A contract is a meeting of minds between two 1.
Conception or Generation – Classifications of contracts
persons whereby one binds himself, with This is the stage where the parties
respect to the other, to give something or to begin their intial negotiation,
render some service. (125a) bargaining for the formation of the
contract and ending at the moment of
Ang kontrata ay pagpupulong ng kaisipan sa agreement. It is also called the
pagitan ng dalawang tao na kung saan ang preparatory stage.
isa ay binibigkis ang kanyang sarili sa isa na 2. Perfection or Birth – This is
magbigay o maggawad ng serbisyo. the stage where the contract is said
to have been born,
Discussion: the parties had a meeting of minds as
Dean Ernesto to the object, cause or consideration
Pineda, in his book, suggested a definition of and other terms and conditions of the
a contract: contract. It has passed
preparatory state, thus giving birth
It is a meeting of the minds to the contract.
between two or more parties,
3. Consummation or Fulfillment –
whereby one party binds
This is the last stage which consists
himself with respect to the the performance or fulfillment by the
other, or where both parties
parties of their obligations under the
bind themselves reciprocally,
terms of the perfected
in favor of one another, to contract. Consummation
fulfill a prestation to give, to
the accomplishment, death
do or not to do.
termination of the contract where
the parties cease to be contractually
Three stages in making a contract:
related to one another.
1. By name
a. Nominate – those which have been given
particular names (i.e. sale, barter, mortgage,
lease, carriage, agency, etc.)
b. Innominate – those which have not been
where given a particular name and not regulated by
special provision of law. Roman law has
classified them as follows: Do ut des (I
give that you may give); Do ut facias (I give
the that you may do); Facio ut facias (I do that
you may do); Facio ut des (I do that you may
give).
2. By subject matter
a. Contracts covering things (i.e. contract of
sale, deposit, pledge)
means
b. Contracts covering services (i.e. contract of
or
carriage)
c. Contracts covering tranmissible rights or
credits (i.e. contract of usufruct, assignment
of credits.)
 3. By formation or perfection contract because it provides gain to the other b. Aleatory – contracts where the fulfillment
party for free. is dependent on chance or event which may
a. Consensual – perfected by mere consent not happen within the period stipulated, and
(i.e. sale) c. Remunerative – contracts where one party the loss contempated may not happen. (i.e.
gives something or renders service to another insurance contract)
b. Real – cannot be perfected without in consideration of a previous or past deeds
delivery (i.e. commodatum, depositum, of the other. 7. By completion or performance
pledge, loan)
5. By vinculum produced or according a. Exceuted – contracts which are already
c. Formal or Solemn- cannot be perfected to the party or parties obligated completed when formally entered into (i.e.
without compliance with the special sale of a thing)
formalities or solemnities required by law, a. Unilateral – contracts where only one of
otherwise they are void (i.e. donations, the parties is bound to fulfill and obligation (i.e. b. Executory – contracts where the
mortgages of real property) commodatum, promissory note) prestation promised by the parties have yet to
be fulfilled at some future date (i.e. a
4. By Cause b. Bilateral – contracts where both parties unilateral promise to sell which has been
have reciprocally bound themselves to fulfill accepted, but the sale is not yet executed)
a. Onerous – contracts that provide for their obligations in favor of the other (i.e. sale)
exchange of valuable considerations (i.e. sale Also known as synalagmatic contracts. 8. By dependence of one contract on
where the seller delivers the object of the the other
contract and the buyer pays the purchase 6. By certainty or fulfillment
price) a. Principal – contracts which can exist by
a. Commutative – contracts where the themselves alone without depending on
b. Gratuitous – contracts where one of the contracting parties contemplate the assured another (i.e. sale, lease, deposit,
parties gives something or renders service to fulfillment of the terms and conditions of their commodatum)
the other without receiving any equivalent or agreement, and there is no risk to anticipate
compensation (i.e. pure donation, (i.e. contracts of mortgage and pledge)
commodatum). It is also called the lucrative
 b. Accessory – contracts which cannot exist
alone but mut depend on another contract (i.e.
