G.R. No. 83897 . November 9, 1990.
ESTEBAN B. UY JR. and NILO S. CABANG, petitioners, vs. THE HONORABLE COURT OF APPEALS, WILSON TING, and YU HON, respondents.

FACTS

Petitioner Esteban Uy Jr. filed a sum of money case (Civil Case No. Q-34782) against Sy Yuk Tat and obtained a writ of preliminary attachment. Co-petitioner Nilo Cabang, as Special Sheriff, implemented the writ and attached properties found at 65 Speaker Perez St., Quezon City. Private respondents Wilson Ting and Yu Hon filed a third-party claim over these attached properties, asserting absolute ownership, and moved to dissolve the attachment in the same case. Their pleadings were later stricken from the records. Meanwhile, a judgment by default was rendered in favor of Uy in that first case.
Subsequently, private respondents filed a separate damages case (Civil Case No. Q-35128, the second case) against petitioners Uy and Cabang, alleging illegal seizure of their properties. The court in this second case issued a status quo order. Despite this, the court in the first case granted Uy’s motion for execution, and the attached properties were sold at public auction. In the second case, private respondents then applied for and were granted a writ of preliminary attachment against petitioners’ properties. Petitioners moved to dismiss, arguing the second court had no jurisdiction to interfere with properties under custodia legis of a co-equal court and that the complaint stated no cause of action. Their motion was denied.

ISSUE

Whether the Regional Trial Court, in the second case for damages, gravely abused its discretion in issuing the writ of preliminary attachment against petitioners and in denying their motion to dismiss.

RULING

The Supreme Court denied the petition and affirmed the Court of Appeals. The issuance of the writ of preliminary attachment in the second case was proper. The legal logic is that a writ of preliminary attachment is a provisional remedy granted at the commencement of an action or during its pendency, based on grounds enumerated in the Rules of Court. The grounds invoked by private respondents—that petitioners are guilty of fraud in contracting the debt or incurring the obligation upon which the action is brought, and that they have removed or disposed of their property, or are about to do so, with intent to defraud their creditors—are valid statutory grounds under the Rules. The Court found that the trial court did not act capriciously or whimsically in determining the existence of these grounds based on the allegations and evidence presented.
Furthermore, the Court ruled that the sale of the disputed properties at public auction in the first case did not render the second case moot and academic. The settled doctrine is that the attachment and sale of properties belonging to a third person to satisfy the judgment against a debtor is void. Thus, private respondents, as alleged owners, retained a cause of action for damages against petitioners for the alleged wrongful attachment of their properties. The claim that the second court interfered with custodia legis is unavailing because the properties were no longer in legal custody after their allegedly void sale. Petitioners’ other procedural objections, such as non-joinder of a party and lack of verification, were deemed mere formal defects curable by amendment and not sufficient grounds for dismissal, as rules of procedure should not be applied rigidly to defeat substantial justice.