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    MERALCO Vs DMCI - Property

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    This case involves a dispute between Metro Manila Transit Corporation (MMTC) and DMCI over 228 buses acquired by DMCI through MMTC's bus assistance program. Under the lease-purchase agreement, DMCI had the right to possess the buses until full payment as long as it did not default for three consecutive months. However, MMTC repossessed the buses, claiming default, and attempted to sell them. The courts found no actual default and ruled that MMTC's repossession was invalid as DMCI still had the right to possess the buses. The appellate court ordered MMTC to return the buses or pay compensation to DMCI, as the buses could no longer be returned in their original state.

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    MERALCO Vs DMCI - Property

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    200 views2 pages
    This case involves a dispute between Metro Manila Transit Corporation (MMTC) and DMCI over 228 buses acquired by DMCI through MMTC's bus assistance program. Under the lease-purchase agreement, DMCI had the right to possess the buses until full payment as long as it did not default for three consecutive months. However, MMTC repossessed the buses, claiming default, and attempted to sell them. The courts found no actual default and ruled that MMTC's repossession was invalid as DMCI still had the right to possess the buses. The appellate court ordered MMTC to return the buses or pay compensation to DMCI, as the buses could no longer be returned in their original state.

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    This case involves a dispute between Metro Manila Transit Corporation (MMTC) and DMCI over 228 buses acquired by DMCI through MMTC's bus assistance program. Under the lease-purchase agreement, DMCI had the right to possess the buses until full payment as long as it did not default for three consecutive months. However, MMTC repossessed the buses, claiming default, and attempted to sell them. The courts found no actual default and ruled that MMTC's repossession was invalid as DMCI still had the right to possess the buses. The appellate court ordered MMTC to return the buses or pay compensation to DMCI, as the buses could no longer be returned in their original state.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    200 views2 pages

    MERALCO Vs DMCI - Property

    Uploaded by

    BemBem Bem-Bem
    This case involves a dispute between Metro Manila Transit Corporation (MMTC) and DMCI over 228 buses acquired by DMCI through MMTC's bus assistance program. Under the lease-purchase agreement, DMCI had the right to possess the buses until full payment as long as it did not default for three consecutive months. However, MMTC repossessed the buses, claiming default, and attempted to sell them. The courts found no actual default and ruled that MMTC's repossession was invalid as DMCI still had the right to possess the buses. The appellate court ordered MMTC to return the buses or pay compensation to DMCI, as the buses could no longer be returned in their original state.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    METRO MANILA TRANSIT CORPORATION vs.

    DMCI

    Facts:

    In 1981, the national government, through petitioner Metro Manila Transit Corporation (MMTC),
    launched a bus assistance program to aid private bus operators in acquiring new bus units through a
    “lease-purchase on easy installment payment” scheme. Respondent D.M. Consortium, Inc. (DMCI)
    availed of the program and entered into a lease- purchase agreement (LPA) with MMTC for the
    acquisition of 228 buses. Both parties agreed that, pending full payment, the monthly installments
    were to be treated as rentals. The salient features of the agreement included, among others, that it
    shall be a violation of the Lease Purchase Agreement if the LESSEE shall default in the payment of
    any rent hereunder and such default shall continue unremedied for a period of three (3) consecutive
    months and that The LESSEE shall have the option to purchase or otherwise acquire title to or
    ownership of any of the Leased Equipment, upon expiration of the lease period, or prior to the
    expiration of said lease period, provided, that the LESSEE shall have paid in full all outstanding
    obligations to the LESSOR.

    After an alleged default in its amortizations, DMCI was informed by MMTC that it was taking
    immediate possession of all the bus units and accessories. Meanwhile, because of the national
    emergency caused by a coup d’état attempt, then President Corazon Aquino issued Memorandum
    Order (MO) No. 267 on December 7, 1989 directing the Secretary of Transportation and
    Communication to temporarily take over the operations of DMCI. Under the MO, the DOTC
    Secretary was to recommend payment of “just compensation to the owner for the use of their buses
    and facilities."

    On December 9, 1989, MMTC repossessed the buses by occupying the premises of DMCI, including
    its offices. Consequently, MMTC took steps to sell the repossessed buses at a public auction. Before
    the public bidding, however, DMCI filed a petition for injunction with prayer for the issuance of a
    temporary restraining order (TRO) and/or writ of preliminary injunction in the RTC of Quezon City.
    TRO was issued enjoining the scheduled public auction of the buses. After due notice and hearing,
    the lower court later issued a writ of preliminary injunction in favor of DMCI.

    RTC decided in favor of

    DMCI and found no basis for MMTC to repossess the buses or to sell them at public auction. CA
    sustained the RTC’s order for MMTC to return the buses to DMCI and pay 2M for the appropriation
    and use of its furniture, fixtures and other equipments.

    Issue:

    Whether or not MMTC's repossession of the buses is a valid exercise of its right to possession of
    ownership

    Ruling:

    No. Undeniably, under the law, jus possidendi is a necessary incident of ownership. However, the
    owner cannot exercise this right to the prejudice of a party whose possession is predicated on a
    contract like agency, trust, pledge or lease, as in this case. Under the LPA between MMTC and DMCI,
    the latter, as lessee, had a right of possession over the buses and it may be deprived of said right
    only if it failed to pay its dues for three consecutive months. Both the trial court and the appellate
    court established that there was actually no default on the part of DMCI justifying MMTC’s seizure of
    the buses. MMTC cannot now use the principle of jus possidendi as an excuse for its unwarranted
    act and frustrate the redelivery of the vehicles to DMCI.

    In addition, a party vested with the right of possession to the property may set up this right even
    against the owner thereof. Under Article 539 of the Civil Code, every possessor has a right to be
    respected in his possession and, if deprived of such right, the law shall restore it to him. In the case
    at bar, after having been unjustly denied of its right of possession to the buses, DMCI is entitled to
    get them back from MMTC. But since the buses can no longer be returned in their original state and
    considering further that DMCI has already paid their full amount, the CA resolution ordering MMTC
    to instead pay DMCI their value at the time of repossession is correct.

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