mortgage – depends on the contract of loan)
c. Preparatory – contracts entered into for
the creation of another contract (i.e. agency,
the principal gives authority to the agent
through a Special Power of Attorney)
9. By the actual number of person/s
participating in the contract
a. Ordinary – contracts where two (or more)
parties are represented by different persons
(i.e. sale – there is a seller and a buyer)
b. Auto-contracts – contracts where the
two parties are represented by the one and
the same person, who represents and acts in
different capacities (i.e. agent representing
his principal who authorized him to borrow
money)
10. By the dignity accorded by law
a. Institutional – contracts which are given
special digniy by law (i.e. contract of marriage
which is considered a “social inviolable
institution)
b. Ordinary – contracts which are not
institutional (i.e. sale, lease, deposit, etc)
11. By freedom of bargain
a. Ordinary – contracts where both parties
are palce on equal footing in the negotiation
and perfection stages.
b. Contracts of adhesion – contracts
where one of the parties had drafted the
contract for the other party to accept or not to
accept (i.e. insurance contract which is
already printed)
12. By the evidence needed to prove
their existence
a. Contracts covered by the Statute of
Frauds – requires written evidence, note or
memorandum to prove their existence
b. Contracts which be be proven by oral or
parol evidence (i.e. lease contract for one
year)
13. By the personality of the parties
a. Personal – contracts where the person
of the party is essential to the existence of teh
contract (i.e. contract for life insurance where
the contract shall cease to exist upon the
death of the insured)
b. Impersonal – contracts where the
person/s of a part or parties are not essential
to the continuity of the contract (i.e. contract
of lease – the heirs may continue the
contract)
14. By manner the consent is given
a. Express – contracts where the
consent of the parties is given expressly in
writing or verbally
b. Implied – contracts where the consent
of the parties is not given expressly but is
deducible from the conduct or acts of the
parties (i.e. implied agency when the principal
fails to repudiate the acts of the person on his
behalf)
 c. Presumed – contracts where the stipulations of the contract. These limitations 4. Limitations by Public Order-
consent was not given by the parties but is are: Public order refers to public safety of
presumed or provided by the law itself, to the people which includes the
prevent unjust enrichment on the part of one 1. Limitations by law- Stipulations maintenance of peace and order both
party to the prejudice of the other, such as in a contract must not be in violation in the entire country and in a
quasi-contracts of mandatory and prohibitory laws, particular community.
unless the law itself authorizes the 5. Limitations by Public Policy-
Art 1306 validty of such acts.As a rule, an Public policy is the express will of the
The contracting existing law enters and into and State. A contract is contrary to public
parties may establish such stipulations, forms part of a valid contract without policy if it has a tendency to injure the
clauses, terms and conditions as they may the need for the parties expressly public, is against the public good ,or
deem convenient, provided they are not making reference to it. contravene some established interest
contrary to law, morals, good customs, public 2. Limitations by Morals- Morals of society, or tends clearly to
order, or public policy. refer to norms of conduct universally undermine the security of the
accepted as rules not based on law individuals (Gabriel vs Monte de
Ang mga partido sa kontrata ay maaring but on principles of morality. Morality Piedad 71 Phil 500).
gumawa ng mga stipulasyon, sugnay, in turn is based on man’s faculty of
termino at kundisyon na para sa kanila ay knowing how to distinguish between Art 1307
nararapat, ngunit dapat ito ay hindi what is right from what is wrong. Innominate contract shall
sumasalungat sa batas, moral, mabuting 3. Limitations by Good Customs- be regulated by the stipulations of the parties,
kaugalian, pampublikong kaayusan at Good customs refer to the generally by the provisions of the Titles I and II of this
polisiyang pampubliko. accepted principles of morality which Book, by the rules governing the most
have received some social and analogous nominate contracts, and by the
Discussion: practical recognition in the customs of the place.
community for a long period of time.
This article provides the limitations to which Thus, contracts which have immoral Ang innominate contract ay dapat maregulate
contracting parties may establish in the aims are contrary to good customs. ng stipulasyon ng mga partido, ayon sa
probisyon ng pamagat ng una (obligasyon) at
ng ikalawang bahagi (kontrata) ng librong ito,
ayon sa panuntunan na nakakasakop sa
pinakamalapit na nominate contracts, at sa
nakaugalian sa kanilang lugar.
