G.R. No. L-19614 March 27, 1971
JESUS M. GABOYA, as Administrator of the Estate of DON MARIANO CUI, plaintiff-appellant, vs. ANTONIO MA. CUI, MERCEDES CUI-RAMAS and GIL RAMAS, defendants-appellees, JESUS MA. CUI, JOSE MA. CUI, SERAFIN MA. CUI, JORGE MA. CUI, ROSARIO CUI DE ENCARNACION, PRECILLA C. VELEZ, and LOURDES C. VELEZ, intervenors-appellants, VICTORINO REYNES, defendant-in-counterclaim-appellee.

FACTS

Don Mariano Cui sold three commercial lots to three of his children, Antonio Ma. Cui, Mercedes Cui-Ramas, and Rosario Cui de Encarnacion, in 1946. The deed of sale reserved for Don Mariano a usufruct over the property “that I, shall enjoy the fruits and rents of the same, as long as my natural life shall last.” Rosario’s sale was later cancelled, making Don Mariano, Antonio, and Mercedes co-owners. Antonio and Mercedes later obtained a loan to construct a 12-door commercial building on their share. Don Mariano authorized the mortgage of his share but did not join the construction. A separate agreement assigned to Don Mariano a specific one-third portion of the land, which already had a smaller building he was renting out. The new, larger building was erected by Antonio and Mercedes on the remaining portion. After Don Mariano’s death, the judicial administrator of his estate sought to rescind the 1946 sale, arguing Antonio and Mercedes failed to deliver the “fruits and rents” from the entire property as stipulated, constituting a breach warranting rescission.

ISSUE

The primary issue was whether the defendants-appellees, Antonio and Mercedes, breached the contract of sale by failing to deliver the fruits and rents of the entire property to the usufructuary, Don Mariano, thereby justifying its rescission.

RULING

The Supreme Court affirmed the trial court’s decision denying rescission but ordering Antonio and Mercedes to pay the estate. The Court held that the reserved usufruct in the deed of sale pertained only to the land itself, not to any buildings subsequently erected by the vendees at their own expense. Consequently, Don Mariano’s right was limited to the reasonable rental value of the land occupied by the building constructed by Antonio and Mercedes. Since this rental value was an unliquidated claim that was only determined by the trial court’s judgment, Antonio and Mercedes were not in delay or default prior to that judicial determination. Under Article 1592 of the Civil Code, a vendee in a sale of immovable property is not in default for failure to pay until a judicial or notarial demand for rescission is made, and the court found no such valid demand here. Therefore, the breach did not warrant rescission. The Court upheld the monetary award of P100,088.80, representing the accrued reasonable rental value of the land, plus interest and attorney’s fees, as equitable compensation for the defendants’ use of the land’s usufruct during Don Mariano’s lifetime.