When a Statement of Account Is Not Enough: Proving Deficiency Claims After Foreclosure

The Supreme Court recently reminded creditors that winning a collection case requires more than just presenting a promissory note and a statement of account. In Asset Pool A (SPV-AMC) Inc. v. MEVCO Holdings Company, Inc. (G.R. No. 280513, April 7, 2026), the Court denied the creditor's petition and affirmed the dismissal of its deficiency claim for lack of evidence. The ruling is a practical guide for lenders and borrowers alike on what proof is needed when collecting a deficiency after foreclosure.

The Facts of the Case

MEVCO Holdings Company, Inc. obtained a loan of PHP 3.6 million from Far East Bank and Trust Company (FEBTC), which later merged with Bank of the Philippine Islands (BPI). Mel Velarde, Jr., MEVCO's president, executed a continuing suretyship, binding himself jointly and severally liable for the loan. The loan was secured by real estate mortgages over two parcels of land.

When MEVCO defaulted, the properties were foreclosed and sold at public auction for a total of PHP 5,147,680.00. After applying the proceeds to the outstanding obligation, BPI claimed a deficiency balance of PHP 1,806,912.44 remained. BPI filed a complaint for collection of sum of money. The account was later assigned to Asset Pool A (SPV-AMC) Inc., which substituted BPI as petitioner.

The Issue

The central question was whether Asset Pool had sufficiently proven the existence and amount of the deficiency obligation. A related issue was whether the Court of Appeals erred in ruling on the deficiency amount when the debtor's answer had only raised the issue of prematurity of the demand.

The Ruling

The Supreme Court denied the petition and affirmed the dismissal of the complaint. The Court held that a statement of account, by itself, is not enough to prove a deficiency claim.

A statement of account is not self-proving. The Court reviewed the statement of account submitted by Asset Pool and found that it merely listed amounts "without providing any explanation regarding their calculation or origin." The Court refused to accept the document at face value, noting that "mere allegation is not evidence and is not equivalent to proof." A statement of account that is favorable to the creditor's interest, unsupported by computations or underlying documents, is essentially self-serving and carries no evidentiary weight.

A valid demand must specify the amount and its basis. The Court tied the deficiency claim to the requirement of a valid demand under Article 1169 of the Civil Code. For a debtor to be in delay, the obligee must make a valid demand—judicial or extrajudicial—for the fulfillment of the obligation. In collection cases, a demand is valid only if it specifically states the amount being collected and explains how that amount was computed. A demand that vaguely states an amount, or that fails to establish the basis of the debtor's liability, cannot be enforced.

Issues raised for the first time on appeal may be considered in exceptional cases. While it is a settled rule that defenses not pleaded in the answer cannot be raised for the first time on appeal, the Court noted exceptions. Citing Canlas v. Tubil and Del Rosario v. Bonga, the Court explained that appellate courts may consider new issues when no further evidence is needed, when there is plain error, or when the issue is closely related to the validity of the demand itself. Here, the determination of the deficiency amount was directly tied to whether a valid demand had been made—so the Court could properly rule on it.

Practical Takeaways

• A promissory note alone does not prove the amount of a deficiency. Creditors must present supporting evidence—such as computation sheets, amortization schedules, and records of payments applied—to substantiate the claimed balance.
• A statement of account must be explained, not just submitted. Courts will not accept a bare list of figures, especially when it comes from the creditor itself. The document must show how the amounts were derived.
• Demand letters must be specific. A valid demand under Article 1169 of the Civil Code must state the exact amount claimed and the basis for that amount. A vague demand may not put the debtor in delay.
• Creditors should preserve all records of demand and computation. The failure to prove that a demand was made—or to show how the deficiency was computed—can be fatal to a collection case.
• Borrowers should scrutinize deficiency claims. If a creditor cannot explain how the claimed deficiency was computed, the claim may be dismissed for lack of evidence, as happened here.

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.