(Philippine Civil Code-focused legal article; for general information only, not legal advice.)

I. What “Contract” Means in Philippine Civil Law

Under the Civil Code, a contract is a meeting of minds between parties that results in an obligation—to give, to do, or not to do something. Contracts are a core source of obligations, alongside law, quasi-contracts, delicts, and quasi-delicts.

Key principles that shape all contracts

These foundational doctrines explain why contracts are enforced and how courts interpret them:

Autonomy of contracts – Parties may establish stipulations, clauses, terms, and conditions as they deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy.
Obligatory force – A contract has the force of law between the parties and must be complied with in good faith.
Mutuality – The contract’s validity and compliance cannot be left to the will of only one party.
Relativity – Contracts generally bind only the parties, their assigns, and heirs—subject to recognized exceptions.
Consensuality (general rule) – Contracts are generally perfected by mere consent, except for real or formal contracts.

These principles apply across the “types” and classifications below.

II. Essential Requisites of a Valid Contract (The Non-Negotiables)

A contract is valid only if it has all essential requisites:

1) Consent

Consent must be:

Intelligent and free
Given by a party with legal capacity
Not vitiated by defects (see below)

Vices/defects of consent include:

Mistake (error) – substantial mistake affecting the essence/object or principal conditions.
Violence – physical force.
Intimidation – threat producing reasonable fear of grave evil upon person/property.
Undue influence – improper advantage over another’s will (moral dominance).
Fraud (dolo) – insidious words/acts inducing the other to consent.

Related concepts:

Simulation of contracts
- Absolute simulation → no real intent; generally void.
- Relative simulation → parties conceal true agreement; enforce the real agreement if lawful.

2) Object (Subject Matter)

Must be:

Within the commerce of men (lawfully transferable/subject to dealing)
Not impossible (physically or legally)
Determinate or at least determinable without a new agreement

3) Cause (Consideration in Civil Law terms)

“Cause” differs from common-law consideration but plays a similar function. It must be:

Existing
Lawful
True (not merely simulated)

Kinds of cause:

Onerous contracts – cause is the prestation or promise of the other party (e.g., price in a sale).
Gratuitous contracts – cause is the liberality (e.g., donation).
Remuneratory contracts – cause is a past service/benefit not legally due.

If any essential requisite is missing → the contract is generally void, though outcomes depend on the specific defect classification (rescissible/voidable/etc.).

III. Stages of a Contract (How Contracts “Happen”)

Preparation/Negotiation – parties discuss; usually not yet enforceable unless a binding preliminary contract exists (e.g., option).
Perfection – meeting of minds; contract is born.
Consummation/Performance – obligations are fulfilled; contract ends.

IV. The Big Picture: Main Ways Contracts Are Classified

Philippine civil law classifies contracts in multiple overlapping ways. One contract can belong to several categories at once.

V. Classification by Perfection and Delivery: Consensual, Real, and Formal Contracts

A. Consensual Contracts (General rule)

Perfected by mere consent—no delivery or special form required (unless the law requires form for validity/enforceability).

Examples (commonly treated as consensual):

Sale of movable property (in general)
Lease (in general)
Agency (in general)
Partnership (with form caveats for certain contributions)

B. Real Contracts

Perfected only upon delivery of the object, not merely consent.

Classic examples:

Deposit – perfected upon delivery of the thing.
Pledge – requires delivery of the pledged thing.
Commodatum (loan for use) – delivery required.
Mutuum (simple loan) – delivery of money/consumable required.

C. Formal / Solemn Contracts

Require a specific form for validity (not just evidence).

Common Philippine examples (high-level):

Certain donations, especially of immovable property, require public instruments and specific formalities.
Certain acts involving real property may require formal documentation for validity or for effectiveness against third persons, and registration rules often matter (especially in land transactions).

Practical point: Philippine law distinguishes:

Form for validity (no form → void)
Form for enforceability (no form → unenforceable unless ratified)
Form for convenience/evidence (no form → still valid but harder to prove)

VI. Classification by Name and Legal Regulation: Nominate vs Innominate

A. Nominate Contracts

Contracts with specific names and rules in the Civil Code or special laws.

Examples:

Sale, lease, agency, partnership, deposit, loan, guaranty, mortgage, pledge, antichresis, compromise, etc.

B. Innominate Contracts

Not specifically named but recognized if they meet requisites and are not illegal.

Traditional categories (Latin):

Do ut des – I give so that you give.
Do ut facias – I give so that you do.
Facio ut des – I do so that you give.
Facio ut facias – I do so that you do.

Governed by:

stipulations of the parties,
general provisions on obligations and contracts,
rules on analogous nominate contracts, and
customs.

VII. Classification by Obligations Created: Unilateral vs Bilateral

A. Unilateral Contracts

Only one party is obliged to perform.

