The Shulhan Aruch ruled that there is no distinction between the first night of Succot and the other days of the holiday with respect to rainfall. In his view, whenever it rains during Succot, even on the first night, one eats his meal indoors as usual. This is in contrast to the custom among the Ashkenazim to recite Kiddush and eat a Ke’zayit of bread in the Succa if rain falls on the first night of Succot. Although the Ben Ish Hai (Rabbi Yosef Haim of Baghdad, 1833-1909) ruled in accordance with this Ashkenazic practice, Hacham Ovadia Yosef disagreed, and ruled that Sepharadim should conduct the entire meal – including Kiddush – indoors if rain falls on the first night of Succot. According to Sephardic practice, the first night is no different from the rest of the holiday in this respect, and the advent of rain exempts one from the Succa obligation even on the first night.
This exemption applies if the rain is steady enough that it would spoil a person’s soup in the Succa, or if it rains to the extent that a leak of that nature inside the house would cause a person to relocate to a different room. Once the rain reaches one of these levels of intensity, one is exempt from the obligation and may eat indoors.
It should be emphasized that when one is exempt from the obligation, there is nothing gained by eating in the Succa in the rain. To the contrary, the Sages called a person who eats in the rain in the Succa "foolish." Once the exemption applies, there is no religious value whatsoever in eating in a Succa, and one should therefore remain indoors until the rain stops.
Summary: If a steady rain falls during Succot, one is exempt from the obligation and should not eat in the Succa. According to Sephardic custom, this applies throughout the entire holiday of Succot, including the first night.
