VOL.

453, MARCH 11, 2005 211

J.L.T. Agro, Inc. vs. Balansag
G.R. No. 141882. March 11, 2005. *

J.L.T. AGRO, INC., represented by its Manager, JULIAN L. TEVES, petitioner, vs. ANTONIO

BALANSAG and HILARIA CADAYDAY, respondents.
Civil Law; Contracts; All things, even future ones which are not outside the commerce of man may
be the object of a contract, except 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 .—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.
_______________

*
 SECOND DIVISION.

212

212 SUPREME COURT REPORTS ANNOTATED

J.L.T. Agro, Inc. vs. Balansag
Same; Legitimes; Preterition; Preterition is defined 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; It is the total omission of a
compulsory heir in the direct line from inheritance; 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 .—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 inofficious.
Manresa defines 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. It is the total omission of a compulsory heir in
the direct line from inheritance. 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 disinheriting him, even if he is mentioned in the will in the
latter case. 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.
Same; Donation; Title to immovable property does not pass from the donor to the donee by virtue
of a deed of donation until and unless it has been accepted in a public instrument and the donor duly
notified thereof.—In Sumipat, et al. v. Banga, et al., this Court declared that title to immovable property
does not pass from the donor to the donee by virtue of a deed of donation until and unless it has been
accepted in a public instrument and the donor duly notified thereof. The acceptance may be made in the
very same instrument of donation. If the acceptance does not appear in the same document, it must be
made in another. Where the deed of donation fails to show the acceptance, or where the formal notice of
the acceptance, made in a separate instrument, is either not given to the donor or else not noted in the
deed of donation and in the separate acceptance, the donation is null and void.
213

VOL. 453, MARCH 11, 2005 213

J.L.T. Agro, Inc. vs. Balansag
Same; Land Titles; A certificate of title serves as evidence of an indefeasible title to the property in
favor of the person whose name appears therein.—Well-settled, of course, is the rule that a certificate of
title serves as evidence of an indefeasible title to the property in favor of the person whose name appears
therein. A certificate of title accumulates in one document a precise and correct statement of the exact
status of the fee held by its owner. The certificate, in the absence of fraud, is the evidence of title and
shows exactly the real interest of its owner.
Same; Same; To successfully assail the juristic value of what a Torrens title establishes, a sufficient
and convincing quantum of evidence on the defect of the title must be adduced to overcome the
predisposition in law in favor of a holder of a Torrens title.—To successfully assail the juristic value of
what a Torrens title establishes, a sufficient and convincing quantum of evidence on the defect of the title
must be adduced to overcome the predisposition in law in favor of a holder of a Torrens title. Thus,
contrary to the appellate court’s ruling, the appearance of a mere thumbmark of Don Julian instead of his
signature in the Supplemental Deed would not affect the validity of petitioner’s title for this Court has
ruled that a thumbmark is a recognized mode of signature.

PETITION for review on certiorari of a decision of the Court of Appeals.

The facts are stated in the opinion of the Court.

     Epifanio Sedigo, Sr. and Guingona & Sedigo for petitioner.
     Jose A. Arbas for respondents.

TINGA, J.:

Once again, the Court is faced with the perennial conflict of property claims between two sets of
heirs, a conflict 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.
214
214 SUPREME COURT REPORTS ANNOTATED
J.L.T. Agro, Inc. vs. Balansag
This is a Rule 45 petition assailing the Decision  dated 30 September 1999 of the Court of
1

Appeals which reversed the Decision  dated 7 May 1993 of the Regional Trial Court (RTC),
2

Branch 45, of Bais City, Negros Oriental.

The factual antecedents follow.
Don Julian L. Teves (Don Julian) contracted two marriages, first 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 fifty-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 Certificate 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.”  Milagros Donio, the
4

second wife of Don Julian, participated as an intervenor. Thereafter, the parties to the case
entered into a Compromise Agreement  which embodied the partition of all the properties of Don
5

Julian.
_______________
 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.
2
 Id., at pp. 81-89. Decision penned by Judge Ismael Baldado.
3
 Id., at p. 82. Maria Evelyn and Jose Catalino are the legitimated children of Don Julian and Milagros Donio while
Milagros Reyes and Pedro are their acknowledged natural children.
4
 Id., at p. 82.
5
 Id., at pp. 82-83.

