GR 128120; (October, 2004) (Digest)
G.R. No. 128120 ; October 20, 2004
SWEDISH MATCH, AB, ET AL., petitioners, vs. COURT OF APPEALS, ALS MANAGEMENT & DEVELOPMENT CORPORATION AND ANTONIO K. LITONJUA, respondents.
FACTS
Petitioner Swedish Match AB (SMAB), a Swedish corporation, through its agent Ed Enriquez, sought to sell its shares in its Philippine subsidiary, Phimco Industries, Inc., due to loan covenant pressures. Respondent Antonio Litonjua, representing ALS Management, submitted offers to purchase the shares. In a letter dated June 11, 1990, SMAB’s CEO, Massimo Rossi, invited ALS to conduct a due diligence audit and required ALS to submit its final offer by June 30, 1990. Rossi’s letter also stated that if a separate “global deal” for SMAB’s worldwide assets materialized, SMAB would reimburse some of ALS’s audit costs.
Litonjua replied that completing the audit by the deadline was impossible and requested an extension. Upon ALS’s failure to submit a final bid by June 30, SMAB informed Litonjua it would entertain other offers and subsequently signed a conditional contract with another buyer on July 2, 1990. ALS then filed a complaint for specific performance against SMAB, alleging a perfected contract of sale. The trial court dismissed the complaint, but the Court of Appeals reversed and remanded the case for further proceedings.
ISSUE
Whether the exchange of correspondence between the parties, particularly the letter of June 11, 1990, constituted a perfected contract of sale enforceable by specific performance.
RULING
No. The Supreme Court reversed the Court of Appeals and reinstated the trial court’s order of dismissal. The Court held that no contract of sale was perfected. Rossi’s June 11 letter was merely a solicitation of an offer, not a definite offer itself. It required ALS to submit a final offer after due diligence, making its terms contingent and leaving essential elements like the final price open for future agreement. A contract requires consent, object, and cause; consent manifests through a definite offer and acceptance. Here, there was no clear, absolute, and unconditional offer from SMAB that ALS could accept. The correspondence only constituted preliminary negotiations and a mere invitation to make an offer. The deadline for submission of a final bid was a condition precedent for ALS to become a qualified bidder, not an acceptance of terms. Since no contract was perfected, the action for specific performance had no basis. The case was dismissed for failure to state a cause of action.