Swedish Match vs.

Court of Appeals
G.R. No. 128120 October 20, 2004
Facts:
Swedish Match(SMAB) is a corporation organized under the laws of Sweden not doing business
in the Philippines. It has 3 subsidiary corporation in the Philippines: Phimco Industries, Inc. (Phimco),
Provident Tree Farms, Inc., and OTT/Louie (Phils.), Inc.

In 1988, STORA, the parent compny of SMAB decided to sell SMAB of Sweden and the latters
worldwide match, lighter and shaving products operation to Eemland Management Services now known as
Swedish Match NV of Netherlands(SMNV).

Ed Enriquez, Vice-President of SMSA, management company of the Swedish Match group was
commissioned and granted full power to negotiate SMNV. He was held under strict instruction that the sale
of Phimco shares should be executed on or before June 30, 1990 in view of the tight loan covenants of
SMNV.

Several interested parties tendered their offer including respondent Antonio Litonjua, the president
and general manager of ALS. The first offer of Litonjua was below the expectation of the petitioner but
urged them to undertake a comprehensive review with the assurance that respondent would enjoy a certain
priority. Thereafter, Litonjua offered to buy the shares for US$ 36 million.

On June 18, 1990, Litonjua criticized SMAB’s decision to accept a new bidder and informed the
CEO that it may not be possible for them to submit their final bid within the deadline. Enriquez then sent a
notice to Litonjua that they are constrained to entertain bids due to the respondent’s failure to make a firm
commitment. He told Litonjua that his bid would no longer be considered unless the local group would fail
to consummate the transaction. Litonjua irked by the decision asserted that for all intents and purposes, the
US$ 36 million was their final bid thus finalizing the sale. After 2 months, the negotiation with the local
buyers did not materialize. Enriquez invited Litonjua to resume negotiation with a totally new set of terms
and conditions. Litonjua expressed his objection emphasizing that the new offer constituted an attempt to
reopen the already perfected contract of sale in his favor.

RTC decision for specific performance with damages and prayer for issuance of a writ of
preliminary injunction: Dismissed the complaint of respondent relying on the fact that the petitioner did not
accept the bid offer of respondent as the letter was mere invitation.

CA Decision: Reversed the trial court. It ruled that the series of written communication between
petitioners and respondents collectively constitute a sufficient memorandum of agreement under Art. 1203
of the Civil Code, thus complaint should not be dismissed on the ground that it was unenforceable under
the Statute of Frauds.
Issue: Whether or not there is a perfected contract of sale between both parties with respect to Phimco
shares.

Held: No.

The letters relied upon by the respondent hardly constitute as a note or memorandum is not
complete in itself. First, it does not indicate at what price the share was being sold and second, the letter
does not state the mode of payment. The Trial Court’s dismissal of the complaint of the ground of
unenforceability under the Statute of Frauds is warranted. There can be no contract unless the following
requisites concur: (a) consent of the contracting parties; (b) object certain which is the subject matter of the
contract; (c) cause of the obligation which is established. Proposing the acquisition of the Phimco shares for
US$36 million was merely an offer. The lack of a definite offer on the part of respondents could not
possibly serve as the basis of their claim that the sale of the Phimco shares in their favor was perfected, for
one essential element of a contract of sale was obviously wanting the price certain in money or its
equivalent. The price must be certain; otherwise there is no true consent between the parties. There can be
no sale without a price.