*

G.R. No. 116635. July 24, 1997.

CONCHITA NOOL and GAUDENCIO ALMOJERA, petitioner,  vs.  COURT OF APPEALS,

ANACLETO NOOL and EMILIA NEBRE, respondents.

Contracts;  Sales;  Void Contracts;  Article 1370 of the Civil Code is applicable only to valid and
enforceable contracts.—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,
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.”

Same; Same; Same; A void contract cannot give rise to a valid one.—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. 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.”

Same; Same; Same;  Where 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, such contract may
be deemed to be inoperative and may thus fall, by analogy, under item No. 5 of Article 1409 of the Civil Code
—“Those which contemplate an impossible service.”—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 and may thus fall, by analogy, under item No. 5 of Article 1409 of the Civil Code: “Those
which contemplate an impossible service.” Article

______________

* THIRD DIVISION.

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150 SUPREME COURT REPORTS

ANNOTATED

Nool vs. Court of Appeals

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.

Same; Same; Same; Pacto de Retro; The right to repurchase presupposes a valid contract of sale between

the same parties.—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.
 Same; Same; Same; Options; 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.—
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 supports this.

Same;  Same;  Same;  Estoppel;  One is not estopped in impugning the validity of void contracts; 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.”—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-appellants, Anacleto Nool cannot later on disclaim the terms or contions (sic) agreed upon and his
actuation is within the ambit of estoppel x x x.” 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

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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.” 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.

Same; Same; Same; If a void contract has already been performed, the restoration of what has been given
is in order, and, corollarily, interest thereon will run only from the time of the aggrieved party’s demand for
the return of this amount.—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.” Thus, if a void contract has already “been performed, the restoration of what has
been given is in order.” 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.
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.

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

The facts are stated in the opinion of the Court.
     Godofredo P. Melegrito for petitioners.
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152 SUPREME COURT REPORTS ANNOTATED

Nool vs. Court of Appeals

     Dionisio E. Bala, Jr. and Cesar C. Purugganan for private 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 1

as it resolves this petition for 2 review on certiorari
assailing the January 20, 1993
3
Decision   of Respondent
4
Court of Appeals5
  in CA-G.R. CV No.
36473, affirming the decision  of the trial court which disposed as follows:
“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);

______________
1 Rollo,pp. 20-25.
2 Second Division, composed of J. Fidel P. Purisima, ponente and Chairman, and JJ. Asaali S. Isnani and Corona Ibay
Somera, concurring.
3 In Civil Case No. Br. 23-242.
4 Regional Trial Court of Roxas, Isabela, Second Judicial Region, Branch 23, presided by Judge Teodulo E. Mirasol.
5 Decision of the Regional Trial Court, p. 5; Record of the Regional Trial Court, p. 180.

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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 parcels 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

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154 SUPREME COURT REPORTS ANNOTATED

Nool vs. Court of Appeals

to Conchita, and upon payment of the balance of P14,000.00, plaintiffs were to regain possession of the6 two
(2) hectares of land, which
7
amounts defendants failed to pay, and the same day the said arrangement  was
made; another covenant  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
abovementioned.
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

_______________
 6 Exhibit C, executed in the parties’ native dialect, Ilocano, dated November 30, 1984, Record of the Regional Trial Court, p. 95.
7 Exhibit D, executed in the parties’ native dialect, Ilocano, dated November 30, 1984, Record of the Regional Trial Court, p. 97.

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buying the same. By virtue of such sale by DBP in favor of defendants, the titles of DBP were cancelled and
the corresponding
8
Transfer Certificates of Title (Annexes ‘C’ and ‘D’ to the Complaint) issued to the
defendants.”

