Digest Author: Alexi Calda

TATAD v. GARCIA (1995)

Petition: Petition under Rule 65
Petitioner: Fracisco Tatad and Rodolfo Biazon
Respondent: Hon. Jesus Garcia JR (SOTC) and EDSA LRT
CORPORATION
DOCTRINE:
FACTS:
1. DOTC planned to construct EDSA LRT III which was shall
traverse cities of Pasay, Quezon, Mandaluyong and Makati.
2. The Build-Operate-Tranfer Law (RA 6875) was enacted in lieu of
a proposal by Eli Levin Enterprises of constructing the EDSA LRT
III on a BOT basis.
3. A bidding was done in order to select contractors for the financing
and implementation of the project. Out of the 5 groups that
responded, only EDSA LRT CONSORTIUM met the
requirements.
4. DOTC and EDSA LRT CORPORATION LTD in substitution of
EDSA LRT CONSORTIUM signed an Agreement to Build Lease
and Transfer Light Rail Transit System for EDSA.
5. However, the President through Executive Secretary Drilon,
expressed that she could not grant the approval due to a couple
of procedural reasons. This led DOTC and EDSA LRT
CORPORATION LTD into entering two more agreements: a
revised agreement and supplemental agreement.
6. The agreements state that EDSA LRT III will use light rail vehicles
from the Czech and Slovak Federal Republics.
7. A law authorizing the execution of the project was promulgated.
8. Thus, Senators Tatad and Biazon in their capacities and senators
and taxpayers alleging in one of its arguments that the ESDA
LRT III is a public utility and so ownership and operation thereof
is limited only to Filipino citizens and domestic corporations unlike
ESDA LRT CORPORATION LTD which is a foreign corporation
registered in Hongkong

No franchise, certificate or any other form of authorization for the

operation of a public utility shall be granted except to citizens of the
Philppines or to corporations or associations organized under the laws of
the Philppines at least sixty per centum of whose capital is owned by
such citizens, nor shall such franchise, certificate or authorization be
exclusive character or for a longer period than fifty years

RULING + RATIO:
What constitutes a public utility is not their ownership but their
use to serve the public. Thus, the question (issue) posed by the
petitioners is loaded
The right to operate can exist independently from ownership
o Ownership: relations in law by which a thing pertaining to
one person is completely subjected to his will in
everything not prohibited by law or the concurrence with
the rights of another
o Operate (LRT): transfer passengers from one point to
another, loading and unloading
The agreements provide that DOTC is the one which is going to
operate the EDSA LRT III while EDSA LRT CORP will just
provide technical maintenance which consists of repairs and
distributing maintenance manuals.
o EDSA LRT CORP shall also train DOTC personnel.
o EDSA LRT CORP will just lease its facilities to DOTC for
25 years.
Thus, it will not be EDSA LRT CORP which is going to run the
LRT nor collect fees from the riding public.
Comparison with Kilosbayan: PGMCs role as the lessor was not
confined to the construction and setting-up of online lottery. It
spilled over to its actual operation and administration and control
of the lottery system.
Moment for determining the requisite Filipino nationality is when
the entity applies for a franchise , certificate or any other for of
authrozation and not the mere formation of the public utility
corporation (People v. Quasha)
DISPOSITION: Petition is DISMISSED.

ISSUE: Can EDSA LRT Corporation LTD, a foreign corporation, own

EDSA LRT III which is a public utility?
PROVISION: Section 11 of Article xiii of the Constitution

FECLICIANO, J,. dissenting:

- The case is silent on the extent of Philippine equity in EDSA LRT
Corporation. There is no suggestion that it is at least 75% owned by
Philippine citizens. (75% - requirement in the IRR)