G.R. No. L-49101. October 24, 1983.
RAOUL S.V. BONNEVIE and HONESTO V. BONNEVIE, petitioners, vs. THE HONORABLE COURT OF APPEALS and THE PHILIPPINE BANK OF COMMERCE, respondents.

FACTS

Spouses Jose M. Lozano and Josefa P. Lozano mortgaged their property to respondent Philippine Bank of Commerce on December 6, 1966, to secure a P75,000.00 loan. Two days later, on December 8, 1966, the Lozanos sold the same property to petitioner Honesto Bonnevie via a Deed of Sale with Assumption of Mortgage. Honesto agreed to pay the Lozanos P25,000.00 and assume the P75,000.00 bank loan. He subsequently made several payments on the mortgage directly to the bank. On May 4, 1968, Honesto assigned all his rights to the property to his brother, petitioner Raoul Bonnevie.
The bank, unaware of the sale to Honesto, foreclosed the mortgage extrajudicially after the loan matured and remained unpaid. The property was sold at auction to the bank on August 19, 1968. Honesto filed a complaint seeking annulment of the mortgage and foreclosure, or alternatively, the right to redeem the property. Raoul later intervened. The trial court dismissed the complaint, a decision affirmed by the Court of Appeals.

ISSUE

The core issues were: (1) the validity of the real estate mortgage executed by the Lozanos; (2) the validity of the extrajudicial foreclosure; and (3) whether petitioners had the right to redeem the foreclosed property.

RULING

The Supreme Court affirmed the Court of Appeals, ruling against the petitioners. On the first issue, the mortgage was valid. The execution of the mortgage deed on December 6, 1966, constituted a valid contract, with the disbursement of the loan proceeds on December 12, 1966, being a mere implementation thereof. The mortgage contained a stipulation prohibiting sale without the bank’s written consent. The subsequent sale to Honesto Bonnevie without such consent did not invalidate the original mortgage but constituted a violation of its terms, binding the vendee to the mortgage but not releasing the original mortgagors.
On the second issue, the foreclosure was valid. The bank had no obligation to notify petitioners of the foreclosure because the sale to Honesto was not registered, and the title remained in the Lozanos’ name. A letter from Lozano merely authorizing Honesto to make payments did not constitute notice of change of ownership or a request to redirect correspondence. The loan was overdue when foreclosure was initiated, and partial interest payments by petitioners did not constitute a renewal of the loan or render the foreclosure premature.
Finally, petitioners had no right to redeem. The one-year redemption period under Act No. 3135 had long expired by the time the complaint was filed. The Court found no basis for equitable redemption, as the bank did not act in bad faith; it rightfully foreclosed on a delinquent obligation secured by a valid mortgage. The petition was denied.