G.R. No. 176898; December 3, 2012
GEORGE S. H. SY, doing business under the name and style of OPM INTERNATIONAL CORPORATION, Petitioner, vs. AUTOBUS TRANSPORT SYSTEMS INC., Respondent.

FACTS

Petitioner George Sy (OPM) and respondent Autobus Transport Systems Inc. entered into a verbal agreement wherein Sy would finance Autobus’s acquisition of bus units from Commercial Motors Corporation (CMC) and, in turn, Autobus would purchase air conditioning units from Sy. As security for Sy’s advances to CMC, Autobus delivered to Sy five Transfer Certificates of Title (TCTs) to properties owned by its chairman. Sy subsequently defaulted on his payment obligations to CMC, compelling Autobus to make payments directly to CMC to protect its interests. Autobus made repeated written demands for Sy to either settle the obligations with CMC or return the five TCTs, but Sy failed to comply, prompting Autobus to file a complaint for Specific Performance.
During the pendency of the main case for specific performance, Autobus filed a Motion for the Issuance of a Writ of Preliminary Mandatory Injunction to compel Sy to immediately return the five TCTs. The Regional Trial Court (RTC) granted the motion, ordering the return of the titles. Sy elevated the matter to the Court of Appeals (CA), which affirmed the RTC’s order. Sy then filed the present Petition for Review on Certiorari.

ISSUE

Whether the Court of Appeals committed reversible error in affirming the RTC’s issuance of the writ of preliminary mandatory injunction ordering the return of the five TCTs.

RULING

The Supreme Court denied the petition and affirmed the CA’s decision. The Court held that the issuance of the writ of preliminary mandatory injunction was proper and not tainted with grave abuse of discretion. A writ of preliminary mandatory injunction is an extraordinary remedy issued to compel the performance of a particular act. For its issuance, the applicant must establish a clear legal right, a violation of that right, and a urgent and paramount necessity for the writ to prevent serious damage.
The Court found that Autobus established a clear legal right to the return of the TCTs. The titles were delivered as security for Sy’s primary obligation to pay Autobus’s amortizations to CMC. Since Sy defaulted on this primary obligation, the very purpose for the delivery of the security was defeated. Autobus’s right to the return of the titles became clear upon Sy’s failure to perform his part of the agreement, a fact substantiated by the series of demand letters. The Court ruled that the RTC correctly determined the matter of possession of the titles was a preliminary issue that could be resolved separately from the main action for specific performance, as their continued retention by Sy, who was in default, would cause continuing injustice. The RTC’s factual findings and exercise of discretion were thus upheld.