ASSET POOL A (SPV-AMC) INC. (FORMERLY BANK OF THE PHILIPPINE ISLANDS), PETITIONER, VS. MEVCO HOLDINGS COMPANY INC., AND MEL VELARDE, JR., RESPONDENTS.

Asset Pool A versus MEVCO Holdings

The Case

This is a petition for review on certiorari brought by Asset Pool A (SPV-AMC) Inc., formerly the Bank of the Philippine Islands, against MEVCO Holdings Company Inc. and its president, Mel Velarde, Jr. The action below was a complaint for collection of a sum of money — specifically, the deficiency balance left unpaid after the extrajudicial foreclosure of two mortgaged parcels of land. The case matters because it teaches two enduring lessons: that a creditor suing on a deficiency must actually prove the amount of that deficiency, and that a demand which does not show how the amount was computed is not a valid demand at all.

Procedural History

The complaint was originally filed by the Bank of the Philippine Islands before a branch of the Regional Trial Court of Makati City. While the case was pending, the account was assigned to Asset Pool, and substitution was allowed; the case was eventually re-raffled to Branch 59 of the same court. On March 2, 2022, the trial court dismissed the complaint as premature, finding that no demand had been proven before the extrajudicial foreclosure. Asset Pool appealed to the Court of Appeals. On June 26, 2024, the Court of Appeals affirmed the dismissal, though on a different ground: it agreed that the acceleration clause made demand unnecessary, but held that Asset Pool had failed to prove its entitlement to the deficiency balance. Asset Pool moved for reconsideration, which was denied on May 9, 2025. Asset Pool then came to the Supreme Court by petition for review on certiorari under Rule 45.

Facts

MEVCO obtained a loan from the Far East Bank and Trust Company in the amount of 3,600,000 pesos. Mel Velarde, Jr., as president, executed a continuing suretyship binding himself jointly and severally with MEVCO for the loan. The loan was secured by real estate mortgages over two parcels of land. The Far East Bank later merged into the Bank of the Philippine Islands, which survived as the creditor.

MEVCO defaulted. Demands were made, but MEVCO did not pay, so the mortgages were extrajudicially foreclosed. At the public auction the properties were sold for 2,314,080 pesos and 2,833,600 pesos. The proceeds were applied to the obligation, yet a deficiency balance of 1,806,912.44 pesos remained. Asset Pool sued to recover that balance, with interest, penalties, attorney's fees of 100,000 pesos, and costs.

MEVCO answered that the complaint was premature because negotiations on the final amount were never concluded, and that no valid final demand had been made; it also assailed the interest and penalty rates as unconscionably high. Velarde claimed he was impleaded merely as president. MEVCO sought information on how the amount was computed through written interrogatories and inspection of documents; the trial court denied the interrogatories but granted inspection, and Asset Pool complied. The trial court dismissed the complaint as premature, and the Court of Appeals affirmed on the ground of insufficient evidence.

Issues

• Whether or not the Court of Appeals erred in denying the appeal and in ruling that Asset Pool failed to prove the existence of the deficiency obligation after applying the foreclosure proceeds.
• Whether or not the trial court erred in deciding the case on grounds not put in issue or joined in the pleadings.

Applicable Provisions

Article 1169 of the Civil Code provides:

Those obliged to deliver or to do something incur in delay from the time the obligee judicially or extrajudicially demands from them the fulfillment of their obligation.

This is the provision the Court uses to test whether a valid demand existed, since a valid demand presupposes an obligation clearly established by the creditor.

Ruling

On the first issue, the Court denied the petition and held that the Court of Appeals correctly dismissed the appeal for insufficiency of evidence. Asset Pool relied on a statement of account, but that document merely listed amounts without any explanation of their calculation or origin. The Court applied the basic rule that a mere allegation is not evidence and is not equivalent to proof; the statement of account was self-serving and devoid of evidentiary weight. The Court also rejected Asset Pool's logic that, because the Court of Appeals disagreed that the complaint was premature, it should have ruled in Asset Pool's favor — the case not being premature merely allowed it to proceed on the merits.

On the second issue, the Court held that the Court of Appeals did not act beyond its jurisdiction. The core of the demand is the amount of the deficiency, and MEVCO had in fact sought information on how that amount was computed. While defenses not pleaded in the answer may not ordinarily be raised for the first time on appeal, the Court recognized exceptions, citing Canlas versus Tubil and Del Rosario versus Bonga, where the factual bases would not require further evidence. The Court then laid down the rule on valid demand:

In cases of demand for collection of sum of money, the demand, in order to be valid, must specifically show the amount being collected and provide details on how such amount was arrived at.

Because the statement of account lacked the necessary information, it could not be a valid demand, and the debtor could not be considered in delay.

Doctrine

A creditor suing to collect a deficiency balance after extrajudicial foreclosure must prove the amount of that deficiency; a statement of account that merely lists figures without showing how they were computed is a bare allegation, not evidence, and carries no evidentiary weight. A valid demand for a sum of money must specifically show the amount being collected and provide details on how that amount was arrived at; a vague demand is not valid under Article 1169 of the Civil Code, and without a valid demand the debtor does not incur delay. Finally, an appellate court may rule on an issue not squarely pleaded below when the factual bases are already before it and no further evidence is needed.

Disposition

The petition was denied, and the Decision and Resolution of the Court of Appeals were affirmed; Asset Pool lost, and the dismissal of its complaint stood.

Remember This

Memorize this line: a demand for a sum of money must state the amount and show how it was computed, or it is not a valid demand. Examiners use this case to test the requisites of a valid demand and the rule that a mere allegation is not evidence.