Gaboya v.

Cui therefrom the installments due for payment on the loan

G.R. No. L-19614 | March 27, 1971 | J. JBL Reyes to the Rehabilitation Finance Corporation.

FACTS Cases commenced:

Don Mariano Cui, widower, as owner of three lots in the 1) Two other children of Don Mariano named Jesus
City of Cebu, with a total extension of 2,658 square and Jorge brought an action in the CFI for the
meters, sold said three lots to three of his children purpose of annulling the deed of sale of the
named Rosario, Mercedes, and Antonio. Because three lots in question on the ground that they
Rosario for lack of funds was unable to pay her belonged to the conjugal partnership of Don
corresponding share of the purchase price, the sale to Mariano and his deceased wife Antonia Perales.
her was cancelled and the onethird of the property Plaintiffs Jesus and Jorge applied for the
corresponding to her was returned to the vendor. These appointment of a receiver to take charge of the
three lots are commercial. The improvements thereon lots and of the rentals of the building. This
were destroyed during the last Pacific War so that at the petition was DENIED.
time of the sale in 1946, there were no buildings or any 2) Rosario, that daughter of Don Mariano who was
other improvements on them. Because of the sale of one of the original vendees, filed a petition to
these lots pro indiviso and because of the cancellation of declare her father incompetent and to have a
the sale to one of the three original vendees, Don guardian appointed for his property. The petition
Mariano and his children Mercedes and Antonio became was GRANTED and Don Mariano was declared
coowners of the whole mass in equal portions. incompetent and Victorino Reynes was
appointed guardian of his property.
Subsequently, a building was erected on a portion of this
mass facing Calderon street and was occupied by a Thereafter, complaint #1 seeking to annul the deed of
Chinese businessman for which he paid Don Mariano sale of the three lots in favor of Mercedes and Antonio
P600 a month as rental. The date when the building, was was amended so as to include as plaintiffs not only the
constructed and by whom do not appear in the record. guardian Victorino Reynes but also all the other children
of Don Mariano.
Sometime after the sale to Mercedes and Antonio the
two applied to the Rehabilitation Finance Corporation Guardian Victorino Reynes filed a motion in the
(RFC) for a loan of P130,000 with which to construct a guardianship proceedings seeking authority to collect the
12door commercial building presumably on a portion of rentals from the three lots in question and asking the
the entire parcel corresponding to their share. In order to Court to order Antonio and Mercedes to deliver to him as
facilitate the granting of the loan and inasmuch as only guardian all the rentals they had previously collected
two of the three coowners applied for the loan, Don from the 12door commercial building, together with all
Mariano executed an authority to mortgage authorizing the papers belonging to his ward. This motion was
his two children co owners to mortgage his share, stating DENIED.
that: "That by virtue of these presents, I hereby agree,
consent permit and authorize my said coowners to Decision was rendered in case #1 found that the three
mortgage, pledge my share so that they may be able to lots in question were not conjugal property but belonged
construct a house or building in the said property, exclusively to Don Mariano and so UPHELD the sale of
provided however, that the rents of the said land shall twothirds of said lots to Antonio and Mercedes. The
not be impaired and will always be received by me. plaintiffs appealed to the Court of Appeals where the
case is now pending.
The loan was eventually granted and was secured by a
mortgage on the three lots in question, Don Mariano 3) Case now before SC By the erstwhile
being included as one of the three mortgagors and guardian of Don Mariano Cui (while the latter
signing the corresponding promissory note with his two was still alive) in order to recover P126,344.91
coowners. He did not however, join in the construction of plus legal interest from Antonio Cui and
the 12door commercial building wherein it was agreed Mercedes Cui apparently as fruits due to his
among the three coowners to assign to Don Mariano that ward by virtue of his usufruct.
onethird of the whole mass facing Calderon street and
on which was erected the building already referred to as CFI denied resolution of sale and sentenced
being occupied by a Chinese businessman and for which Antonio and Mercedes to pay to the Judicial
he was paying Don Mariano P600 a month rental. The Administrator of the Estate of Mariano Cui the
area of this onethird portion was fixed at 900 square amount of P100,088.80.