215
VOL. 453, MARCH 11, 2005 215
J.L.T. Agro, Inc. vs. Balansag
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  dated 31 January 1964. The
6

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 first marriage. The property was to
remain undivided during the lifetime of Don Julian.  Josefa and Emilio likewise were given other
7

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.
Paragraph 13 of the Compromise Agreement, at the heart of the present dispute, lays down the
effect of the eventual death of Don Julian vis-à-vis his heirs:
13. That in the event of death of Julian L. Teves, the properties hereinafter adjudicated to Josefa Teves
Escaňo 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 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)
On 16 November 1972, Don Julian, Emilio and Josefa executed a Deed of Assignment of Assets
with Assumption of Liabilities  in favor of J.L.T. Agro, Inc. (petitioner). Less than a
8

_______________

6
 Rollo, pp. 69-75.
7
 Ibid.
8
 Rollo, p. 83.

216
216 SUPREME COURT REPORTS ANNOTATED
J.L.T. Agro, Inc. vs. Balansag
year later, Don Julian, Josefa and Emilio also executed an instrument entitled Supplemental to
the Deed of Assignment of Assets with the Assumption of Liabilities (Supplemental Deed)  dated 9

31 July 1973. This instrument which constitutes a supplement to the earlier deed of assignment
transferred ownership over Lot No. 63, among other properties, in favor of petitioner.  On 14 10

April 1974, Don Julian died intestate.

On the strength of the Supplemental Deed in its favor, petitioner sought the registration of the
subject lot in its name. A court, so it appeared, issued an order  cancelling OCT No. 5203 in the
11

name of spouses Don Julian and Antonia on 12 November 1979, and on the same date TCT No.
T-375 was issued in the name of petitioner.  Since then, petitioner has been paying taxes
12

assessed on the subject lot. 13

Meanwhile, Milagros Donio and her children had immediately taken possession over the
subject lot after the execution of the Compromise Agreement. In 1974, they entered into a yearly
lease agreement with spouses Antonio Balansag and Hilaria Cadayday, respondents herein.  On 14

Lot No. 63, respondents temporarily established their home and constructed a lumber yard.
Subsequently, Milagros Donio and her children executed a Deed of Extrajudicial Partition of
Real Estate  dated 18 March 1980. In the deed of partition, Lot No. 63 was allotted to Milagros
15

Donio and her two (2) children, Maria Evelyn and Jose Catalino. Unaware that the subject lot
was already registered in the name of petitioner in 1979, respondents bought Lot No. 63 from
Milagros Donio as
_______________

 Records, pp. 77-79.

9

 Rollo, p. 84.
10

 RTC Records, p. 108.

11

 Id., at pp. 109 and 162; Rollo, p. 84.

12

 Id., at p. 14.
13

 Balansag died on 16 January 1997.

14

 Records, p. 98; Exh. “B”.

15

217
VOL. 453, MARCH 11, 2005 217
J.L.T. Agro, Inc. vs. Balansag
evidenced by the Deed of Absolute Sale of Real Estate  dated 9 November 1983.
16

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. 17

Respondents, as vendees of Lot No. 63, filed 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 filed by respondents. The dispositive
portion of the decision reads:
“WHEREFORE, premises considered, by preponderance of evidence, this Court finds judgment in favor
of the defendant and against the plaintiff, and thus hereby orders:

1. (1)That complaint be dismissed;

2. (2)That plaintiffs vacate the subject land, particularly identified as Lot No. 63 registered
under Transfer Certificate of Title No. T-375;
3. (3)That plaintiffs pay costs.

Finding no basis on the counterclaim by defendant, the same is hereby ordered dismissed. 19

The trial court ruled that the resolution of the case specifically hinged on the interpretation of
paragraph 13 of the Compromise Agreement.  It added that the direct adjudication of the
20

properties listed in the Compromise Agreement was only in favor of Don Julian and his two
children by the first
_______________

16
 Id., at p. 102; Exh. “D”.
  Rollo, pp. 81-82.
17

 Supra note 12.
18

 Rollo, p. 89.
19

 Id., at p. 85.
20

218
218 SUPREME COURT REPORTS ANNOTATED
J.L.T. Agro, Inc. vs. Balansag
marriage, Josefa and Emilio.  Paragraph 13 served only as an amplification of the terms of the
21

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. 22

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 final and operative, as the lot was still
subject to future disposition by Don Julian during his lifetime.  It cited paragraph 14  of
23 24

the Compromise Agreement in support of his conclusion.  With Lot No. 63 being the conjugal
25

property of Don Julian and Antonia, the

_______________

21
 Id., at p. 87.
22
 Id., at p. 87.
23
 Id., at pp. 87-88.
24
 14. That, however, in the event Julian L. Teves or his heirs above-mentioned in the next preceding paragraph  would
sell any of the properties adjudicated to the said Julian L. Teves in this agreement, his two children of the first marriage,
Emilio B. Teves and Josefa Teves Escaño, shall be given the first option and preference to buy said properties at a price to
be agreed upon by the parties only in case, when the latter two shall refuse to buy may Julian L. Teves or his heirs already
mentioned sell the same to other third persons. (Emphasis added)
25
 Id., at p. 88.

