G.R. No. L-49101 - Bonnevie vs. Court of Appeals

Petitioners Honesto V. Bonnevie and Raoul S.V. Bonnevie filed a complaint against the Philippine Bank of Commerce before the Court of First Instance of Rizal on January 26, 1971.
The complaint sought the annulment of the Deed of Mortgage dated December 6, 1966, executed by spouses Jose M. Lozano and Josefa P. Lozano in favor of the Bank, as well as the extrajudicial foreclosure conducted on September 4, 1968.
The complaint alleged that the mortgage lacked consideration and that the mortgage was executed by persons not owners of the property. Further, the foreclosure allegedly did not comply with legal conditions.
Alternatively, petitioners invoked equity and justice, claiming the Bank should have accepted their offer to redeem the property.

Lack of consent to the sale and assumption of mortgage by petitioners.
Demand letters and foreclosure notices were sent to Jose Lozano’s address.
The Bank was notified of the sale only after foreclosure.
Under contract law, the Bank’s consent was necessary before releasing Jose Lozano or substituting debtors.
The principal loan amount of P75,000 remained unpaid despite demands.
The property was still registered in the name of the Lozanos.
Bank practice does not require payments to be made personally by the debtor.
The mortgage had valid consideration, as proxied by the loan contract and promissory note.

Raoul S.V. Bonnevie filed a motion for intervention, based on a Deed of Assignment from Honesto Bonnevie covering Honesto’s rights over the property.
Intervention was granted to resolve all issues in one proceeding.
On March 29, 1976, the trial court rendered judgment dismissing the complaint with costs.
Motion for reconsideration was denied.

Petitioners appealed, assigning errors as to the validity of the mortgage, auction sale, right to redeem, bad faith on the part of the Bank, and dismissal of the complaint.
The Court of Appeals affirmed the trial court’s dismissal on August 11, 1978.
Motion for reconsideration was denied on October 3, 1978.

The Lozano spouses owned the property and mortgaged it on December 6, 1966, to secure a loan of P75,000 from the Bank.
On December 8, 1966, the Lozanos executed a Deed of Sale with Assumption of Mortgage in favor of petitioner Honesto Bonnevie, with total consideration of P100,000 (P25,000 payable to the Lozanos, the balance to the Bank).
The loan amount was not yet released on December 6, 1966; the promissory note was signed on December 12, 1966.
Petitioner made payments totaling P18,944.22 to the Bank between April 28, 1967 and July 12, 1968.
On May 4, 1968, Honesto assigned his rights in the property to Raoul Bonnevie.
The Bank applied for foreclosure on June 10, 1968; notices were published on June 30, July 7, and July 14, 1968.
Auction sale was conducted on August 19, 1968; property was sold to the Bank for P84,387.
Petitioner’s offers to repurchase the property failed; an adverse claim was annotated on the title on October 9, 1969.

Whether the real estate mortgage executed by the spouses Lozano in favor of the Philippine Bank of Commerce was validly and legally executed.

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

Whether, assuming the right to redeem existed, the Bank was justified in refusing the petitioners’ offers to repurchase the property.