3. SELEGNA MANAGEMENT V.

UCPB (2006)

- Selegna Managament & Spouses Angeles were granted a credit facility amounting to P70
Million by UCPB
- As security for the credit facility, Selegna & Spouses Angeles executed real estate mortgages
over several parcels of land located in Muntinlupa, Las Pinas, QC, and Makati
- The parties stipulated that failure to pay any availment of the accommodation or interest, or the
sum due shall constitute “default,” which would allow UCPB to declare that all debts are
immediately due and payable
- Selegna & Spouses Angeles increased the loan amount to P103 Million with a 21% interest rate
per annum which was to mature on March 26, 1999.
- EventuallyAngeles went into default and their loan ballooned to P132 M.
- UCPB sent them demand letters. In response, Angeles paid about P10 M in interest at the same
time they asked for a 60 day period to restructure the loan.
- UCPB accepted the P10 M payment but was unsatisfied hence they issued a formal demand
letter for the payment of the principal amount, interest, penalty, and other charges. Soon
thereafter, UCPB filed for extrajudicial foreclosure of the properties mortgaged.

Whether a late partial payment could have forestalled a long expired maturity date?

NO

Their partial payment did not extinguish the obligation. The Civil Code states that a debt is not
paid “unless the thing x x x in which the obligation consists has been completelydelivered x x x.”
Besides, a late partial payment could not have possibly forestalled a long-expired maturity date.

Angeles is clearly in default per provisions laid down in their Credit Agreement with UCPB
which is the binding law between the parties. 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.

Three (3) Requisites for a Finding of Default:

1st: the obligation is demandable and liquidated
2nd: debtor delays performance
3rd: the creditor judicially or extrajudicially requires the debtor’s performance
All three were present in this case.

The 1st requisite is present notwithstanding a detailed accounting of the partially foreclosed
properties. A debt is liquidated when the amount is known or is determinable by inspection of
the terms and conditions of the relevant promissory notes and related documentation. Failure to
furnish a debtor a detailed statement of account does not ipso facto result in an unliquidated
obligation.

It is in fact clear from the agreement of the parties that when the payment is accelerated due to an
event of default, the penalty charge shall be based on the total principal amount outstanding, to
be computed from the date of acceleration until the obligation is paid in full. Their Credit
Agreement even provides for the application of payments. It appears from the agreements that
the amount of total obligation is known or, at the very least, determinable.

Further, in the Real Estate Mortgage agreement between the parties (in the “Event of Default”
clause), Angeles granted UCPB the right to extrajudicially foreclose the properties mortgaged
which secured the loan/obligation.