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 Lozano mortgaged their property to secure the payment of the loan in the principal
amount of P75,000.00 from defendant Philippine Bank of Commerce. On December 6, 1966, when the
mortgage was executed by the Lozano spouses in favor of defendant bank, the loan of P75,000.00 was
not yet received, it was only on December 12, 1966 when the spouses and Alfonso Lim signed the
promissory note for that amount.

From April 28, 1967 to July 12, 1968, plaintiff spouses made payments to defendant bank on the
mortgage. On May 4, 1968, plaintiff assigned all his rights under the Deed of Sale with Assumption of
Mortgage to his brother, intervenor Raoul Bonnevie. On June 10, 1968, defendant bank applied for the
foreclosure of the mortgage, the auction sale was conducted and the property was sold to defendant bank
for P84,387.00; and that offers from plaintiff to repurchase the property failed, he caused an adverse
claim to be annotated on the title of the property.

The complaint filed by petitioner Honesto Bonnevie with the CFI of Rizal against respondent
Philippine Bank of Commerce sought the annulment of the Deed executed in favor of the bank by the
spouses Lozano and the extrajudicial foreclosure. Alleging that the Deed of Mortgage lacks consideration
and was executed not by the owner of the mortgaged property.

In the answer of respondent Bank, it denied most of the allegations and raised various affirmative
defences. After petitioner Honesto rested his case, petitioner Raoul Bonnevie filed a motion for
intervention premised on the Deed of Assignment executed by petitioner Honesto in favor of petitioner
Raoul covering the rights and interests of petitioner Honesto over the subject property. The intervention
was ultimately granted.

The lower court dismissed the complaint with costs against plaintiff and the intervenor. The
motion for reconsideration was also denied. Petitioners appealed to respondent Court of Appeals. The
respondent court affirmed the decision of the lower court, and denied the motion for reconsideration.
Hence, the present petition for review.

ISSUE: Whether the real estate mortgage executed by the spouses Lozano in favor of respondent
bank was validly and legally executed.

HELD:

In attacking the validity of the deed of mortgage, they contended that when it was executed on
December 6, 1966, there was yet no principal obligation to secure as the loan of P75,000.00 was not
received by the Lozano spouses "So much so that in the absence of a principal obligation, there is want
of consideration in the accessory contract, which consequently impairs its validity and fatally affects its
very existence."

This contention is patently devoid of merit. 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.

Petitioners also argued that granting the validity of the mortgage, the subsequent renewals of the original
loan, using as security the same property which the Lozano spouses had already sold to petitioners,
rendered the mortgage null and void,

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.

WHEREFORE, the appeal being devoid of merit, the decision of the Court of Appeals is hereby
AFFIRMED. Costs against petitioners.
 G.R. No. L-26371 September 30, 1969 MOBIL OIL PHILIPPINES, INC., plaintiff-
appellant, vs. RUTH R. DIOCARES, ET AL., defendants-appellees.

FACTS:

Defendants Ruth and Lope Diocares entered into a contract of loan and real estate mortgage
wherein the plaintiff Mobil Oil Philippines, Inc., extended to the said defendants a loan of
P45,000.00, that the defendants will repay the loan in monthly installments of P950.88 for a period of
5 years from Feb. 9, 1965.

To secure the loan they executed a first mortgage on two parcels of land both issued by the
Register of Deeds of Bacolod City. That in case of failure of the defendants to pay any of the
installments due and purchase their petroleum requirements from the plaintiff, the latter has the right
to foreclose the mortgage. The defendant left a balance of P43,098.24 and failed to buy the
petroleum. The plaintiff, therefore, prayed that the defendants be ordered to pay the said amount
with interest.
Defendants, Diocares, admitted their indebtedness, denying the alleged refusal to pay.
According to them, being that they sought for an extension of time to do so, inasmuch as they were
not in a position to comply with their obligation.

The plaintiff filed a motion for judgement on the pleadings. The lower court granted the
motion, but denied the foreclosure sought by the plaintiff. The court said that the said loan
agreement did not establish a real estate mortgage. The document should have been registered.
(Art. 2125, Civil Code of the Phil.)" The Court ordered the defendant to pay P43,098.24, with
interest. Hence this appeal by the plaintiff-appellant.

ISSUE: WON the said loan agreement did not establish a real estate mortgage.

HELD:

The court find the appeal meritorious, stating that the lower court should not have held that
no real estate mortgage was established and should have ordered its foreclosure.

The codal provision is clear and explicit. Even if the instrument were not recorded, "the
mortgage is nevertheless binding between the parties." The law cannot be any clearer. Effect must
be given to it as written. The mortgage subsists; the parties are bound. As between them, the mere
fact that there is as yet no compliance with the requirement that it be recorded cannot be a bar to
foreclosure.

A contrary conclusion would manifest less than full respect to what the codal provision
ordains. The liability of the mortgagor is therein explicitly recognized. To hold, as the lower court did,
that no foreclosure would lie under the circumstances would be to render the provision in question
nugatory. That the Courts are not allowed to do. What the law requires in unambiguous language
must be lived up to. No interpretation is needed, only its application, the undisputed facts calling for
it.

"In article [2125] an additional provision is made that if the instrument of mortgage is not
recorded, the mortgage is nevertheless binding between the parties." We are not free to adopt then
an interpretation, even assuming that the codal provision lacks the forthrightness and clarity that this
particular norm does and, therefore, requires construction, that would frustrate or nullify such
legislative objective.

An exception should be made to the rule that is indispensable for a mortgage to be validly
constituted that it be recorded. Equity so demands, and justice is served. There is thus full
acknowledgment of the binding effect of a promise, otherwise the freedom a contracting party is
supposed to possess becomes meaningless. It could be said of course that to allow foreclosure in
the absence of such a formality is to offend against the demands of jural symmetry. What is
"indispensable" may be dispense with. Such an objection is far from fatal. This would not be the first
time when logic yields to what is fair and what is just. To such an overmastering requirement, law is
not immune.

WHEREFORE, the lower court order is affirmed with the modification that in default of the payment
that the mortgage be foreclosed . With costs against defendants-appellees.