Adlawan vs.

Judge Torres, Aboitiz Facts: Petitioner Adlawan was indebted to Respondent company Aboitiz for construction projects the former was awarded with. However, due to inability to pay, Aboitiz filed for collection of sum of money against petitioner in the CFI of Cebu. It also moved for preliminary attachment on some of Adlawans properties after filing a bond. Aboitiz filed a notice of dismissal for the above mention case. When Adlawan moved for the enforcement of the dismissal, it was denied by the court on account of the filing by respondent Aboitiz an action or delivery of personal property before the CFI of Lapu-Lapu and petitioner Adlawans filing for damages in the same court for the seizure of his property by virtue of the preliminary attachment. Respondent Aboitiz alleged that the voluntary dismissal of the previous case was without prejudice to the institution of another action based on the same subject matter and that the issuance of the writ was justified because the petitioners were intending to defraud Aboitiz by mortgaging 11 parcels of land to PCIB thereby making PCIB a preferred creditor to the prejudice of Aboitiz. Issue: Was the writ of attachment legal or valid? Held: Negative. The affidavit submitted by Aboitiz in support of its prayer for the writ of attachment does NOT meet the requirements of Rule 57 of the Rules of Court regarding allegations on impending fraudulent removal, concealment and disposition of defendants property. To justify a preliminary attachment, the removal or disposal must have been made with intent to defraud defendants creditors. The factual basis must be alleged in the affidavit in support of the prayer for the writ of attachment if not so specifically alleged in the verified complaint. (See full text for the copy of the affidavit) The Supreme Court have found that there is no factual allegation which may constitute as a valid basis for the contention that the mortgage was in fraud of Aboitiz. The affidavit is the foundation of the writ and if none be filed or one be filed which wholly fails to set out some facts required by law to be stated therein, there is no jurisdiction and the proceedings are null and void. Bare allegation that an encumbrance of a property is in fraud of the creditor does NOT suffice. Factual bases for such conclusion must be clearly averred. By mortgaging a piece of property, a debtor merely subjects it to a lien but ownership thereof is not parted with. The Inability to pay ones creditors is no necessarily synonymous with fraudulent intent not to honor an obligation. When petitioners filed for reconsideration of the order directing the issuance of the writ, the respondent Judge Torres should have conducted a hearing or required a submission of counter-affidavit from the petitioners, if only to gather the facts in support of the alleged fraud.