Case Digest: Land Transportation Office (LTO) vs. City of Butuan, G.R. No.

131512,
January 20, 2000

Facts:
The City of Butuan, invoking its autonomy and powers granted by the Local Government Code
(Republic Act No. 7160), issued an ordinance regulating the operation of tricycles-for-hire,
including the collection of fees for their registration and the issuance of permits or licenses for
their operation within the city. The Land Transportation Office (LTO), whose mandate includes
the registration of all motor vehicles and the licensing of drivers in the Philippines, challenged
this local ordinance. The LTO argued that its authority to register motor vehicles and issue
licenses for drivers was a function of the national government and could not be usurped by local
government units (LGUs).

Issue:
Whether the power to register tricycles and issue licenses for driving them has devolved to
LGUs, specifically to the City of Butuan, under the Local Government Code.

Holding:
The Supreme Court ruled in favor of the LTO, holding that the power to register all motor
vehicles (including tricycles) and to issue licenses for the driving thereof remains with the LTO, a
national government agency. The Court clarified that while the Local Government Code provides
LGUs certain powers, including the regulation of tricycles-for-hire and the granting of franchises
for their operation, it does not extend to the registration of motor vehicles and the issuance of
driver's licenses, which are functions specifically vested in the LTO. The Court emphasized that
the Local Government Code aimed to give LGUs the authority to regulate for public welfare but
did not intend to create an imperium in imperio that operates independently of the national
government.

Rationale:
The Supreme Court differentiated between the powers granted to LGUs under the Local
Government Code and the inherent functions of the LTO. It explained that regulation and
franchising of tricycles-for-hire by LGUs are meant to address local concerns effectively.
However, the registration of vehicles and issuance of driver's licenses are regulatory functions
that have national implications, particularly concerning road safety, and thus remain with the
LTO. The Court also highlighted the potential problems of decentralizing these functions, such
as the increased likelihood of vehicle theft, proliferation of fake licenses, and logistical issues
related to the inspection and documentation of vehicles.

Conclusion:
The Supreme Court's decision underscores the importance of maintaining certain regulatory
functions, such as vehicle registration and driver licensing, at the national level to ensure
consistency, safety, and order in the country's transportation system. While LGUs have the
power to regulate tricycles-for-hire within their territorial jurisdictions, they do not have the
authority to take over the functions specifically assigned to the LTO by law.