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Commissioner of Internal Revenue vs. Philippine Airlines, Inc.

COMMISSIONER OF INTERNAL REVENUE, Petitioner, versus PHILIPPINE AIRLINES, INC., Respondent.

G.R. No. 160528 | 2006-10-09

FIRST DIVISION
 
DECISION
 
PANGANIBAN, CJ
 
A franchise is a legislative grant to operate a public utility. Like those of any other statute, the ambiguous provisions of a franchise should be construed in accordance with the intent of the legislature. In the present case, Presidential Decree 1590 granted Philippine Airlines an option to pay the lower of two alternatives: (a) "the basic corporate income tax based on PAL's annual net taxable income computed in accordance with the provisions of the National Internal Revenue Code" or (b) "a franchise tax of two percent of gross revenues." Availment of...