You are a second year student of a University and your family owns a corporation named SERENDRA DEVELOPMENTCorporation ("SDC") is engaged in the sale and lease of commercial and residential lands and buildings in the Philippines.

Last January 2010, SDC's board of directors decided to build a commercial complex and decided to secure the services of Mr. Robert Edison, a licensed architect and is well-known because of his extra-ordinary skills in combining the beauty of nature with the modern architectural designs.

SDC's board of director, through its president, sent a letter to Mr. Edison for him to make a design for the commercial complex. LCO offered an amount of Five Million Pesos (Php 5,000,000) as service fee to Mr. Edison. After three (3) days, SDC's President received a letter from Mr. Edison stating that Mr. Edison will agree to make an architectural design for Ten Million Pesos (Php 10,000,000).

Because of the expensive fees demanded by Mr. Edison, SDC decided to make an offer, through a letter to Mr. Ralph Robinsons also a well-known architect with the same skills and designs employed by Mr. Edison. After three (3) days, SDC's President received and was able to read the letter of Mr. Robinsons, accepting the offer of Php 5,000,000 for making the design for the commercial complex. On January 15, 2010, SDC, through its President and Mr. Robinsons formalized their agreement by signing a Service Contract Agreement.

Thus Mr. Robinsons started making the design but on September 1, 2015 Mr. Robinsons met an accident and died, leaving his son Joey and Wife Patty. Thus, Mr. Robinsons failed to finish the design.

SDC was constrained to secure the services of another well-known architect, Mr. Giovanni Mendenilla, who agreed to the Php 5,000,000 service fees. Mr. Mendenilla finished his design and the corporation started its construction based on the design of Mr. Mendenilla.

On September 6, 2015 the phase 1 of SDC's commercial complex called SDCR Industrial Business Park was already completed and ready to be occupied by prospective lessors. Mr. Gregorio Del Rosario would like to lease a space in the commercial complex for his Italian restaurant. Thus, on September 7, 2015, Mr. Del Rosario sent a letter to SDCR addressed to its President stating his interest to lease a space. On September 9, 2015, SDC through its President sent a letter to Mr. Del Rosario. Attached in the said letter is a proposed Contract of Lease, whereby it is proposed that the lease agreement will be for a minimum of five (5) years with a monthly rental of Fifty Thousand Pesos (Php 50,000.00) per month. On September 11, 2015, Mr. Del Rosario sent a reply-letter to SDC's President and he wish to include the following provisions in the terms and conditions of the Contract of Lease:

"1. The lessee (Mr. Del Rosario) will agree to lease the space for a minimum period of five (5) years, if he decides not to go back to Italy next year.

1. The Lessee has the right to sell any goods in his restaurants, including foods and wishes imported from Italy, even if these are not cleared by the Bureau of Customs ("BOC").
2. The Lessee has the right to terminate the contract, in case the Lessor failed to comply with his obligations set forth in the agreement, such as failure to maintain a proper waste disposal system."

Your father is the president of SDC. When he learned that you are currently enrolled in the subject of Aspects of Contracts and Negligence in Business, he asked you to help him understand the implications of the above mentioned transactions and issues confronting SDC.

REQUIRED:

Based on the initial facts given above,

1. Explain the importance of the essential elements required for the formation of a valid contract. Discuss what is the effect if any of the essential elements is totally absent (1.1)
2. What is required for there to be considered to have a meeting of minds between the parties to a contract?
3. The student should be able to explain (1) what constitute a valid consent (2) what constitute a valid acceptance (3) when is an offer considered to have been validly accepted and (4) what is the effect if there is no valid offer and acceptance. The student should be able to cite the applicable provisions under the Civil Code of the Philippines. (1.1)

• What are the requisites for a valid object of a contract?

1. The student should be able to (a) explain the requirements to have a valid object of a contract (b) explain the concept of objects which are "outside the commerce of men" and give at least 5 examples and (c) explain what is the effect if there is no valid object to a contract.

1. In the problem given above, was there already a perfected service contract between SDC and Mr. Ralph Robinsons? Determine if all the requisites of a valid contract are present or absent.
2. The student should be able to enumerate the (1) three (3) stages in dealing with contracts (2) Explain whether the essential elements of a valid contract is present and if not, determine what element or elements is/are absent. The student should be able to explain the status of the service contract (whether valid, void, voidable or unenforceable) and explain why?
3. In the scenario between Mr. Robinsons and SDC, if Mr. Robinsons failed to make his design, is there a breach of contract? If there is none, explain why. If there is a breach, explain why?

• In the scenario between Giovanni Mendenilla and SDC, in case Mr. Mendenilla made an express warranty that his architectural design is compliant with the Philippine standards, and that the building will not collapse due to poor architectural design within two (2) years from date of completion, but after one (1) year from its complete construction the building collapsed: What is the remedy of SDC, if any, and what is the effect of Mr. Mendenilla's Warranty. Can Fortuitous event or Loss of the thing due be interposed? why