CONCHITA NOOL and GAUDENCIO ALMOJERA, petitioner,

vs.
COURT OF APPEALS, ANACLETO NOOL and EMILIA NEBRE, respondents.

PANGANIBAN, J.:

A contract of repurchase arising out of a contract of sale where the seller did not have any
title to the property "sold" is not valid. Since nothing was sold, then there is also nothing to
repurchase.

Statement of the Case

This postulate is explained by this Court as it resolves this petition for review
on certiorari assailing the January 20, 1993 Decision1 of Respondent Court of Appeals2 in
CA-G.R. CV No. 36473, affirming the decision3 of the trial court4 which disposed as follows:5

WHEREFORE, judgment is hereby rendered dismissing the complaint for no

cause of action, and hereby:

1. Declaring the private writing, Exhibit "C", to be an option to

sell, not binding and considered validly withdrawn by the
defendants for want of consideration;

2. Ordering the plaintiffs to return to the defendants the sum of

P30,000.00 plus interest thereon at the legal rate, from the
time of filing of defendants' counterclaim until the same is fully
paid;

3. Ordering the plaintiffs to deliver peaceful possession of the

two hectares mentioned in paragraph 7 of the complaint and in
paragraph 31 of defendants' answer (counterclaim);

4. Ordering the plaintiffs to pay reasonable rents on said two

hectares at P5,000.00 per annum or at P2,500.00 per cropping
from the time of judicial demand mentioned in paragraph 2 of
the dispositive portion of this decision, until the said two
hectares shall have been delivered to the defendants; and

5. To pay the costs.

SO ORDERED.

The Antecedent Facts

The facts, which appear undisputed by the parties, are narrated by the Court of Appeals as
follows:
Two (2) parcels of land are in dispute and litigated upon here. The first has an
area of 1 hectare. It was formerly owned by Victorino Nool and covered by
Transfer Certificate of Title No. T-74950. With an area of 3.0880 hectares, the
other parcel was previously owned by Francisco Nool under Transfer
Certificate of Title No. T-100945. Both parcel's are situated in San Manuel,
Isabela. The plaintiff spouses, Conchita Nool and Gaudencio Almojera, now
the appellants, seek recovery of the aforementioned parcels of land from the
defendants, Anacleto Nool, a younger brother of Conchita, and Emilia Nebre,
now the appellees.

In their complaint, plaintiff-appellants alleged inter alia that they are the

owners of subject parcels of land, and they bought the same from Conchita's
other brothers, Victorino Nool and Francisco Nool; that as plaintiffs were in
dire need of money, they obtained a loan from the Ilagan Branch of the
Development Bank of the Philippines, in Ilagan, Isabela, secured by a real
estate mortgage on said parcels of land, which were still registered in the
names of Victorino Nool and Francisco Nool, at the time, and for the failure of
plaintiffs to pay the said loan, including interest and surcharges, totaling
P56,000.00, the mortgage was foreclosed; that within the period of
redemption, plaintiffs contacted defendant Anacleto Nool for the latter to
redeem the foreclosed properties from DBP, which the latter did; and as a
result, the titles of the two (2) parcels of land in question were transferred to
Anacleto Nool; that as part of their arrangement or understanding, Anacleto
Nool agreed to buy from plaintiff Conchita Nool the two (2) parcels of land
under controversy, for a total price of P100,000.00, P30,000.00 of which price
was paid to Conchita, and upon payment of the balance of P14,000.00,
plaintiffs were to regain possession of the two (2) hectares of land, which
amounts defendants failed to pay, and the same day the said
arrangement6 was made; another covenant7 was entered into by the parties,
whereby defendants agreed to return to plaintiffs the lands in question, at
anytime the latter have the necessary amount; that plaintiffs asked the
defendants to return the same but despite the intervention of the Barangay
Captain of their place, defendants refused to return the said parcels of land to
plaintiffs; thereby impelling them (plaintiffs) to come to court for relief.

