G.R. No. L-5968 - Rivera vs. Ocampo

The case arose in civil cause No. 17111 involving an interpleader action initiated by Atkins, Kroll & Co., Inc.
Atkins, Kroll & Co., Inc. had made a deposit of ₱21,792.49 in the clerk’s office, representing the value of the second remittance (remesa) of steel rails sold by Cathay Ceramics, Inc. under a contract executed on April 25, 1952.
The sale involved two shipments: the first remittance, valued at ₱25,789.45, had been delivered on June 20, 1952, and the second remittance, amounting to ₱21,792.49, had been sent on July 17, 1952.

Defendants included Lope Sarreal, Associated Insurance & Surety Co., Inc., Rizalina S. Rivera, Claro Rivera, and Jesus L. Uy.
Jesus L. Uy, represented by his attorney Jose L. Uy, claimed a preferred right over the second remittance deposit, asserting that the amount should be exclusively released to him.
Rizalina S. Rivera and the Associated Insurance & Surety Co., Inc. countered by asserting their own preferred rights; they contended that from the ₱21,792.49 deposit, first part should clear Rizalina S. Rivera’s claim and any remaining balance be paid to her.

On July 30, 1952 – one day after the filing of the interpleader action – Cathay Ceramics, Inc. filed an urgent motion seeking permission to withdraw the deposited amount from the clerk’s office, provided it would be substituted by a surety bond amounting to ₱25,000.00.
Rizalina S. Rivera and Associated Insurance & Surety Co., Inc. opposed the motion, arguing that their respective rights would not be adequately protected if the funds were withdrawn and replaced by a bond.
The matter was initially heard by Judge Zulueta (temporary presiding judge) and then referred to Judge Ocampo, who on August 5, 1952, issued an order directing the clerk to:

Deliver ₱19,800.00 to defendant Jesus L. Uy, and
Release the balance of ₱1,992.49 to defendant Cathay Ceramics, Inc. contingent upon the submission and approval of the ₱25,000.00 surety bond with specified conditions for prompt payment to the claimants.

Rizalina S. Rivera and Associated Insurance & Surety Co., Inc. filed an urgent motion for reconsideration, additionally requesting that if their motion was denied, the withdrawal of the deposit be stayed pending a certiorari petition before the Supreme Court.
The respondent judge indicated his intention to deny the motion for reconsideration and to proceed with executing the August 5 order unless an interdict was issued.
The petitioners (the recurrentes) approached the higher court contending that the judge had either exceeded his jurisdiction or had abused his discretion in ordering the withdrawal of the deposit, seeking the revocation of the order and the issuance of a preliminary prohibitory interdict.

Did the respondent judge act in excess of his jurisdiction or abuse his discretion by authorizing the withdrawal of the deposited fund in lieu of its being left undisturbed in the court’s custodia legis?
Was the ordering of such a withdrawal, with the condition of substituting the funds by a surety bond, legally tenable under the existing rules and codes?

Can a surety bond of ₱25,000.00 serve as an adequate and readily available substitute for the liquid cash deposit of ₱21,792.49?
Does the bond protect the rights and interests of the other claimants as robustly as the actual cash deposit held in the clerk’s custody?

Is the deposit properly characterized as being in “custodia legis,” thereby invoking strict limitations on its use as contemplated by the Civil Code provisions on depositum?
Should the deposit be used solely for interpleader purposes as initially intended by the plaintiff, rather than being prematurely allocated for the benefit of one or two of the defendants?