What are the kinds of simulation of contract?
1. Absolute – the contracting parties do not intend to be bound by the contract at all, thus the contract is void.
2. Relative – the real transaction is hidden; the contracting parties conceal their true agreement; binds the parties to their real agreement when it does not prejudice third persons or is not intended for any purpose contrary to law, morals, etc. If the concealed contract is lawful, it is absolutely enforceable, provided it has all the essential requisites: consent, object, and cause. As to third persons without notice, the apparent contract is valid for purposes beneficial to them.
As to third persons with notice of the simulation, they acquire no better right to the simulated contract than the original parties to the same.