A contract of repurchase arising out of a contract of sale where the seller did not have any title to the property "sold" at the time of the sale is not valid; since nothing was sold, there is nothing to repurchase.

The dispute centers on two parcels of land originally owned by Victorino Nool and Francisco Nool (Conchita Nool's brothers). Petitioners Conchita Nool and Gaudencio Almojera mortgaged these lands to the Development Bank of the Philippines (DBP). Due to non-payment, the mortgage was foreclosed, and DBP consolidated ownership. Subsequently, petitioners entered into an alleged contract of sale (Exhibit C) with respondents Anacleto Nool (Conchita's brother) and Emilia Nebre, with an accompanying agreement for repurchase (Exhibit D). However, respondents later discovered petitioners did not own the land and purchased it directly from DBP.

• Petitioners Conchita Nool and Gaudencio Almojera claimed ownership of two parcels of land, alleging they bought them from Conchita's brothers, Victorino and Francisco Nool.
• Petitioners mortgaged these lands to the DBP, Ilagan Branch, to secure a loan; the lands were still registered in the names of Victorino and Francisco Nool at that time.
• Petitioners failed to pay the loan, leading to the foreclosure of the mortgage and consolidation of ownership in DBP's name on May 23, 1983, as the one-year redemption period (March 16, 1982, to March 15, 1983) expired without redemption.
• On November 30, 1984, petitioners and respondents Anacleto Nool (Conchita's brother) and Emilia Nebre executed two private handwritten documents: Exhibit C (Resibo ti Katulagan/Receipt of Agreement) where petitioners purportedly "sold" the lands to respondents for P100,000.00 (P30,000.00 paid, P14,000.00 balance for two hectares), and Exhibit D (Kasuratan/Writing) where respondents agreed that Conchita Nool could "acquire back or repurchase later on said land when she has the money."
• Respondents, upon discovering that petitioners did not own the lands, negotiated and bought the properties directly from DBP through a Deed of Conditional Sale on April 1, 1985.
• New certificates of title were issued to respondent Anacleto Nool on February 8, 1988.
• Petitioners sought to repurchase the lands from respondents based on Exhibit D, but respondents refused.

• The terms of the contracts (Exhibits C and D) are clear and should be enforced based on Article 1370 of the Civil Code, meaning their literal stipulations should control.
• The Court of Appeals erred in ruling Exhibits C and D as utterly void and inexistent, rather than merely voidable.
• The Court of Appeals failed to give legal significance to petitioners' actual possession and cultivation of two hectares pending payment of the P14,000.00 balance by respondents.
• Respondents should be estopped from disclaiming the terms of the agreement (Exhibit D) because Anacleto Nool took possession of two hectares and allowed petitioners to cultivate the other two.
• The right to repurchase is valid based on Section 119 of the Public Land Act and an implied trust relationship between the siblings.
• It is a miscarriage of justice to order them to return P30,000.00 when Anacleto Nool allegedly owed them a balance of P14,000.00, and to pay rent for land they were allowed to cultivate.

• They acquired the lands from DBP through a negotiated sale after discovering petitioners did not own them.
• Defendant Anacleto Nool was misled into signing the private writing (Exhibit D) agreeing to return the lands, believing his sister Conchita still had the right to redeem the properties.
• The private writing (Exhibit D) was an option to sell, not binding for want of consideration, and was validly withdrawn.
• The alleged contract of sale (Exhibit C) and the contract of repurchase (Exhibit D) are void because petitioners were not the owners of the land at the time of the purported sale.

• Whether the alleged contract of sale (Exhibit C) and the contract of repurchase (Exhibit D) are valid and enforceable.
• Whether respondents are estopped from impugning the validity of the void contracts.
• Whether petitioners are entitled to repurchase the property based on Section 119 of the Public Land Act or an implied trust.
• Whether the trial court and Court of Appeals correctly ordered petitioners to return P30,000.00 with interest and pay rent.

• The petition was denied, and the decision of the Court of Appeals was affirmed.
• The Supreme Court ruled that the contract of sale (Exhibit C) was void because the petitioners (sellers) did not have any title to the parcels of land at the time of the purported sale, as ownership had already been consolidated with DBP.
• Consequently, the contract of repurchase (Exhibit D) was also void, as it was dependent on the validity of the sale. One cannot repurchase what was not validly sold.
• Even if Exhibit D were considered a separate unilateral promise to sell, it would be unenforceable under Article 1479 of the Civil Code for lack of consideration distinct from the price.
• The right to repurchase under Section 119 of the Public Land Act was already exhausted when respondent Anacleto Nool (an heir) acquired the property from DBP; the rationale of keeping homestead lands within the family was fulfilled.
• No implied trust was created as there was no evidence that respondents purchased the land from DBP in trust for petitioners; respondents bought it for themselves upon realizing petitioners could not validly sell it.
• Respondents are not estopped from raising the defense of nullity of the contract, as a contract void at inception cannot be validated by ratification or estoppel, especially when it is against public policy or prohibited by law.
• Petitioners are obligated to return the P30,000.00 received under the void contract of sale, as one cannot keep money paid for an object they cannot legally deliver. Interest runs from the time of respondents' counterclaim (judicial demand).
• Petitioners' possession and cultivation of two hectares were based on respondents' tolerance, which ceased upon the counterclaim; thus, payment of rent from that point is justified.