In their Answer, defendants-appellees theorized that they acquired the lands

in question from the Development Bank of the Philippines, through negotiated
sale, and were misled by plaintiffs when defendant Anacleto Nool signed the
private writing, agreeing to return subject lands when plaintiffs have the
money to redeem the same; defendant Anacleto having been made to
believe, then, that his sister, Conchita, still had the right to redeem the said
properties.

The pivot of inquiry here, as aptly observed below, is the nature and
significance of the private document, marked Exhibit "D" for plaintiffs, which
document has not been denied by the defendants, as defendants even
averred in their Answer that they gave an advance payment of P30,000.00
therefor, and acknowledged that they had a balance of P14,000.00 to
complete their payment. On this crucial issue, the lower court adjudged the
said private writing (Exhibit "D") as an option to sell not binding upon and
considered the same validly withdrawn by defendants for want of
consideration; and decided the case in the manner above-mentioned.
 There is no quibble over the fact that the two (2) parcels of land in dispute
were mortgaged to the Development Bank of the Philippines, to secure a loan
obtained by plaintiffs from DBP (Ilagan Branch), Ilagan, Isabela. For the non-
payment of said loan, the mortgage was foreclosed and in the process,
ownership of the mortgaged lands was consolidated in DBP (Exhibits 3 and 4
for defendants). After DBP became the absolute owner of the two parcels of
land, defendants negotiated with DBP and succeeded in buying the same. By
virtue of such sale by DBP in favor of defendants, the titles of DBP were
cancelled and the corresponding Transfer Certificates of Title (Annexes "C"
and "D" to the Complaint) issued to the defendants.8

It should be stressed that Manuel S. Mallorca, authorized officer of DBP, certified that the
one-year redemption period was from March 16, 1982 up to March 15, 1983 and that the
mortgagors' right of redemption was not exercised within this period. 9 Hence, DBP became
the absolute owner of said parcels of land for which it was issued new certificates of title,
both entered on May 23, 1983 by the Registry of Deeds for the Province of Isabela. 10 About
two years thereafter, on April 1, 1985, DBP entered into a Deed of Conditional
Sale 11 involving the same parcels of land with Private Respondent Anacleto Nool as vendee.
Subsequently, the latter was issued new certificates of title on February 8, 1988. 12

The Court of Appeals ruled: 13

WHEREFORE, finding no reversible error infirming it, the appealed Judgment

is hereby AFFIRMED in toto. No pronouncement as to costs.

The Issues

Petitioners impute to Respondent Court the following alleged "errors":

1. The Honorable Court of Appeals, Second Division has misapplied the legal
import or meaning of Exhibit "C" in a way contrary to law and existing
jurisprudence in stating that it has no binding effect between the parties and
considered validly withdrawn by defendants-appellees for want of
consideration.

2. The Honorable Court of Appeals, Second Division has miserably failed to

give legal significance to the actual possession and cultivation and
appropriating exclusively the palay harvest of the two (2) hectares land
pending the payment of the remaining balance of fourteen thousand pesos
(P14,000.00) by defendants-appellees as indicated in Exhibit "C".

3. The Honorable Court of Appeals has seriously erred in affirming the

decision of the lower court by awarding the payment of rents per annum and
the return of P30,000.00 and not allowing the plaintiffs-appellants to re-
acquire the four (4) hectares, more or less upon payment of one hundred
thousand pesos (P100,000.00) as shown in Exhibit "D". 14

The Court's Ruling

The petition is bereft of merit.

First Issue: Are Exhibits "C" and "D" Valid and Enforceable?

