The elements of contract may fall under the following categories:

I. Essential Elements

1. Consent.

Consent refers to the meeting of the minds between the contracting parties or their conformity to all the terms and conditons of the contract which is freely given. Legal capacity is presupposed by consent. One cannot give concent unless he has legal capacity under the law.

Illustrative Cases:

a. First Philippine Holdings Corporation vs. Trans Middle East (Phils.) Equities Inc.
G.R. No. 179505, December 4, 2009

Consent is essential to the existence of a contract; and where it is wanting, the contract is non-existent. In a contract of sale, its perfection is consummated at the moment there is a meeting of the minds upon the thing that is the object of the contract and upon the price. Consent is manifested by the meeting of the offer and the acceptance of the thing and the cause, which are to constitute the contract. To enter into a valid contract of sale, the parties must have the capacity to do so. Every person is presumed to be capacitated to enter into a contract until satisfactory proof to the contrary is presented. The burden of proof is on the individual asserting a lack of capacity to contract, and this burden has been characterized as requiring for its satisfaction clear and convincing evidence.

b. Restituta Leonardo vs. Court of Appeals
G.R. No. 125485, September 13, 2004

The essence of consent is the agreement of the parties on the terms of the contract, the acceptance by one of the offer made by the other. It is the concurrence of the minds of the parties on the object and the cause which constitutes the contract. The area of agreement must extend to all points that the parties deem material or there is no consent at all.

To be valid, consent must meet the following requisites: (a) it should be intelligent, or with the exact notion of the matter to which it refers; (b) it should be free and (c) it should be spontaneous. Intelligence in consent is vitiated by error; freedom by violence, intimidation or undue influence; and spontaneity by fraud.

2. Object certain.

Object certain refers to the subject matter of the contract. It must be definite and certain, otherwise, the meeting of the minds of the contracting parties is not possible. The object can be a thing, right or service arising from a contract.

The object of a contract is embodied in Article 1347 of the Civil Code-

Art. 1347. All things which are not outside the commerce of men, including future things, may be the object of a contract. All rights which are not intransmissible may also be the object of contracts.
No contract may be entered into upon future inheritance except in cases expressly authorized by law.

If the object of a contract is a thing, it should be withig the commerce of man, that is, its alienation or free exchange is not restricted by law. In other words, it can be the subject of lawful negotiation. Accordingly, property of public dominion like public roads, plazas, squares foreshore lands are outside the commerce of man as the law restricts their alienation or disposition.

A “Future thing” which has a potentiality of existence at some future time may be the object of a contract. “Future right” may also be an object of a contract. Thus, a composer or author can sell an intellectual work which he intends to compose or write even before the work is actually composed or written.

3. Cause of the obligation.

Cause or consideration refers to the compelling reason why a party assumes an obligation. It is different from motive— the personal reason/s unknown to the other party why a person enters into the contract.

Illustrative Cases

a. Timoteo Bacalso vs. Gregoria Aca-ac
G.R. No. 172919, January 13, 2016

Article 1352 of the New Civil Code of the Philippines is explicit in providing that ‘contracts without cause produce no effect whatsoever’. If there is no cause, the contract is void.
It must be stressed that the present case is not merely a case of failure to pay the purchase price, which can only amount to a breach of obligation with rescission as the proper remedy. What we have here is a purported contract that lacks a cause- one of the three essential requisites of a valid contract. Failue to pay the consideration is different from lack of consideration. The former results in a right to demand the fulfillment or cancellation of the obligation under an existing valid contract while the latter prevents the existence of a valid contract.
Well-settled is the rule that where there is no consideration, the sale is null and void ab initio.

4. Delivery of the object.

Delivery refers to “tradicion” or transfer of possession of the object to the other party which is required as an additional element in real contracts. Note that while consensual contracts are perfected by mere meeting of the minds, real contracts are perfected by delivery.

Illustrative Case:

Celestina T. Naguiat vs. Court of Appeals
G.R. No. 118375, October 3, 2003

A loan contract is a real contract, not consensual, and, as such, is perfected only upon the delivery of the object of the contract.

5. Mandated formalities.

This refer to the need to comply with certain solemnities or formalities required for the validity of certain formal contracts.
As a general rule, form is not required in consensual contract. Contracts are binding upon the contracting parties in whatever from they may have been entered into as long as all the essential requisites for their validity are present.
However, the form of the contract is essential, absolute and indispensable in the following cases:

a. When the law requires that a contract be in certain from for its validity;

b. When the law requires that a contract be in certain form for its enforceability.