meters approximately onethird of the total area of the
three lots. Argument before SC: Usufructuary right
reserved in favor of Don Mariano Cui extends to
The 12door commercial building was eventually and includes the rentals of the building
constructed and the builderowners thereof Mercedes constructed by Antonio Cui and Mercedes Cui
and Antonio received and continued to receive the rents on the land sold to them by their father
thereof amounting to P4,800 a month and paying
 ISSUES the rules of accession are totally unnecessary and
1) WON the usufruct reserved by the vendor in the inappropriate where the ownership of land and of the,
deed of sale, over the lots in question that were materials used to build thereon are concentrated on one
at the time vacant and unoccupied, gave the and the same person. Even if the law did not provide for
usufructuary the right to receive the rentals of accession the landowner would necessarily own the
the commercial building constructed by the building, because he has paid for the materials and labor
vendees with funds borrowed from the used in constructing it. The Civil Code itself limits the
Rehabilitation and Finance Corporation, the loan cases of industrial accession to those involving land and
being secured by a mortgage over the lots sold materials belonging to different owners.
2) If the usufruct extended to the building, whether
the failure of the vendees to pay over its rentals Note that if the income from constructions made by the
to the usufructuary entitled the latter to rescind owner during the existence of the usufruct should be
held to accrue automatically to the usufructuary under
HELD Article 571, such improvements could not diminish the
1) NO. The reserved usufruct in favor of the vendor, value of the usufruct nor prejudice the right of the
Mariano Cui, was limited to the rentals of the land usufructuary; and the qualifications by Article 595 on the
alone. Had it been designed to include also the rents of owner's right to build would be redundant. The limitations
the buildings intended to be raised on the land, an set by Article 595 to the construction rights of the naked
express provision would have been included to the owner of the land are evidently premised upon the fact
effect. that such constructions would necessarily reduce the
area of the land under usufruct, for which the latter
Appellants, however, argue that the terms of the deed should be indemnified. This is precisely what the court a
constituting the usufruct are not determinative of the quo has done in sentencing the appellee owners of the
extent of the right conferred; and that by law, the building to pay to the usufructuary a monthly rent of
enjoyment of the rents of the building subsequently P1,758.00 for the area occupied by their building, after
erected passed to the usufructuary, by virtue of Article mature consideration of the rental values of lands in the
571 inasmuch as the building constructed by appellees neighborhood.
was an accession to the land.
Appellants urge, in support of their stand, that the loan
SC: This argument is not convincing. Under the articles for the construction of the building was obtained upon
of the Civil Code on industrial accession by modification the security of a mortgage not only upon the share of
on the principal land (Articles 445 to 456 of the Civil appellees but also upon the undivided interest of Don
Code) such accession is limited either to buildings Mariano Cui in the lots in question.
erected on the land of another, or buildings constructed
by the owner of the land with materials owned by SC: There was no adequate proof that the vendor, Don
someone else. Mariano Cui, ever renounced his usufruct. The alleged
waiver was purely verbal, and is supported solely by the
Articles 447 and 445, in turn, treat of accession testimony of Antonio Cui, one of the alleged beneficiaries
produced by the landowner's building, planting and thereof. As a gratuitous renunciation of a real right over
sowing "with the materials of another" and when "the immovable property that as created by public document,
materials, plants or seeds belong to a third person other the least to be expected in the regular course of
than the landowner or the builder, planter or sower. business is that the waiver should also appear in writing.

Nowhere in these articles on industrial accession is there 2) NO. Such rental value not having been liquidated until
any mention of the case of landowner building on his the judgment under appeal was rendered, Antonio and
own land with materials owned by himself (which is the Mercedes Cui were not in default prior thereto, and the
case of appellees Mercedes and Antonio Cui). The deed of sale was therefore, not subject to rescission.
reason for the omission is readily apparent: recourse to