The petitioner-spouses plead for the enforcement of their agreement with private
respondents as contained in Exhibits "C" and "D," and seek damages for the latter's alleged
breach thereof. In Exhibit C, which was a private handwritten document labeled by the
parties as Resibo ti Katulagan or Receipt of Agreement, the petitioners appear to have
"sold" to private respondents the parcels of land in controversy covered by TCT No. T-74950
and TCT No. T-100945. On the other hand, Exhibit D, which was also a private handwritten
document in Ilocano and labeled as Kasuratan, private respondents agreed that Conchita
Nool "can acquire back or repurchase later on said land when she has the money." 15

In seeking to enforce her alleged right to repurchase the parcels of land, Conchita (joined
by her co-petitioner-husband) invokes Article 1370 of the Civil Code which mandates that
"(i)f the terms of a contract are clear and leave no doubt upon the intention of the
contracting parties, the literal meaning of its stipulations shall control." Hence, petitioners
contend that the Court of Appeals erred in affirming the trial court's finding and conclusion
that said Exhibits C and D were "not merely voidable but utterly void and inexistent."

We cannot sustain petitioners' view. Article 1370 of the Civil Code is applicable only to valid
and enforceable contracts. The Regional Trial Court and the Court of Appeals ruled that the
principal contract of sale contained in Exhibit C and the auxiliary contract of repurchase in
Exhibit D are both void. This conclusion of the two lower courts appears to find support
in Dignos vs. Court of Appeals, 16 where the Court held:

Be that as it may, it is evident that when petitioners sold said land to the
Cabigas spouses, they were no longer owners of the same and the sale is null
and void.

In the present case, it is clear that the sellers no longer had any title to the parcels of land
at the time of sale. Since Exhibit D, the alleged contract of repurchase, was dependent on
the validity of Exhibit C, it is itself void. A void contract cannot give rise to a valid
one. 17 Verily, Article 1422 of the Civil Code provides that "(a) contract which is the direct
result of a previous illegal contract, is also void and inexistent."

We should however add that Dignos did not cite its basis for ruling that a "sale is null and
void" where the sellers "were no longer the owners" of the property. Such a situation
(where the sellers were no longer owners) does not appear to be one of the void contracts
enumerated in Article 1409 of the Civil Code. 18 Moreover, the Civil Code 19 itself recognizes
a sale where the goods are to be "acquired . . . by the seller after the perfection of the
contract of sale," clearly implying that a sale is possible even if the seller was not the owner
at the time of sale, provided he acquires title to the property later on.

In the present case however, it is likewise clear that the sellers can no longer deliver the
object of the sale to the buyers, as the buyers themselves have already acquired title and
delivery thereof from the rightful owner, the DBP. Thus, such contract may be deemed to be
inoperative 20 and may thus fall, by analogy, under item no. 5 of Article 1409 of the Civil
Code: "Those which contemplate an impossible service." Article 1459 of the Civil Code
provides that "the vendor must have a right to transfer the ownership thereof [object of the
sale] at the time it is delivered." Here, delivery of ownership is no longer possible. It has
become impossible.
Furthermore, Article 1505 of the Civil Code provides that "where goods are sold by a person
who is not the owner thereof, and who does not sell them under authority or with consent of
the owner, the buyer acquires no better title to the goods than the seller had, unless the
owner of the goods is by his conduct precluded from denying the seller's authority to sell."
Here, there is no allegation at all that petitioners were authorized by DBP to sell the
property to the private respondents. Jurisprudence, on the other hand, teaches us that "a
person can sell only what he owns or is authorized to sell; the buyer can as a consequence
acquire no more than what the seller can legally transfer." 21 No one can give what he does
not have — nono dat quod non habet. On the other hand, Exhibit D presupposes that
petitioners could repurchase the property that they "sold" to private respondents. As
petitioners "sold" nothing, it follows that they can also "repurchase" nothing. Nothing sold,
nothing to repurchase. In this light, the contract of repurchase is also inoperative — and by
the same analogy, void.