219
VOL. 453, MARCH 11, 2005 219
J.L.T. Agro, Inc. vs. Balansag
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 five (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. 27
 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 Certificate of Title No. T-375 registered in the
name of J.L.T. Agro, Inc. as null and void. With costs against defendant J.L.T. Agro, Inc. represented by
its Manager, Julian L. Teves.
SO ORDERED.” 28

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.  The two sets of heirs acquired full own-
29

_______________

 Ibid.
26

 Id., at p. 89.
27

 Id., at p. 24.
28

 Id., at p. 19.
29

220
220 SUPREME COURT REPORTS ANNOTATED
J.L.T. Agro, Inc. vs. Balansag
ership 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.  Don Julian could have disposed of only his conjugal
30

share in the Hacienda Medalla Milagrosa. 31

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 filled up, thereby indicating that the TCT is “spurious and of dubious
origin.” 32

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.
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. 33

_______________

 Id., at p. 22.
30

 Id., at p. 23.
31

 Id., at p. 24.
32

 Id., at p. 33.
33

221
 VOL. 453, MARCH 11, 2005 221
J.L.T. Agro, Inc. vs. Balansag
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
affirmance 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 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  is relevant, where we defined future inheritance as any property or
34

right not in exis-
_______________

 111 Phil. 503; 1 SCRA 899 (1961).

34

222
222 SUPREME COURT REPORTS ANNOTATED
J.L.T. Agro, Inc. vs. Balansag
tence 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. 35

For the inheritance to be considered “future,” the succession must not have been opened at
the time of the contract.  A contract may be classified as a contract upon future inheritance,
36

prohibited under the second paragraph of Article 1347, where the following requisites concur:
 1. (1)That the succession has not yet been opened;
2. (2)That the object of the contract forms part of the inheritance; and
3. (3)That the promissor has, with respect to the object, an expectancy of a right which is
purely hereditary in nature. 37

_______________

 Perillo, et al. v. Perillo, et al., (CA) 48 O.G. 4444, cited in Padilla, Civil Law, Vol. IV-A, 221 (1988).
35

 Tolentino, Civil Code of the Philippines, Vol. IV, 522 (1991).

36

 Ibid.
37

223
VOL. 453, MARCH 11, 2005 223
J.L.T. Agro, Inc. vs. Balansag
The first 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.
....
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.  The partition will of 38

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 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. 39

The historical antecedent of Article 1080 of the New Civil Code is Article 1056  of the old 40

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 first make a will with all the formalities provided by law. 41

_______________

 Civil Code of the Philippines, Vol. III, 556 (12th ed., 1989).
38

 Ibid.
39

 Art. 1056. If the testator should make a partition of his property by an act inter vivos, or by will, such partition shall
40

stand in so far as it does not prejudice the legitime of the forced heirs.
 Dizon-Rivera v. Dizon, 144 Phil. 558; 33 SCRA 554 (1970); See also Zaragoza v. Court of Appeals, G.R. No.
41

106401, September

224
224 SUPREME COURT REPORTS ANNOTATED
J.L.T. Agro, Inc. vs. Balansag
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. 42

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. 43

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.
_______________

29, 2000, 341 SCRA 309, 315-316. A contrary opinion, however, is advanced by Tolentino and Reyes and Puno.
 Albela and Aebuya v. Albela and Allones, (CA) G.R. No. 5583-R, June 20, 1951.
42

 Johnson v. Breeding, 136 Tenn 528, 190 SW 545.

43

225
VOL. 453, MARCH 11, 2005 225
J.L.T. Agro, Inc. vs. Balansag
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 inofficious. Manresa defines 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.  It is the total omission of a compulsory heir in the direct line from inheritance.  It
44 45

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 disinheriting him, even if he is mentioned in the will in
the latter case.  But there is no preterition where the testator allotted to a descendant a share
46

_______________

44
 Aznar v. Duncan, 123 Phil. 1450; 17 SCRA 590 (1966).
45
 Art. 854. 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 inofficious.
....
46
 Tolentino, Civil Code of the Philippines, Vol. III, 187 (1992).
 226
226 SUPREME COURT REPORTS ANNOTATED
J.L.T. Agro, Inc. vs. Balansag
less than the legitime, since there was no total omission of a forced heir. 47

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.  Hence, the total omission
48

_______________

 Reyes v. Barretto-Datu, 125 Phil. 501; 19 SCRA 85 (1967).

