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Selegna Management and Development Corp. v. UCPB

The Supreme Court ruled that the petitioners were in default and the respondent bank had the right to foreclose on the mortgaged properties extrajudicially. There are three requirements for default: the obligation must be demandable and liquidated, the debtor must delay performance, and the creditor must judicially or extrajudicially require performance. The petitioners received a loan secured by real estate mortgages and were required to pay interest monthly. When they were unable to pay, the respondent bank sent a demand letter and the petitioners only made a partial payment, so the bank applied for extrajudicial foreclosure.

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323 views1 page

Selegna Management and Development Corp. v. UCPB

The Supreme Court ruled that the petitioners were in default and the respondent bank had the right to foreclose on the mortgaged properties extrajudicially. There are three requirements for default: the obligation must be demandable and liquidated, the debtor must delay performance, and the creditor must judicially or extrajudicially require performance. The petitioners received a loan secured by real estate mortgages and were required to pay interest monthly. When they were unable to pay, the respondent bank sent a demand letter and the petitioners only made a partial payment, so the bank applied for extrajudicial foreclosure.

Uploaded by

alfred chua
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We take content rights seriously. If you suspect this is your content, claim it here.
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74.

Selegna Management and Development Corp. v. UCPB,


G.R. No. 165662, May 3, 2006
PANGANIBAN, CJ:
DOCTRINE OF LAW: There are three requisites necessary for a finding of default.
First, the obligation is demandable and liquidated; second, the debtor delays
performance; third, the creditor judicially or extrajudicially requires the debtor’s
performance.
FACTS: Petitioners were granted a credit facility in the amount of P70 million by
Respondent, as security for this credit facility, petitioners executed real estate
mortgages over several parcels of land. Petitioners were likewise required to execute a
promissory note in favor of respondent every time they availed of the credit facility. As
required in these notes, they paid the interest in monthly amortizations. The parties
stipulated in their Credit Agreement that failure to pay "any availment of the
accommodation or interest, or any sum due" shall constitute an event of default, which
shall consequently allow respondent bank to "declare as immediately due and payable
all outstanding availments of the accommodation together with accrued interest and any
other sum payable."
Petitioner unable to pay their dues, respondent send a demand letter, In
response, petitioners paid respondent the amount of P10,199,473.96 as partial payment
of the accrued interests. Apparently unsatisfied, UCPB applied for extrajudicial
foreclosure of petitioners’ mortgaged properties.

ISSUE: Whether petitioners are in default hence respondent has right to foreclose the
mortgaged properties extrajudicially

RULING: Yes, It is a settled rule of law that foreclosure is proper when the debtors are
in default of the payment of their obligation. In fact, the parties stipulated in their credit
agreements, mortgage contracts and promissory notes that respondent was authorized
to foreclose on the mortgages, in case of a default by petitioners. That this authority was
granted is not disputed.

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