530 Phil. 490
CARPIO MORALES, J.:
SECTION 117. Tax on franchises. – Any provision of general or special laws to the contrary notwithstanding, there shall be levied, assessed and collected in respect to all franchise, upon the gross receipts from the business covered by the law granting the franchise, a tax in accordance with the schedule prescribed hereunder:The said provision of the Tax Code was amended by Section 12 of the E-VAT Law which was passed in 1994, reading:(a) On electric utilities, city gas and water
supplies.......................................................... Two (2%) percent
(b) On telephone and/or telegraph systems, and
radio/or broadcasting stations...........................Three (3%) percent
(c) On other franchises......................................Five (5%) percent
The grantee shall file with, and pay the tax due thereon to, the Commissioner of Internal Revenue or his duly authorized representative in accordance with the provisions of Section 125 of this Code, and the return shall be subject to audit by the Bureau of Internal Revenue, any provision of any existing law to the contrary notwithstanding. (Underscoring supplied)
SEC. 12. Section 117 of the National Internal Revenue Code, as amended, is hereby further amended to read as follows:
As the immediately quoted Section 12 of the E-VAT Law shows, the payment of 3% franchise tax by a telecommunications company required under Section 117 (b) of the Tax Code was omitted.SEC. 117. Tax on Franchises. — Any provision of general or special law to the contrary notwithstanding there shall be levied, assessed and collected in respect to all franchises on electric, gas and water utilities a tax of two percent (2%) on the gross receipts derived from the business covered by the law granting the franchise.
The grantee shall file the return with, and pay the tax due thereon to, the Commissioner of Internal Revenue or his duly authorized representative in accordance with the provisions of Section 125 of this Code and the return shall be subject to audit by the Bureau of Internal Revenue, any provision of any existing law to the contrary notwithstanding.
Period Covered | Date Paid | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 nd Qtr. 1994 | 20 July 1994 | P 9,380,243.00 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3 rd Qtr. 1994 | 20 October 1994 | 10,892,806.80 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4 th Qtr. 1994 | 20 January 1995 | 14,645,196.78 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1 st Qtr. 1995 | 20 April 1995 | 9,512,684.78 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 nd Qtr. 1995 | 20 July 1995 | 9,870,148.49 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3 rd Qtr. 1995 | 22 October 1995 | 8,586,305.90 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4 th Qtr. 1995 | 22 January 1996 | 7,907,764.76 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
P 70,795,150.51 |
It is of the considered opinion of this Court that the exclusion of petitioner by way of an express amendment by deletion started immediately upon the effectivity of Republic Act No. 7716 on May 28, 1994 and with the continuing validity and operation of said Act notwithstanding the issuance of the TRO, such exclusion remain uninterrupted. As this Court sees it, the exclusion or deletion requires no enforcement and/or implementation to be applicable, which would thereby cover it within the ambit of the TRO. The words "enforcement" and "implementation" as applied to the ACT would necessitate the promulgation of rules and regulations which, in turn, demand some positive acts to be done by concerned taxpayers who will become liable to the tax, i.e., declaration and payment of taxes and compliance with reporting procedures. Exclusion or exemption, however, falls in a different class as the taxpayer so deleted or exempted is not duty bound to do any positive or negative act. xxx In this sense, the exemption or deletion benefiting petitioner can thus be stated beyond cavil to be one that is self-operative.Thus the CTA ordered petitioner to "REFUND the amount of P70,795,150.51" to respondent.
In the light of the foregoing reasons, this Court joins the petitioner in its submission that "only those provisions in R.A. 7716 which need to be implemented by the BIR were restrained but those provisions which are self-operative such as the grant of tax exemption or removal of a tax liability, which does not need implementation by the BIR to be effective, were already enjoyed by those entitled thereto upon the effectivity of the law."[12] (Emphasis and underscoring supplied)
SEC. 3. Section 102 of the National Internal Revenue Code, as amended, is hereby further amended to read as follows:
In fine, under the E-VAT Law, respondent ceased to be liable to pay the 3% franchise tax. It instead is made liable to pay 10% VAT on sale of services.SEC. 102. Value-added tax on sale of services and use or lease of properties. – (a) Rate and base of tax. - There shall be levied, assessed and collected, as value-added tax equivalent to 10% of gross receipts derived from the sale or exchange of services, including the use or lease of properties.