47

 Paragraph 13 of the Compromise Agreement provides in part:

48

. . . . 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

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J.L.T. Agro, Inc. vs. Balansag
from inheritance of Don Julian’s heirs from the second marriage, a requirement for preterition to
exist, is hardly imaginable as it is unfounded.
Despite the debunking of respondents’ argument on preterition, still the petition would
ultimately rise or fall on whether there was a valid transfer effected by Don Julian to petitioner.
Notably, Don Julian was also the president and director of petitioner, and his daughter from the
first marriage, Josefa, was the treasurer thereof. There is of course no legal prohibition against
such a transfer to a family corporation. Yet close scrutiny is in order, especially considering that
such transfer would remove Lot No. 63 from the estate from which Milagros and her children
could inherit. Both the alleged transfer deed and the title which necessarily must have emanated
from it have to be subjected to incisive and detailed examination.
Well-settled, of course, is the rule that a certificate of title serves as evidence of an
indefeasible title to the property in favor of the person whose name appears therein.  A certificate 49

of title accumulates in one document a precise and correct statement of the exact status of the fee
held by its owner. The certificate, in the absence of fraud, is the evidence of title and shows
exactly the real interest of its owner. 50

To successfully assail the juristic value of what a Torrens title establishes, a sufficient and
convincing quantum of evidence on the defect of the title must be adduced to overcome the
predisposition in law in favor of a holder of a Torrens title. Thus, contrary to the appellate
court’s ruling, the appearance
_______________
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)

 Noblejas and Noblejas, Registration of Land and Titles and Deeds, p. 178 (1986 ed.).
49

 Halili v. Court of Industrial Relations, 326 Phil. 982; 257 SCRA 174 (1996).

50

228
228 SUPREME COURT REPORTS ANNOTATED
J.L.T. Agro, Inc. vs. Balansag
of a mere thumbmark of Don Julian instead of his signature in the Supplemental Deed would not
affect the validity of petitioner’s title for this Court has ruled that a thumbmark is a recognized
mode of signature. 51

The truth, however, is that the replacement of OCT No. 5203 in the name of Julian by T.C.T.
No. T-375 is marred by a grave irregularity which is also an illegality, as it contravenes the
orthodox, conventional and normal process established by law. And, worse still, the illegality is
reflected on the face of both titles. Where, as in this case, the transferee relies on a voluntary
instrument to secure the issuance of a new title in his name such instrument has to be presented
to the Registry of Deeds. This is evident from Sections 53 and 57 of Presidential Decree (P.D.)
No. 1529 or the Property Registration Decree. The sections read, thus:
SEC. 53. Presentation of owner’s duplicate upon entry of new certificate.—No voluntary
instrument shall be registered by the Register of Deeds unless the owner’s duplicate certificate
is presented with such instrument, except in cases expressly provided for in this Decree or upon order
of the court, for cause shown. (Emphasis supplied)
....
SEC. 57. Procedure in registration of conveyances.—An owner desiring to convey his registered land
in fee simple shall execute and register a deed of conveyance in a form sufficient in law. The Register
of Deeds shall thereafter make out in the registration book a new certificate of title to the grantee and
shall prepare and deliver to him an owner’s duplicate certificate. The Register of Deeds shall note upon
the original and duplicate certificate the date of transfer, the volume and page of the registration book in
which the new certificate is registered and a reference by number to the last preceding certificate. The
original and the owner’s duplicate of the grantor’s certificate shall be stamped “cancelled.” The deed of
conveyance shall be filed and endorsed with the number and
_______________

 Solar v. Diancin, 55 Phil. 479 (1930); De Gala v. Gonzales, 51 Phil. 480 (1928).

51

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VOL. 453, MARCH 11, 2005 229
J.L.T. Agro, Inc. vs. Balansag
the place of registration of the certificate of title of the land conveyed. (Emphasis supplied)
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 certificates of title. It is in this regard that
the finding of the Court of Appeals concerning the absence of entries on the blanks intended for
the Book No. and Page No. gains significant relevance. Indeed, this aspect fortifies 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
Certificate of Title No. 375 is issued per Order of the Court of First Instance on file in this office.
Date of Instrument: November 12, 1979
Date of Inscription: Nov. 12, 1979 4:00 P.M.

