G.R. No. 153267 - China Banking Corp. vs. Court of Appeals

On September 24, 1996, AFPSLAI (private respondent) filed a complaint for a sum of money against China Banking Corporation (CBC), the petitioner, wherein the subject matter comprised Home Notes.
The petitioner, in its answer, admitted to being the registered owner of the Home Notes which were originally issued to Fund Centrum Finance, Inc. (FCFI) and subsequently sold, transferred, and assigned to the respondent.

The trial court denied the motion to dismiss.
A subsequent motion for reconsideration by petitioner was also denied by the trial court.
Petitioner elevated the case to the Court of Appeals by filing a Petition for Certiorari and Prohibition, which was likewise dismissed by the appellate court for lack of merit.

After the above proceedings, petitioner filed another Motion to Dismiss invoking prescription.

The petitioner argued that the Home Notes, bearing a uniform maturity date of December 2, 1983, clearly established the date of accrual of the cause of action, hence making the filing on September 24, 1996, untimely under the ten-year prescriptive period pursuant to Article 1144 of the Civil Code.

The trial court did not find prescription apparent in the complaint and directed petitioner to present its supporting evidence.
Instead of complying fully, the petitioner again filed a motion for reconsideration limiting its appeal to the issue of prescription, which the trial court denied, emphasizing the need for a trial to resolve conflicting claims on whether the action had prescribed.

Asserted that the uniform maturity date of the Home Notes indicated the accrual of the cause of action.
Cited precedents (such as Soriano v. Ubat) arguing that the prescription period should commence when the creditor has the right to file an action.

Contended that the maturity date does not equate to the accrual of the cause of action.
Maintained that, based on precedents like Elido, Sr. v. Court of Appeals, the action accrued only on July 20, 1995, when the actual demand for payment by respondent was made.
Argued that both the trial court and the appellate court had determined that prescription was not apparent on the face of the complaint.

The Court found that the cause of action under a written contract accrues only when there is an act or omission by the obligor that constitutes a breach of the contractual duty.
The uniform maturity date merely indicates when payment would commence upon presentation for notation and/or surrender, not when the breach (and thus the cause of action) occurred.
Consequently, petitioner’s argument that the cause of action accrued on December 2, 1983, was rejected in favor of the view that the action accrued on July 20, 1995—upon the actual demand for payment being refused.

Whether or not the date of maturity of the Home Notes is the date of accrual of the cause of action for the collection of the sum of money.

Whether the prescription period as provided under Article 1144 of the Civil Code should be computed from the uniform maturity date or from the actual date of demand (i.e., when the obligation was breached).
Whether there was any grave abuse of discretion by the trial court in denying the motions to dismiss based on prescription.

The appropriateness of bringing the matter to the Supreme Court through a petition for certiorari under Rule 65 after the procedural history that involved both trial and appellate court decisions.