Petitioner Vs Vs Respondents: Second Division
Petitioner Vs Vs Respondents: Second Division
DECISION
TINGA , J : p
Once again, the Court is faced with the perennial con ict of property claims between
two sets of heirs, a con ict ironically made grievous by the fact that the decedent in this
case had resorted to great lengths to allocate which properties should go to which set of
heirs.
This is a Rule 45 petition assailing the Decision 1 dated 30 September 1999 of the
Court of Appeals which reversed the Decision 2 dated 7 May 1993 of the Regional Trial
Court (RTC), Branch 45, of Bais City, Negros Oriental.
The factual antecedents follow.
Don Julian L. Teves (Don Julian) contracted two marriages, rst with Antonia Baena
(Antonia), and after her death, with Milagros Donio Teves (Milagros Donio). Don Julian had
two children with Antonia, namely: Josefa Teves Escaño (Josefa) and Emilio Teves
(Emilio). He had also four (4) children with Milagros Donio, namely: Maria Evelyn Donio
Teves (Maria Evelyn), Jose Catalino Donio Teves (Jose Catalino), Milagros Reyes Teves
(Milagros Reyes) and Pedro Reyes Teves (Pedro). 3
The present controversy involves a parcel of land covering nine hundred and fty-
four (954) square meters, known as Lot No. 63 of the Bais Cadastre, which was originally
registered in the name of the conjugal partnership of Don Julian and Antonia under Original
Certi cate of Title (OCT) No. 5203 of the Registry of Deeds of Bais City. When Antonia
died, the land was among the properties involved in an action for partition and damages
docketed as Civil Case No. 3443 entitled "Josefa Teves Escaño v. Julian Teves, Emilio B.
Teves, et al." 4 Milagros Donio, the second wife of Don Julian, participated as an intervenor.
Thereafter, the parties to the case entered into a Compromise Agreement 5 which
embodied the partition of all the properties of Don Julian.
On the basis of the compromise agreement and approving the same, the Court of
First Instance (CFI) of Negros Oriental, 12th Judicial District, rendered a Decision 6 dated
31 January 1964. The CFI decision declared a tract of land known as Hacienda Medalla
Milagrosa as property owned in common by Don Julian and his two (2) children of the rst
marriage. The property was to remain undivided during the lifetime of Don Julian. 7 Josefa
and Emilio likewise were given other properties at Bais, including the electric plant, the
"movie property," the commercial areas, and the house where Don Julian was living. The
remainder of the properties was retained by Don Julian, including Lot No. 63. acCITS
At the Register of Deeds while trying to register the deed of absolute sale,
respondents discovered that the lot was already titled in the name of petitioner. Thus, they
failed to register the deed. 1 7
Respondents, as vendees of Lot No. 63, led a complaint before the RTC Branch 45
of Bais City, seeking the declaration of nullity and cancellation of TCT No. T-375 in the
name of petitioner and the transfer of the title to Lot No. 63 in their names, plus damages.
18
After hearing, the trial court dismissed the complaint led by respondents. The
dispositive portion of the decision reads:
(2) That plaintiffs vacate the subject land, particularly identified as Lot
No. 63 registered under Transfer Certificate of Title No. T-375;
The trial court ruled that the resolution of the case speci cally hinged on the
interpretation of paragraph 13 of the Compromise Agreement. 2 0 It added that the direct
adjudication of the properties listed in the Compromise Agreement was only in favor of
Don Julian and his two children by the rst marriage, Josefa and Emilio. 2 1 Paragraph 13
served only as an ampli cation of the terms of the adjudication in favor of Don Julian and
his two children by the first marriage.
According to the trial court, the properties adjudicated in favor of Josefa and Emilio
comprised their shares in the estate of their deceased mother Antonia, as well as their
potential share in the estate of Don Julian upon the latter's death. Thus, upon Don Julian's
death, Josefa and Emilio could not claim any share in his estate, except their proper share
in the Hacienda Medalla Milagrosa which was adjudicated in favor of Don Julian in the
Compromise Agreement. As such, the properties adjudicated in favor of Don Julian, except
Hacienda Medalla Milagrosa, were free from the forced legitimary rights of Josefa and
Emilio, and Don Julian was under no impediment to allocate the subject lot, among his
other properties, to Milagros Donio and her four (4) children. 2 2
The trial court further stressed that with the use of the words "shall be," the
adjudication in favor of Milagros Donio and her four (4) children was not nal and
operative, as the lot was still subject to future disposition by Don Julian during his lifetime.
