G.R. No. 176898 - Sy vs. Autobus Transport Systems, Inc.

Petitioner George S. H. Sy, doing business under the name and style of OPM International Corporation, is engaged in the sale and installation of bus air conditioning units.
In July 1996, petitioner entered into a verbal agreement with respondent Autobus Transport Systems, Inc., a public utility bus company operating on northern Luzon routes from Manila.

Under the agreement, respondent was to purchase Konvecta air conditioning units from petitioner.
Petitioner was to finance respondent’s acquisition of 22 bus engines and chassis from Commercial Motors Corporation (CMC) and 22 bus deluxe bodies from Almazora Motors Corporation (AMC).
Payment terms were clearly delineated:

Respondent was to amortize the payments for the Konvecta air conditioning units separately from the bus units.
Payment for the bus engines and chassis was scheduled to begin on the fourteenth month following the first delivery.
The acquisition cost for the 22 bus units was to be paid in 36 monthly installments starting on the fifteenth month after the initial delivery.

As security, respondent was required to execute chattel mortgages over the buses in favor of CMC.
Upon full payment to CMC, a new chattel mortgage was to be executed in favor of petitioner.
Additionally, respondent provided titles to five properties in Caloocan City (registered under the name of Gregorio Araneta III, the respondent’s chairman) as further security for petitioner’s advances to CMC.

After the first batch’s delivery, respondent delivered Transfer Certificates of Title (TCT) Nos. 292199–292203 to petitioner as security.
Petitioner defaulted on the payment of the amortizations, prompting CMC to demand payment directly from respondent.
A series of correspondences followed:

On November 26, 1998, respondent, through counsel, demanded that petitioner settle the obligations with CMC or return the five titles.
On December 5, 1998, petitioner apologized and requested an extension until January 31, 1999.
On January 28, 1999, respondent again reminded petitioner; petitioner then asked for an additional extension until February 10, 1999.

On March 12, 1999, respondent filed a complaint for Specific Performance in Civil Case No. 99-93127, seeking:

Specific performance of petitioner’s obligations including payment of the balance due to CMC.
Return of the five Transfer Certificates of Title.
Attorney’s fees amounting to a specified sum.

Petitioner, in his answer, raised the defense of lack of cause of action by asserting:

The controversy was between petitioner and CMC, not respondent.
Respondent’s failure to pay its amortizations was the reason for petitioner's non-compliance.
A counterclaim for a P56 million sum allegedly due from respondent was also interposed.

Petitioner's repeated failure to appear during pre-trial proceedings led to his declaration in default, allowing respondent to present evidence ex parte.
On May 16, 2000, the Regional Trial Court (RTC) rendered a decision in favor of respondent which ordered:

Petitioner to perform his obligations by paying the balance of respondent’s loan to CMC.
Petitioner to return the five titles.
Payment of attorney’s fees (reduced to P20,000) plus court costs.
Dismissal of petitioner's counterclaim due to lack of merit.

Petitioner filed a Petition for Relief from Judgment on account of the death of his counsel, which the RTC found sufficiently meritorious to set aside its decision and schedule the case for trial.
Respondent later filed a Motion to Order the return of the five titles, which the RTC denied on December 9, 2004.
On January 11, 2005, respondent moved for the issuance of a Writ of Preliminary Mandatory Injunction to compel petitioner to return the five titles.
On April 11, 2005, the RTC granted the motion and issued the writ, requiring petitioner to return the titles upon respondent posting a TWO MILLION PESOS bond, approved by the court.
Petitioner’s subsequent Motion for Reconsideration (which included an offer to post a counter bond) was denied by the RTC on July 26, 2005.

Petitioner elevated the case to the Court of Appeals (CA) via a Petition for Certiorari, alleging grave abuse of discretion by the RTC.
The CA found no grave abuse of discretion in the issuance of the writ and affirmed the RTC’s decision.
A subsequent motion for reconsideration by petitioner was also denied by the CA in a Resolution dated March 6, 2007.

Upholding the issuance of a writ of preliminary mandatory injunction ordering petitioner to return the five Transfer Certificates of Title.
Declaring that petitioner (OPM) no longer had any reason to hold on to the titles given his default in meeting obligations to CMC.

Whether the Court of Appeals erred in denying petitioner’s offer to post a counter bond under Section 6, Rule 58 of the 1997 Rules of Court.

Whether the factual findings involving alleged grave abuse of discretion by the CA are reviewable by the Supreme Court on appeal by certiorari.