Temporary Restraining Order on RA 7716 VAT Law

The Supreme Court consolidated cases and set them for hearing on July 7, 1994.
By a vote of 11 to 4, the Supreme Court issued a Temporary Restraining Order.
The Temporary Restraining Order orders respondents to cease and desist from enforcing and/or implementing Republic Act No. 7716.
The Temporary Restraining Order applies to enforcement and/or implementation of Republic Act No. 7716, otherwise known as the “Expanded Value Added Tax Law.”

The BIR enjoins a stop to the registration requirement for businesses newly covered by the Expanded VAT Law under RMO 41-94 and other related revenue issuances.
The BIR enjoins a stop to the collection of the PHP 1,000.00 annual registration fees prescribed by the Expanded VAT Law.
The BIR enjoins that all VAT and non-VAT persons be governed by the National Internal Revenue Code provisions prior to its amendment by Republic Act No. 7716.
The BIR enjoins that amendments introduced by Republic Act No. 7716 be treated as ineffective until the Supreme Court declares otherwise.

For the interim period, operators of restaurants, refreshment parlors, and other eating places including caterers must continue paying the caterer’s tax under Section 114 of the NIRC prior to its amendment by RA 7716.
For the interim period, sale of copra remains exempt from VAT under Section 103 of the NIRC as amended by RA 7716, and must be subject to 10% VAT under Section 103 of the old NIRC.
For the interim period, sale of real property that became taxable under RA 7716 must continue to be VAT exempt under the provisions of Sections 99 and 100 of the old NIRC.
All other tax consequences addressed by the Temporary Restraining Order follow the governing effect of the pre-RA 7716 NIRC rules during the TRO period.

Non-VAT sales invoices already registered with the BIR that were later superimposed with rubber stamp marking for issuance as VAT sales invoices under Revenue Regulations No. 10-94 must be reverted.
The reverted invoices must be treated as remaining non-VAT sales invoices for issuance purposes.

All amendments of the NIRC made by Republic Act No. 7716 are treated as ineffective until the Supreme Court declares otherwise.
During the pending Supreme Court decision, claims for refund of the PHP 1,000.00 annual registration fee made under RA 7716 must not be given due course.

The cease-and-desist order covers 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., together with their agents, representatives, and persons acting in their stead.
All concerned are enjoined to comply immediately with the specific operational stops and adjustments stated in the circular.
The BIR Commissioner adopts the circular upon signing by LIWAYWAY VINZONS-CHATO as Commissioner.

The Temporary Restraining Order continues until further orders from the Supreme Court.
The interim tax and administrative rules remain in force pending decision of the Supreme Court on the effect and enforcement of Republic Act No. 7716.