2 3 It cited paragraph 14 2 4 of the Compromise Agreement in support of his conclusion. 2 5
With Lot No. 63 being the conjugal property of Don Julian and Antonia, the trial court also
declared that Milagros Donio and her children had no hereditary rights thereto except as to
the conjugal share of Don Julian, which they could claim only upon the death of the latter.
26
The trial court ruled that at the time of Don Julian's death on 14 April 1974, Lot No.
63 was no longer a part of his estate since he had earlier assigned it to petitioner on 31
July 1973. Consequently, the lot could not be a proper subject of extrajudicial partition by
Milagros Donio and her children, and not being the owners they could not have sold it. Had
respondents exercised prudence before buying the subject lot by investigating the
registration of the same with the Registry of Deeds, they would have discovered that ve
(5) years earlier, OCT No. 5203 had already been cancelled and replaced by TCT No. T-375
in the name of petitioner, the trial court added. 2 7
The Court of Appeals, however, reversed the trial court's decision. The decretal part
of the appellate decision reads:
WHEREFORE, premises considered, the decision appealed from is hereby
REVERSED and SET ASIDE and a new one is entered declaring the Transfer
Certi cate of Title No. T-375 registered in the name of J.L.T. Agro, Inc. as null and
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void.
With costs against defendant J.L.T. Agro, Inc. represented by its Manager,
Julian L. Teves.
SO ORDERED. 2 8
Per the appellate court, the Compromise Agreement incorporated in CFI decision
dated 31 January 1964, particularly paragraph 13 thereof, determined, adjudicated and
reserved to Don Julian's two sets of heirs their future legitimes in his estate except as
regards his (Don Julian's) share in Hacienda Medalla Milagrosa. 2 9 The two sets of heirs
acquired full ownership and possession of the properties respectively adjudicated to them
in the CFI decision and Don Julian himself could no longer dispose of the same, including
Lot No. 63. The disposition in the CFI decision constitutes res judicata. 3 0 Don Julian could
have disposed of only his conjugal share in the Hacienda Medalla Milagrosa. 3 1
The appellate court likewise emphasized that nobody in his right judgment would
preterit his legal heirs by simply executing a document like the Supplemental Deed which
practically covers all properties which Don Julian had reserved in favor of his heirs from
the second marriage. It also found out that the blanks reserved for the Book No. and Page
No. at the upper right corner of TCT No. T-375, "to identify the exact location where the
said title was registered or transferred," were not lled up, thereby indicating that the TCT
is "spurious and of dubious origin." 3 2
Aggrieved by the appellate court's decision, petitioner elevated it to this Court via a
petition for review on certiorari, raising pure questions of law. DcaSIH
Before this Court, petitioner assigns as errors the following rulings of the appellate
court, to wit: (a) that future legitime can be determined, adjudicated and reserved prior to
the death of Don Julian; (b) that Don Julian had no right to dispose of or assign Lot No. 63
to petitioner because he reserved the same for his heirs from the second marriage
pursuant to the Compromise Agreement; (c) that the Supplemental Deed was tantamount
to a preterition of his heirs from the second marriage; and (d) that TCT No. T-375 in the
name of petitioner is spurious for not containing entries on the Book No. and Page No. 3 3
While most of petitioner's legal arguments have merit, the application of the
appropriate provisions of law to the facts borne out by the evidence on record nonetheless
warrants the a rmance of the result reached by the Court of Appeals in favor of
respondents.
Being the key adjudicative provision, paragraph 13 of the Compromise Agreement
has to be quoted again:
13. That in the event of death of Julian L. Teves, the properties herein
adjudicated to Josefa Teves Escaño and Emilio B. Teves, (excluding the
properties comprised as Hacienda Medalla Milagrosa together with all its
accessories and accessions) shall be understood as including not only their one-
half share which they inherited from their mother but also the legitimes and other
successional rights which would correspond to them of the other half belonging
to their father, Julian L. Teves. In other words, the properties now selected and
adjudicated to Julian L. Teves (not including his share in the Hacienda Medalla
Milagrosa) shall exclusively be adjudicated to the wife in second marriage of
Julian L. Teves and his four minor children, namely, Milagros Donio Teves, his
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two acknowledged natural children Milagros Reyes Teves and Pedro Reyes Teves
and his two legitimated children Maria Evelyn Donio Teves and Jose Catalino
Donio Teves." (Emphasis supplied)
With the quoted paragraph as basis, the Court of Appeals ruled that the adjudication
in favor of the heirs of Don Julian from the second marriage became automatically
operative upon the approval of the Compromise Agreement, thereby vesting on them the
right to validly dispose of Lot No. 63 in favor of respondents.
