Francisco S. Tatad, et al. v. Sec. of DOTC Jesus Garcia, Jr., EDSA LRT Corporation, LTD.

G.R. No. 114222

April 6, 1995

Nature:
This is a petition under Rule 65 of the Revised Rules of Court to prohibit respondents from further implementing and
enforcing the "Revised and Restated Agreement to Build, Lease and Transfer a Light Rail Transit System for EDSA"
dated April 22, 1992, and the "Supplemental 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.

Facts:
In 1989, the government planned to build a railway transit line along EDSA. No bidding was made but certain
corporations were invited to prequalify. The only corporation to qualify was the EDSA LRT Consortium which was
obviously formed for this particular undertaking. An agreement was then made between the government, through
the Department of Transportation and Communication (DOTC), and EDSA LRT Consortium. The agreement was
based on the Build-Operate-Transfer scheme provided for by law (RA 6957, amended by RA 7718). Under the
agreement, EDSA LRT Consortium shall build the facilities, i.e., railways, and shall supply the train cabs. Every phase
that is completed shall be turned over to the DOTC and the latter shall pay rent for the same for 25 years. By the
end of 25 years, it was projected that the government shall have fully paid EDSA LRT Consortium. Thereafter, EDSA
LRT Consortium shall sell the facilities to the government for $1.00.

However, Senators Francisco Tatad, John Osmeña, and Rodolfo Biazon opposed the implementation of said
agreement as they averred that EDSA LRT Consortium is a foreign corporation as it was organized under Hongkong
laws; that as such, it cannot own a public utility such as the EDSA railway transit because this falls under the
nationalized areas of activities. The petition was filed against Jesus Garcia, Jr. in his capacity as DOTC Secretary.

Issue:
Can respondent EDSA LRT Corporation, Ltd., a foreign corporation own EDSA LRT III, a public utility?

Held:
What private respondent owns are the rail tracks, rolling stocks like the coaches, rail stations, terminals and the
power plant, not a public utility. While a franchise is needed to operate these facilities to serve the public, they do
not by themselves constitute a public utility. What constitutes a public utility is not their ownership but their use to
serve the public.

In law, there is a clear distinction between the “operation” of a public utility and the ownership of the facilities and
equipment used to serve the public. The right to operate a public utility may exist independently and separately from
the ownership of the facilities thereof. One can own said facilities without operating them as a public utility, or
conversely, one may operate a public utility without owning the facilities used to serve the public. The devotion of
property to serve the public may be done by the owner or by the person in control thereof who may not necessarily
be the owner thereof.