Reg
LGUs indubitably now have the power to regulate the operation of tricycles-for-hire and
LAND TRANSPORTATION OFFICE V. CITY OF BUTUAN
GR NO. 131512, Jan 20, 2000
NATURE OF THE CASE:
POWER OF TAXATION
PETITIONERS: Land Transportation Office
RESPONDENTS: City of Butuan
FACTS:
The 1887 Constitution enunciates the policy that the territorial and political subdivisions shall
enjoy local autonomy. RA No. 7160 otherwise known as the Local Government Code,
expresses that the territorial and political subdivisions of the State shall enjoy genuine and
meaningful local autonomy in order to enable them to attain their fullest development as self-
reliant communities and make them more effective partners in the attainment of national goals,
and it is a basic aim of the State to provide for a more responsive and accountable local
government structure instituted through a system of decentralization whereby LGUs shall be
given more powers, authority, responsibilities and resources. On August 16, 1992, the
Sangguniang Panlungsod of Butuan 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 tricycles-for-hire, fees for the registration of the vehicle,
and fees for the issuance of a permit for the driving thereof.
PETITIONERS ARGUMENTS: Petitioner LTO explains that one of the functions of the
national government that, indeed, has been transferred to LGUs is the franchising authority
over tricycles-for-hire of the land transportation franchising and regularity 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.
RESPONDENTS ARGUMENTS: Respondent City of Butuan asserts that one of the salient
provisions introduced by the LGC 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 provision of the LGC, the
Sangguniang Panlungsod of Butuan passed SP Ordinance No. 916-42
ISSUE: WON respondent City of Butuan may issue license and permit and collect fees for the
operation of tricycle
FALLO: Wherefore, the assailed decision which enjoins the LTO from requiring the due
registration of tricycles and a license for the driving thereof is REVERSED and SET ASIDE.
HELD:
No.
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 drivers 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 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 in order 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 governments 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.