I need to write a handover report and realized this word "decessor" is underlined in red by the word editor, my question is can I still use this word in formal situation and why "predecessor" is acceptable?
No, you cannot/should not use "decessor."
Contrary to "predecessor," it's not in the Merriam-Webster Unabridged Dictionary, and this says a lot about it being accepted. Equally, it's not found at Google Books except in Latin texts, the ones in English being all cases of syllabication of "predecessor."
Not everything that works in Latin has been conveyed/accepted to English:-)