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Fpic V Ca

FPIC, a grantee of an oil pipeline concession, paid local taxes under protest when applying for a Mayor's Permit in Batangas City. FPIC argued it was exempt as a transportation contractor. The RTC and CA ruled FPIC was not a common carrier and thus not exempt. However, the Supreme Court ruled FPIC is a common carrier based on the definition in civil code, as it transports petroleum products through pipelines for others as a public business. As a common carrier already paying common carrier taxes, FPIC is exempt from additional gross receipts taxes to prevent duplicate taxation.

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68 views2 pages

Fpic V Ca

FPIC, a grantee of an oil pipeline concession, paid local taxes under protest when applying for a Mayor's Permit in Batangas City. FPIC argued it was exempt as a transportation contractor. The RTC and CA ruled FPIC was not a common carrier and thus not exempt. However, the Supreme Court ruled FPIC is a common carrier based on the definition in civil code, as it transports petroleum products through pipelines for others as a public business. As a common carrier already paying common carrier taxes, FPIC is exempt from additional gross receipts taxes to prevent duplicate taxation.

Uploaded by

Venus Jane Finuliar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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) FIRST PHILIPPINE INDUSTRIAL CORPORATION,

petitioner, vs. COURT OF APPEALS, HONORABLE


PATERNO V. TAC-AN, BATANGAS CITY and
ADORACION C. ARELLANO, in her official capacity as
City Treasurer of Batangas, respondents.

FACTS

1. Petitioner (FPIC) is a grantee of a pipeline concession under RA 387 – to contract, install, and operate
oil pipelines.

2. Applied for Mayor’s Permit with Mayor’s office in Batangas City; required to pay local tax first for a
total of 956k payable in 4 installments; in order not to hamper its operations, petitioner paid tax under
protest in the amt of 239k for 1st q of 1993.

3. A letter-protest was filed later on addressed to the City treasurer (respondent) – stating that it is
engaged in transportation of petroleum products from the Batangas refineries via pipeline and thus
exempt from paying tax on gross receipts.

4. The city treasurer denied the protest saying that petitioner cannot be considered engaged in
transportation business so it cannot claim exemption under the LGC.

5. A complaint was filed with the RTC for tax refund alleging:

- Among others, that the collection of such tax does not apply to transportation contractors.

6. Respondents argued that petitioner cannot be exempt, contending that:

- Pipelines are not included in the term “common carrier” which refers solely to ordinary carriers
such as trucks, trains, ships etc.
- Respondents further posit that the term “common carrier” under the said code pertains to the
mode or manner by which a product is delivered to its destination.

RTC: dismissed the complaint for tax refund

- Held that FPIC is either a contractor or other independent contractor; tax exemptions are strictly
construed against the taxpayer.
- That the exemption granted under Sec. 133 (j) encompasses only common carriers so as not to
overburden the riding public or commuters with taxes. Plaintiff is not a common carrier, but a
special carrier extending its services and facilities to a single specific or “special customer”
under a “special contract.”

CA: affirmed RTC

ISSUE: WON petitioner is a common carrier or transportation contractor; won exempt from tax

RULING: common carrier


1. Definition of common carrier

NCC: common carrier is “any person, corporation, firm or association engaged in the business of carrying
or transporting passengers or goods or both, by land, water, or air, for compensation, offering their
services to the public.”

2. Test for determining WON a party is a common carrier of GOODS:

a. He must be engaged in the business of carrying goods (petroleum products) 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;

b. He must undertake to carry goods of the kind to which his business is confined;

c. He must undertake to carry by the method by which his business is conducted and over his
established roads; and

d. The transportation must be for hire.

3. Based on the above definitions and requirements, there is no doubt that petitioner is a common
carrier.

4. respondent’s argument that the term “common carrier” as used in Section 133 (j) of the Local
Government Code refers only to common carriers transporting goods and passengers through moving
vehicles or vessels either by land, sea or water, is erroneous.

As correctly pointed out by petitioner, the definition of


“common carriers” in the Civil Code makes no distinction as to the means of transporting, as long as it is
by land, water or air. It does not provide that the transportation of the passengers or goods should be
by motor vehicle. In fact, in the United States, oil pipe line operators are considered common carriers.

5. It is clear that the legislative intent in excluding from the taxing power of the local government unit
the imposition of business tax against common carriers is to prevent a duplication of the so-called
“common carrier’s tax.”

6. Petitioner is already paying three (3%) percent common carrier’s tax on its gross sales/earnings under
the National Internal Revenue Code.

To tax petitioner again on its gross receipts in its transportation of petroleum business would defeat the
purpose of the Local Government Code.

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