Nool v. Court of Appeals
REITERATIONFacts
The Antecedents: Petitioners Conchita Nool and Gaudencio Almojera alleged they are owners of two parcels of land, having bought them from Conchita's brothers, Victorino and Francisco Nool. Due to financial needs, they mortgaged these lands to the Development Bank of the Philippines (DBP). Upon failure to pay the loan, the mortgage was foreclosed, and titles were consolidated in DBP. Defendant Anacleto Nool, Conchita's brother, redeemed the properties from DBP. Subsequently, an arrangement was made where Anacleto agreed to buy the lands from Conchita for P100,000.00, with P30,000.00 paid as down payment and P14,000.00 as balance. A separate agreement stipulated that Conchita could repurchase the lands when she had the money. Petitioners claim Anacleto refused to return the lands despite demands. Procedural History: The trial court dismissed the complaint for no cause of action, declaring the private writing (Exhibit "C") an option to sell, not binding and validly withdrawn for want of consideration. It ordered the return of P30,000.00 with interest, delivery of possession of two hectares, payment of rents, and costs. The Court of Appeals affirmed the trial court's decision. The Petition: Petitioners assail the Court of Appeals' ruling that the private writings (Exhibits "C" and "D") have no binding effect and were validly withdrawn for want of consideration. They also argue that the appellate court failed to give legal significance to their actual possession and cultivation of the land and erred in ordering the return of P30,000.00 with interest and payment of rents, instead of allowing them to re-acquire the land.
Issue(s)
Whether Exhibits "C" and "D" are valid and enforceable contracts. Whether the defendants are estopped from impugning the validity of the contracts. Whether the order for the return of P30,000.00 with interest and payment of rent is proper.
Ruling
The petition is denied, and the assailed Decision of the Court of Appeals affirming that of the trial court is affirmed.
Ratio Decidendi
On Whether Exhibits "C" and "D" are Valid and Enforceable: The Court held that both the contract of sale (Exhibit "C") and the contract of repurchase (Exhibit "D") are void. The sellers, petitioners Conchita and Gaudencio Nool, did not have title to the properties at the time of the alleged sale, as the lands had already been foreclosed by DBP and subsequently sold to the private respondents. Since the sellers could not validly transfer ownership, the contract of sale was inoperative, contemplating an impossible service. Consequently, the alleged contract of repurchase, which presupposes a prior valid sale between the same parties, was also void. The Court emphasized the principle of nemo dat quod non habet, stating that one can sell only what one owns or is authorized to sell, and a buyer acquires no better title than the seller had. As petitioners "sold" nothing, they could "repurchase" nothing. On Whether the Defendants are Estopped from Impugning the Validity of Void Contracts: The Court ruled that the private respondents cannot be estopped from raising the defense of nullity of the contracts. Article 1410 of the Civil Code provides that the action or defense for the declaration of the inexistence of a contract does not prescribe. It is a well-settled doctrine that validity cannot be given to a contract by estoppel if it is prohibited by law or against public policy. Therefore, even if the private respondents initially acted in good faith, believing the contract was valid, a void contract cannot be validated by ratification or prescription, nor can it be binding on the parties. On the Return of P30,000.00 with Interest and Payment of Rent: The Court found the order for the return of P30,000.00 with interest to be proper. Since the contract of sale was void, the petitioners could not legally keep the money paid for the object of the sale. Article 22 of the Civil Code mandates the return of anything acquired without just or legal ground. Interest is due from the time of the demand in the counterclaim. Furthermore, the petitioners' possession and cultivation of the land ceased to be legally tenable upon the private respondents' counterclaim and demand to vacate, thus justifying the order for payment of rents.
Main Doctrine
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. A contract void at inception cannot be validated by ratification or prescription and certainly cannot be binding on or enforceable against the parties.