G.R. No. 125948 - 1st Philippine Industrial Corp. vs. Court of Appeals

Petitioner First Philippine Industrial Corporation (FPIC) holds a pipeline concession granted under Republic Act No. 387 (1967) and renewed by the Energy Regulatory Board in 1992.
FPIC’s business is the transport of petroleum products via pipeline from Batangas refineries to Sucat and JTF Pandacan Terminals for compensation.

In January 1995, before issuing its mayor’s permit, the City Treasurer of Batangas assessed FPIC a local business tax of ₱956,076.04 for 1993 gross receipts amounting to ₱181,681,151.00, payable in four quarterly installments.
To avoid operational disruption, FPIC paid ₱239,019.01 under protest for the first quarter and, on January 20, 1994, filed a letter-protest invoking exemption under Section 133(j) of the Local Government Code (LGC) for common carriers and persons engaged in transportation by hire.
On March 8, 1994, the City Treasurer denied the protest, ruling that pipelines are not “common carriers” under the LGC.

On June 15, 1994, FPIC filed a complaint for tax refund and preliminary injunction in the Regional Trial Court (RTC) of Batangas City, arguing that the tax was illegally imposed in violation of LGC exemptions and definitions.
The RTC, on October 3, 1994, dismissed the complaint, holding that FPIC was a special carrier and that tax exemptions must be strictly construed against the taxpayer.
On November 29, 1995, the Court of Appeals (CA) affirmed the RTC decision; its denial of petitioner’s motion for reconsideration followed on July 18, 1996.
FPIC filed a petition for review on certiorari with the Supreme Court. The petition was initially denied on November 11, 1996, then reinstated on January 20, 1997, after a granted motion for reconsideration.

Does FPIC qualify as a “common carrier” or “transportation contractor” under Section 133(j) of the LGC, thus exempting it from local gross‐receipts business tax?
Is the exemption provision under Section 133(j) sufficiently clear and unequivocal to override the rule of strict construction against tax exemptions?
Do pipeline operations, as concessioned under RA 387, fall within the LGC’s definitions of common carriers and public utilities, preventing double taxation?