Petitioner argues that the appellate court erred in holding that future legitime can be
determined, adjudicated and reserved prior to the death of Don Julian. The Court agrees.
Our declaration in Blas v. Santos 3 4 is relevant, where we de ned future inheritance as any
property or right not in existence or capable of determination at the time of the contract,
that a person may in the future acquire by succession. Article 1347 of the New Civil Code
explicitly provides:
ART. 1347. All things which are not outside the commerce of men,
including future things, may be the object of a contract. All rights which are not
intransmissible may also be the object of contracts.
No contract may be entered into upon future inheritance except in cases
expressly authorized by law.
All services which are not contrary to law, morals, good customs, public
order or public policy may likewise be the object of a contract.
Well-entrenched is the rule that all things, even future ones, which are not outside the
commerce of man may be the object of a contract. The exception is that no contract may
be entered into with respect to future inheritance, and the exception to the exception is the
partition inter vivos referred to in Article 1080. 3 5
For the inheritance to be considered "future," the succession must not have been
opened at the time of the contract. 3 6 A contract may be classi ed as a contract upon
future inheritance, prohibited under the second paragraph of Article 1347, where the
following requisites concur:
(1) That the succession has not yet been opened; HEcaIC
(2) That the object of the contract forms part of the inheritance; and
(3) That the promissor has, with respect to the object, an expectancy of a
right which is purely hereditary in nature. 3 7
The rst paragraph of Article 1080, which provides the exception to the exception
and therefore aligns with the general rule on future things, reads:
ART. 1080. Should a person make a partition of his estate by an act
inter vivos, or by will, such partition shall be respected, insofar as it does not
prejudice the legitime of the compulsory heirs.
xxx xxx xxx
In interpreting this provision, Justice Edgardo Paras advanced the opinion that if the
partition is made by an act inter vivos, no formalities are prescribed by the Article. 3 8 The
partition will of course be effective only after death. It does not necessarily require the
formalities of a will for after all it is not the partition that is the mode of acquiring
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ownership. Neither will the formalities of a donation be required since donation will not be
the mode of acquiring the ownership here after death; since no will has been made it
follows that the mode will be succession (intestate succession). Besides, the partition
here is merely the physical determination of the part to be given to each heir. 3 9
The historical antecedent of Article 1080 of the New Civil Code is Article 1056 4 0 of
the old Civil Code. The only change in the provision is that Article 1080 now permits any
person (not a testator, as under the old law) to partition his estate by act inter vivos. This
was intended to abrogate the then prevailing doctrine that for a testator to partition his
estate by an act inter vivos, he must rst make a will with all the formalities provided by
law. 4 1
Article 1056 of the old Civil Code (now Article 1080) authorizes a testator to
partition inter vivos his property, and distribute them among his heirs, and this partition is
neither a donation nor a testament, but an instrument of a special character, sui generis,
which is revocable at any time by the causante during his lifetime, and does not operate as
a conveyance of title until his death. It derives its binding force on the heirs from the
respect due to the will of the owner of the property, limited only by his creditors and the
intangibility of the legitime of the forced heirs. 4 2
The partition inter vivos of the properties of Don Julian is undoubtedly valid pursuant
to Article 1347. However, considering that it would become legally operative only upon the
death of Don Julian, the right of his heirs from the second marriage to the properties
adjudicated to him under the compromise agreement was but a mere expectancy. It was a
bare hope of succession to the property of their father. Being the prospect of a future
acquisition, the interest by its nature was inchoate. It had no attribute of property, and the
interest to which it related was at the time nonexistent and might never exist. 4 3
Evidently, at the time of the execution of the deed of assignment covering Lot No. 63
in favor of petitioner, Don Julian remained the owner of the property since ownership over
the subject lot would only pass to his heirs from the second marriage at the time of his
death. Thus, as the owner of the subject lot, Don Julian retained the absolute right to
dispose of it during his lifetime. His right cannot be challenged by Milagros Donio and her
children on the ground that it had already been adjudicated to them by virtue of the
compromise agreement.
Emerging as the crucial question in this case is whether Don Julian had validly
transferred ownership of the subject lot during his lifetime. The lower court ruled that he
had done so through the Supplemental Deed. The appellate court disagreed, holding that
the Supplemental Deed is not valid, containing as it does a prohibited preterition of Don
Julian's heirs from the second marriage. Petitioner contends that the ruling of the Court of
Appeals is erroneous. The contention is well-founded.
