Martin, Michael Alexey D.R.

Contract of Sale
Sales / 2B Article 1458
Case Digest Swedish Match v. CA

Swedish Match vs. CA and Antonio Litonjua

G.R. No. 128120, 20 October 2004
FACTS:
Swedish Match is corporation operating under the laws of Sweden. SMAB has three subsidiary
corporations in the Philippines and one of the corporations is Phimco.
STORA, the parent company of SMAB, decided to sell SMAB and its subsidiary corporations. Ed
Enriquez, the Vice President of SMAB was granted full powers to negotiate for the sale of Phimco.
Enriquez came to the Philippines and informed the Philippine financial and business circles that
Phimco shares were for sale.
Several parties were interested in the Phimco shares, one of which is the respondent Antonio
Litonjua, who was the President and general manager of ALS Management and Development
Corporation. Litonjua offered to buy the Phimco shares for a sum of P750,000,000. The COO of
SMAB, Massimo Rossi, informed that said price was too low so they rejected his offer. Litonjua
offered to buy the Phimco shares for US$30.6million and on the same day he raised the price to
US$36 million. Rossi agreed to the price but under the condition that ALS should undertake a due
diligence process.
Litonjua rejected because of the changes in the bidding process. Litonjua also satted that because
of the changes, they might not be able to place a final bid.
Rossi informed Litonjua that they reached a conditional contract with a local group. He also added
in case the conditional contract fails, they will be considering the offers by Litonjua. The deal with
the local groups did not materialize so Enriquez made contact with Litonjua stating the condition
of the offer. Enriquez states that they need to negotiate the deal again in a span of 15 days and
if it does not materialize then they would look for other offers.
Litonjua objected to that because they are opening new terms and conditions for the sale of the
Phimco shares.
Litonjua filed a case against SMAB for specific performance. They also filed a case because they
claimed that Phimco, with bad faith, violated their contract with SMAB. They claimed that Phimco
delayed the delivery of documents so their audit took too long which removed their offer due to a
deadline.
Phimco contended by claiming that ALS has no cause of action because there was no perfected
contract.
RTC ruled in favor of Phimco stating that there was no perfected contract of sale. It came to this
decision because the letter by the ALS shows that Phimco has not yet accepted their offer and it
was just a mere invitation to conduct a due diligence process. Another evidence used by RTC is

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Martin, Michael Alexey D.R. Contract of Sale
Sales / 2B Article 1458
Case Digest Swedish Match v. CA

that based on the narration of facts, ALS had failed to give final offer because they were pass the
deadline issued by Phimco.
ALS and Litonjua filed to the CA. CA reversed the RTC decision. CA ruled that the series of
correspondence between Phimco and ALS constitute a sufficient memorandum of their
agreement.
ISSUES:
a. Whether or not there was a perfected contract of sale between petitioners and
respondents regarding the Phimco shares
RULING:
a. There was no perfected contract of sale between Phimco and ALS
There is no perfected contract of sale between Phimco and ALS. Based on the narration of facts,
there was no meeting of the minds with regards to the final price for the shares. The US$36 million
offered was not the actual price for the Phimco shares. That amount of money was just an offer
by ALS for their bidding. It was also acknowledged by Litonjua himself that because of the
deadline, ALS will not be able to place a final offer on the shares of Phimco thus there was no
perfection of the contract of sale.
One of the elements of a contract of sale is the price certain in money or its equivalent. This
element of a contract of sale is not present in the current case. There was a lack of a definite offer
on the part of ALS so there is no basis for their claim that the contract was perfected. The price
of US$36 million was not yet certain, there is no consent between the parties.
DISPOSITION:
1. The petition by Phimco is granted
2. The CA decision enforcing specific performance is Modified
3. Damages will be settled in the RTC

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