Land Transportation Office, represented by Assistant Secretary Manuel Bruan, LTO Regional Office, Region

X represented by its Regional Director, Timoteo A. Garcia, and LTO Butuan represented by Rosita G.
Sadiaga, its Registrar, petitioners vs.
City of Butuan, represented in this case by Democrito D. Plaza II, City Mayor, respondent
January 20, 2000
J. Vitug
Nature: Petition for Review
Summary: The City of Butuan issued an ordinance wich provided for the payment of franchise fees,
registration fees, and fees for issuance of drivers permit. The City of Butuan issued the ordinance believing
that tall the powers of the DOTC have been transferred to the LGUs. On the other hand, the LTO questioned
said Ordinance and argued that the authority to register has not been transferred by the LGC to the LGUs.
The SC held that only the franchising power has been transferred to LGUs, but not the power to register.
Doctrine:

The newly delegated powers pertain to the franchising and regulatory powers theretofore exercised
by the LTFRB and not to the functions of the LTO relative to the registration of motor vehicles and
issuance of licenses for the driving thereof.

Police power and taxation, along with eminent domain, are inherent powers of sovereignty which
the State might share with local government units by delegation given under a constitutional or a
statutory fiat. Although the power of taxation and police power are correlative, the grant of one does
not necessarily carry with it the grant of the other
Facts:

The Sangguniang Panglungsod ng Butuan passed an Ordinance entitled An Ordinance Regulating

the Operation of Tricycle-for-Hire, providing mechanism for the issuance of Franchise, Registration
and Permit, and Imposing Penalties for Violations thereof and for other Purposes
o The said ordinance provided for the following:

Payment of franchise fees for the grant of the franchise of tricycles-for-hire

Fees for the registration of the vehicle

Fees for the issuance of a permit for the driving thereof (of tricycles)

LTO then questioned such Ordinance. LTO explains that although the franchising authority over
tricycles-for-hire of the LTFRB has been trasferred to local government units, it does not mean that
the authority of the LTO to register all motor vehicles and to issue to qualified persons of liceses to
drve such vehicles are also trasferred.

On the other hand, the City of Butuan argued that one of the salient features of the LGC is in the
area of local taxation which allows LGUs to collect registration fees or charges along with, in its
view, the corresponding issuance of all kinds of licenses or permit for the driving of tricycles.
o The respondent City uses the following as legal bases:

Sec. 5, Art. X, 1987 Constitution1

Sec 1292 &1333, LGC

1 Section 5. The Commission shall enjoy fiscal autonomy. Their approved annual appropriations shall be
automatically and regularly released.
2 Section 129. Power to Create Sources of Revenue. - Each local government unit shall exercise its power
to create its own sources of revenue and to levy taxes, fees, and charges subject to the provisions herein,
consistent with the basic policy of local autonomy. Such taxes, fees, and charges shall accrue exclusively to
the local government units.
3 Section 133. Common Limitations on the Taxing Powers of Local Government Units. - Unless otherwise
provided herein, the exercise of the taxing powers of provinces, cities, municipalities, and barangays shall
not extend to the levy of the following:(a) Income tax, except when levied on banks and other financial
institutions;
(b) Documentary stamp tax;
(c) Taxes on estates, inheritance, gifts, legacies and other acquisitions mortis causa, except as otherwise
provided herein;
(d) Customs duties, registration fees of vessel and wharfage on wharves, tonnage dues, and all other kinds
of customs fees, charges and dues except wharfage on wharves constructed and maintained by the local
government unit concerned;
(e) Taxes, fees, and charges and other impositions upon goods carried into or out of, or passing through, the
territorial jurisdictions of local government units in the guise of charges for wharfage, tolls for bridges or
otherwise, or other taxes, fees, or charges in any form whatsoever upon such goods or merchandise;
(f) Taxes, fees or charges on agricultural and aquatic products when sold by marginal farmers or fishermen;
(g) Taxes on business enterprises certified to by the Board of Investments as pioneer or non-pioneer for a

The City of Butuan, thru Mayor Plaza, filed with the trial court a petition for prohibition, mandamus,
injunction with a prayer for preliminary restraining order ex-parte. The petition sough the declaration
of the validity of the Ordinance mentioned above and the prohibition of the registration of tricyclesfor-hire and the issuance of licenses for the driving thereof by the LTO

RTC ruled against the LTO and held that the authorities in question belongs to the LGUs

CA affirmed the RTC ruling. Hence, this petition.