(SGD.) MANUEL C. MONTESA

Acting Deputy Register of Deeds II
(Emphasis supplied) 52

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 filed in court, and the court issued
_______________

 Records, p. 108.
52

230
230 SUPREME COURT REPORTS ANNOTATED
J.L.T. Agro, Inc. vs. Balansag
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 certificate of title but a new transfer certificate of title in place of the original certificate
of title. But if the court order, as the entry intimates, directed the issuance of a new transfer
certificate of title—even designating the very number of the new transfer certificate 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,  as the petition for 53

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:
_______________

 A certified copy of the original OCT No. 5203 is part of the RTC Records. See p. 107.
53

231
VOL. 453, MARCH 11, 2005 231
J.L.T. Agro, Inc. vs. Balansag
....
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 ratified 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 reflected 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.
From the properties at Bais
Adjudicated to Don Julian L. Teves
....
Lot No. 63, Tax Dec. No. 33, Certificate of Title No. 5203, together with all improvements. Assessed
value—P2,720.00
....
WHEREAS, this Deed of Assignment is executed by the parties herein in order to effect the
registration of the transfer of the above corporation.
NOW, THEREFORE, for and in consideration of the above premises the ASSIGNOR hereby
transfers, conveys, and assigns unto J.L.T. AGRO, INC., the above described parcel of land[s] with a fair
market value of EIGHTY-FOUR THOUSAND PESOS (P84,000.00), Philippine Currency, and which
transfer, conveyance and assignment shall become absolute upon signing.  (Emphasis supplied)
54

The amount of P84,000.00 adverted to in the dispositive portion of the instrument does not
represent the consideration for the assignment made by Don Julian. Rather, it is a mere statement
of the fair market value of all the nineteen (19)
_______________

 Records, pp. 167-168.

54

232
232 SUPREME COURT REPORTS ANNOTATED
J.L.T. Agro, Inc. vs. Balansag
properties enumerated in the instrument, of which Lot No. 63 is just one, that were transferred by
Don Julian in favor of petitioner. Consequently, the testimony  of petitioner’s accountant that the
55

assignment is supported by consideration cannot prevail over the clear provision to the contrary
in the Supplemental Deed.
The Court of Appeals, on the other hand, apparently considered the 1948 mortgage which is
annotated on the back of the TCT No. T-375 as the consideration for the assignment.  However,56

the said annotation  shows that the mortgage was actually executed in favor of Rehabilitation
57

Finance Corporation, not of petitioner.  Clearly, said mortgage, executed as it was in favor of the
58

Rehabilitation Finance Corporation and there being no showing that petitioner itself paid off the
mortgage obligation, could not have been the consideration for the assignment to petitioner.
Article 1318 of the New Civil Code enumerates the requisites of a valid contract, namely: (1)
consent of the contracting parties; (2) object certain which is the subject matter of the contract;
and (3) Cause of the obligation which is established.
Thus, Article 1352 declares that contracts without cause, or with unlawful cause produce no
effect whatsoever. Those contracts lack an essential element and they are not only voidable but
void or inexistent pursuant to Article 1409, paragraph (2).  The absence of the usual recital of
59

considera-
_______________

 Rollo, pp. 14-16.

55
  Id., at p. 22.
56

 Records, p. 108.
57

 Id., at p. 162. Rehabilitation Finance Corporation later became Development Bank of the Philippines.
58

 Padilla, Civil Law, Vol. IV-A, 247-248 (1988). Ocejo, Perez and Co. v. Flores and Bas, 40 Phil. 921, Escutin v.
59

Escutin, 60 Phil. 922.

Art. 1409. The following contracts are inexistent and void from the beginning:
....

