KANEN, MILEYSA I. ATTY.

FE SIMBORIO
JD-4 PROFESSOR
ELECTIVE IV (LGC)

BUTUAN VS LTO (322 SCRA 805)

Land Transportation Office vs City of Butuan
322 SCRA 805 [GR No. 131512 January 20, 2000]

Facts: 

Respondent city of Butuan asserts that one of the salient provisions introduced by the local
government code is in the area of local taxation which allows LGUs to collect registration fees or
charges along with, its view, the corresponding issuance of all kinds of licenses or permits for the
driving of tricycles. Relying on the provisions of the local government code, the Sangguniang
Panlungsod of Butuan, on August 16, 1992 passed SP Ordinance no. 916-42 entitled “An
Ordinance Regulating the Operation Of Tricycles-For-Hire, Providing Mechanism For The
Issuance of Franchise, Registration and Permit and Imposing Penalties For Violations Thereof
and for Other Purposes.” The ordinance provided for among other things, the payment of
franchise fees for the grant of the franchise of tricyles-for-hire, fees for the registration of the
vehicle, and fees for the issuance of a permit for the driving thereof. Petitioner LTO explains that
one of the functions of the national government that, indeed, has been transferred to local
government units is the franchising authority over tricycles-for-hire of the land transportation
franchising and regulatory board but not, it asseverates, the authority of LTO to register all motor
vehicles and to issue qualified persons of licenses to drive such vehicles.

Issue: Whether respondent city of Butuan may issue license and permit and collect fees for the
operation of tricycle.

Held: No. LGUs indubitably now have the power to regulate the operation of tricycles-for-hire
and to grant franchises for the operation thereof. “To regulate” means to fix, establish or control;
to adjust by rule, method or established made; to direct by rule or restriction; or to subject to
governing principles of law. A franchise is defined to be a special privilege to do certain things
conferred by government on an individual or corporation and which does not belong to citizens
generally of common right. On the other hand, to register means to record formally and exactly,
to enroll, or to enter precisely in a list or the like, and a driver’s license is the certificate or
license issued by the government which authorizes a person to operate a motor vehicle. The
devolution of the functions of the DOTC, performed by the LTFRB, to the LGUs, as so aptly
observed by the solicitor general is aimed at curbing the alarming in on case of accidents in
national highways involving tricycles. It has been the perception that local governments are in
good position to achieve the end desired by the law-making body because of their proximity to
the situation that can enable them to address that serious concern better than the national
government.
It may not be amiss to state nevertheless, that under article 458 (a) [3-VI] of the local
government code, the power of the LGUs to regulate the operation of tricycles and to grant
franchises for the operation thereof is still subject to the guidelines prescribed by the DOTC. In
compliance therewith, the Department of Transportation and Communications (DOTC) issued
guidelines to implement the devolution of LTFRBs franchising authority over tricycles-for-hire
to local government units pursuant to the local government code.

The reliance made by the respondents on the broad taxing power of local government units,
specifically under section 133 of the local government code, is tangential. Police power and
taxation, along with eminent domain, are inherent powers of sovereignty which the state might
share with local government units by delegation or given under a constitutional or a statutory
fiat. All these inherent powers are for a public purpose and legislative in nature but the
similarities just about end there. The basic aim of police power is public good and welfare.
Taxation, in its case, focuses on the power of government to raise revenue to support its
existence and carry out its legitimate objectives. Although correlative to each other in many
respects, the grant of one does not necessarily carry with it the grant of the other. The two
powers are by tradition and jurisprudence separate and distinct powers, varying in their
respecting concepts, character, scopes, and limitations. To construe the tax provisions of section
133 (1) indistinctively would result in the repeal to that extent of LTOs regulatory power which
evidently has not been intended. If it were otherwise, the law could have just said so in section
447 and 458 of Book III of the local government code in the same manner that the specific
devolution of LTFRBs power on franchising of tricycles has been provided. Repeal by
implication is not favored. The power over tricycles granted under section 458 (8) (3) (VI) of the
local government code to LGUs is the power to regulate their operation and to grant franchises
for the operation thereof. The government’s exclusionary clause contained in the tax provisions
of section 133 (1) of the local government code must be held to have had the effect of
withdrawing the express powers of LTO to cause the registration of all motor vehicles and the
issuance of license for the driving thereof. These functions of the LTO are essentially regulatory
in nature, exercised pursuant to the police power of the state, whose basic objectives are to
achieve road safety by insuring the road worthiness of these motor vehicles and the competence
of drivers prescribed by RA 4136. Not insignificant is the rule that a statute must not be
construed in isolation but must be taken in harmony with the extent body of laws.