Swedish Match v CA

SWEDISH MATCH v CA FACTS: Swedish Match, AB (SMAB) is a corporation organized under the laws of Sweden, with 3 subsidiary corporations Phimco, Provident Tree Farms, Inc, and OTT/Louie (Phils,), Inc. In 1988, STORA, its parent company, decided to sell SMAB and the latter’s worldwide match, lighter and shaving products operation to Swedish Match NV (SMNV). Enriquez, VP of SMSA (management company of SMAB), was held under special instructions that the sale of Phimco shares should be executed on or before June 30, 1990. Respondent GM Antonio Litonjua of ALS Management and Development Corp. was one of the interested parties to acquire Phimco shares, offering US$36 million. After an exchange of information between CEO Rossi of SMAB and Litonjua, the latter informed that they may not be able to submit their final bid on the given deadline considering that the acquisition audit of Phimco and the review of the draft agreements have not been completed. In a letter dated July 3, 1990, Rossi informed Litonjua that on July 2, SMAB signed a conditional contract with a local group for the disposal of Phimco and that the latter’s bid would no longer be considered unless the local group would fail to consummate the transaction on or before September 15, 1990. Irked by SMAB’s decision to junk his bid, Litonjua asserted that the US$36 million bid was final, thus finalizing the terms of the sale. After 2 months from receipt of Litonjua’s letter, Enriquez informed the former that the proposed sale with the local buyers did not materialize and invited to resume negotiations for the sale of Phimco shares based on a new set of conditions, as to reducing the period of sale from 30-day to 15, to which Litonjua expressed objections and emphasized that the new offer constituted an attempt to reopen the already perfected contract of sale. ISSUE: Whether or not there was a perfected contract of sale between petitioners and respondents, with respect to the Phimco shares. HELD: No, there was no perfected contract of sale since Litonjua’s letter of proposing acquisition of the Phimco shares for US$36 million was merely an offer. Consent in a contract of sale should be manifested by the meeting of the offer and acceptance upon the thing and the cause which are to constitute the contract. The lack of a definite offer on the part of the 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 needed to be certain --- the price in money or its equivalent. Obviously, there can be no sale without a price. Respondents’ attempt to prove the alleged verbal acceptance of their US$36 million bid becomes futile since there was in the first place no meeting of the minds with respect to the price, and such was merely a preliminary offer. Respondents’ failure to submit their final bid on the deadline set by the petitioners prevented the perfection of the contract of sale.