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Tatad vs.

Garcia
Facts:
(a) The petitioner wants to prohibit the respondents from
implementing and enforcing the Revised and Restated
Agreement to Buld, Lease and Trasnfer a Light Rail Transit
System for EDSA dated April 22, 1992 and the Supplementary
Agreement to the 22 April 1992 Revised and Restated
Agreement To Build, Lease and Transfer a Light Rail Transit
System for EDSA dated May 6, 1993
(b)July 9, 1990:
RA 6957: An Act Authorizing the Financing, Construction,
Operation and Maintenance of Infrastructure Projects by the
Private Sector, and for other purposes(BOT or BT Law)- was
signed by Pres. Corazon Aquino
(c) DOTC issued department orders creating Prequalification Bids
and Awards Committee and Technical Committee. Guidelines
were published in three newspapers, once a week for three
consecutive weeks
(d)The prequalification criteria were Legal aspects-10%;
Management/Organizational capability-30%; Financial
capability-30%; technical capability-30%
(e) There were 5 applications. Among the 5, only EDSA LRT
Consortium met the requirements.
(f) Negotiations proceeded. However, the president cannot grant
the request for approval because of the incompliance with
some of the provision of the BOT Law
(g)They renegotiated and formed the Revised and Restated
Agreement To Build, Lease and Transfer a Light Rail Transit
System for EDSA
(h)The private respondent will be responsible for the financing of
the entire project. The private respondent shall deliver the use
and possession to DOTC which shall operate the same. DOTC
will pay private respondents monthly basis which will come
from the earnings from EDSA LRT III
(i) RA No. 7718: Act Amending Certain Sections of RA 6957, was
signed by President Ramos
Issue:
Can EDSA LRT Corporation, a foreign corporation own EDSA LRT
III, a public utility?
Ruling:
The petition is dismissed. The private respondent own the
facilities but they are not operating the public utility

The private respondent owns the rail tracks, rolling stocks like the
coaches, rail stations, terminals and the power plant, not a public
utility.
The Constitution requires a franchise for operating a public utility.
However, a franchise to own facilities is not needed as long as
they do not operate them to serve the public
Section 11, Article 12
No franchise, certificate, or any other form of authorization for the
operation of a public utility shall be granted except to citizens of the
Philippines or to corporations or associations organized under the
laws of the Philippines, at least sixty per centum of whose capital is
owned by such citizens; nor shall such franchise, certificate, or
authorization be exclusive in character or for a longer period than
fifty years
Theres a distinction between operation of a public utility and the
ownership of the facilities and equipment used to serve the public.
One can own the facilities but do no operate the public utility. One
can operate the public utility but do not own the facilities
Private respondent admitted that they are the owner of the facilities
and they did not franchise to operate the public utility. Upon
completion, private respondent will deliver possession of the LRT
system by way of lease for 25 years. The DOTC will handle the
operation of the LRT III. DOTC shall assume all the obligations and
liabilities of a common carrier and private respondent shall not be
accountable for losses or damages and the like.