DELPHER TRADES CORPORATION, and DELPHIN PACHECO vs.

INTERMEDIATE APPELLATE COURT and HYDRO PIPES PHILIPPINES,

INC.,

G.R. No. L-69259, an!a"# 26, $9%%

&ACTS'

In 1974, Delfn Pacheco and his sister, Pelagia Pacheco, were the

owners o 27,169 square meters o real estate Identifed as Lot !o 1"9#,

$alinta %state, in the $unici&alit' o Polo (now )alen*uela+, Proince o 

-ulacan (now $etro $anila+ which is coered .' /ranser 0ertifcate o /itle

!o /424" o the -ulacan land registr'

n 3&ril , 1974, the said coowners leased to 0onstruction

0om&onents International Inc the same &ro&ert' and &roiding that during

the e5istence or ater the term o this lease the lessor should he decide to

sell the &ro&ert' leased shall frst oer the same to the lessee and the letter

has the &riorit' to .u' under similar conditions

4 months later, lessee 0onstruction 0om&onents International, Inc

assigned its rights and o.ligations under the contract o lease in aor o 

'dro Pi&es Phili&&ines, Inc with the signed conormit' and consent o 

lessors Delfn Pacheco and Pelagia Pacheco

 /he contract o lease, as well as the assignment o lease were

annotated at the .ac8 o the title, as &er sti&ulation o the &arties

n anuar' , 1976, a deed o e5change was e5ecuted .etween lessors

Delfn and Pelagia Pacheco and deendant Del&her /rades 0or&oration

where.' the ormer cone'ed to the latter the leased &ro&ert' together with

another &arcel o land or 2,#"" shares o stoc8 o deendant cor&oration

with a total alue o P1,#"","""""

n the ground that it was not gien the frst o&tion to .u' the leased

&ro&ert' &ursuant to the &roiso in the lease agreement, res&ondent 'dro

Pi&es Phili&&ines, Inc, fled an amended com&laint or recone'ance o Lot

!o 1"9# in its aor under conditions similar to those where.' Del&her

 /rades 0or&oration acquired the &ro&ert' rom Pelagia Pacheco and Del&hin

Pacheco

 /he 0:I o -ulacan ruled in aor o the &lainti

 /he I30 a;rmed the decision o the 0:I

ISSUE'

 

<hether or not the =Deed o %5change= o the &ro&erties e5ecuted .'

the Pachecos on the one hand and the Del&her /rades 0or&oration on the

other was meant to .e a contract o sale which, in eect, &re>udiced the

&riate res&ondent?s right o frst reusal oer the leased &ro&ert' included in

the =deed o e5change=

ARGUMENTS'

%duardo !eria, a 0P3 and soninlaw o the late Pelagia Pacheco

testifed that Del&her /rades 0or&oration is a amil' cor&oration and that the

cor&oration was organi*ed .' the children o the two s&ouses (s&ouses

Pelagia Pacheco and -en>amin ernande* and s&ouses Delfn Pacheco and

Pilar 3ngeles in order to &er&etuate their control oer the &ro&ert' through

the cor&oration and as a means to aoid ta5es

@nder this actual .ac8dro&, the &etitioners contend that there was

actuall' no transer o ownershi& o the su.>ect &arcel o land since the

Pachecos remained in control o the &ro&ert' /hus, the &etitioners allegeA

=0onsidering that the .enefcial ownershi& and control o Petitioner

0or&oration remained in the hands o the original coowners, there was no

transer o actual ownershi& interests oer the land when the same was

transerred to Petitioner 0or&oration in e5change or the latter?s shares o 

stoc8 /he transer o ownershi&, i an'thing, was merel' in orm .ut not in

su.stance In realit', Petitioner 0or&oration is a mere alter ego or conduit o 

the Pacheco coowners

n the other hand, the &riate res&ondent argues that Del&her /rades

0or&oration is a cor&orate entit' se&arate and distinct rom the Pachecosn

and that there was actual transer o ownershi& interests oer the leased

&ro&ert' when the same was transerred to Del&her /rades 0or&oration in

e5change or the latter?s shares o stoc8

RULING'

!o, it was not meant to .e a contract o sale

3ter incor&oration, one .ecomes a stoc8holder o a cor&oration .'

su.scri&tion or .' &urchasing stoc8 directl' rom the cor&oration or rom

indiidual owners thereo (Balmon, De5ter C 0o @nson, 47 Phil, 649, citing

-ole :ulton 1912E, 2 Pa, 6"9+ In the case at .ar, in e5change or their

&ro&erties, the Pachecos acquired 2,#"" original unissued no &ar alue

shares o stoc8s o the Del&her /rades 0or&oration 0onsequentl', the

Pachecos .ecame stoc8holders o the cor&oration .' su.scri&tion =/he

 

essence o the stoc8 su.scri&tion is an agreement to ta8e and &a' or

original unissued shares o a cor&oration, ormed or to .e ormed

It is to .e stressed that .' their ownershi& o the 2,#"" no &ar shares

o stoc8, the Pachecos hae control o the cor&oration /heir equit' ca&ital is

##F as against 4#F o the other stoc8holders, who also .elong to the same

amil' grou&

In eect, the Del&her /rades 0or&oration is a .usiness conduit o the

Pachecos <hat the' reall' did was to inest their &ro&erties and change the

nature o their ownershi& rom unincor&orated to incor&orated orm .'

organi*ing Del&her /rades 0or&oration to ta8e control o their &ro&erties and

at the same time sae on inheritance ta5es

 /he records do not &oint to an'thing wrong or o.>ectiona.le a.out this

=estate &lanning= scheme resorted to .' the Pachecos =/he legal right o a

ta5&a'er to decrease the amount o what otherwise could .e his ta5es or

altogether aoid them, .' means which the law &ermits, cannot .e dou.ted

 /he =Deed o %5change= o &ro&ert' .etween the Pachecos and

Del&her /rades 0or&oration cannot .e considered a contract o sale /here

was no transer o actual ownershi& interests .' the Pachecos to a third

&art' /he Pacheco amil' merel' changed their ownershi& rom one orm to

another /he ownershi& remained in the same hands ence, the &riate

res&ondent has no .asis or its claim o a light o frst reusal under the lease

contract

DISPOSITI(E PORTION

<%G%:G%, the instant &etition is here.' HG3!/%D, /he questioned

decision and resolution o the then Intermediate 3&&ellate 0ourt are

G%)%GB%D and B%/ 3BID% /he amended com&laint in 0iil 0ase !o #)

79 o the then 0ourt o :irst Instance o -ulacan is DIB$IBB%D !o costs