08 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.
Digested by: Dolar, Theodore Adriel S.
Topic: Common Carriers
Doctrine: Common carriers are not
confined to transport of good using vehicles
of crafts. The transport of oil through a
series of pipelines can be considered as the
work of a common carrier.
Emergency Recit: Petitioner operated
pipelines and transported oil through the
same. When a LGU sought to tax it,
Petitioner claimed tax exemption as a
common carrier. The SC ultimately held that
Petitioner is a common carrier despite it’s
business being transporting oil through
pipelines as the law does not distinguish
how a carrier transports goods.
FACTS
 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 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.- YES
HELD
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 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.

PETITION is GRANTED.