Don Julio contracted two marriages. The first was with Ana, and after her death, with Mila. Don Julio had two children with Ana, namely Pina and Elmo. He had also four children with Mila, namely, Mely, Tino, Donna and Tony. When Ana died, her surviving daughter Pina filed an action for partition and damages against Don Julio, his brother Elmo et.al. Mila, the second wife also participated as intervenor. This case was eventually settled when the parties entered into a Compromise Agreement which embodied the partition of all the properties of Don Julio.
The compromise agreement which was adopted and approved by the Court as its decision on January 31, 1964, declared a hacienda as property owned in common by Don Julio and his two children by the first marriage, Pina and Elmo. The hacienda was to remain undivided during the lifetime of Don Julio. Pina and Elmo were likewise given other properties including the electric plant, the movie house, commercial areas and the house where Don Julio was living. The rest of the properties were retained by Don Julio. According to the Compromise Agreement (par.13), these properties selected and adjudicated to Don Julio, excluding his share in the hacienda shall be exclusively adjudicated to Mila (second wife) and his four minor children with her, namely Mely, Tino, Donna and Tony.
Among the properties adjudicated to and retained by Don Julio was a parcel of land covering 954 square meters known as lot 63 and covered by OCT No. 5203. After the execution of the compromise agreement, Mila and her children immediately took possession of this lot. But on November 16, 1972, Don Julio and his children Pina and Elmo executed a Deed of Assignment of Assets and Assumption of Liabilities in favor of J.L.T. Agro Inc., a family corporation established by Don Julio with him as president and Pina as treasurer. The assignment transferred all their assets and liabilities to JLT. Later on July 31, 1973, they executed a Supplemental Deed to the earlier Deed of Assignment transferring ownership over lot 63, among other properties, in favor of JLT. On April 14, 1974, Don Julio died. Meantime, also in 1974, Mila and her children entered into a lease agreement with the spouses Banaag over lot 63 wherein the said spouses temporarily established their home and put up a lumber yard. On the other hand, on November 12, 1979, JLT was able to secure TCT No. T- 375 on lot 63. The said title was issued not on the strength of the Supplemental Deed signed by Don Julio, Pina and Emilio but by virtue of a court order reconstituting OCT 5203 which was allegedly lost and ordered cancelled and replaced.
Unaware that lot 63 was already registered in the name of JLT, Mila and her children executed a Deed of Extrajudicial Partition on March 18, 1980 allotting said lot to Mila and her two children Mely and Tino. Then on November 9, 1983, the Banaag spouses bought the said property as evidenced by a Deed of Sale. While trying to register said Deed, the spouses discovered that lot 63 was already titled in the name of JLT. Thus they filed a complaint against JLT seeking the declaration of nullity of TCT T-375 and the transfer of the title in their names, plus damages.
The lower court ruled that Don Julio had validly transferred ownership of lot 63 during his lifetime through the Supplemental Deed and so it dismissed the case. The Court of Appeals (CA) however disagreed, holding that the Supplemental Deed is not valid, containing as it does a prohibited preterition of Don Julio’s heirs from the second marriage. Was the CA correct?
No. Preterition is done only in a Will or Testament. In this case Don Julio did not execute a will but only a partition inter vivos (between the living) of his properties as evidenced by the court approved Compromise Agreement. This is allowed by law in so far as it does not prejudice the legitime of the compulsory heirs and is effective only after death (Article 1080 Civil Code). Thus it is premature if not irrelevant to speak of preterition prior to the death of Don Julio 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 Julio upon his death. Hence, there is no total omission from inheritance of Don Julio’s heirs from the second marriage which is a requirement for preterition to exist.
Considering that the partition inter-vivos would become legally operative only upon the death of Don Julio, 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. It had no attribute of property and the interest to which it related was at the time non-existent and might never exist. Don Julio remained the owner of lot 63 and as the owner he retained the absolute right to dispose of it during his lifetime. His right cannot be challenged by Mila and her children on the ground that it had already been adjudicated to them by virtue of the compromise agreement.
In this case however, the TCT (No. T-375) issued in favor of JLT was nevertheless nullified because it was obtained not by virtue of the Supplemental Deed which was never presented before the Register of Deeds but by a court order requiring the replacement of the allegedly lost OCT 5203. Considering that the original of OCT 5203 is still on file with the Register of Deeds, it should just have been reconstituted not replaced (JLT Agro Inc. vs. Balansag, G.R. 141882, March 11, 2005. 453 SCRA 211).