G.R. No. L-19159; September 29, 1964
GLICERIA C. LIWANAG, Special Administratrix of the Estate of Pio D. Liwanag, petitioner, vs. HON. LUIS B. REYES, Judge of the Court of First Instance of Manila and ROTEGAAN FINANCING, INC., respondents.

FACTS

On July 14, 1960, Pio D. Liwanag executed a real estate mortgage in favor of Rotegaan Financing, Inc. to secure a P180,000.00 loan, due on July 14, 1961. Before the loan matured, Liwanag died intestate. As the obligation remained unpaid after the due date, Rotegaan filed a complaint for foreclosure against his estate and Gliceria Liwanag as special administratrix, also praying for the appointment of a receiver. The mortgage contract contained a stipulation consenting to the appointment of a receiver in case of judicial foreclosure.
Gliceria Liwanag, as special administratrix, filed a motion to dismiss the complaint, arguing she could not be sued in that capacity. She also opposed the receivership, contending the mortgaged property was in custodia legis due to the pending estate settlement proceedings. The lower court issued an order appointing a receiver and deferred action on the motion to dismiss. After her motion for reconsideration was denied, Gliceria filed this certiorari petition, alleging grave abuse of discretion.

ISSUE

The primary issues are: (1) whether a special administratrix can be validly sued in a foreclosure action; and (2) whether the lower court committed grave abuse of discretion in appointing a receiver over property under estate administration.

RULING

The Supreme Court dismissed the petition, affirming the lower court’s orders. On the first issue, the Court held that a special administratrix can be sued. While the Rules of Court do not expressly authorize suits against a special administrator, they do not prohibit it either. The Court reasoned that disallowing such suits would prejudice creditors, as the statute of limitations could run against their claims during delays in appointing a regular administrator, thereby defeating the purpose of the mortgage security.
On the second issue, the Court found no abuse of discretion in appointing a receiver. The mortgage contract expressly stipulated the mortgagor’s consent to the appointment of a receiver in case of judicial foreclosure. This contractual provision, agreed upon by the deceased himself, must be respected. The general rule that property in custodia legis is exempt from receivership does not apply when the action seeks to enforce a superior lien, like a mortgage, and the appointment is a feasible means to preserve the property as contractually agreed. Trial courts are granted wide discretion in matters of receivership, and absent arbitrary exercise, the Supreme Court will not interfere. The orders were therefore affirmed.