7/25/2019 Diaz Et Al vs Sec of Finance and Cir

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DIAZ et al vs SEC OF FINANCE AND CIR

Facts:

Renato Diaz and Aurora Ma. Timbol in this case assails the validity of the impending imposition of the Value-AddedTax or VAT. They claim that since the VAT ould result in increased toll fees! they have an interest as regular users oftoll ays in stopping the "#R action.

Diaz and Timbol hold the vie that $ongress did not! hen it enacted the %#R$! intend to include toll fees ithin themeaning of &sale of services& that are sub'ect to VAT( that a toll fee is a &user)s tax!& not a sale of services( that toimpose VAT on toll fees ould amount to a tax on public service( and that! since VAT as never factored into theformula for computing toll fees! its imposition ould violate the non-impairment clause of the constitution.

Diaz and Timbol assert that the substantiation re*uirements for claiming input VAT ma+e the VAT on toll ayoperations impractical and incapable of implementation. They cite the fact that! in order to claim input VAT! the name!address and tax identification number of the toll ay user must be indicated in the VAT receipt or invoice. The mannerby hich the "#R intends to implement the VAT , by rounding off the toll rate and putting any excess collection in anescro account , is also illegal! hile the alternative of giving &change& to thousands of motorists in order to meet theexact toll rate ould be a logistical nightmare. Thus! according to them! the VAT on toll ay operations is not

administratively feasible.Issue:

Whether or not the imposition of VA on toll!a" operators is not a#ministrativel" feasi$le an# cannot $eimplemente#% NO%

Rulin&:

Administrative feasibility is one of the canons of a sound tax system. #t simply means that the tax system should becapable of being effectively administered and enforced ith the least inconvenience to the taxpayer. %on-observanceof the canon! ho ever! ill not render a tax imposition invalid &except to the extent that specific constitutional orstatutory limitations are impaired.& Thus! even if the imposition of VAT on toll ay operations may seem burdensometo implement! it is not necessarily invalid unless some aspect of it is sho n to violate any la or the $onstitution.

ere! it remains to be seen ho the taxing authority ill actually implement the VAT on toll ay operations. Anydeclaration by the $ourt that the manner of its implementation is illegal or unconstitutional ould be premature.Although the transcript of the August /! /0 0 1enate hearing provides some clue as to ho the "#R intends to goabout it! the facts pertaining to the matter are not sufficiently established for the $ourt to pass 'udgment on. "esides!any concern about ho the VAT on toll ay operations ill be enforced must first be addressed to the "#R on homthe tas+ of implementing tax la s primarily and exclusively rests. The $ourt cannot preempt the "#R)s discretion onthe matter! absent any clear violation of la or the $onstitution.