Issue # 1: W/N the power of the LTO to register, tricycles in particular, as well as to issue licenses for the
driving thereof, has likewise devolved to local government units (the newly delegated powers pertain to the
frnchising and regulatory powers exercised by the LTFRB and not to the functions of the LTO relative to the
registration of motor vehicles and issuances of licenses for the driving)
Ratio # 1

The concerned department in the case at bar is the DOTC. Under this department are LTO and
LTFRB.
o LTO line agency whose powers and functions, pursuant to Art. III, Sec. 4 (d) (1) of the
Land Transportation and Traffic Code, deal primarily with the registration of all motor
vehicles and the licensing of drivers thereof
o LTFRB the governing body tasked by EO 202 to regulate the operation of public utility or
for hire vehicles and to grant franchises or certificates of public convenience

By virtue of Sec. 458 LGC, certain functions of the DOTC were transferred to the LGUs. The LGUs
now have the power to regulate the operation of tricycles-for-hire and to grant franchises for the
operation thereof.
o Definition of to regulate to fix, establish, or control; to adjust by rule, method, or
establishedmode; to direct by rule or restriction; or to subject to governing principles or
laws

The devolution of the functions of DOTC, performed by the LTFRB, to the LGUs is aimed at curbing
the alarming increase of accidents in national highways involving tricycles. It is deemed that the
LGUs are in better position in achieving such end because of their proximity to the situation.

However, under Art. 458 (a)(3-VI) LGC, the power of 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. Hence, the power of the LTO in requiring the registration of all kinds of motor vehicles used
or operated on or upon any public highway in the country is unaffected by the LGC.

The following are the reasons why the registration must be under LTO
o Avoid incidence of theft if under the LGUs, lost vehicle will be registered in another LGU
o Avoid fake drivers license driver not qualified in one municipality can easily go to
another
o Devolution will entail hiring of more personnel

The City of Butuan cannot argue that since the power of taxation if granted to LGUs, it necessarily
carries with it police power. Although correlative to each other, the grant of one does not carry with
it the grant of the other. Also, upholding the Citys argument will result in the repeal of one of the
LGC provisions relative to LTOs regulatory power.

period of six (6) and four (4) years, respectively from the date of registration;
(h) Excise taxes on articles enumerated under the national Internal Revenue Code, as amended, and taxes,
fees or charges on petroleum products;
(i) Percentage or value-added tax (VAT) on sales, barters or exchanges or similar transactions on goods or
services except as otherwise provided herein;
(j) Taxes on the gross receipts of transportation contractors and persons engaged in the transportation of
passengers or freight by hire and common carriers by air, land or water, except as provided in this Code;
(k) Taxes on premiums paid by way or reinsurance or retrocession;
(l) Taxes, fees or charges for the registration of motor vehicles and for the issuance of all kinds of licenses or
permits for the driving thereof, except tricycles;
(m) Taxes, fees, or other charges on Philippine products actually exported, except as otherwise provided
herein;
(n) Taxes, fees, or charges, on Countryside and Barangay Business Enterprises and cooperatives duly
registered under R.A. No. 6810 and Republic Act Numbered Sixty-nine hundred thirty-eight (R.A. No. 6938)
otherwise known as the "Cooperative Code of the Philippines" respectively; and
(o) Taxes, fees or charges of any kind on the National Government, its agencies and instrumentalities, and
local government units.

Moreover, the SC expressed ots concern over the seeming laxity in the grant of franchises for the
operation of tricycles-for-hire and in allowing the indiscriminate use by such vehicles on public
highways and principal thoroughfares. The Court reminded the LGUs to perform their duties and
that in case of non-performance, various laws warrant an incurrence of criinal and civil liabilities
such as the following:
o Art. 208, RPC4
o Art. 275, 346, 21897, Civil Code
o Sec. 24, LGC8
Disposition: TRO against LTO set aside

4 Article 208. Prosecution of offenses; negligence and tolerance. - The penalty of prision correccional in its
minimum period and suspension shall be imposed upon any public officer, or officer of the law, who, in
dereliction of the duties of his office, shall maliciously refrain from instituting prosecution for the punishment
of violators of the law, or shall tolerate the commission of offenses.
5 Article 27. Any person suffering material or moral loss because a public servant or employee refuses or
neglects, without just cause, to perform his official duty may file an action for damages and other relief
against the latter, without prejudice to any disciplinary administrative action that may be taken.
6 Article 34. When a member of a city or municipal police force refuses or fails to render aid or protection
to any person in case of danger to life or property, such peace officer shall be primarily liable for damages,
and the city or municipality shall be subsidiarily responsible therefor. The civil action herein recognized shall
be independent of any criminal proceedings, and a preponderance of evidence shall suffice to support such
action.
7 Article 2189. Provinces, cities and municipalities shall be liable for damages for the death of, or injuries
suffered by, any person by reason of the defective condition of roads, streets, bridges, public buildings, and
other public works under their control or supervision. (n)
8 Section 24. Liability for Damages. - Local government units and their officials are not exempt from liability
for death or injury to persons or damage to property.