G.R. No.

L-49101 October 24, 1983

RAOUL S.V. BONNEVIE and HONESTO V. BONNEVIE
vs.
THE HONORABLE COURT OF APPEALS and THE PHILIPPINE BANK OF COMMERCE

Facts:
Spouses Jose M. Lozano and Josefa P. Lozano secured their loan of P75K from Philippine Bank of
Commerce (PBC) by mortgaging their property. They Executed Deed of Sale with Mortgage to Honesto
Bonnevie wherein P75,000 is payable to PBC and P25K is payable to Spouses Lanzano.

Honesto Bonnevie paid a total of P18,944.22 to PBC. Later on, he assigned all his rights under the Deed
of Sale with Assumption of Mortgage to his brother, intervenor Raoul Bonnevie

However, PBC applied for the foreclosure of the mortgage, and notice of sale was published. Thus,
Honesto Bonnevie filed in the CFI of Rizal against Philippine Bank of Commerce for the annulment of
the Deed of Mortgage dated December 6, 1966 as well as the extrajudicial foreclosure made on
September 4, 1968.

In the lower court, Honesto Bonnevie alleged among others that (a) the Deed of Mortgage lacks
consideration and (b) the mortgage was executed by one who was not the owner of the mortgaged
property. It was foreclosed pursuant to Act No. 3135 as amended, without, however, complying with the
condition imposed for a valid foreclosure. They insisted that the Bank should have accepted their offer to
redeem the property under the principle of equity said justice.

ISSUE: Whether or not the forclosure on the mortgage is validly executed.

HELD: YES, the mortgage deed itself was executed for and on condition of the loan granted to the
Lozano spouses. Even if they 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.

Respondent Bank had every right to rely on the certificate of title. It was not bound to go behind the same
to look for flaws in the mortgagor's title, the doctrine of innocent purchaser for value being applicable to
an innocent mortgagee for value.  They Lonzanos 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.

In fact, itt was not until September 29, 1969 that Honesto Bonnevie first wrote respondent and offered to
redeem the property. The loan had already matured on December 26, 1967 so when respondent Bank
applied for foreclosure, the loan was already six months overdue. Payment of interest on July 12, 1968
does not make the earlier act of PBC inequitous nor does it ipso facto result in the renewal of the loan. In
order that a renewal of a loan may be effected, not only the payment of the accrued interest is necessary
but also the payment of interest for the proposed period of renewal as well.