Sy v. Autobus Transport Systems
REITERATIONFacts
The Antecedents: Petitioner George S. H. Sy, doing business as OPM International Corporation, entered into a verbal agreement with respondent Autobus Transport Systems, Inc. Under this agreement, Sy was to finance Autobus's acquisition of 22 bus engines and chassis from Commercial Motors Corporation (CMC) and 22 bus bodies from Almazora Motors Corporation. In return, Autobus would amortize the payments for the air conditioning units and the bus units separately. Sy was to settle Autobus's account with CMC, with Autobus commencing payments to Sy on the fifteenth month after the first delivery. As security for Sy's advances to CMC, Autobus delivered titles to five properties in Caloocan City, registered under the name of Autobus's chairman, Gregorio Araneta III. However, Sy defaulted on his payments to CMC, compelling Autobus to pay some of the obligations directly. Procedural History: Following Sy's continued failure to settle the obligations with CMC, Autobus filed a complaint for Specific Performance against Sy before the Regional Trial Court (RTC) of Manila. Sy was declared in default twice for failing to appear at pre-trial conferences, but the RTC eventually reconsidered the order of default. The RTC rendered a decision in favor of Autobus, ordering Sy to pay the balance to CMC and return the five titles. Sy filed a Petition for Relief from Judgment, which the RTC granted, setting aside its decision and ordering a trial. Subsequently, Autobus filed a Motion for the Issuance of a Writ of Preliminary Mandatory Injunction to compel Sy to return the five titles. The RTC granted this motion, ordering Sy to return the titles upon Autobus posting a P2,000,000.00 bond. Sy's motion for reconsideration and to post a counter-bond was denied. Sy then filed a Petition for Certiorari with the Court of Appeals (CA), alleging grave abuse of discretion by the RTC. The CA affirmed the RTC's orders, finding no grave abuse of discretion. The Petition: This Petition for Review on Certiorari under Rule 45 of the Rules of Court assails the Decision and Resolution of the Court of Appeals. Petitioner Sy argues that the CA erred in affirming the issuance of the writ of preliminary mandatory injunction, contending that Autobus failed to show a clear legal right and the likelihood of grave and irreparable damage. Sy claims the titles were delivered as security for Autobus's entire obligation to OPM, which he asserts is not yet fully paid. He also argues that the CA erred in not allowing him to post a counter-bond and that the P2 million bond posted by Autobus was insufficient. The core issues presented are whether the RTC committed grave abuse of discretion in issuing the writ of preliminary mandatory injunction and denying the offer to post a counter-bond, and whether the CA's findings of fact in this regard can be reviewed by the Supreme Court.
Issue(s)
Whether the Court of Appeals committed a grave and serious error when it found the issuance of the writ of preliminary mandatory injunction to be in order, and consequently, declared that OPM no longer had any reason to hold on to the five (5) titles. Whether the Court of Appeals committed a grave and serious error when it did not find justifiable grounds to warrant the writ's dissolution by OPM's offer to post a counter bond under Section 6, Rule 58 of the 1997 Rules of Court. Whether the findings of fact of the Court of Appeals committed with grave abuse of discretion may be reviewed by the Supreme Court on appeal by certiorari.
Ruling
The Supreme Court denied the petition and affirmed the assailed Decision and Resolution of the Court of Appeals.
Ratio Decidendi
On the issue of whether the Court of Appeals committed a grave and serious error when it found the issuance of the writ of preliminary mandatory injunction to be in order: The Supreme Court held that a writ of preliminary mandatory injunction requires a clear and unmistakable right, a material and substantial invasion of that right, and an urgent need to prevent irreparable injury. In this case, the RTC found that the five titles were delivered to OPM as security for its advances to CMC. Since OPM defaulted in its obligations to CMC, the condition for the delivery of the titles was not met, thus, OPM had no further justification to hold them. The Court noted that OPM admitted its failure to comply with its obligations to CMC in its letters. Furthermore, the titles were in the name of Gregorio Araneta III, who was not a party to the transaction, and there was no document showing the terms of OPM's possession beyond acknowledgment of receipt. The RTC considered the fear that OPM might use the titles to obtain a loan from Metrobank, where OPM admitted the titles were turned over, as a basis for the urgency. The Court found that the damages OPM might suffer from returning the titles were practically inexistent compared to the damages Autobus and the owners of the titles suffered due to OPM's continuous possession, as they could not exercise their proprietary rights. The CA affirmed the RTC's findings, concluding that OPM no longer had a reason to hold the titles after failing to pay CMC. On the issue of whether the Court of Appeals committed a grave and serious error when it did not find justifiable grounds to warrant the writ's dissolution by OPM's offer to post a counter bond: The Supreme Court reiterated that the fixing of the amount of bond and the granting of a motion for the filing of a counter bond are discretionary upon the trial court. The CA found no grave abuse of discretion on the part of the RTC in denying OPM's motion to post a counter bond. The Court emphasized that such discretionary actions of the trial court should not be disturbed in the absence of grave abuse of discretion. The CA agreed with the RTC that the issuance of the writ was in order, and the offer to post a counter bond did not, on its own, warrant the writ's dissolution. The Court found no grave abuse of discretion in the RTC's assessment of the evidence and its discretionary powers regarding the bond. On the issue of whether the findings of fact of the Court of Appeals committed with grave abuse of discretion may be reviewed by the Supreme Court on appeal by certiorari: The Supreme Court reiterated that the issuance of a writ of preliminary injunction is a matter of discretion for the trial court, and its assessment and evaluation of evidence involve findings of fact left to its conclusive determination. Therefore, the grant or denial of such a writ will not be disturbed unless issued with grave abuse of discretion amounting to lack or in excess of jurisdiction. Grave abuse of discretion implies a capricious and whimsical exercise of judgment, equivalent to a lack of jurisdiction, or an arbitrary or despotic manner of acting. The Court found no such grave abuse of discretion in the CA's affirmation of the RTC's issuance of the writ. The Court also noted that the issue of whether respondent still owes OPM P30 million is a factual issue best left for the determination of the RTC in the main case.
Main Doctrine
A writ of preliminary mandatory injunction requires a clear and unmistakable right, a material and substantial invasion of that right, and an urgent need to prevent irreparable injury. The failure of a party to comply with the conditions for which collateral was given justifies the issuance of a writ of preliminary mandatory injunction to return the collateral, especially when the continued possession by the petitioner poses greater potential harm than its return.