Right of Asian Spirit to Avail of Tax Privileges Enjoyed by PAL under Its Charter

DOJ OPINION NO. 038, s. 2006 June 16, 2006 Secretary Leandro R. Mendoza Department of Transportation and Communication 17/F The Columbia Tower, Brgy. Wack-Wack Ortigas Ave., 1555 Mandaluyong City Sir: This refers to your request for confirmatory opinion on whether Asian Spirit, Inc. ("Asian Spirit"), can avail of the tax privileges enjoyed by the Philippine Airlines (PAL) under its Charter. 1 The query precipitates from the express provision of R.A. No. 9183, 2 particularly Section 14 thereof, which states that: "Sec. 14. Interpretation of Franchise. This franchise shall not be interpreted to mean as an exclusive grant of the privileges herein provided for. However, in the event that any competing individual, partnership or corporation shall receive a similar permit or franchise with terms and/or provisions more favorable than those herein granted or which tend to place the herein grantee at any disadvantage, then such terms and/or provisions shall be deemed part hereof and shall operate equally in favor of the herein grantee." In this connection, the Asian Spirit claims that by virtue of the above-quoted categorical provision on the "most favored treatment clause", the tax exemptions, privileges and other favorable terms enjoyed by the other airlines, particularly the PAL under its charter 3 be automatically incorporated in their franchise. It further claims that considering that it is paying for taxes, duties, charges, royalties or fees dues which are not usually imposed to other airlines, the Asian Spirit is placed at a disadvantage position. aSEDHC Hence this query. The Secretary of Justice in previous similar queries has had the occasion to interpret the "most favored treatment clause." Particularly, in DOJ Opinion No. 55, 2005, citing Opinion No. 51, s. 1987, wherein the Secretary opined that: "The basic idea of the aforesaid clause is "fair play", such that a rival firm will not gain an undue or unfair advantage over the other in the pursuit of their respective competing business. In other words, the purpose of the said clause is to place the holder thereof on an equal footing with its rival enterprise by not giving such competitors undue advantage" By placing the franchise holders in equal footing it gives them opportunity to have free competition, which eventually redound to the benefit of the public. For which reason and by virtue of fair play, Asian Spirit should be treated equally with other airlines. TECcHA Moreso, settled is the rule under statutory construction that when the words and phrases of the statute are clear and unequivocal, their meaning must be determined from the language employed and the statute must be taken to mean exactly what it says ( Baranda vs. Gustilo , 165 SCRA 757, 758-759). The rationale is because where the law speaks in clear and categorical language, there is no room for interpretation; there is only room for application ( Cebu Portland Cement vs. Mun. of Naga, Cebu , 24 SCRA 708; also, Nepomuceno vs. Rehabilitation Finance Corporation , 110 Phil. 42; Pascual vs. Pascual-Bautista , 207 SCRA 561, 567). Please be guided accordingly. (SGD.) RAUL M. GONZALEZ Secretary Footnotes 1. Presidential Decree, No. 1590 (An Act Granting a New Franchise to Philippine Airlines, Inc. to Establish, to Operate, and Maintain Air Transport Services in the Philippines and Other Countries). 2. An Act Granting the Asian Spirit, Inc. a Franchise to Establish, Operate and Maintain Domestic and International Airport Services. 3. Sec. 13 of P.D. No. 1590.