Article 854 provides that the preterition or omission of one, some, or all of the
compulsory heirs in the direct line, whether living at the time of the execution of the will or
born after the death of the testator, shall annul the institution of heir; but the devises and
legacies shall be valid insofar as they are not ino cious. Manresa de nes preterition as
the omission of the heir in the will, either by not naming him at all or, while mentioning him
as father, son, etc., by not instituting him as heir without disinheriting him expressly, nor
assigning to him some part of the properties. 4 4 It is the total omission of a compulsory
heir in the direct line from inheritance. 4 5 It consists in the silence of the testator with
regard to a compulsory heir, omitting him in the testament, either by not mentioning him at
all, or by not giving him anything in the hereditary property but without expressly
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disinheriting him, even if he is mentioned in the will in the latter case. 4 6 But there is no
preterition where the testator allotted to a descendant a share less than the legitime, since
there was no total omission of a forced heir. 4 7
In the case at bar, Don Julian did not execute a will since what he resorted to was a
partition inter vivos of his properties, as evidenced by the court approved Compromise
Agreement. Thus, it is premature if not irrelevant to speak of preterition prior to the death
of Don Julian in the absence of a will depriving a legal heir of his legitime. Besides, there
are other properties which the heirs from the second marriage could inherit from Don
Julian upon his death. A couple of provisions in the Compromise Agreement are indicative
of Don Julian's desire along this line. 4 8 Hence, the total omission from inheritance of Don
Julian's heirs from the second marriage, a requirement for preterition to exist, is hardly
imaginable as it is unfounded. IcESaA
As petitioner bases its right to the subject lot on the Supplemental Deed, it should
have presented it to the Register of Deeds to secure the transfer of the title in its name.
Apparently, it had not done so. There is nothing on OCT No. 5203 or on the succeeding
TCT No. T-375 either which shows that it had presented the Supplemental Deed. In fact,
there is absolutely no mention of a reference to said document in the original and transfer
certi cates of title. It is in this regard that the nding of the Court of Appeals concerning
the absence of entries on the blanks intended for the Book No. and Page No. gains
signi cant relevance. Indeed, this aspect forti es the conclusion that the cancellation of
OCT No. 5203 and the consequent issuance of TCT No. T-375 in its place are not
predicated on a valid transaction.
What appears instead on OCT No. 5203 is the following pertinent entry:
Entry No. 1374: Kind: Order: Executed in favor of J.L.T. AGRO, INC.
CONDITIONS: Lost owner's duplicate is hereby cancelled , and null and void
and a new Certi cate of Title No . 375 is issued per Order of the Court of First
Instance on file in this office. CIaHDc
What the entry indicates is that the owner's duplicate of OCT No. 5203 was lost, a
petition for the reconstitution of the said owner's duplicate was led in court, and the court
issued an order for the reconstitution of the owner's duplicate and its replacement with a
new one. But if the entry is to be believed, the court concerned (CFI, according to the entry)
issued an order for the issuance of a new title which is TCT No. T-375 although the original
of OCT No. 5203 on file with the Registry of Deeds had not been lost.
Going by the legal, accepted and normal process, the reconstitution court may order
the reconstitution and replacement of the lost title only, nothing else. Since what was lost
is the owner's copy of OCT No. 5203, only that owner's copy could be ordered replaced.
Thus, the Register of Deeds exceeded his authority in issuing not just a reconstituted
owner's copy of the original certi cate of title but a new transfer certi cate of title in place
of the original certi cate of title. But if the court order, as the entry intimates, directed the
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issuance of a new transfer certi cate of title — even designating the very number of the
new transfer certi cate of title itself — the order would be patently unlawful. A court
cannot legally order the cancellation and replacement of the original of the O.C.T. which
has not been lost, 5 3 as the petition for reconstitution is premised on the loss merely of the
owner's duplicate of the OCT.
Apparently, petitioner had resorted to the court order as a convenient contrivance to
effect the transfer of title to the subject lot in its name, instead of the Supplemental Deed
which should be its proper course of action. It was so constrained to do because the
Supplemental Deed does not constitute a deed of conveyance of the "registered land in fee
simple" "in a form sufficient in law," as required by Section 57 of P.D. No. 1529.
A plain reading of the pertinent provisions of the Supplemental Deed discloses that
the assignment is not supported by any consideration. The provision reads:
xxx xxx xxx
WHEREAS, in the Deed of Assignment of Assets with the Assumption of
Liabilities executed by Julian L. Teves, Emilio B. Teves and Josefa T. Escaño at
Dumaguete City on 16th day of November 1972 and rati ed in the City of
Dumaguete before Notary Public Lenin Victoriano, and entered in the latter's
notarial register as Doc. No. 367; Page No. 17; Book No. V; series of 1972, Julian
L. Teves, Emilio B. Teves and Josefa T. Escaño, transferred, conveyed and
assigned unto J.L.T. AGRO, INC., all its assets and liabilities as re ected in the
Balance Sheet of the former as of December 31, 1971.