• Nemo dat quod non habet — No one can give what he does not have. This principle was applied to invalidate the sale (Exhibit C) because the petitioners, not being the owners of the land (which was already owned by DBP), could not validly sell it. Since they sold nothing, the respondents acquired no rights from them through that purported sale.
• Void Contract — A contract that is inexistent and produces no legal effect from the beginning. The Court held that the contract of sale (Exhibit C) was void because the petitioners had no title to the property. Consequently, the ancillary contract of repurchase (Exhibit D) was also void, as a void contract cannot give rise to another valid contract (citing Article 1422). It was also analogized to a contract contemplating an impossible service under Article 1409(5) as delivery of ownership by petitioners was no longer possible.
• Contract of Repurchase (Pacto de Retro) — A right reserved by the vendor in the same instrument of sale to repurchase the thing sold. The Court explained that Exhibit D could not be a valid right of repurchase because it was not part of a valid sale from petitioners to respondents, and even if considered separate, it was made after the supposed "sale" by individuals who were not the owners. The right to repurchase presupposes a valid prior sale by the one seeking to repurchase.
• Option Contract / Unilateral Promise to Sell — 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 (Article 1479, Civil Code). The Court found that even if Exhibit D were treated as an independent promise to sell by respondents, it was unenforceable for lack of a distinct consideration.
• Estoppel — An equitable doctrine preventing someone from asserting something contrary to what they previously implied by their conduct or words, especially if it prejudices another who relied on it. The Court ruled that estoppel cannot validate a void contract or give it enforceability, as the action or defense for the declaration of the inexistence of a contract does not prescribe (Article 1410, Civil Code).
• Accion In Rem Verso / Unjust Enrichment (Article 22, Civil Code) — Every 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. This was applied to require petitioners to return the P30,000.00 they received from respondents, as the contract of sale was void and they could not deliver title.
• Redemption under Public Land Act (Sec. 119) — Every conveyance of land acquired under free patent or homestead provisions shall be subject to repurchase by the applicant, his widow, or legal heirs, within five years from the date of conveyance. The Court held that this right was already fulfilled when Anacleto Nool, an heir of the original homestead grantees (through his siblings Victorino and Francisco), acquired the property from DBP.

• "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."
• "As petitioners ‘sold" nothing, it follows that they can also 'repurchase” nothing. Nothing sold, nothing to repurchase."
• "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."
• "It is 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.’"

• Dignos vs. Court of Appeals — Cited to support the ruling that a sale is null and void when the sellers were no longer owners of the property.
• Segura vs. Segura — Referenced for the principle that a person can sell only what he owns or is authorized to sell, and the buyer acquires no more than what the seller can legally transfer.
• Diamante vs. CA — Cited to explain that an agreement to repurchase made in a separate instrument after an absolute sale is not a right of repurchase but a promise to sell, which requires a consideration distinct from the price to be binding under Article 1479 of the Civil Code.
• Villarica, et al. Vs. Court of Appeals, et al. — Referenced for the rule that the right of repurchase must be reserved by the vendor in the same instrument of sale, not granted by the vendee in a subsequent instrument.
• Ramos, et al. vs. Icasiano, et al. — Cited for the principle that an agreement to repurchase made after the sale, when the purchaser has acquired the thing absolutely, is a new contract (a promise to sell).
• Vda. De Cruzo, et al. vs. Carriaga, et al. — Cited as another case applying the principle that a right of repurchase must be reserved in the original sale instrument.
• Ferrer vs. Mangente — Cited in relation to the fulfillment of the purpose of Section 119 of the Public Land Act, which is to keep homestead lands within the family of the grantee.
• Prudential Bank vs. Panis — Cited for the rule that validity cannot be given by estoppel to a contract prohibited by law or against public policy.
• Arsenal vs. IAC — Cited (within the Prudential Bank citation) regarding estoppel not applying to void contracts.
• Gonzalo Puyat & Sons, Inc. vs. De los Amas and Alino — Cited (within the Prudential Bank citation) regarding estoppel not applying to void contracts.

• Article 1370, Civil Code — States that if the terms of a contract are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of its stipulation shall control. Petitioners invoked this, but the Court held it applies only to valid and enforceable contracts.
• Article 1422, Civil Code — Provides that a contract which is the direct result of a previous illegal contract, is also void and inexistent. Applied to show that the repurchase agreement (Exhibit D) is void because it stemmed from a void sale (Exhibit C).
• Article 1409, Civil Code — Enumerates inexistent and void contracts. The Court analogized the situation to item (5): "Those which contemplate an impossible service," as delivery of ownership by petitioners had become impossible.
• Article 1459, Civil Code — States that the vendor must have a right to transfer the ownership thereof [object of the sale] at the time it is delivered. Applied to show the sale was inoperative as petitioners could not deliver ownership.
• Article 1505, Civil Code — Provides that where goods are sold by a person who is not the owner thereof, the buyer acquires no better title than the seller had, unless the owner is precluded by conduct from denying the seller's authority. Applied to show petitioners could not transfer title they did not possess.
• Article 1601, Civil Code — Defines conventional redemption as taking place when the vendor reserves the right to repurchase the thing sold. Used to explain that Exhibit D was not a valid conventional redemption.
• Article 1479, Civil Code — States 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. Applied to Exhibit D, considered as a promise to sell, finding it void for lack of distinct consideration.
• Section 119, Public Land Act (CA 141) — Grants the right of repurchase of homestead lands to the applicant, widow, or legal heirs. The Court ruled this right was already fulfilled by Anacleto Nool's acquisition from DBP.
• Article 1410, Civil Code — States that the action or defense for the declaration of the inexistence of a contract does not prescribe. Used to support the argument that respondents were not estopped from claiming the nullity of the contracts.
• Article 22, Civil Code — Requires every person who acquires something at another's expense without just or legal ground to return it. Applied to justify ordering petitioners to return the P30,000.00.