Innominate Contracts – those which are not
given any names or designations.
1. Do ut des (I give that you may
give)
2. Do ut facio (ii give that you may
do)
3. Facio ut des (I do that you may
give)
4. Facio ut facias (I do that you
may do)
Innominate Contracts shall be governed by
the following:
1. Stipulations of the parties;
2. Provision of Title I (Obligations)
and Title II (Contracts) of this Code;
3. Rules governing the most
analogous nominate contracts; and
4. Customs of the place.
Art 1308
The contract
must bind both contracting parties; its validity
or compliance cannot be left to the will of one
of them. (1256a)
Ang kasunduan ay dapat magbigkis sa isat
isa, ang bisa o pagtupad ay hindi maaring
ipaubaya sa kagustuhan ng isa sa kanila.
Discussion:
Mutuality of contracts. It is but natural and
logical that the contract shall bind both
contracting parties. This is the principle of
mutuality contract. It is based on the essential
quality of the parties. It is incongruous to bind
one party and let free the other party from
responsibility.
Obligations arising from contract have the
force of law between the parties and should
be complied with in good faith.
The binding effect of a contract on both
parties is based on the principle that the
obligations arising from contract have the
force of law between the contracting parties,
and there must be mutuality between them
based essentially on their quality under which
it is repugnant to have one party bound by the
contract while leaving the other free
therefrom.
Validity or Compliance. Cannot be left to the
will of the one of the contracting parties.
What is meant here is that the contract cannot
have any stipulation authorizing one of the
contracting parties:
To determine whether or not the contract
shall be valid, or;
To determine whether or not the contract
shall be fulfilled
However, a third person may be authorized to
determine the performance or fulfillment of
the contract but not to determine its validity.
He must not however make the determination
of the fulfillment evidently equitable.
Stipulations allowing a party to cancel or
rescind do not militate against mutuality of
contracts.
No judicial action for rescission is necessary
where the revocation of the contract is
authorized for the violations of its terms and
conditions.
Mutual cancellation. The general rule is that a
party cannot revoke or renounce a contract
without the consent of the other. They may
however mutually cancel their contract under
such terms and conditions as they deem
wise.
Article 1309. The determination of the
performance may be left to a third person,
whose decision shall not be binding until it
has been made known to both contracting
parties.
Example: In a contract of sale, the fixing of
the price and the delivery date can be left to a
third person.
Note: The decision binds the parties only after
it is made known to both.
Art 1310 Art 1311
The determination shall not be obligatory Contracts take effect only in between the
if it is evidently inequitable. In such case, the parties, their assigns and heirs, except in
courts shall decide what is equitable under case where the rights and obligations arising
the circumstances. (n) from the contract are not transmissible by
their nature, or by stipulation or by provision
Ang pagtitiyak ng isang obligasyon ay hindi of law. The heirs is not liable beyond the
na kinakailangan kung kapansinpansin ang value of the property he received from the
hindi pagkapantay ng mga ito. Ang korte ang decedent.
siya magpapasiya upang ito ay maging
pantay. If a contract should contain some stipulation
in favor of a third person, he may demand
Discussion: its fulfillment provided he communicated his
acceptance to the obligor before its
Juan a tenant of a rice farm of Mrs soledad revocation. A mere incidental benefit or
was not able to give the lease due to Mrs interest of a person is not sufficient . The
Soledad for two consecutive rice contracting parties must have clearly
season. Who will decide on the case? How deliberately conferred a favor upon a third
do you think it will be decided? Justice or person.
Equity?
Ang kontrata ay magkakaroon lamang ng
Base on Article 1310, the Court will only be bias sa pagitan ng partido, ang kanilang
the one to decide on the based on justice and itinalaga, at ang taga-pagmana, maliban kung
equity. Justice means giving each what is due sakali na kung saan ang karapatan at
but equity is a process by which court relax obligasyon ay magkaroon galling sa kontrata
the sanctions of the law for humanitarian ay hindi maaaring mailipat ng sariling
consideration. katangian, o ng mga istipulasyon o ang
probisyon ng batas. Ang tagapagpamana ay
walang pananagutan ukol sa halaga ng
ari-arian na kanyang tinanggap galling sa
namatay.
