Adlawan v. Torres
REITERATIONFacts
The Antecedents: Respondent Aboitiz & Company, Inc. (Aboitiz) initiated legal actions against petitioners Eleazar and Elena Adlawan to recover substantial sums of money. These claims were based on unpaid loan amortizations, technical and managerial services rendered, and outstanding installments for equipment provided to the petitioners. The underlying dispute involved significant financial obligations, leading Aboitiz to seek the seizure of petitioners' assets to secure the payment of these debts. Procedural History: The case traces its roots to Civil Case No. R-21761, where Aboitiz initially sought collection and obtained a writ of preliminary attachment. This writ was later set aside by the court, and Aboitiz subsequently dismissed its complaint. However, Aboitiz refiled similar actions, docketed as Civil Cases Nos. CEB-1185 and CEB-1186, in the Regional Trial Court of Cebu City, again seeking writs of attachment. These cases were consolidated. Petitioners' motions to halt the enforcement of these new writs were denied, leading to the issuance of an order by respondent Judge Ramon Am. Torres directing the sheriffs to proceed with the attachment. This order was temporarily held in abeyance to allow petitioners to pursue further remedies. The Petition: Petitioners filed a petition for certiorari and mandamus with preliminary injunction or restraining order, seeking to nullify the orders granting the issuance of writs of preliminary attachment. They argued that the real estate mortgage executed by them in favor of Philippine Commercial and Industrial Bank (PCIB) did not constitute fraudulent removal, concealment, or disposition of property, and that even if it did, proof of intent to defraud was lacking. Petitioners also contended that the respondent judge exceeded his jurisdiction by issuing the order without a hearing and by proceeding despite the pendency of a related case before the Supreme Court (G.R. No. 63225). The Supreme Court issued a temporary restraining order, which was later made permanent, enjoining the enforcement of the writs of attachment.
Issue(s)
Whether the respondent judge gravely abused his discretion in ordering the issuance of the writs of preliminary attachment. Whether the execution of a real estate mortgage by the petitioners in favor of PCIB constituted a fraudulent removal, concealment, or disposition of property justifying a writ of attachment. Whether the respondent judge exceeded his jurisdiction in issuing the order of December 12, 1983, without first hearing the parties on the motion for attachment and the motion to dissolve the attachment. Whether the filing of Civil Cases Nos. CEB-1185 and CEB-1186 constituted undue interference with the proceedings in G.R. No. 63225.
Ruling
The petition is GRANTED. The Temporary Restraining Order issued on January 6, 1984, is made PERMANENT. Respondent Judge or whoever is the presiding judge of the Regional Trial Court, Branch 6, Cebu City, is DIRECTED to PROCEED with the resolution of Civil Cases Nos. CEB-1185 and CEB-1186 with deliberate dispatch.
Ratio Decidendi
On the propriety of the writ of preliminary attachment: The Court held that the affidavit supporting the prayer for the writ of attachment did not meet the requirements of Rule 57 of the Revised Rules of Court. Specifically, the affidavit lacked factual allegations constituting a valid basis for the contention that the mortgage was in fraud of respondent Aboitiz. The Court reiterated the principle that to justify a preliminary attachment, the removal or disposal must be made with intent to defraud creditors, and proof of fraud is mandated. Bare allegations that an encumbrance of property is in fraud of a creditor do not suffice; factual bases must be clearly averred. The execution of a mortgage, which merely subjects property to a lien without parting with ownership, is not inherently a fraudulent disposition of property. Furthermore, the inability to pay creditors is not synonymous with fraudulent intent not to honor an obligation. On the fraudulent nature of the real estate mortgage: The Court found that when petitioners filed a motion for reconsideration of the order directing the issuance of the writ of attachment, the respondent judge should have treated it as a motion for the discharge of the attachment. Consequently, the judge should have conducted a hearing or required the submission of counter-affidavits from the petitioners to gather facts supporting the allegation of fraud, as mandated by Section 13 of Rule 57. This procedure is crucial because attachment is a harsh remedy, and its governing rules must be strictly construed against the applicant. Writs of attachment can only be granted on concrete and specific grounds, not on general averments that merely quote the words of the rules. On the procedural aspect of issuing the order of December 12, 1983: The Court emphasized that the judge should have conducted a hearing or required the submission of counter-affidavits from the petitioners to gather facts supporting the allegation of fraud, as mandated by Section 13 of Rule 57, when the motion for reconsideration was filed. This is because attachment is a harsh remedy, and its governing rules must be strictly construed against the applicant. Writs of attachment can only be granted on concrete and specific grounds, not on general averments that merely quote the words of the rules. On the issue of undue interference with G.R. No. 63225: The Court stated that it need not discuss the issue of whether Civil Cases Nos. CEB-1185 and CEB-1186 constituted undue interference with the proceedings in G.R. No. 63225, in view of the entry of judgment in the latter case. This implies that the resolution of the main issue regarding the attachment made further discussion on this point unnecessary.
Main Doctrine
A writ of attachment is a harsh, extraordinary, and summary remedy, and the rules governing its issuance must be construed strictly against the applicant. A writ of attachment can only be granted on concrete and specific grounds and not on general averments quoting perfunctorily the words of the Rules. The execution of a mortgage in favor of another creditor is not, per se, a fraudulent disposition of property, and bare allegations of such intent without factual bases do not suffice to justify a writ of attachment.