Classification of Contracts

a. According to Degree of Dependence i. Preparatory

 A preparatory contract is one which has for its object the establishment of a condition in law which is necessary as a preliminary step towards the celebration of another subsequent contract (i.e. partnership, agency).

ii. Principal

 A principal contract is one which can subsist independently from other contracts and whose purpose can be fulfilled by themselves (i.e. sales, lease).

iii. Accessory

 An accessory contract is one which can exist only as a consequence of, or in relation with, another prior contract (i.e. pledge, mortgage).

b. According to Perfection i. Consensual

 A consensual contract is one which is perfected by mere agreement of the parties (i.e. sales, lease).

ii. Real

 A real contract is one which requires not only the consent of the parties for their perfection, but also the delivery of the object by 1 party to the other (i.e. commodatum, deposit, pledge).

c. According to their Form i. Common or informal

 An informal contract is one which does not require some particular form (i.e. loan, lease).

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Professor Ruben F. Balane

ii. Special or formal

 A formal contract is one which requires some particular form (i.e.

donation, chattel mortgage).

d. According to Purpose

i. Transfer of ownership (i.e. sale)

ii. Conveyance of use (i.e. commodatum) iii. Rendition of service (i.e. agency) e. According to Subject Matter

i. Things (i.e. sale, deposit, pledge) ii. Services (i.e. agency, lease of services) f. According to the Nature of the Obligation

i. Bilateral

 A bilateral contract is one which gives rise to reciprocal obligations for both parties (i.e. sale, lease).

ii. Unilateral

 A unilateral contract is one which gives rise to an obligation for only 1 of the parties (i.e. commodatum, gratuitous deposit).

g. According to Cause i. Onerous

 An onerous contract is one in which each of the parties aspires to procure for himself a benefit through the giving of an equivalent or compensation (i.e. sale).

ii. Gratuitous

 A gratuitous contract is one in which one of the parties proposes to give to the other a benefit without any equivalent or compensation (i.e. commodatum).

h. According to Risk i. Commutative

 A commutative contract is one in which each of the parties acquires an equivalent of his prestation and such equivalent is pecuniarily appreciable and already determined from the moment of the celebration of the contract (i.e. lease).

ii. Aleatory

 An aleatory contract is one in which each of the parties has to his account the acquisition of an equivalent prestation , but such equivalent, although pecuniarily appreciable, is not yet determined, at the moment of the celebration of the contract, since it depends upon the happening of an uncertain event, thus charging the parties with the risk of loss or gain (i.e. insurance).

i. According to Name i. Nominate

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 A nominate contract is one which has a name and is regulated by special provisions of law (i.e. sale, lease)

ii. Innominate

Art. 1307. Innominate contracts shall be regulated by the stipulations of the parties, by the provisions of Titles I and II of this Book, by the rules governing the most analogous nominate contracts, and by the customs of the place.

 An innominate contract is one that does not have a name and is not regulated by special provisions of law.

 A contract is not void just because it has no name. It is not a requisite for validity. A contract may have no name but it can be valid provided it has all the elements of a contract and all the restrictions are respected.

 4 Classes of Innominate Contracts

 do ut des (“I  give  that  you  give”)

 do ut facias (“I  give  that  you  do”)

 facio ut des (“I  do  that  you  give”)

 facio ut facias (“I  do  that  you  do”) B. Form of Contracts

Art. 1356. Contracts shall be obligatory, in whatever form they may have been entered into, provided all the essential requisites for their validity are present. However, when the law requires that a contract be in some form in order that it may be valid or enforceable, or that a contract be proved in a certain way, that requirement is absolute and indispensable. In such cases, the right of the parties stated in the following article cannot be exercised.

Art. 1357. If the law requires a document or other special form, as in the acts and contracts enumerated in the following article, the contracting parties may compel each other to observe that form, once the contract has been perfected. This right may be exercised simultaneously with the action upon the contract.

Art. 1358. The following must appear in a public document:

(1) Acts and contracts which have for their object the creation, transmission, modification or extinguishment of real rights over immovable property; sales of real property or of an interest therein a governed by articles 1403, No. 2, and 1405;

(2) The cession, repudiation or renunciation of hereditary rights or of those of the conjugal partnership of gains;

(3) The power to administer property, or any other power which has for its object an act appearing or which should appear in a public document, or should prejudice a third person;

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Professor Ruben F. Balane

(4) The cession of actions or rights proceeding from an act appearing in a public document.

All other contracts where the amount involved exceeds five hundred pesos must appear in writing, even a private one. But sales of goods, chattels or things in action are governed by articles, 1403, No. 2 and 1405.

 General Rule: There is no need for a specific form, but there must still be some manifestation of consent.

 Exception: When the written form is required 1. For validity

 If it not written, the same is void.

 Examples are donations (Articles 748, 749), antichresis (Article 2134), interest in a loan (Article 1956), sale of land by an agent (Article 1874), contribution of immovables in a partnership (Article 1773) 2. For enforceability

 The contract is unenforceable if it is not written.

a. An agreement that by its terms is not to be performed within a year from the making thereof (Article 1403 (a))

b. A special promise to answer for the debt, default or miscarriage of another (Article 1403 (b))

c. An agreement made in consideration of marriage, other than a mutual promise to marry (Article 1403 (c))

d. An agreement for the sale of goods, chattels or things in action, at a price not less than P500, unless the buyer accepts and receives part of such goods and chattels, or the evidence, or some of them, of such things in action, or pay at the time some part of the purchase money; but when a sale is made by auction and entry is made by the auctioneer in his sales book, at the time of sale, of the amount and kind of property sold, terms of sale, price, names of the purchasers and person on whose account the sale is made, it is a sufficient memorandum (Article 1403 (d))

e. An agreement of lease for a period of more than 1 year, or the sale of real property or of an interest therein (Article 1403 (e))

f. A representation as to the credit of a 3^rd person (Article 1403 (f)) g. No express trusts concerning an immovable or any interest therein

may be proved by parol evidence (Article 1443) 3. For registrability

 The following must appear in a public instrument:

a. Acts and contracts which have for their object the creation, transmission, modification or extinguishment of real rights over immovable property; sales of real property or of an interest therein governed by Articles 1403 (2) and 1405

b. The cession, repudiation or renunciation of hereditary rights or of those of the conjugal partnership of gains

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Professor Ruben F. Balane

c. The power to administer property, or any other power which has for its object an act appearing or which should appear in a public document, or should prejudice a 3^rd person

d. The cession of actions or rights proceeding from an act appearing in a public document

 Contracts enumerated in Article 1358 are valid as between the contracting parties even when they have not been reduced to public or private writings.

 Except in certain cases where public instruments and registration are required for the validity of the contract itself, the legalization of a contract by means of a public writing and its entry in the register are not essential solemnities or requisites for the validity of the contract as between the contracting parties, but are required for the purposes of making it effective as against 3^rd person.

 Article 1357 gives the contracting parties the coercive power to reciprocally compel the execution of the formalities required by law, as soon as the requisites for the validity of the contracts are present.