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First Philippine Industrial Corporation vs Court of Appeals
· 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 said permit 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 four (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 Local Government Code.
· The City Treasurer denied the protest on the ground that FPIC cannot 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 Court of Appeals affirmed the same.
· While the SC initially denied the petition, it was reinstated after the granting of Petitioner’s Motion for Reconsideration.
Whether or not Petitioner is a common carrier and is consequently exempt from paying tax on gross receipts.
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 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 refer only to transporting goods via vehicles or 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 Local Government Code.