Abelardo Valarao v. Court of Appeals
Abelardo sold a land to Arellano under a Deed of Conditional Sale. The contract stipulates that if the vendee fails to pay 3 consecutive monthly installments, the contract shall be considered automatically rescinded without the necessity of judicial action and all payments made by the vendee shall be forfeited in favor of the vendor.
Arellano failed to pay 2 monthly installments and in the 3rd month, he went to Abelardo to pay but the latter, through his maid, did not accept the payment.
Whether or not Art. 1592 of the Civil Code is applicable to a conditional sale
NO. Art. 1592 of the Civil Code applies only to contracts of sale, and not to contracts to sell or conditional sales or sale on installments where title passes to the vendee only upon full payment of the purchase price.
Also, the court in this case did not adopt the automatic forfeiture clause because it was proven that the vendee’s failure to pay on the 3rd month was because of the vendor’s failure to accept the payment. In order to enforce the automatic forfeiture clause in a deed of conditional sale, the vendors have the burden of proving a contractual breach on the part of the vendee.