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5. When There Is Sale Even When No Price Has Been Agreed Upon

Art. 1474 provides: Where the price cannot be determined in accordance with thepreceding articles, or in any other manner, the contract is INEFFICACIOUS. However, if

the thing or any part thereof has been delivered to and appropriated by the buyer, he must

pay a reasonable price therefore. What is reasonable price is a question of fact dependenton the circumstances of each particular case.

Art. 1474 presents the ONLY EXCEPTION when there would still be a valid saleeven when there has been no meeting of the minds as to the price or any other

consideration.

Covers all sale contract situations where there has been at least a meeting of

the minds or an agreement to buy and sell the subject matter.

A remedy clause in favor of the seller who has delivered the subject matter in

accordance with an agreement with the buyer who has received and

appropriated it.

Note: If price is merely an estimate Court may fix the reasonable price.

a. What does article 1474 Mean by Preceding Articles?

Should be construed to refer to all articles preceding, namely Articles 1469 to

1473.

b. What does Article 1474 Mean by Inefficacious?

The inability to produce the effect wanted; inability to get things done. Does not exclude void sale contracts when the price is neither certain or

ascertainable.

It includes valid conditional contracts of sale (which have become

inefficacious) in the same group as void contacts, form the focal point ofprice.

c. Concept of Appropriation; Summation

To set apart for some special purpose; to take for oneself; take possession of:

use as ones own.

Covers the situation of acceptance by the buyer as the counterpart ofdelivery on the part of the seller, and having treated thereafter the subject

matter as his own.

Concept of appropriation is not applicable to real estate and that the rights of

the parties to a purported sale would be under the principles applicable to

builders in good faith.

Appropriation under article 1474, even when applied only to movables, wouldnecessarily entail transformation of the subject matter of sale such that it

can no longer be returned to its original state, as to warrant the fixing of

reasonable price to prevent unjust enrichment.

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Case-Law Basis: Robles v. Lizarraga Hermanos

Established the appropriation doctrine under Article 1474 founded on the

principles of unjust enrichment and estoppel.

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.

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 the minds as to thesubject matter, and may apply to void sale contract situation where the defect is as to the

price.

There is a valid contract of sale in spite of the lack of an agreement as to price or defect

in the agreement upon which an action for specific performance would prosper for therecovery of the price when the following elements are present:

1. There was a meeting of the minds of the parties of sale and purchase as to the

subject matter;

2. There was an agreement that price would be paid which fails to meet the criteriaof being certain or ascertainable: and

3. There was delivery by the buyer, of the subject matter of the sale.

RULINGS ON RECEIPTS AND OTHER DOCUMENTS EMBODYING PRICE

El Oro Engravers v. Court of Appeals

Sales Invoices are not evidences of payment since they are only evidence of the

receipt of the goods; and that the best evidence to prove payment of the price is theofficial receipt issued by the seller.

Leabres v. Court of Appeals

Where the buyer sought to enforce his purchase of a parcel of land based

primarily on a receipt signed by the seller acknowledging the sum of P1000,00.

There was merely an acknowledgement of the sum of One Thousand Pesos. Therewas no agreement as to the total price of the land nor to the monthly installment to be

paid by the buyer. Requisites of a valid contract of sale are lacking in the said receipt and

therefore the sale is not valid nor enforceable.

The requisites of a valid Contract of Sale namely:

1. Consent or meeting of the minds of the parties;

2. Determinate subject matter;

3. Price certain in money or its equivalent

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Toyota Shaw, Inc. v. Court of Appeals

The court held that there was never any perfected contract between the partiesunder the agreement that only provided for a downpayment of P100,000.00, but did not

indicate the total purchase price nor the manner by which the balance shall be paid.

Limson v. Court of Appeals

When there is nothing in the receipt to indicate that the P20,000.00 earnestprice was part of the purchase price, the only conclusion that could be made was that

there was no sale.

Coronel v. Court of Appeals

The Court held that there was a perfected contract of sale, there being no

reservation of any title until full payment of the purchase price.

Cheng v. Genato

The Court ruled that there was neither a valid nor enforceable sale since the

requisites of a valid contract of sale are lacking in the receipt.

Xentrex Automotive, Inc. v. Court of Appeals

The Court held that a contract of sale is perfected at the moment there is a

meeting of the minds upon the thing which is the object of the contract and upon theprice,

David v. Tiongson

The Court clarified that the sale of real property on installments even when the

receipt or memorandum evidencing the same does not provide for the stated installments,when there has already been partial payment, the Statute of Frauds is not applicable

because it only applies to executory and not to completed, executed, or partially executed

contracts.

Tigno v. Aquino

The Court held that in itself, the absence of receipts or any proof of consideration,would not be conclusive of the inexistence of a sale since consideration is always

presumed.

INADEQUACY OF PRICE

Lesion or inadequacy of cause shall not invalidate a contract, unless there has

been fraud, mistake, or undue influence.

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1. Distinguished from Simulated Price

When the parties to an alleged contract do not really intend to be bound by it,

the contract is simulated and void. A simulated or fictitious contract has no

legal effect whatsoever because there is no real agreement between the parties.

Gross inadequacy of price by itself will not result in a void contract of sale,unless it signifies a defect in the consent or that the parties actually intended a

donation or some other contract.

2. Rescissible Contracts of Sale

a. Those entered into by guardians whenever the ward whom they represent suffer

lesion by more than one-fourth of the value of the object of sale; andb. Those agreed upon in representation of absentees, if the latter should suffer lesion

by more than one-fourth of the value of the object of sale.

3. Judicial Sale

Gross inadequacy of price may avoid judicial sale of real property. However, for ajudicial sale to be set aside on the ground of inadequacy of price, the inadequacy must be

such as to be shocking to the conscience of man.

4. Sales with Right to Repurchase

In a conventional sale with a right to repurchase feature, the gross inadequacy of

price raises a presumption of equitable mortgage.

WHEN MOTIVE NULLIFIES SALE

When the primary motive is illegal, such as when the sale was executed over a

parcel of land to illegally frustrate a persons right to inheritance and to avoid payment ofestate tax, the sale is void because illegal motive predetermined the purpose of the

contract.

Motive particular reason of a contracting party which does not affect the other party.