Contract of Repurchase
Dependent on Validity of Sale

As borne out by the evidence on record, the private respondents bought the two parcels of
land directly from DBP on April 1, 1985 after discovering that petitioners did not own said
property, the subject of Exhibits C and D executed on November 30, 1984. Petitioners,
however, claim that they can exercise their alleged right to "repurchase" the property, after
private respondents had acquired the same from DBP. 22 We cannot accede to this, for it
clearly contravenes the intention of the parties and the nature of their agreement. Exhibit D
reads:

WRITING

Nov. 30, 1984

That I, Anacleto Nool have bought from my sister Conchita Nool a land an
area of four hectares (4 has.) in the value of One Hundred Thousand
(100,000.00) Pesos. It is our agreement as brother and sister that she
can acquire back or repurchase later on said land when she has the money.
[Emphasis supplied].

As proof of this agreement we sign as brother and sister this written

document this day of Nov. 30, 1984, at District 4, San Manuel, Isabela.

Sgd ANACLET
O NOOL

Anacleto Nool

Sgd Emilio Paron

Witness

Sgd Conchita
Nool

Conchita Nool 2
One "repurchases" only what one has previously sold. In other words, the right to
repurchase presupposes a valid contract of sale between the same parties. Undisputedly,
private respondents acquired title to the property from DBP, and not from petitioners.

Assuming arguendo that Exhibit D is separate and distinct from Exhibit C and is not affected
by the nullity of the latter, still petitioners do not thereby acquire a right to repurchase the
property. In that scenario, Exhibit D ceases to be a "right to repurchase" ancillary and
incidental to the contract of sale; rather, it becomes an accepted unilateral promise to sell.
Article 1479 of the Civil Code, however, provides that "an accepted unilateral promise to
buy or sell a determinate thing for a price certain is binding upon the promissor if the
promise is supported by a consideration distinct from the price." In the present case, the
alleged written contract of repurchase contained in Exhibit D is bereft of any consideration
distinct from the price. Accordingly, as an independent contract, it cannot bind private
respondents. The ruling in Diamante vs. CA 24 supports this. In that case, the Court through
Mr. Justice Hilario G. Davide, Jr. explained:

Article 1601 of the Civil Code provides:

Conventional redemption shall take place when the vendor reserves the right
to repurchase the thing sold, with the obligation to comply with the provisions
of article 1616 and other stipulations which may have been agreed upon.

In Villarica, et al. Vs. Court of Appeals, et al., decided on 29 November 1968,

or barely seven (7) days before the respondent Court promulgated its
decisions in this case, this Court, interpreting the above Article, held:

The right of repurchase is not a right granted the vendor by the vendee in a
subsequent instrument, but is a right reserved by the vendor in the same
instrument of sale as one of the stipulations of the contract. Once the
instrument of absolute sale is executed, the vendor can not longer reserve
the right to repurchase, and any right thereafter granted the vendor by the
vendee in a separate instrument cannot be a right of repurchase but some
other right like the option to buy in the instant case. . . .

In the earlier case of Ramos, et al. vs. Icasiano, et al., decided in 1927, this

Court had already ruled that "an agreement to repurchase becomes a
promise to sell when made after the sale, because when the sale is made
without such an agreement, the purchaser acquires the thing sold absolutely,
and if he afterwards grants the vendor the right to purchase, it is a new
contract entered into by the purchaser, as absolute owner already of the
object. In that case the vendor has nor reserved to himself the right to
repurchase.

In Vda. De Cruzo, et al. vs. Carriaga, et al. this Court found another occasion
to apply the foregoing principle.

Hence, the Option to Repurchase executed by private respondent in the

present case, was merely a promise to sell, which must be governed by
Article 1479 of the Civil Code which reads as follows:
 Art. 1479. A promise to buy and sell a determinate thing for a price certain is
reciprocally demandable.

An accepted unilateral promise to buy or to sell a determinate thing for a

price certain is binding upon the promissor if the promise is supported by a
consideration distinct from the price.

