GLICERIA C. LIWANAG, SPECIAL ADMINISTRATRIX OF THE ESTATE OF PIO D. LIWANAG, PETITIONER, VS. HON. COURT OF APPEALS, HON. JESUS DE VEYRA, AS JUDGE OF THE COURT OF FIRST INSTANCE …

Liwanag versus Court of Appeals

The Case

This is the case of Liwanag versus Court of Appeals. Gliceria Liwanag, acting as special administratrix of the estate of her deceased husband Pio Liwanag, asks the Supreme Court to stop a mortgage foreclosure suit that a creditor filed against her in her capacity as special administratrix. She insists that a special administrator cannot be sued for the debts of the deceased. The case matters because it settles two things every reviewee must know: first, that a wrong denial of a motion to dismiss is corrected by appeal after judgment on the merits, not by certiorari; and second, that a mortgagee may foreclose his mortgage by suing the special administratrix of the estate, making her a party defendant.

Procedural History

The estate of Pio Liwanag was being settled in a special proceeding before the Court of First Instance of Manila. Within that same court, the creditor Manuel Agregado filed a separate civil case for the foreclosure of a real estate mortgage. Gliceria Liwanag, as special administratrix, moved to dismiss the foreclosure complaint on the ground that she cannot be sued by a creditor of the deceased. The respondent judge, the Honorable Jesus de Veyra, denied the motion.

Gliceria then went to the Court of Appeals by a petition for certiorari, asking that the order be annulled and that the judge be enjoined from hearing the foreclosure case. The Court of Appeals issued a preliminary injunction, but later rendered a decision denying the writ and dissolving the injunction, with costs against her. She then elevated the matter to the Supreme Court by appeal by certiorari.

Facts

During his lifetime, Pio Liwanag constituted a real estate mortgage in favor of Manuel Agregado. Pio Liwanag thereafter died, and the settlement of his estate became the subject of a special proceeding, with Gliceria Liwanag appointed special administratrix.

On January 9, 1962, Agregado commenced a civil case for the foreclosure of that mortgage against Gliceria in her capacity as special administratrix. On July 18, 1962, she moved to dismiss the complaint, arguing that as special administratrix she cannot be sued by a creditor of the deceased.

The respondent judge denied the motion on August 1, 1962. Gliceria then sought relief in the Court of Appeals, which ultimately denied her petition and dissolved its preliminary injunction. Hence the appeal to the Supreme Court, where she pressed the theory that a special administrator is not liable to pay the debts of the deceased, and that therefore the creditor had no cause of action against her.

Issues

• Whether or not the denial of a motion to dismiss, on the ground that the complaint states no cause of action, may be corrected by a petition for certiorari rather than by an appeal after judgment on the merits.
• Whether or not a mortgagee may bring an action for foreclosure against the special administratrix of the estate of a deceased mortgagor.

Applicable Provisions

Section 7 of Rule 86 of the Rules of Court provides:

A creditor holding a claim against the deceased, secured by a mortgage or other collateral security, may pursue any of these remedies: (1) abandon his security and prosecute his claim in the testate or intestate proceeding and share in the general distribution of the assets of the estate; (2) foreclose his mortgage or realize upon his security by an action in court, making the executor or administrator a party defendant, and if there is a deficiency after the sale of the mortgaged property, he may prove the same in the testate or intestate proceedings; and (3) rely exclusively upon his mortgage and foreclose it any time within the ordinary period of limitations, and if he relies exclusively upon the mortgage, he shall not share in the distribution of the assets.

This provision is the heart of the case, because it expressly allows the mortgagee to foreclose by an action in court making the executor or administrator a party defendant.

Ruling

On the first issue, the Court held that the alleged absence of a cause of action does not affect the jurisdiction of the respondent judge to hear the foreclosure case. It follows that the denial of the motion to dismiss, even if it were erroneous, is reviewable not by writ of certiorari but by appeal after the rendition of judgment on the merits. Certiorari was therefore the wrong remedy.

On the second issue, the Court held that the theory that a mortgagee cannot bring a foreclosure action against the special administrator of the estate of a deceased person had already been rejected. The Court pointed to its earlier ruling in the case of Liwanag versus Reyes, involving the same petitioner, the same estate, a similar foreclosure of another mortgage, and an identical motion to dismiss and issue. There the Court explained that the creditor had chosen the second remedy under Section 7 of Rule 86, having filed his foreclosure action against the administratrix of the property.

On whether the special administratrix may be sued as such, the Court reasoned that the Rules of Court do not expressly prohibit making the special administratrix a defendant in a suit against the estate. Otherwise, creditors would suffer the adverse effects of the statute of limitations running against them where the appointment of a regular administrator is delayed. If the action were denied on this technical ground alone, and the appointment of a regular administrator delayed, the very purpose for which the mortgage was constituted would be defeated.

Doctrine

First, the denial of a motion to dismiss on the ground that the complaint states no cause of action does not divest the trial court of jurisdiction; the error, if any, is corrected by appeal after judgment on the merits, not by certiorari. Second, under Section 7 of Rule 86, a creditor whose claim is secured by a mortgage may foreclose that mortgage by an action in court, making the executor or administrator a party defendant. Third, the Rules of Court do not expressly prohibit making the special administratrix a defendant in a suit against the estate; to hold otherwise would let the statute of limitations run against creditors while the appointment of a regular administrator is delayed, defeating the very purpose of the mortgage.

Disposition

The Supreme Court affirmed the decision of the Court of Appeals, with costs against the petitioner Gliceria Liwanag, so that the foreclosure action against her as special administratrix may proceed.

Remember This

Memorize this line: a mortgagee may foreclose his mortgage by an action in court making the executor or administrator, including the special administratrix, a party defendant. Examiners use this case to test the three remedies of a secured creditor under Section 7 of Rule 86, and to test the rule that a denial of a motion to dismiss is corrected by appeal, not certiorari.