Kung ang kontrata ng ilang istipulasyon na
pumapabor sa ibang tao, sya ay maghabol ng
kanyang nagawa na kondisyon na kanyang
ipinagbibigya-alam ang pagtanggap sa may
obligasyon bago ang pagbawi. Ang kaugnay
na benepisyo o ang interes ng isang tao ay
hindi sapat. Ang dalawang sumasang-ayon
sa kontrata ay dapat mayroon na malinaw at
sadyang pakikipag-ugnayan at pumapanig sa
ibang tao.
One of the characteristics of contracts is that
they are binding or effective only bet. The
contracting parties, their assigns
heirs. The rights and obligation
transmissible, because if they are
transmissible they are only binding between
the contracting parties. Assigns and heirs are
excluded when the right or obligation is
personal to the party and better called
as “Principle of Effectivity”
Under 1311, third persons are not bound in
contract where they did not participate.
contracts are binding only between the
contracting parties, their assigns
heirs. This rule complimented by the
principle in evidence known as “
inter alios, aliis neque nocitprodest”.
Example:
James is indebted to Jake in the amount of
P10,000.00. James and Jake are the parties
to the contract.
If Jake dies, James must pay the heirs of
Jake. If Jake assigns his credit to Paulo, then
James is liable to pay Paulo.
If James dies and Sherwin is the heir, the
and Sherwin assumes the obligation of James
is and Jake. Sherwin is bound by the contract
not entered into by James, his predecessor in
interest, in view of the privity of interest
between him and James. However, Sherwin
is not liable beyond the value of the property
he inherits from James, the decedent.
Meaning of stipulation of pour autrui.
or
It is a stipulation in a contract clearly and
Res deliberately conferring favor upon a third
person who has a right to demand its
fulfillment provided he communicates his
acceptance to the obligor before its
revocation.
Art 1312
In contracts creating real rights, third
persons who come into possession of the
object of the contract are bound thereby,
subject to the provisions of the Mortgage Law
and the Land Registration law.
Sa kontrata ay lumilikha para sa tunay na
karapatan, ang ibang tao na pumunta na sila
ay may pinanghahawakan ng mga bagay ng
kontrata ay may pananagutan, sa ilalim ng
probisyon ng batas na para sa pagsasangla
at sa pagrerehistro ng lupa na batas.
Article 1313. Creditors are protected in case
of contracts intended to defraud them.
The article implies that every contract that
both parties entered, the creditors are always
protected from frauds that an obligor may
create in the said contract.
Creditors are protected in cases of contracts
intended to defraud them. (n)
Ang mga nagpautang ay protektado sa mga
kaso ng mga kontrata na naglalayong sila ay
dayain.
Discussion:
This action is article is an exception to the
principle of relativity which covers contracts
that are binding only between parties, their
assigns and heirs.
When a debtor intends to defraud his creditor
and alienates his property without leaving
enough for them, his creditor may file for
rescission of the said contracts. This action
of rescission of contract is also known
as accion pauliana.
Fraudulent Insolvency is a serious crime
under the Revised Penal Code with the
following essential elements:
1. That the offender is a debtor;
that is, he has obligations which are
due and payable;
2. That he absconds with his
property;
3. That there be prejudice to his
creditors.
Fraudulent Insolvency is punishable
with prision mayor if the offender is a
merchant, and prision correcional in its
maximum period to prision mayor in its
medium period if not a merchant.
1314
Any third person who induces another to
violate his contract shall be liable for
damages to the other contracting party.
Kung sinumang hindi partido sa kontrata ang
manghihikayat na labagin ng partido sa
kontrata ang laman ng kontrata, siya ay
mananagot sa danyos sa naperhuwisyong
tao na partido sa kontrata.
Discussion:
Interference with Contractual Relations- This
article is known in the law of torts as
interference with contractual relations. The
liability incurred by the intermeddler cannot
be more than the liability incurred by the party
in whose behalf he intermeddled. Otherwise,
it will result to injustice.
