Short answer. Yes. When you and the seller left the price to a third person and that person fixed it in bad faith or by mistake, the Civil Code lets the courts fix the price instead. The sale is not automatically void; the court supplies the correct price so the agreement can stand on fair terms.
What the law says
If the third person or persons acted in bad faith or by mistake, the courts may fix the price.
Civil Code, Article 1469 — Price Certain. Read the full provision →
Leaving the price to a third person is allowed
A sale needs a price that is certain, but the parties do not have to name a figure themselves. Article 1469 says it is enough that the price be determinable by reference to another certain thing, or that its determination be left to the judgment of a special person or persons. So agreeing that a named appraiser or referee will set the price is perfectly valid. The price becomes certain once that person makes the determination, and the sale is complete on the terms he fixes, binding both buyer and seller to the figure honestly arrived at.
When the third person acts in bad faith or by mistake
The problem you describe is exactly what the article's next sentence addresses: if the third person or persons acted in bad faith or by mistake, the courts may fix the price. A dishonest or plainly erroneous valuation does not bind you. Instead of the contract collapsing, the law lets a court step in and substitute a correct price. This protects the party prejudiced by a rigged or blundered appraisal, while still respecting the parties' original choice to sell — the deal survives, only the tainted number is replaced by a judicially determined one.
If the third person simply will not or cannot act
The article treats a different failure differently. Should the chosen person be unable or unwilling to fix the price at all, the contract is inefficacious unless the parties afterward agree on the price themselves. And where the third person is prevented from fixing the price through the fault of the seller or the buyer, the party who is not at fault has the remedies the law gives an aggrieved seller or buyer. So refusal to act, mistake, and obstruction each lead to their own outcome under the same article.
What a court will and will not do
The remedy is correction, not a free rewrite of your bargain. A court fixes the price because the mechanism you agreed on produced a bad-faith or mistaken result; it does not set aside terms you validly agreed to simply because one side now regrets the deal. You will need to show the valuation was actually tainted by bad faith or genuine error, not merely that you hoped for a better number. The article keeps the sale alive on a fair price rather than letting a corrupted appraisal defeat the agreement entirely.
Cases citing this provision
These Supreme Court decisions cite the provision above. We list them so you can read them yourself; the summaries of what each decided are not ours to give.
- Captain Ramon R. Verga, Jr. vs. Harbor Star Shipping Services, Inc, G.R. No. 261323, November 27, 2024 — read the decision on LawPhil →