G.R. NO. 150097 - DEVELOPMENT BANK OF THE PHILIPPINES, VS. ALEJANDRO AND ADELAIDA LICUANAN.D E C I S I O N - Supreme Court E-Library

Ruling

Accordingly, a cause of action on a written contract accrues only when an actual breach or violation thereof occurs. Applying the foregoing principle to the instant case, we rule that private respondent's cause of action accrued only on July 20, 1995, when its demand for payment of the Home Notes was refused by petitioner . It was only at that time, and not before that, when the written contract was breached and private respondent could properly file an action in court. The cause of action cannot be said to accrue on the uniform maturity date of the Home Notes as petitioner posits because at that point, the third essential element of a cause of action, namely, an act or omission on the part of petitioner violative of the right of private respondent or constituting a breach of the obligation of petitioner to private respondent, had not yet occurred. [29] (emphasis supplied) The acceleration clause of the promissory notes stated that "[i]n case of non-payment of this note or any portion of it on demand , when due, on account of this note, the entire obligation shall become due and demandable ...." [30] Hence, the maturity dates only indicate when payment can be demanded. It is the refusal to pay after demand that gives the creditor a cause of action against the debtor. Since demand, which is necessary to make respondents guilty of default, was never made on respondents, the CA and RTC correctly ruled that the foreclosure was premature and therefore null and void. In arguing that the foreclosure was valid, petitioner also avers that respondents are estopped from questioning the validity of the foreclosure sale since they offered to repurchase the foreclosed properties. [31] We are not persuaded. The reason why respondents offered to repurchase the properties was clearly stated in their letter to petitioner: I am very much interested in repurchasing back these properties because they are the only properties which my family have and because our house is located inside this property and for this matter I am willing to pay [for] these properties in cash which I already told the bank when I went there. [32] Besides, we have already ruled that an offer to repurchase should not be construed as a waiver of the right to question the sale. [33] Instead, it must be taken as an intention to avoid further litigation and thus is in the nature of an offer to compromise. [34] By offering to redeem the properties, respondents can attain their ultimate objective: to pay off their debt and regain ownership of their lands. [35] Moreover, it was petitioner, in its November 16, 1984 letter, which informed respondents that the properties were available for sale. Respondents merely took up petitioner's offer for them to reacquire their properties. Petitioner assigns as error the failure of the CA to rule on its deficiency claim. It alleged that the price the mortgaged property was sold for (P104,000) was less than the amount of respondents' indebtedness (P131,642.33), thus