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 March9
15, 1983 and that the mortgagor’s
right of redemption was not exercised within this period.  Hence, DBP became the absolute owner
of said parcels of land for which it was issued new certificates
10
of title, both entered on May 23,
1983 by the Registry of Deeds for the Province of Isabela.
11
 About two years thereafter, on April 1,
1985, DBP entered into a Deed of Conditional Sale   involving the same parcels of land with
Private Respondent Anacleto 12
Nool as vendee. Subsequently, the latter was issued new certificates
of title on February 8, 1988. 13
The Court of Appeals ruled:
“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

______________
8 Decision of the Court of Appeals, pp. 2-3; rollo, pp. 21-22.
9 Affidavit of Non-Redemption, p. 1; Record of the Regional Trial Court, p. 27.
10 DBP Transfer Certificates of Title, Record of the RegionalTrial Court, pp. 28-29.
11 Record of the Regional Trial Court, pp. 30-32.
12 Anacleto Nool’s Transfer Certificates of Title, Record of the Regional Trial Court, pp. 33-34.
13 Ibid., p. 5; rollo, p. 24.

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156 SUPREME COURT REPORTS ANNOTATED

Nool vs. Court of Appeals

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,
14
more or less upon payment of one hundred thousand pesos
(P100,000.00) as shown in Exhibit ‘D.’ ”

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
15
Conchita Nool “can acquire back or repurchase
later on said land when she has the money.”

______________
14 Petition, pp. 7-8; rollo, pp. 8-9.
15 Exhibit D-1, English translation of the document marked as Exhibit D; records, p. 98.

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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.
16
This conclusion of the two lower courts appears to find support in Dignos
vs. Court of Appeals,  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
17
on the validity of
Exhibit C, it is itself void. A void contract cannot give rise to a valid one.  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

______________
16 158 SCRA 375, 383, February 29, 1988.
17 Ibid., p. 732.

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158 SUPREME COURT REPORTS ANNOTATED

Nool vs. Court of Appeals
18 19
Code.  Moreover, the Civil Code  itself recognizes a sale where the goods are to be “acquired x x x
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 from20
the rightful owner, the DBP. Thus, such contract may be deemed to be
inoperative  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

______________
18 Article 1409 of the Civil Code provides.

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

(1) Those whose cause, object or purpose is contrary to law, morals, good customs, public order or public policy;
(2) Those which are absolutely simulated or fictitious;
(3) Those whose case or object did not exist at the time of the transaction;
(4) Those whose object is outside the commerce of men;
(5) Those which contemplate an impossible service;
(6) Those where the intention of the parties relative to the principal object of the contract cannot be ascertained;
(7) Those expressly prohibited or declared void by law.

These contracts cannot be ratified. Neither can the right to set up the defense of illegality be waived.”
19 Article 1402, Civil Code.
20 Cf. Vitug, Compendium of Civil Law and Jurisprudence (1993), p. 547.

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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 to21 sell; the buyer can as a consequence acquire no more than what
the seller can legally transfer.”   No one can give what he does not have—nemo 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 alleged22 right to “repurchase” the property, after private respondents had
acquired the same from DBP.  We cannot accede to this, for it clearly contravenes the intention
of the parties and the nature of their agreement. Exhibit D reads:

“W R I T I N G

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

______________
21 Segura vs. Segura, 165 SCRA 368, 374, September 19, 1988.
22 Petitioners’ Memorandum, pp. 14-15; rollo, pp. 58-59.

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160 SUPREME COURT REPORTS

ANNOTATED
Nool vs. Court of Appeals

brother and sister that she can acquire back or repurchase later on said land when she has
the money. [Italics 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 ANACLETO NOOL 
Anacleto Nool

Sgd EMILIO PARON 

      Witness

Sgd CONCHITA NOOL  23

Conchita Nool”
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

______________
23 Records, p. 98. The original document in Ilocano reads as follows:

“Kasuratan

Nov. 30, 1984

Siak ni Anacleto Nool adda ginatang ko keni kabsat ko nga ni Conchita Nool nga daga nga uppat nga hectarya (4
has.) nga aggatad iti One Hundred Thousand (100,000.00) pesos. Ket nagtulagan mi nga agkabsat nga mabalin nanto
nga pasublien wenno repurchase nanto to nasao nga daga no maadaan iti kuwarta.
Kas pammaneknek iti daytoy nga katulagan agpirma kami nga agkabsat iti daytoy nga kasuratan ita nga aldaw
Nov. 30, 1984 ditoy Dist. No. 4 San Manuel, Isabela.
(Sgd.) Emilio Padron      (Sgd.) Anacleto Nool 
Testigo      (Sgd.) Anacleto Nool 
     (Sgd.) Conchita Nool” 
      (Records, p. 97)

