they would leave it to Budget Secretary Florencio Abad to look for additional sources to fund the different programs.

The BIR is hoping to raise ay least P1 billion a month from the VAT, which should have been included in the toll fees since its imposition in 2005. (Jill Beltran/Virgil Lopez/JCV/AH/Sunnex)