The phrase "sale or exchange of services" means the performance of all kinds of services in the Philippines, for others for a fee, remuneration or consideration, including those performed or rendered by construction and service contractors; x x x services of franchise grantees of telephone and telegraph, radio and television broadcasting and all other franchise grantees except those under Section 117 of this Code; x x x (Underscoring supplied)
The Court, by a vote of 11 to 4, further Resolved to ISSUE a TEMPORARY RESTRAINING ORDER, effective immediately and continuing until further orders from this Court, ordering all the respondents to CEASE and DESIST from enforcing and/or implementing R.A. No. 7716, otherwise known as the "Expanded Value Added Tax Law."Notably, there is nothing in the above-quoted order that can be read to mean that the TRO applies only to the specific provisions of the E-VAT law which were being challenged in Tolentino et al. The wording of the order leaves no doubt that what was restrained by the TRO was the implementation of the E-VAT law in its entirety.
NOW, THEREFORE, effective immediately and continuing until further orders from this Court, You, respondents Executive Secretary TEOFISTO GUINGONA, JR., Secretary of Finance ROBERTO F. DE OCAMPO, Commissioner of Internal Revenue LIWAYWAY V. CHATO, and Commissioner of Customs GUILLERMO L. PARAYNO, Jr., or your agents, representatives and/or any person or persons acting in your place or stead, are hereby ORDERED to CEASE and DESIST from enforcing and/or implementing R.A. No. 7716, otherwise known as the "Expanded Value Added Tax Law." (Emphasis and underscoring supplied)
With the issuance of the TRO, the enforcement and/or implementation of the entire E-VAT law was stopped.[16]
- Stop implementation of the registration requirement for businesses newly covered by the Expanded VAT Law as prescribed under RMO 41-94 and other related revenue issuances.
- Stop collection of the P1,000.00 annual registration fees prescribed by the expanded VAT Law.
- All VAT and non-VAT persons shall be governed by the provisions of the National Internal Revenue Code prior to its amendment by Republic Act No. 7716 (e.g., operators of restaurants, refreshment parlors and other eating places including caterers shall continue paying the caterer's tax prescribed under Section 114 of the NIRC prior to its amendment by RA 7716; sale of copra which is exempted from VAT under Section 103 of the NIRC, as amended by RA 7716, shall be subject to 10% VAT pursuant to Section 103 of the old NIRC; sale of real property which became taxable under RA 7716 shall continue to be VAT exempt pursuant to the provisions of Sections 99 and 100 of the old NIRC; etcetera).
- All sales invoices heretofore registered with the BIR as non-VAT sales invoices which have been superimposed with rubber stamp marking for issuance as VAT sales invoices pursuant to Revenue Regulations No. 10-94 shall be reverted to and considered remaining as non-VAT sales invoices.
- All other amendments of the NIRC made by RA 7716 shall be considered ineffective until the Supreme Court has declared otherwise. In the meanwhile, pending decision of the Court, claims for refund of the P1,000.00 annual registration fee made under RA 7716 shall not be given due course. (Emphasis and underscoring supplied)
[16] Wiseman v. Philipps, 191 Ark. 63, 84 S.W.2d 91.
Q-1. What are the franchise grantees subject to VAT beginning January 1, 1996? A-1 a. Telephone and telegraph companies; b. Radio and television broadcasting; and c. Other franchise grantees which are not included in No. 2 hereunder. Q-2. What franchise grantees are not subject to Vat but to the two percent (2%) tax under Section 117 of the Tax Code? A-2. a. Electric franchise grantees; b. Gas franchise grantees and c. Water utilities. Q-3. Now that franchise grantees [are] now subject to VAT, will they still be subject [to] the franchise tax? A-3. Franchise grantees now subject to Vat are no longer subject to franchise tax. Q-4. What happens to the "in lieu of all taxes" provision in the charter of a franchise grantee now covered by VAT? A-4. The "in lieu of all taxes: provision in the franchise is not affected by the expanded Vat law. VAT merely replaced the franchise tax . In other words, VAT instead of franchise tax shall be in lieu of all taxes due from a franchise grantee.