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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 24an independent contract, it cannot bind
private respondents. The ruling in  Diamante vs. CA 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 no 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. x x x.”
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 repurchase, it is a new contract entered into by the purchaser, as absolute
owner already of the object. In that case the vendor has not reserved to himself the right to repurchase.”
______________
24 206 SCRA 52, 60-61, February 7, 1992.

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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
25
Petitioners also base their alleged right to repurchase26on (1) Sec. 119 of the Public Land Act  and
(2) an implied trust relation as “brother and sister.”   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
27
of the provision to keep homestead lands within the family of the grantee was
thus fulfilled.

______________
25 Memorandum, p. 12; rollo, p. 56.
26 Ibid.,
p. 14; rollo, p. 58.
27 See Ferrer vs. Mangente, 50 SCRA 424, April 13, 1973.

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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-appellants, Anacleto
Nool cannot later on disclaim 28the terms or contions (sic) agreed upon and his actuation is within
the ambit of estoppel x x x.”   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
29
the competence of any citizen to barter away what public policy by
law seeks to preserve.”   Thus, it is immaterial that private respondents initially acted to
implement the contract of sale,

______________
28 Petition,
pp. 12-13; rollo, pp. 13-14.
29  PrudentialBank vs. Panis,  153 SCRA 390, 398, August 31, 1987; citing  Arsenal vs. IAC,  143 SCRA 54, (1986)
and Gonzalo Puyat & Sons, Inc. vs. De los Amas and Alino, supra.

164

164 SUPREME COURT REPORTS ANNOTATED

Nool vs. Court of Appeals

believing in good faith that the same was valid. We stress that a contract void at inception cannot
be validated by ratification 30or prescription and certainly cannot be binding on or enforceable
against private respondents.

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 31
(2) to order petitioners to pay rent when
they “were allowed to cultivate the said two hectares.”
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 32
something at the expense of the latter without
just or legal ground, shall return the same.”   Thus, if a 33void contract has already “been
performed, the restoration of what has been given is in order.”  Corollarily and as aptly ordered
by respondent appellate court, interest thereon will run only from the 34
time of private
respondents’ demand for the return of this amount in their counterclaim.   In the same vein,
petitioners’ posses-
______________
30 Tolentino, Arturo A., Commentaries and Jurisprudence on the Civil Code of the Philippines, p. 633, Vol. IV, (1991).
31 Memorandum, p. 13; rollo, p. 57.
32 Article 22, Civil Code of the Philippines.
33 Tolentino, supra, p. 632; citing Perez Gonzales & Alguer; 1-I Ennecerus, Kipp & Wolff 364-366; 3 Von Tuhr 311; 3

Fabres 231.
34 Answer with Counterclaim, p. 7; Record of the Regional Trial Court, p. 22.

165

VOL. 276, JULY 24, 1997 165

Nool vs. Court of Appeals

sion 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.

     Narvasa (C.J., Chairman), Davide, Jr., Melo and Francisco, JJ., concur.

Petition denied, judgment affirmed.

Notes.—When the terms of a contract clearly show that it is one of sale with right of
repurchase, it must be interpreted according to its literal sense, and held to be such a contract.
(Ignacio vs. Court of Appeals, 246 SCRA 242 [1995])
The court will enforce the agreement or understanding in consonance with the true intent of
the parties at the time of the execution of the contract even if the purported Sale Con Pacto de
Retro was registered in the name of the transferee and a new certificate of title was issued in his
name. (Olea vs. Court of Appeals, 247 SCRA 274 [1995])

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