WHEREAS, on the compromise agreement, as mentioned in the Decision
made in the Court of First Instance of Negros Oriental, 12th Judicial District
Branch II, on Dec. 31, 1964 pertaining to Civil Case No. 3443 the following
properties were adjudicated to Don Julian L. Teves. We quote. HCacDE
Lot No. 63, Tax Dec. No. 33, Certi cate of Title No. 5203, together with all
improvements. Assessed value — P2,720.00
xxx xxx xxx
Footnotes
1. Rollo, pp. 9-24. Decision penned by Justice B. Adefuin-De la Cruz and concurred in by
Justices Fermin Martin, Jr. and Presbitero Velasco, Jr.
4. Id. at 82.
5. Id. at 82-83.
6. Rollo, pp. 69-75.
7. Ibid.
8. Rollo, p. 83.
9. Records, pp. 77-79.
10. Rollo, p. 84.
11. RTC Records, p. 108.
35. Perillo, et al v. Perillo, et al., (CA) 48 O.G. 4444, cited in PADILLA, CIVIL LAW, Vol. IV-A,
221 (1988).
36. TOLENTINO, CIVIL CODE OF THE PHILIPPINES, Vol. IV, 522 (1991).
37. Ibid.
38. CIVIL CODE OF THE PHILIPPINES, Vol. III, 556 (12th ed., 1989).
39. Ibid.
40. Art. 1056. If the testator should make a partition of his property by an act inter vivos, or
by will, such partition shall stand in so far as it does not prejudice the legitime of the
forced heirs.
41. Dizon-Rivera v. Dizon, 144 Phil. 558 (1970); See also Zaragoza v. Court of Appeals, G.R.
No. 106401, September 29, 2000, 341 SCRA 309, 315-316. A contrary opinion, however,
is advanced by Tolentino and Reyes and Puno.
42. Albela and Aebuya v. Albela and Allones, (CA) G.R. No. 5583-R, June 20, 1951.
46. TOLENTINO, CIVIL CODE OF THE PHILIPPINES, Vol. III, 187 (1992).
47. Reyes-Barreto v. Barretto-Datu, 125 Phil. 501 (1967).
48. Paragraph 13 of the Compromise Agreement provides in part:
. . . In other words, the properties now selected and adjudicated to Julian L. Teves (not
including his share in the Hacienda Medalla Milagrosa) shall exclusively be adjudicated
to the wife in second marriage of Julian L. Teves and his four minor children, namely,
Milagros Donio Teves, his two acknowledged natural children Milagros Reyes Teves and
Pedro Reyes Teves and his two legitimated children Maria Evelyn Donio Teves and Jose
Catalino Donio Teves. (Emphasis supplied)
Paragraph 7 thereof reads:
7. That the parties shall not demand the partition of the said Hacienda Medalla
Milagrosa which shall remain undivided during the lifetime of Julian L. Teves and shall
be under the joint administration of Julian L. Teves, Josefa T. Escaño and Emilio B.
Teves. Monthly reports of the affairs and management of the hacienda shall be
prepared and approved by all. In the event of death of Julian L. Teves, the Hacienda
Medalla Milagrosa may then be partitioned and the one-half undivided share which in
this agreement pertains to Julian L. Teves may be divided between his heirs, namely,
Emilio B. Teves, Josefa Teves Escaño, the wife in second marriage of Julian L. Teves,
Milagrosa Donio Teves and his four minor children, the two acknowledged natural,
Milagros Reyes Teves and Pedro Reyes Teves and the other two legitimated children
Maria Evelyn Donio Teves and Jose Catalino Teves, in the proportion established by law.
(Emphasis supplied)
49. NOBLEJAS AND NOBLEJAS, REGISTRATION OF LAND AND TITLES AND DEEDS, p.
178 (1986 ed.).
50. Halili v. Court of Industrial Relations, 326 Phil. 982 (1996).
51. Solar v. Diancin, 55 Phil. 479 (1930); De Gala v. Gonzales, 51 Phil. 480 (1928).
52. Records, p. 108.
53. A certified copy of the original OCT No. 5203 is part of the RTC Records. See p. 107.
59. PADILLA, CIVIL LAW, Vol. IV-A, 247-248 (1988). Ocejo, Perez and Co. v. Flores and Bas,
40 Phil. 921, Escutin v. Escutin, 60 Phil. 922.
Art. 1409. The following contracts are inexistent and void from the beginning: