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 or not 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 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
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.