Examples:

Pure donation (donor is obliged; donee generally not, unless with conditions)
Gratuitous commodatum (borrower has obligations, but structure is often treated as one-sided in benefit)

B. Bilateral Contracts

Both parties are bound reciprocally.

Examples:

Sale (deliver vs pay)
Lease (provide use/enjoyment vs pay rent)
Barter (deliver one thing vs deliver another)

Important consequence: In reciprocal obligations, the law recognizes remedies like rescission (resolution) for substantial breach, plus damages.

VIII. Classification by Consideration/Benefit: Onerous vs Gratuitous

A. Onerous Contracts

Each party’s performance is given in exchange for the other’s.

Examples:

Sale, lease, contract for services

B. Gratuitous Contracts

One party gives a benefit without receiving equivalent consideration.

Examples:

Donations
Purely gratuitous agency (though agency can be compensated)

Why it matters: standards of liability, interpretation, and sometimes formal requirements differ.

IX. Classification by Equality of Exchange: Commutative vs Aleatory

A. Commutative

The prestations are certain and roughly equivalent at the time of contract.

Examples:

Ordinary sale

B. Aleatory

One or both prestations depend on chance or an uncertain event.

Examples:

Insurance-like arrangements (as regulated by special laws)
Certain contingent agreements (subject to legality)

X. Classification by Dependence: Principal vs Accessory vs Preparatory

A. Principal Contracts

Stand alone.

Examples:

Sale, lease

B. Accessory Contracts

Exist to secure or support a principal obligation.

Examples:

Pledge, mortgage, antichresis (security)
Guaranty/suretyship (security; suretyship is often governed by special rules and practice)

Accessory follows the principal: generally, if the principal is void, accessory typically fails (with nuanced exceptions in some contexts).

C. Preparatory Contracts

Made in contemplation of a future principal contract.

Examples:

Agency (to enter into contracts on another’s behalf)
Partnership (for business operations that will produce multiple transactions)
Option contract (special rules: requires separate consideration to be binding as an option)

XI. Classification by Performance Status: Executed vs Executory

Executed – obligations have been performed.
Executory – still to be performed (wholly or partly).

Why it matters: breach, rescission, damages, and risk allocation often turn on whether performance has occurred.

XII. Classification by Manner of Expression: Express vs Implied

A. Express Contracts

Terms are stated orally or in writing.

B. Implied Contracts

Inferred from:

acts of parties,
silence in certain contexts,
conduct showing meeting of minds.

Caution: Do not confuse implied contracts with quasi-contracts (which are not based on consent, but imposed by law to prevent unjust enrichment).

XIII. Classification by Form/Proof: Oral vs Written (and the Statute of Frauds)

Many contracts are valid even if oral, but some agreements must be in writing to be enforceable (not necessarily to be valid). This is where the Statute of Frauds comes in.

Typical categories requiring a written memorandum to be enforceable (high-level)

Commonly included are agreements:

not to be performed within a year,
for the sale of certain property interests,
involving suretyship-like promises,
and other enumerated categories.

Key concept: Lack of the required writing usually makes the contract unenforceable, not automatically void—meaning it may be ratified or become enforceable through acceptance/partial performance depending on the context and rule applied.

XIV. Classification by Risk/Condition: Pure vs Conditional; With a Term

A. Pure Obligations

Demandable at once (no condition or term).

B. Conditional Contracts

Effect depends on an uncertain event:

Suspensive condition – contract/obligation becomes effective upon happening.
Resolutory condition – contract/obligation is extinguished upon happening.

C. Contracts with a Period (Term)

Demandable only when the day comes (or until the day comes).

XV. Classification by Defect/Enforceability: The Four “Problem Contracts”

Philippine civil law distinguishes defective contracts into four main types—each with different consequences.

A. Rescissible Contracts

Valid and binding but may be rescinded due to lesion or economic damage or fraud affecting certain protected relationships.

Common grounds (in general terms):

contracts causing lesion to wards/absentees in specific representative contexts,
contracts in fraud of creditors (accion pauliana),
certain partitions with lesion.

Rescission here is a remedy of equity: it presupposes a valid contract.

B. Voidable (Annullable) Contracts

Valid until annulled; defect arises from:

incapacity (e.g., minority in applicable cases), or
vitiated consent (mistake, violence, intimidation, undue influence, fraud)

These can be ratified, curing the defect.

C. Unenforceable Contracts

Cannot be enforced in court unless ratified, typically due to:

failure to comply with Statute of Frauds (enforceability form),
lack of authority of an agent (in some cases),
or similar enforceability barriers.

Ratification may be express or implied (e.g., accepting benefits).