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VOL. 453, MARCH 11, 2005 233
J.L.T. Agro, Inc. vs. Balansag
tion in a transaction which normally should be supported by a consideration such as the
assignment made by Don Julian of all nineteen (19) lots he still had at the time, coupled with the
fact that the assignee is a corporation of which Don Julian himself was also the President and
Director, forecloses the application of the presumption of existence of consideration established
by law. 60

Neither could the Supplemental Deed validly operate as a donation. Article 749 of the New
Civil Code is clear on the point, thus:
Art. 749. In order that the donation of the immovable may be valid, it must be made in a public document,
specifying therein the property donated and the value of the charges which the donee must satisfy.
The acceptance may be made in the same deed of donation or in a separate public document, but it
shall not take effect unless it is done during the lifetime of the donor.
If the acceptance is made in a separate instrument, the donor shall be notified thereof in an authentic
form, and this step shall be noted in both instruments.
In Sumipat, et al. v. Banga, et al.,  this Court declared that title to immovable property does not
61

pass from the donor to the donee by virtue of a deed of donation until and unless it has been
accepted in a public instrument and the donor duly notified thereof. The acceptance may be made
in the very same instrument of donation. If the acceptance does not appear in the same document,
it must be made in another. Where the deed of donation fails to show the acceptance, or where
the formal notice of the acceptance, made in a separate
_______________

(2) Those which are absolutely simulated or fictitious; . . . .

 Art. 1354. Although the cause is not stated in the contract, it is presumed that it exists and is lawful, unless the debtor
60

proves the contrary.

 G.R. No. 155810, August 13, 2004, 436 SCRA 521.
61

234
234 SUPREME COURT REPORTS ANNOTATED
J.L.T. Agro, Inc. vs. Balansag
instrument, is either not given to the donor or else not noted in the deed of donation and in the
separate acceptance, the donation is null and void.
In the case at bar, although the Supplemental Deed appears in a public document,  the 62

absence of acceptance by the donee in the same deed or even in a separate document is a glaring
violation of the requirement.
One final note. From the substantive and procedural standpoints, the cardinal objectives to
write finis to a protracted litigation and avoid multiplicity of suits are worth pursuing at all
times.  Thus, this Court has ruled that appellate courts have ample authority to rule on specific
63

matters not assigned as errors or otherwise not raised in an appeal, if these are indispensable or
necessary to the just resolution of the pleaded issues.  Specifically, matters not assigned as errors
64

on appeal but consideration of which are necessary in arriving at a just decision and complete
resolution of the case, or to serve the interest of justice or to avoid dispensing piecemeal justice. 65

_______________

62
 Records, p. 169.
63
 Sumipat, et al. v. Banga, et al., supra note 60.
64
 Villegas v. Court of Appeals, G.R. No. 129977, February 1, 2001, 351 SCRA 69, 74; Logronio v. Taleseo, 370 Phil.
452; 312 SCRA 52 (1999), citing Saura Import and Export Co., Inc. v. Philippine International Surety Co., Inc., 8 SCRA
143; Miguel v. Court of Appeals, 29 SCRA 760, October 30, 1969; Sociedad Europea de Financion, S.A. v. Court of
Appeals, 193 SCRA 105, January 21, 1991; Larobis v. Court of Appeals, 220 SCRA 639, March 30, 1993; Hernandez v.
Andal, 78 Phil. 196 citing 4 C.J.S. 1734 and 3 C.J.S. 1341; Barons Marketing Corp. v. Court of Appeals, 286 SCRA 96,
108; Korean Airlines Co., Ltd. v. Court of Appeals, G.R. No. 114061, August 3, 1994, 234 SCRA 717, 725; Vda. de
Javellana v. Court of Appeals, G.R. No. L-60129, July 29, 1983, 123 SCRA 799, 805; Catholic Bishop of Balanga v.
Court of Appeals, 332 Phil. 206; 264 SCRA 181 (1996) citing Section 16(b), Rule 46 of the Rules of Court.
65
 Catholic Bishop of Balanga v. Court of Appeals, supra note 63.

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J.L.T. Agro, Inc. vs. Balansag
In the instant case, the correct characterization of the Supplemental Deed, i.e., whether it is valid
or void, is unmistakably determinative of the underlying controversy. In other words, the issue of
validity or nullity of the instrument which is at the core of the controversy is interwoven with the
issues adopted by the parties and the rulings of the trial court and the appellate court.  Thus, this 66

Court is also resolute in striking down the alleged deed in this case, especially as it appears on its
face to be a blatant nullity.
WHEREFORE, foregoing premises considered, the Decision dated 30 September 1999 of the
Court of Appeals is hereby AFFIRMED. Costs against petitioner J.L.T. Agro, Inc.
SO ORDERED.
     Puno (Chairman), Austria-Martinez, Callejo, Sr. and Chico-Nazario, JJ., concur.
Judgment affirmed.
Note.—Although title does not vest ownership, a torrens certificate is evidence of an
indefeasible title to property in favor of the person whose name appears thereon. (Liao vs. Court
of Appeals, 323 SCRA 430 [2000])

——o0o——