The first refers to solemn or formal contracts. While the second refers to the agreements covered by the statute of frauds.

Examples of Solemn or Formal Contracts:

1. Donation of real property which requires a public instrument for its validity. Acceptance of the donation must also be in a public instrument to be valid (Art. 749)

2. Donation of personal property the value of wich is more than five thousand pesos. Unless the donation and the acceptance be in writing the donation is void (Art. 748)

3. Interest shall not be due unless it has been expressly stipulated in writing (Art. 1956)

Examples of Agreements which must be in writing for their enforceability:

1. An agreement that by its terms is not to be performed within a year from the making thereof;

2. A special promise to answer for the debt, default, or miscarriage of another;

3. An agreement made in consideration of marriage, other than a mutual promise to marry;

Illustrative Case:

Rolando c. De la Paz vs. L & J Development Company
G.R. No. 183360, September 8, 2014

The lack of a written stipulation to pay interest on the loaned amount disallows a creditor from charging monetary interest.
Under Article 1956 of the Civil Code, no interest shall bedue unless it has been expressly stipulated in writing. Jurisprudence on the matter also holds that for interest to be due and payable, two conditions must concur: a) express stipulation for the payment of interest; and b) the agreement to pay interest is reduced in writing.
Here, it is undisputed that the parties did not put down in writing their agreement. Thus, no interest is due. The collection of interest without any stipulation in writing is prohibited by law.

II. Natural Elements.

Natural elements are elements of contracts which are inherent. They need not be stated in the contract. Example: The “warranty of eviction” in contracts of sale.

Illustrative Case:

Pilipinas Makro, Inc. vs. Coco Charcoal Philippines, Inc.
G.R. No. 196419, October 04, 2017

A warranty is a collateral undertaking in a sale of either real or personal property, express or implied; that if the property sold does not possess certain incidents or qualities, the purchaser may either consider the sale void or claim damages for breach of warranty. Thus, a warranty may either be express or implied.

An express warranty pertains to any affirmation of fact or any promise by the seller relating to the thing, the natural tendency of which is to induce the buyer to purchase the same. It includes all warranties derived from the language of the contract, so long as the language is express-it may take the form of an affirmation, a promise or a representation. On the other hand, an implied warranty is one which the law derives by application or inference from the nature of transaction or the relative situation or circumstances of the parties, irrespective of any intention of the seller to create it. In other words, an express warranty is different from an implied warranty in that the former is found within the very language of the contract while the latter is by operation of law.

III. Accidental Elements.

These are the elements which exist only when expressly provided by the contracting parties in the contract for the purpose of limiting or modifying the normal effecs of contracts. Example: The parties may stipulate on the place of payment: Currency to be used in payment; manner of payment, whether in cash or by installment, etc.

Illustrative Case:

Rido Montecillo vs. Ignacia Reynes
G.R. No. 138018, July 26, 2002

In the recent case of San Miguel Properties Philippines, Inc. v. Huang, (336 SCRA 737) we ruled that –

“In Navarro v. Sugar Producers Cooperative Marketing Association, Inc. (1 SCRA 1181 [1961]), we laid down the rule that the manner of payment of the purchase price is an essential element before a valid and binding contract of sale can exist. Although the Civil Code does not expressly state that the minds of the parties must also meet on the terms or manner of payment of the price, the same is needed, otherwise there is no sale. As held in Toyota Shaw, Inc. v. Court of Appeals (244 SCRA 320 [1995]), agreement on the manner of payment goes into the price such that a disagreement on the manner of payment is tantamount to a failure to agree on the price.”

One of the three essential requisites of a valid contract is consent of the parties on the object and cause of the contract. In a contract of sale, the parties must agree not only on the price, but also on the manner of payment of the price. An agreement on the price but a disagreement on the manner of its payment will not result in consent, thus preventing the existence of a valid contract for lack of consent. This lack of consent is separate and distinct from lack of consideration where the contract states that the price has been paid when in fact it has never been paid.

Reynes expected Montecillo to pay him directly the P47,000.00 purchase price within one month after the signing of the Deed of Sale. On the other hand, Montecillo thought that his agreement with Reynes required him to pay the P47,000.00 purchase price to Cebu Ice Storage to settle Jayag’s mortgage debt. Montecillo also acknowledged a balance of P10,000.00 in favor of Reynes although this amount is not stated in Montecillo’s Deed of Sale. Thus, there was no consent, or meeting of the minds, between Reynes and Montecillo on the manner of payment. This prevented the existence of a valid contract because of lack of consent.

Reference:
Obligations and Contracts by Dean Ernesto L. Pineda, 2009 Edition