D. Void (Inexistent) Contracts

Produce no legal effect and cannot be ratified (as a rule). Grounds include:

absence of essential requisites,
illegal or impossible object,
absolutely simulated contracts,
those expressly prohibited or declared void by law,
and other fundamental defects.

In pari delicto may bar recovery when both parties are at fault in an illegal contract—subject to recognized exceptions (e.g., when public policy protection applies).

XVI. Special “Types” Seen Often in Philippine Practice (Practical Labels)

These labels frequently appear in real disputes and drafting, even if not always formal Civil Code classifications:

A. Contracts of Adhesion

Standard-form contracts drafted by one party (banks, telcos, insurance, online terms). They are not automatically invalid, but ambiguities are construed against the drafter, and courts scrutinize unfair terms.

B. Option Contracts vs Mere Offers

A mere offer can generally be withdrawn before acceptance.
An option contract (a promise to keep an offer open) must generally have separate consideration to be binding as an option. Without it, it may be treated as a mere offer (subject to details and proof).

C. Earnest Money vs Option Money (Common in Sales)

Earnest money is typically part of the price and proof of perfected sale (context matters).
Option money is consideration to keep an offer open (not part of the price unless agreed).

D. Agency vs Independent Contractor Arrangements

Misclassification can affect liability. The key is control and the nature of the undertaking, among other indicators.

E. Compromise Agreements

Encouraged in policy; once valid, a compromise can have strong binding effects and may end litigation (subject to legality and consent).

XVII. Interpretation, Reformation, and Breach

A. Interpretation rules (core ideas)

When disputes arise:

The literal meaning controls if terms are clear.
If ambiguous, courts look at intent, contemporaneous acts, usage, and surrounding circumstances.
Stipulations should be interpreted together, not in isolation.

B. Reformation of Instruments

If the parties’ true agreement is not reflected due to mistake, fraud, inequitable conduct, or accident, the written instrument may be reformed to express the real intent—provided a valid agreement exists.

C. Breach and remedies

Depending on the contract and breach:

Specific performance (fulfill as promised)
Rescission / resolution (undo reciprocal obligations for substantial breach)
Damages (actual, moral, nominal, temperate, liquidated, exemplary—when proper)
Interest (subject to rules on stipulation and applicable legal standards)
Attorney’s fees only when allowed by law or stipulation and justified

Good faith vs bad faith matters greatly in damages.

XVIII. Extinguishment of Contracts/Obligations (How Contracts End)

Common modes:

Payment/performance
Loss of the thing due
Condonation/remission
Confusion/merger
Compensation
Novation (change of object/conditions, substitution of debtor, subrogation, etc., with strict requisites)
Annulment (voidable contracts)
Rescission (rescissible; and “resolution” for reciprocal breach)
Fulfillment of a resolutory condition
Prescription (extinctive)

XIX. Concrete Examples: Where Civil Code “Types” Appear in Everyday Philippine Transactions

Sale of a car – nominate, bilateral, onerous, commutative, consensual (usually), executory until delivery/payment.
Loan of money (utang) with interest – nominate (mutuum), real (delivery needed), often unilateral in basic structure, onerous if with interest.
Renting an apartment – nominate (lease), bilateral, onerous, consensual.
Pawning jewelry – typically pledge-like security concepts; real contract element (delivery).
Home loan with real estate mortgage – principal loan + accessory mortgage; often with formal/registration aspects.
Donation of land to a child – gratuitous; formalities are critical; may implicate family/property rules.
Signing a bank’s standard loan terms – contract of adhesion; enforceable but construed strictly against the drafter if ambiguous/unfair.

XX. Drafting and Litigation Pitfalls (What Usually Causes Trouble)

Using the wrong instrument (e.g., “option” language without separate consideration)
Unclear price/payment terms, vague object descriptions
Not observing formalities for donations or real property-related instruments
Relying on oral agreements that fall under Statute of Frauds categories
Signing standard-form contracts without understanding acceleration, default, penalties, and attorney’s fees clauses
Authority issues (agent signs without proper authority)
Vitiation of consent claims (pressure, misrepresentation, hidden terms)

XXI. Quick Reference: “Type” Checklist

A single contract can be described along these axes:

By perfection: consensual / real / formal
By name: nominate / innominate
By obligations: unilateral / bilateral
By cause: onerous / gratuitous / remuneratory
By risk: commutative / aleatory
By dependence: principal / accessory / preparatory
By performance: executed / executory
By expression: express / implied
By enforceability/defect: valid / rescissible / voidable / unenforceable / void

If you want, share a specific scenario (e.g., “I paid a reservation fee for a condo,” “I signed a loan with a co-maker,” “we have only text messages”), and I can classify the contract types involved and outline the usual Civil Code issues and remedies that tend to arise in that situation.