G.R. No. L-72006. November 29, 1988.
FLORENCIO REYES, JR., as Administrator of the Estate of FLORENCIO REYES, SR., petitioner, vs. HON. LEONARDO M. RIVERA, as Presiding Judge of Branch III, RTC, Baguio City, HON. BONIFACIO T. DORIA, as Presiding Judge of Branch VI, RTC, Baguio City, FRANCISCO SAN PEDRO, JUANA OCAMPO and GENARO BULOTANO, respondents.

FACTS

Petitioner Florencio Reyes, Jr., as estate administrator, filed this special civil action to annul orders from the Regional Trial Court of Baguio. The core dispute involves ownership and rental rights over the Venancia Building. Petitioner filed Civil Case No. 2817 for recovery of possession against private respondents, claiming ownership via a contract with respondent Francisco San Pedro. Separately, tenants Romeo Espinosa and Aurora Cervantes filed Civil Case No. 167-R, an interpleader suit, against petitioner and San Pedro, depositing rentals with the court to determine the rightful recipient. Respondent Judge Doria ordered the consolidation of these two cases.
Subsequently, respondent Judge Rivera, presiding over the consolidated cases, issued an order dated February 6, 1985, allowing private respondent Genaro Bulotano to withdraw the P19,000 deposit made by Espinosa in the interpleader case. Judge Rivera justified this by citing a final and executory ejectment judgment from the Municipal Trial Court in a different case (Civil Case No. 7739), which ordered Espinosa to pay Bulotano unpaid rentals. The petitioner assails this withdrawal order and also seeks Judge Rivera’s inhibition from hearing the related cases.

ISSUE

The primary issues are: (1) Whether the consolidation of the interpleader case with the recovery of possession case was proper; (2) Whether Judge Rivera gravely abused his discretion in allowing the withdrawal of the interpleader deposit; and (3) Whether Judge Rivera should be ordered to inhibit himself.

RULING

The Supreme Court granted the petition. First, it upheld the consolidation order. The issue in the interpleader case (who is entitled to rentals) is subsumed within the principal issue in the recovery case (who is the lawful owner of the building). Consolidation served the policy against multiplicity of suits and was not tainted with grave abuse of discretion.
Second, the Court ruled that Judge Rivera committed grave abuse of discretion in authorizing the withdrawal. The P19,000 deposited by Espinosa in the interpleader case constituted property in custodia legis (in the custody of the law). Such funds, deposited specifically to answer for rentals pending the court’s determination of the rightful claimant, are immune from execution for a personal judgment debt of the depositor in a separate case. The ejectment judgment against Espinosa in his personal capacity could not justify reaching the interpleader deposit. The order was annulled, and Bulotano was ordered to return the amount.
Third, the Court ordered Judge Rivera to inhibit himself from hearing the consolidated cases and the unrelated Civil Case No. 288-R. This was not a direct sanction for the abuse of discretion but was deemed necessary to dispel any suspicion of bias or prejudice, especially considering that petitioner had filed an administrative complaint against the judge concerning the assailed order. The cases were ordered re-raffled to other branches.