- Petitioner
- Metro Manila Transit Corporation
- Respondent
- D.M. Consortium
- Citation
- G.R. No. 147594
- Court
- Supreme Court
- Division
- First Division
- Ponente
- Corona, J.
- Decided
- March 7, 2007
Summary
MMTC and DMCI entered a lease-purchase agreement for 228 buses in 1981. After alleged payment default, MMTC repossessed the buses in 1989, but DMCI had actually overpaid by P35 million. The RTC and CA found no valid basis for repossession since DMCI made partial payments and there was no three-consecutive-month default required under the agreement. The Supreme Court affirmed, ruling that the contract governed the parties' rights and DMCI retained possession rights as lessee. Since the buses couldn't be returned in original condition after years of litigation, MMTC was ordered to pay their value at the time of wrongful seizure plus P2 million for appropriated equipment. The case establishes that lessees have enforceable possession rights even against owners when based on valid contracts.