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LTO v City of Butuan corresponding franchise, the issuance of tricycle drivers

January 20, 2000| PEREZ, J.| Basic Services and Facilities license, and the collection of fees thereforto the exclusion of
Digester: Melliza, F.S.L. the LTO. It cites the provisions which grant LGUs the power to
SUMMARY: The City of Butuan, in the exercise of its power to create sources of revenue:
impose taxes as an LGU, claimed that the LGC (Sections 129 and 1) SEC. 129. Power to Create Sources of Revenue.
133) had granted to LGUs the authority to register tricycles, the Each local government unit shall exercise its power to
grant of the corresponding franchise, the issuance of tricycle create its own sources of revenue and to levy taxes,
drivers' license, and the collection of fees thereforto the fees, and charges subject to the provisions herein,
exclusion of the LTO. Its Sanggunian Panglungsod passed an consistent with the basic policy of local autonomy. Such
ordinance for the registration of tricycles. The LTO, on the other taxes, fees, and charges shall accrue exclusively to the
hand, argued that one of the functions of the national government local government units.
that was transferred to LGUs is the franchising authority over 2) SEC. 133. Common Limitations on the Taxing
tricycles of the LTFRBBUT NOT the authority of LTO to register Powers of Local Government Units. Unless
all motor vehicles and to issue to qualified persons of licenses to otherwise provided herein, the exercise of the taxing
drive such vehicles. The RTC and the CA ruled for the City of powers of provinces, cities, municipalities, and
Butuan. The SC reversed. It first looked into the law that made the barangays shall not extend to the levy of the following:
LTO, and the LTOs issuances on the regulation of tricycles. It held X X X (I) Taxes, fees or charges for the registration of
that the power of LGUs pertain to the franchising and regulatory motor vehicles and for the issuance of all kinds of
powers exercised by the LTFRB, and not the functions of the LTO licenses or permits for the driving thereof, except
relative to the registration of motor vehicles and issuance of tricycles.
licenses for driving them. The functions of the LTO are essentially The City of Butuans Sanggunian Panglungsod passed an
regulatory in nature and are exercised pursuant to the police ordinance for the registration of tricycles, entitled An
power of the State. The Court differentiated Police Power and the Ordinance Regulating the Operation of Tricycles-for-Hire,
Power of Taxation, saying they are separate and distinct powers. providing mechanism for the issuance of Franchise,
The Court stressed the exclusionary clause in the tax provision of Registration and Permit, and Imposing Penalties for Violations
the LGC must not be held to have the effect of withdrawing the thereof and for other Purposes.
express powers of the LTO. 1) The ordinance provided for, among other things, the
payment of franchise fees for the grant of the franchise
DOCTRINE: Police power and taxation, along with eminent of tricycles-for-hire, fees for the registration of the
domain, are inherent powers of sovereignty which the State might vehicle, and fees for the issuance of a permit for the
share with local government units by delegation given under a driving thereof.
constitutional or a statutory fiat. The basic aim of police power is The LTO, on the other hand, argued that one of the functions of
public good and welfare. Taxation, in its case, focuses on the the national government that was transferred to LGUs is the
power of government to raise revenue in order to support its franchising authority over tricycles of the LTFRBBUT NOT
existence and carry out its legitimate objectives. Although the authority of LTO to register all motor vehicles and to issue
correlative to each other in many respects, the grant of one does to qualified persons of licenses to drive such vehicles.
not necessarily carry with it the grant of the other. The two powers The RTC and the CA ruled for the City of Butuan.
are, by tradition and jurisprudence, separate and distinct powers,
varying in their respective concepts, character, scopes and RULING: The assailed decision which enjoins the Land
limitations. Transportation Office from requiring the due registration of
FACTS: tricycles and a license for the driving thereof is REVERSED and
The City of Butuan, in the exercise of its power to tax as an SET ASIDE.
