BONNEVIE VS. COURT OF APPEALS, G.R. NO.

L-49101 OCTOBER 24, 1983

FACTS:

Spouses Lozano were the owners of the property which they mortgaged to secure payment of
loan obtain from respondent Philippine Bank of Commerce. Two days after, Deed of Sale with
Assumption of Mortgage without the consent of the bank was executed in favor of plaintiff. The
latter applied for foreclosure of the mortgage and notice was published in Luzon Weekly Courier.
Auction sale was conducted and property was sold to respondent. Offers from plaintiff to
repurchase the property did not materialize.

Petitioner Honesto Bonnevie filed a complaint against respondent for the annulment of the
Deed of Mortgage as well as the extrajudicial foreclosure. It alleged, the Deed of Mortgage lacks
consideration and property in question was foreclosed without complying with the condition
imposed for a valid foreclosure.

Private respondent denied the allegations and raised that the defendant has not given its
consent to the sale of the mortgaged property to plaintiff and the assumption by the latter of the
loan secured thereby; the demand letters and notice of foreclosure were sent to Jose Lozano at his
address; and the loan of P75,000.00 which was secured by mortgage, after two renewals remain
unpaid despite countless reminders and demands. It is not true that the mortgage, at the time of its
execution and registration, was without consideration as alleged because the execution and
registration of the securing mortgage, the signing and delivery of the promissory note and the
disbursement of the proceeds of the loan are mere implementation of the basic consensual contract
of loan.

Procedural History:

Thus, lower court dismissed the complaint with costs against petitioner which was affirmed
by the Court of Appeals.

ISSUES:

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

2) Whether the extrajudicial foreclosure of the said mortgage was validly and legally effected.

3) Whether petitioners had a right to redeem the foreclosed property.

HELD:

1) Yes. The real estate mortgage executed by the spouses in favor of the respondent bank was
validly and legally executed.

The law provides that contract of loan with mortgage, being a consensual contract deemed
perfected at the execution of the contract of mortgage. Failure to take immediate collection of
consideration is immaterial.

Application/ Analysis:

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.

2) Yes. The extrajudicial foreclosure of the said mortgage was validly and legally effected.

Act No. 3135 does not require personal notice on the mortgagor. The requirement on notice
is that:

"Section 3. Notice shall be given by posting notices of the sale for not less than twenty days
in at least three public places of the municipality or city where the property is situated, and if such
property is worth more than four hundred pesos, such notice shall also be published once a week
for at least three consecutive weeks in a newspaper of general circulation in the municipality or
city."

Moreover, jurisprudence provides that to be a newspaper of general circulation, it is enough

Application/ Analysis:

The lack of notice of the foreclosure sale on petitioners is a flimsy ground. Respondent Bank
not being a party to the Deed of Sale with Assumption of Mortgage, it can validly claim that it was
not aware of the same and hence, it may not be obliged to notify petitioners. Secondly, petitioner
Honesto Bonnevie was not entitled to any notice because as of May 14, 1968, he had transferred
and assigned all his rights and interests over the property in favor of intervenor Raoul Bonnevie
and respondent Bank was not likewise informed of the same. For the same reason, Raoul
Bonnevie is not entitled to notice.

The notice of sale was published in the Luzon Courier and notices of the sale were posted for
not less than twenty days in at least three (3) public places in the Municipality where the property
is located. Petitioners were thus placed on constructive notice.

The affidavit of publication, executed by the publisher, business or advertising manager of

3) No. Petitioners had no right to redeem the foreclosed property.

Law provides that unregistered mortgagor has no right or disallowed to redeem the property.

Application/ Analysis:

No consent having been secured from respondent Bank to the sale with assumption of
mortgage by petitioners, the latter were not validly substituted as debtors. In fact, 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. But even granting that as purchaser or assignee of the
property, as the case may be, the petitioners had acquired a right to redeem the property,
petitioners failed to exercise said right within the period granted by law.

CONCLUSION:

Wherefore, the real estate mortgage executed by the spouses in favor of the respondent bank
and extrajudicial foreclosure of the said mortgage was validly and legally executed and petitioner
being unregistered mortgagor had no right to redeem the foreclosed property. Thus, appeal of the
petitioner is devoid of merit. The decision of the Court of Appeals hereby affirmed. Costs against
petitioner.