First Philippine Industrial Corporation vs. Court of Appeals, Hon. Paterno V.

Tac-an, Batangas City, and

Adoracion C. Arellano, in her official capacity as City Treasurer of Batangas

G.R. No. 125948 December 29, 1998 Martinez, J.

Facts:
- Carrier: First Philippine Industrial Corporation
- Goods: Petroleum products

Petitioner FPIC is a grantee of a pipeline concession under RA 387 (Petroleum Act) to contract, install, and
operate oil pipelines. Sometime in January 1995, the FPIC applied for a Mayor’s Permit from the Office of
the City Mayor of Batangas. Before this was to be issued, the City Treasurer required the payment of local
tax based on gross receipts from the fiscal year 1993 pursuant to the Local Government Code. This
amounted to Php 956, 076.04, payable in 4 installments. FPIC paid the first installment under protest. In
its protest, FPIC contended that it is engaged in the business of transporting petroleum products from
Batangas refineries, via pipeline, to Sucat and JFT Pandacan Terminals. FPIC claimed exemption from
paying tax on gross receipts under Sec. 133 of the LGC. It further alleged that transportation contractors
are not included in the enumeration of contractors under Sec. 131 of the LGC.

The City Treasurer denied the protest on the ground that FPIC cannot be considered to be engaged in the
transportation business. It was also asserted by the Respondent City Treasurer that pipelines are not
included in the term “common carrier” which it contended solely refers to trucks, trains, ships, and the
like. As such, the City Treasurer held that FPIC is not exempted. FPIC filed a complaint for tax refund with
the RTC Batangas, but the same was denied. The CA affirmed the same. While the SC initially denied the
petition, it was reinstated after the granting of Petitioner’s MR.

Issue: Whether Petitioner is a common carrier and is consequently exempt from paying tax on gross
receipts.

Ruling: Yes. A common carrier may be defined as one who holds himself out to the public as engaged in
the business of transporting persons or property from place to place, for compensation, offering his
services to the general public. The test for determining whether a party is a common carrier of goods is:

1. He must be engaged in the business of carrying goods for others as a public employment, and must
hold himself out as ready to engage in the transportation of goods for person generally as a business
and not as a casual occupation;
2. He must undertake to carry goods of the kind to which his business is confined;
3. He must undertake to carry by the method by which his business is conducted and over his
established roads; and
4. The transportation must be for hire.

Based on these definitions and requirements, there is no doubt that FPIC is a common carrier. The
Respondents’ argument that the term common carriers refers only to transporting goods via vehicles or

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vessels is erroneous. The definition makes no distinction as to the means of transporting. Further, under
Art. 86 of the Petroleum Act, FPIC is considered a common carrier. The BIR likewise consider FPIC a
common carrier in BIR Ruling No. 069-83. From the foregoing, there is no doubt that the petitioner is a
common carrier and is exempt from the business tax under Sec. 133 of the LGC.

Doctrine: The definition of a common carrier makes no distinction as to the means of transporting the
goods.

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