Right to Repurchase Based on

Homestead or Trust Non-Existent

Petitioners also base their alleged right to repurchase on (1) Sec. 119 of the Public Land
Act 25 and (2) an implied trust relation as "brother and sister." 26

The Court notes that Victorino Nool and Francisco Nool mortgaged the land to DBP. The
brothers, together with Conchita Nool and Anacleto Nool, were all siblings and heirs qualified
to repurchase the two parcels of land under Sec. 119 of the Public Land Act which provides
that "(e)very conveyance of land acquired under the free patent or homestead provisions,
when proper, shall be subject to repurchase by the applicant, his widow or legal heirs,
within a period of five years from the date of conveyance." Assuming the applicability of this
statutory provision to the case at bar, it is indisputable that Private Respondent Anacleto
Nool already repurchased from DBP the contested properties. Hence, there was no more
right of repurchase that his sister Conchita or brothers Victorino and Francisco could
exercise. The properties were already owned by an heir of the homestead grantee and the
rationale of the provision to keep homestead lands within the family of the grantee was thus
fulfilled. 27

The claim of a trust relation is likewise without merit. The records show that private
respondents did not purchase the contested properties from DBP in trust for petitioners. The
former, as previously mentioned, in fact bought the land from DBP upon realization that the
latter could not validly sell the same. Obviously, petitioners bought it for themselves. There
is no evidence at all in the records that they bought the land in trust for private
respondents. The fact that Anacleto Nool was the younger brother of Conchita Nool and that
they signed a contract of repurchase, which as discussed earlier was void, does not prove
the existence of an implied trust in favor of petitioners.

Second Issue: No Estoppel in Impugning the

Validity of Void Contracts

Petitioners argue that "when Anacleto Nool took the possession of the two hectares, more or
less, and let the other two hectares to be occupied and cultivated by plaintiffs-appellant,
Anacleto Nool cannot later on disclaim the terms or contions (sic) agreed upon and his
actuation is within the ambit of estoppel . . . 28 We disagree. The private respondents cannot
be estopped from raising the defense of nullity of contract, specially in this case where they
acted in good faith, believing that indeed petitioners could sell the two parcels of land in
question. Article 1410 of the Civil Code mandates that "(t)he action or defense for the
declaration of the inexistence of a contract does not prescribe." It is a well-settled doctrine
that "as between parties to a contract, validity cannot be given to it by estoppel if it is
prohibited by law or it is against public policy (19 Am. Jur. 802). It is not within the
competence of any citizen to barter away what public policy by law seeks to
preserve." 29 Thus, it is immaterial that private respondents initially acted to implement the
contract of sale, believing in good faith that the same was valid. We stress that a contract
void at inception cannot be validated by ratification or prescription and certainly cannot be
binding on or enforceable against private respondents. 30

Third Issue: Return of P30,000.00 with Interest

and Payment of Rent

Petitioners further argue that it would be a "miscarriage of justice" to order them (1) to
return the sum of P30,000.00 to private respondents when allegedly it was Private
Respondent Anacleto Nool who owed the former a balance of P14,000.00 and (2) to order
petitioners to pay rent when they "were allowed to cultivate the said two hectares." 31

We are not persuaded. Based on the previous discussion, the balance of P14,000.00 under
the void contract of sale may not be enforced. Petitioners are the ones who have an
obligation to return what they unduly and improperly received by reason of the invalid
contract of sale. Since they cannot legally give title to what they "sold," they cannot keep
the money paid for the object of the sale. It is basic that "(e)very person who through an
act of performance by another, or any other means, acquires or comes into possession of
something at the expense of the latter without just or legal ground, shall return the
same." 32 Thus, if a void contract has already "been performed, the restoration of what has
been given is in order." 33 Corollarily and as aptly ordered by respondent appellate court,
interest thereon will run only from the time of private respondents' demand for the return of
this amount in their counterclaim. 34 In the same vein, petitioners' possession and
cultivation of the two hectares are anchored on private respondents' tolerance. Clearly, the
latter's tolerance ceased upon their counterclaim and demand on the former to vacate.
Hence, their right to possess and cultivate the land ipso facto ceased.

WHEREFORE, the petition is DENIED and the assailed Decision of the Court of Appeals
affirming that of the trial court is hereby AFFIRMED.

SO ORDERED.