Short answer. You are not bound by it. Article 1310 of the Civil Code provides that the determination made by the third person is not obligatory if it is evidently inequitable, and that the courts shall then decide what is equitable under the circumstances. The contract itself survives; only the unfair figure is set aside.
What the law says
The determination shall not be obligatory if it is evidently inequitable. In such case, the courts shall decide what is equitable under the circumstances.
Civil Code, Article 1310 — Inequitable Determination. Read the full provision →
Delegating the price, and its limit
Parties often leave a figure to an outsider — an appraiser, an auditor, an agreed expert — precisely so neither of them controls it. Having accepted that mechanism, you are ordinarily stuck with the result even if it disappoints you. Article 1310 sets the outer limit of that bargain. The determination loses its binding force when it is evidently inequitable, which is a demanding standard: not merely on the low side, not merely a figure you would have argued down, but so far off that it cannot be reconciled with the circumstances.
The court fixes the figure, it does not void the deal
The remedy the article gives is substitution, not destruction. A court does not throw out the contract because the appraiser got it wrong; it decides what is equitable under the circumstances and that becomes the price. Both parties remain bound to the transaction they agreed to make.
That is a deliberate design. Allowing an unfair valuation to unravel the whole agreement would hand either party an easy escape route, so the Code corrects the number and leaves the bargain standing. Expect the court to work from evidence of value — comparable transactions, expert testimony, the method the third person actually used.
What to do, and what not to do
Object promptly and in writing. Accepting the determination, performing on the strength of it, or letting time pass without protest all weaken a later complaint that it was inequitable. Ask the third person for the basis and workings of the valuation, since a figure with no visible method is much easier to attack than one with a reasoned computation behind it.
Then gather independent evidence of value as at the same date, and take advice before filing. It also pays to look at how the appointment was made in the first place: if the third person was never genuinely independent, or acted outside the mandate the parties gave them, you may have arguments that do not depend on Article 1310 at all.
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.
- In the Matter of Urgent Petition for the Release of Prisoners on Humanitarian Grounds, G.R. No. 252117, July 28, 2020 — read the decision on LawPhil →
- Reynaldo P. Floirendo Jr. vs. Metropolitan Bank & Trust Co, G.R. No. 148325, September 3, 2007 — read the decision on LawPhil →