G.R. No. 39746; March 28, 1934
LA URBANA, Mutual Building and Loan Association, plaintiff-appellee, vs. AIMEE SARGENT VIUDA DE ALEGRE, judicial administratix of the intestate estate of the deceased, Juan B. Alegre, defendant-appellant.

FACTS

Plaintiff La Urbana filed a foreclosure suit on three mortgages executed by the late Juan B. Alegre. The defendant administratrix of Alegre’s estate argued that the mortgages had been novated by a subsequent agreement to consolidate them into a new 20-year mortgage. The plaintiff’s board agreed to the consolidation offer but set conditions, including obtaining approval from the probate court. Before the administratrix could fulfill these conditions, the plaintiff withdrew from the proposed agreement.

ISSUE

Whether the proposed consolidation agreement novated the original mortgage contracts, thereby barring their foreclosure.

RULING

No. The Supreme Court affirmed the trial court’s judgment ordering foreclosure. There was no novation. The proposed consolidation agreement was merely an executory contract that never became binding because a crucial condition—the approval of the probate court—was never met. Without such approval, the administratrix lacked the authority to bind the estate, and the contract lacked mutuality. The Court also upheld the award of attorney’s fees as stipulated in the mortgage contracts, finding no reason to modify the trial court’s assessment.

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