Facts:

The case involves La Urbana, Mutual Building and Loan Association as the plaintiff and Aimee Sargent Viuda de Alegre, the judicial administratrix of the intestate estate of the deceased Juan B. Alegre, as the defendant. The events leading to the case unfolded in the Court of First Instance of Sorsogon, where the plaintiff sought to foreclose three mortgages executed by Juan B. Alegre during his lifetime. The plaintiff argued that the mortgages were valid and enforceable despite the defendant's claims. The trial court ruled in favor of the plaintiff, leading the defendant to appeal the decision. The defendant raised several assignments of error, including the assertion that the mortgage contracts had been novated and superseded by a proposed consolidation agreement between the parties. The administratrix had requested a delay in payments and proposed consolidating the mortgages into a new one with a longer repayment period. The board of directors of La Urbana accepted this...

Facts:

1. Parties Involved:

   • Plaintiff: La Urbana Mutual Building and Loan Association.
   • Defendant: Aimee Sargent Viuda de Alegre, Judicial Administratrix of the intestate estate of Juan B. Alegre.

2. Nature of the Case:

   • Plaintiff filed a foreclosure suit in the Court of First Instance of Sorsogon regarding three mortgages executed by the late Juan B. Alegre.

3. Background of the Mortgages:

   • Juan B. Alegre, during his lifetime, executed three mortgages in favor of La Urbana.
   • Despite being wealthy, his estate became heavily involved in debts, leading to delinquent payments on the mortgages.

4. Proposed Consolidation of Mortgages:

   • The administratrix (defendant) proposed consolidating the three mortgages and accrued interest into a new mortgage with a 20-year term, replacing the original 10-year term.
   • La Urbana's board of directors agreed to the proposal but imposed conditions, including the approval of the probate court.

5. Withdrawal from the Agreement:

   • Before the administratrix could fulfill the conditions, La Urbana withdrew from the proposed agreement and proceeded to enforce the original mortgages.

6. Defendant's Defense:

   • The defendant argued that the original mortgages were novated by the proposed consolidation agreement and that La Urbana could not unilaterally withdraw from it.

Issue:

• (Unlock)

Ruling:

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Ratio:

1. Novation Requires Mutual Consent and Authority:

   • Novation requires the mutual consent of both parties and the authority to enter into the new agreement. In this case, the proposed consolidation agreement lacked probate court approval, which was a necessary condition for its validity.

2. Probate Court Approval is Essential:

   • The administratrix lacked the authority to bind the estate without the probate court's approval. The Court emphasized that prolonged administration of estates is discouraged under the law, making it unlikely that the probate court would have approved the proposed 20-year agreement.

3. Right to Withdraw from Negotiations:

   • Until a contract is fully executed, parties are free to withdraw from negotiations. La Urbana's withdrawal from the proposed agreement was lawful, as the agreement had not yet been finalized.

4. Enforceability of Original Contracts:

   • The original mortgage contracts remained valid and enforceable, as no valid novation had occurred.

5. Attorney's Fees are Contractual and Reasonable:

   • The award of attorney's fees was based on the terms of the mortgage contracts and the complexity of the case. The Court found no reason to modify the trial court's decision on this matter.