LGU, claimed that the LGC (Sections 129 and 133) had granted
to LGUs the authority to register tricycles, the grant of the
Whether the power of the Land Transportation Office (LTO) operated on or upon any public highway of the
to register, tricycles in particular, as well as to issue licenses Philippines unless the same is properly registered for
for the driving thereof, has been devolved to local the current year in accordance with the provisions of
government units.No. But LGUs do have the power to this Act (Article 1, Chapter II, R.A. No. 4136).
regulate the operation of tricycles and to grant franchises o The Commissioner of Land Transportation and his
for the operation thereof. deputies are empowered at any time to examine and
The Court first distinguished between the power to regulate inspect such motor vehicles to determine whether said
and the power to register. vehicles are registered, or are unsightly, unsafe,
o Regulatemeans to fix, establish, or control; to adjust improperly marked or equipped, or otherwise unfit to be
by rule, method, or established mode; to direct by rule operated on because of possible excessive damage to
or restriction; or to subject to governing principles or highways, bridges and other infrastructures.
laws. o The LTO is additionally charged with being the central
o Registermeans to record formally and exactly, to repository and custodian of all records of all motor
enroll, or to enter precisely in a list or the like, and a vehicles
"driver's license" is the certificate or license issued by The Court enumerated the consequences of the City of
the government which authorizes a person to operate a Butuans interpretation of the Statute:
motor vehicle. o If the tricycle registration function of respondent LTO is
Then, the Court said that under Art. 457 of the LGC, certain decentralized, the incidence of theft of tricycles will
functions of the DOTC were transferred to LGUs. The provision most certainly go up, and stolen tricycles registered in
states: Subject to the guidelines prescribed by the one local government could be registered in another
Department of Transportation and Communications, with ease. The determination of ownership thereof will
regulate the operation of tricycles and grant franchises for the also become very difficult.
operation thereof within the territorial jurisdiction of the city." o Fake driver's licenses will likewise proliferate. This
The Court also cited the DOTCs Guidelines to Implement likely scenario unfolds where a tricycle driver, not
the Devolution of LTFRBs Franchising Authority over qualified by petitioner LTO's testing, could secure a
Tricycles-For-Hire to Local Government units pursuant to license from one municipality, and when the same is
the Local Government Code." confiscated, could just go another municipality to secure
o The guidelines empower LGUs to issue, amend, revise, another license.
renew, suspend, or cancel MTOP (franchises) and o Devolution will entail the hiring of additional personnel
prescribe the appropriate terms and conditions therefor. charged with inspecting tricycles for road worthiness,
o The guidelines imposed speed regulations, enumerated testing drivers, and documentation. Revenues raised
the kinds of highways where they may operate, a color from tricycle registration may not be enough to meet
scheme for tricycles operating in the same zone, the salaries of additional personnel and incidental costs for
duration of the validity of the franchise, and so on. tools and equipment.
The newly delegated powers pertain to the franchising and
regulatory powers theretofore exercised by the LTFRB and not [TOPIC] Police Power vis--vis the LGUs power to tax.
to the functions of the LTO relative to the registration of motor The reliance of the City of Butuan on the broad taxing power of
vehicles and issuance of licenses for the driving thereof. local government units, specifically under Section 133 of the
The LGC did not affect the powers of LTO under R.A. Local Government Code, is weak.
No.4136 requiring the registration of all kinds of motor Police power and taxation, along with eminent domain, are
vehicles "used or operated on or upon any public inherent powers of sovereignty which the State might share
highway" in the country. Thus with local government units by delegation given under a
o "SEC. 5. All motor vehicles and other vehicles must be constitutional or a statutory fiat.
registered. - (a) No motor vehicle shall be used or
o The basic aim of police power is public good and The power over tricycles granted under Section 458(a)(3)(VI)
welfare. Taxation, in its case, focuses on the power of of the Local Government Code to LGUs is the power to
government to raise revenue in order to support its regulate their operation and to grant franchises for the
existence and carry out its legitimate objectives. operation thereof.
o Although correlative to each other in many respects, the The exclusionary clause contained in the tax provisions of
grant of one does not necessarily carry with it the grant Section 133(1) of the Local Government Code must not be held
of the other. to have had the effect of withdrawing the express power of LTO
o The two powers are, by tradition and jurisprudence, to cause the registration of all motor vehicles and the issuance
separate and distinct powers, varying in their respective of licenses for the driving thereof.
concepts, character, scopes and limitations. These functions of the LTO are essentially regulatory in nature,
To construe the tax provisions of Section 133(1) indistinctively exercised pursuant to the police power of the State, whose
would result in the repeal to that extent of LTO's regulatory basic objectives are to achieve road safety by insuring the road
power which evidently has not been intended. worthiness of these motor vehicles and the competence of
If it were otherwise, the law could have just said so in Section drivers prescribed by R. A. 4136.
447 and 458 of Book III of the Local Government Code in the Not insignificant is the rule that a statute must not be
same manner that the specific devolution of LTFRB's power on construed in isolation but must be taken in harmony with the
franchising of tricycles has been provided. Repeal by extant body of laws.
implication is not favored.

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