Price signifies the sum stipulated as the equivalent of the
Inefficacious and Appropriation
thing sold
REQUISITES FOR VALID PRICE
(a) It must be REAL; 2
(b) It must be in MONEY OR ITS EQUIVALENT, (i.e., it
must be VALUABLE CONSIDERATION);3
(c) It must be CERTAIN or ASCERTAINABLE. 4
1. Price must be real
a. When Price is Real
There is legal intention on the part of the buyer to
pay the price, and legal expectation on the part of the seller
to receive such price.
b. When Price is Simulated
When a contract of sale is fictitious, and therefore
void and inexistent, as there was no consideration for the
same, no title over the subject matter of the sale can be
conveyed.
Ex: To defraud the Creditor
c. When Price is False
If the price indicated in the covering instrument is
false, the contract of sale is valid, but the underlying deed is
subject to reformation to indicate the real price upon which
the minds of the parties have met.
They may stipulate low price:
Ex: Lower the Tax
They may stipulate high price:
Ex: To prevent right of redemption
d. Effect of:
Non-Payment of Price: The sale may be
consummated
Non-Delivery: The sale is not consummated
e. Accommodation Does Not Make Sale Void for
Lack of Price.
2. Price Must Be in Money or Its Equivalent:
Its Equivalent means Negotiable Instrument. In
can have the effect of payment if it has been cashed or
through the fault of the creditor it may have been impaired.
3. Price must be certain or ascertainable at
perfection
The designation of a third party to fix the price is
valid.
The designation of a third party to choose among
the subject matter is NOT ALLOWED.
4. Manner of payment of price must be agreed upon
The agreement as to the manner of payment goes
into the price, such that a disagreement on the manner of
payment is tantamount to a failure to agree on the price.
If the payment is in form of a thing it may be
barter, depends on the value of the thing. If service, there is a
contract but not contract of sale.
5. When there is sale even when no price has been
agreed upon
Article 1474 is the only exception where there would still be a
valid sale even when there has been no meeting of the minds
as to the price or any other consideration.
6.
The use of term inefficacious was not meant to
exclude void sale, but more to be able to include valid
conditional contracts of sale (which have become
inefficacious) in the same group as void contracts, for the
focal point of price.
In spite of lack of an agreement as to price or
defect in the agreement as to price, there would nevertheless
be a valid contract of sale upon which an action for specific
performance would prosper for the recovery of the price.
In order to recover the price there must be a
delivery by the seller and acceptance and
appropriation by the buyer, of the subject matter of the
sale.
7. Concept of Appropriation
Art. 1474 founded on the principles of unjust
enrichment and estoppel.
1. The doctrine is based on the Principle of Unjust
Enrichment directed against the buyer who is not
allowed to retain the subject matter of the sale
without being liable to pay the price even when no
such agreement on the price was previously made,
and;
2. The doctrine applies even when there is a no
contract situation because of no meeting of the
minds as to the price, although there was a
meeting of minds as to subject matter, and may
also apply to void sale contract situation where the
defect is as to price2
8. Inadequacy of price
Art. 1470 provides specifically for contract of sale,
that gross inadequacy of price does not affect the contract of
sale, except as it may indicate a defect in consent, or the
parties really intended a donation or some other act or
contract.
There is a Gross Inadequacy in Price if a
reasonable man will not agree to dispose of his property at
that amount.
Simulation of Contract V. Gross Inadequacy of Price
Simulation of Contract has no real agreement
between the parties, hence VOID
Gross Inadequacy of Price does not affect the
validity of contract, unless it signifies a defect in the consent
Effects of Inadequacy of price
Is a ground for rescission of conventional sale
It may AVOID judicial sale of real property. Even if
there is an inadequacy of price, a judicial sale will not
be set aside by the court when there is right of
redemption.
It raises a presumption of equitable mortgage.
9. WHEN MOTIVE NULLIFIES SALE
The general rule in a contract of sale is that consideration is
different from the motive.
Cause V. Motive
Cause is the essential reason which moves the contracting
parties to enter into it, and si the immediate, direct and
proximate reason which justifies the creation of an obligation
thought the will of the contracting parties.
Motive is the particular reason of a contracting party which
does not affect the other party.
The sale is void if the illegal motive predetermined the
purpose of the contract