Elements (in torts):
1. Existence of a valid contract
2. Knowledge on the part of the
third person of the existence of the
contract
3. Interference of the third person
without legal justification or excuse
(the third person acted with malice, or
was driven by purely impious
reasons)
Nature:
1. The liability of the intermeddler
and the person for whom he
intermeddled is solidary. This is
because the act is a quasi-delict and
 in quasi-delict, the responsibility is
solidary.
2. Malice is essential to make the
intermeddler liable.
Requisites (in interference in contractual
relations)
1. There must be an existing valid
contract between two or more
persons
2. The third person is aware of
the existence of the contract
3. The third person interferes by
inducing a party to violate the
contract and the contract thus was
violated
4. The interference is without
legal justification or valid excuse
1315 Contracts are perfected by mere
consent, and from that moment the parties
are bound not only to the fulfillment of what
has been expressly stipulated but also to all
the consequences which, according to their
nature, may be in keeping with good faith,
usage and law.
Ang mga kontrata ay naperpekto
pahintulot, at mula sa sandaling iyon ang mga
partido ay nakatali hindi lamang sa pagpuno
sa nabangit na stipulasyon kundi pati na rin
sa mga kahihinatnan na kung saan, ayon sa
kanilang mga likas na katangian, ay maaring
alinsunod sa mabuting kalooban, paggamit at
ng mga batas.
*Responsibility of the parties upon perfection
of consensual contract are extended to all
consequences which are natural effects of the
contract taking into consideration of its real
objects, purposes or aims and other related
things in keeping with the law, good faith and
usage.
1316
Real contracts, such as deposit, pledge
and Commodatum, are not perfected until the
delivery of the object of the obligation. (n)
Tunay na kontrata katulad ng paglalagak,
pagsasanla at pagpapahiram ay hindi wagas
/ sukdulan hangang sa maibigay na ang
bagay ng obligasyon.
ng Discussion:
Perfection of real contracts. The article refers
to real contracts which require delivery of the
object for their validity, in addition to the
presence of the other essential elements of a
contract: consent subject matter and cause of
consideration.
Real contract are perfected from the moment
of the delivery of the object of the obligation.
The real contracts mentioned in the law are:
Deposit;
Pledge;
Commodatum
A contract of carriage is also real contract as
well as mutuum or loan.
A loan contract is not a consensual contract
but a real contract, perfected only upon the
delivery of the object of the contract.
Reason why delivery is required in real
contracts. In real contracts, delivery of the
object is necessary because without the
object, the other party cannot comply with his
duties under the contract.
Agreement to enter into real contract
distinguished from real contract itself. There
can be a contract “to make a deposit, pledge,
etc.” This is consensual. It is perfected upon
the meeting of the minds of the parties.
However, once the object has been delivered,
the contract is converted into a real contract.
Art 1317
No one may contract in the name of
another without being authorized by the latter,
or unless he has by law a right to represent
him.
A contract entered into in the name of another
by one who has no authority or legal
representation, or who has acted beyond his
powers, shall be unenforceable, unless it is
ratified, expressly or impliedly, by the person
Example : Unless he has by law a right to represent him
on whose behalf it has been executed, before
it is revoked by the other contracting party.
(1259a)
Tagalog Translation
Walang sino man makikipag kontrata sa
pangalan ng iba nang walang pahintulot o
maliban mayroon siya sa batas karapatan
kumatawan sa kanya.
Ang kontra pinasok sa pangalan ng iba na
walang kapangyarihan o legal kumatawan o
gumawa ng lampas sa kayang kakayahan, ay
hindi maipapatupad, maliban ito ay
sinang-ayunan ng hayag at tuwiran nang
taong para sa kanya iyon ay isinagawa bago
pa binawi ipawalang saysay ng partido
nakipagkasundo.
May a person contract in the name of another?
What are the effects?
No one may contract in the name of another,
except when
1. He has been authorized or
2. Unless he has by law a right to
represent him, or
3. Unless it is ratified, expressly
or impliedly, by the person on whose
behalf it has been executed, before it
is revoked by the other contracting
party.
Example: He has been authorized or
Pedro did not authorized Gina to sell the
hacienda, but upon being informed that she
had done so, instead of demanding the
annulment of the sale, Pedro proceeded to
collect the installment the amount of the
promissory note given for the purchase of the
sale, and necessarily implies his waiver of the
right to avoid the contract.