FACTS:

The antecedent facts of the case are as follows: On September 24, 1996, private respondent Armed Forces and Police Savings and Loan Association, Inc. (AFPSLAI) filed a complaint for a sum of money against petitioner China Banking Corporation (CBC) with the Regional Trial Court of Quezon City. The complaint pertained to the Home Notes, which were instruments of indebtedness issued in favor of Fund Centrum Finance, Inc. (FCFI). The Home Notes were sold, transferred, and assigned to private respondent. The petitioner admitted being the registered owner of the Home Notes and filed a Motion to Dismiss, alleging that the real party in interest was FCFI, which was not joined in the complaint, and that petitioner was a mere trustee of FCFI. The trial court denied the motion to dismiss, and petitioner filed a motion for reconsideration, which was also denied. Petitioner elevated the case to the Court of Appeals, but it was dismissed for lack of merit. Petitioner then filed another motion to dismiss, invoking prescription. The lower court denied the motion, stating that it was not apparent from the complaint whether or not prescription had set in. Petitioner impugned the orders of the trial court through a petition under Rule 65. The Court of Appeals dismissed the petition, and petitioner now brings the matter to the Supreme Court, arguing that the cause of action accrued on the maturity date of the Home Notes and that the action is already barred by prescription.

ISSUES:

1. Whether or not the date of maturity of the instruments is the date of accrual of cause of action.

RULING:

1. The cause of action in this case accrued on July 20, 1995, when the demand for payment of the Home Notes was refused by petitioner. The cause of action did not accrue on the maturity date of the Home Notes because the obligation to pay only arises upon presentation and surrender of the notes. As such, the civil action for collection of a sum of money filed on September 24, 1996, within a period of not more than ten years from the demand, was not barred by prescription.

PRINCIPLES:

• A cause of action requires a legal right of the plaintiff, an obligation on the part of the defendant, and an act or omission by the defendant constituting a violation of the plaintiff's right or a breach of the defendant's obligation.

• A cause of action on a written contract accrues only when there is an actual breach or violation thereof.

• The date of maturity of an instrument is not the date of accrual of cause of action, but rather the date for computing when prescription begins to set in is the date of actual demand by the holder for payment by the obligor.