G.R. No. L-24072 July 29, 1968
ANTONIO MA. CUI and MERCEDES CUI DE RAMAS, petitioners, vs. COURT OF APPEALS and JOSE MA. CUI, respondents.

FACTS

Lots Nos. 2312, 2313, and 2319 in Cebu City, aggregating 2,658 square meters, were formerly owned pro-indiviso by Don Mariano Cui and two of his eight children, Antonio Ma. Cui and Mercedes Cui de Ramas. In 1947, the three co-owners executed a “Convenio de Asignacion de Parte” assigning to Don Mariano, as his 1/3 share, 900 square meters of Lot No. 2319 facing Calderon Street. This 900-square-meter portion was assumed to correspond to the area occupied by a building owned by the Lim brothers, from which Don Mariano (and later his estate’s administrator) collected rentals. However, a corner portion of Lot No. 2319, abutting Calderon and Lincoln Streets and containing 69 square meters, was left out of the Lim building’s occupancy. Antonio and Mercedes, who continued their co-ownership, treated this 69-square-meter portion as part of their 2/3 share, leased it to Marcelino Godinez, and collected rentals from 1947 to 1959.
After Don Mariano was declared incompetent and later died, an administrator was appointed for his estate. In 1959, the administrator submitted a Project of Partition dividing Lot No. 2319 into Lot No. 2319-A (900 sq. m., covering the entire Calderon frontage, including the 69 sq. m. portion) for the estate, and Lot No. 2319-B (the remainder) for Antonio and Mercedes. This was approved by the lower court on October 19, 1959. Subsequently, a controversy arose over the ownership of the 69 square meters and the rentals collected therefrom. On June 24, 1960, the parties agreed in court that collection of rentals for the 69-square-meter portion (Lot No. 2319-A-1) by the estate would begin only after the lease contract with the Lim brothers was cancelled or rescinded. The lower court authorized the cancellation on June 28, 1960, and approved a Partial Project of Partition on August 29, 1960.
On January 3, 1961, respondent Jose Ma. Cui filed a motion in the lower court praying to declare that the 69-square-meter portion and the rentals collected by Antonio and Mercedes (amounting to P21,300) were property of Don Mariano’s estate, that the rentals constituted a trust property, and that they be delivered to the estate administrator. The lower court denied this motion on March 1, 1961, ruling that the issue had already been settled by the June 24, 1960 agreement and that Antonio and Mercedes had the legal right to use and collect rentals from their undivided two-thirds portion before actual subdivision. Jose Cui appealed this order to the Court of Appeals.

ISSUE

The core issue is whether the Court of Appeals erred in remanding the case to the lower court for further proceedings to clarify aspects of the controversy, instead of deciding on the merits the issues raised by Jose Cui regarding the ownership of the 69-square-meter portion, the nature of the rentals collected as trust funds, and the delivery of said rentals to the estate.

RULING

The Supreme Court set aside the decision of the Court of Appeals and ordered the records remanded to said court with instructions to render a new decision on the merits. The Supreme Court held that the Court of Appeals should have first resolved the fundamental issues raised in the appeal: (1) whether the 69-square-meter lot was part of the 900 square meters assigned to Don Mariano by the 1947 “Convenio”; (2) whether the rentals collected by Antonio and Mercedes constituted trust funds for the estate; and (3) whether said rentals should be delivered to the administrator. The Supreme Court found the remand for further identification and delimitation of the 69 and 100-square-meter portions unnecessary, as there was no disagreement between the parties regarding their location as shown in the submitted plans. Only after deciding these issues against the petitioners-appellants (Antonio and Mercedes) would a remand for an accounting of rentals be justified.