BONNEVIE v CA

Facts:

- Spouses Lozano execute a mortgage contract in favor of Philippine Bank of Commerce for an amount of 75,000.

- Dec, 8 they executed a deed of sale with assumption f mortgage in favor of Honesto Bonnevie in the amount of 100,000. 25K payable upon execution of document. 75,000 payable to defendant-appellee (bank)

- Although the mortgage was executed in Dec. 6, 1966, the amount of the loan was only received on Dec. 12.

- April 28, 1967 – July 12, 1968 Bonnevie made several payments to the mortgage- May 4, 1968 Honesto assigned all his rights to his brother Raoul Bonnevie.- June 1968 bank sought to foreclose the property extra judicially- Bank was able to purchase the property through the public auction in the amount of 84,387.00- Petitioners sought to redeem the property but failed. - Petitioners caused an adverse claim to be annotated on the title of the property.- Petitioners contend that the mortgage is invalid for lack of cause or consideration. A

mortgage being an accessory contract should have a valid principal contract.

Issue:

1. Whether or not the real estate mortgage executed by the spouses Lozano in favor of respondent bank was validly and legally executed.

Held:

Yes. The mortgage executed is perfectly valid. From the recitals of the mortgage deed itself, it is clearly seen that the mortgage deed was executed for and on condition of the loan granted to the Lozano spouses. The fact that the latter did not collect from the respondent Bank the consideration of the mortgage on the date it was executed is immaterial. A contract of loan being a consensual contract, the herein contract of loan was perfected at the same time the contract of mortgage was executed. The promissory note executed on December 12, 1966 is only an evidence of indebtedness and does not indicate lack of consideration of the mortgage at the time of its execution.

Regarding the argument that the subsequent renewal were void because the property were already sold to Bonnevie, the Supreme Court held that This argument failed to consider the provision 2 of the contract of mortgage which prohibits the sale, disposition of, mortgage and encumbrance of the mortgaged properties, without the written consent of the mortgagee, as well as the additional proviso that if in spite of said stipulation, the mortgaged property is sold, the vendee shall assume the mortgage in the terms and conditions under which it is constituted. These provisions are expressly made part and parcel of the Deed of Sale with Assumption of Mortgage.

Petitioners admit that they did not secure the consent of the bank coupled with the fact that the sale/assignment was not registered so that the title remained in the name of the Lozano spouses, insofar as respondent Bank was concerned, the Lozano spouses could rightfully and validly mortgage the property. Also it can be said that petitioners voluntarily assumed the mortgage when they entered into the Deed of Sale with Assumption of Mortgage. They are, therefore, estopped from impugning its validity whether on the original loan or renewals thereof.

Collateral issues:

Publication : It was met and the newspaper was proven to be of general circulation in the locality of Rizal

As to personal notice: Bank was not a party to the deed of sale hence it did not know of the transfer. Hence the bank had an excuse for not notifying them personally.

As to right to redeem: No right to redeem because they were not substituted as debtors because they did not secure the consent of the bank. Their rights were never recorded and hence, respondent Bank is charged with the obligation to recognize the right of redemption only of the Lozano spouses. Even assuming they had the right to redeem, the one year period had already lapsed.