Delpher Trades Corp. V. IAC (1988) – Gutierrez, Jr., J. Petitioners: Delpher Trades Trades Corporation, Corporation, and Delphin Pacheco Resp Re spon onde dent nts: s: Inter Intermed media iate te Appell Appellate ate Court Court and Hydro Pipes Philippines, Inc. Brief Brief Facts: Facts: Delf and Pelagia Pacheco leased the lot they coo!ned to CCII to !hich the si"lings granted a right of #rst refusal. CCII assigned its rights to Hydro Pipes. A deed of e$change !as e$ecuted "et!een the Pache acheco cos s and and Delp Delphe herr Trade rades s Corp Corp.. !her !herei ein n the the Pache acheco cos s con% con%ey eyed ed the the leas leased ed lot lot to Delp Delphe herr in e$change for &'(( shares of stoc). Hydro Pipes #led a complaint for recon%eyance for alleged %iolation of its right of #rst refusal. Doctrine: After ter inco incorp rpor orat atio ion, n, one one "eco "ecome mes s a stoc) stoc)hol holder der of a corpor corporati ation on "y su"sc su"scrip riptio tion n or "y purchasing stoc) directly from the corporation or from indi%idual o!ners thereof.
FACTS: *. Del#n Del#n Pachec Pacheco o and his his sister sister Pelag Pelagia ia Pache Pacheco co !ere !ere the the coo coo!n !ner ers s of a real eal esta estate te in Polo olo +no! +no! alenzuela-. &. They leased the property to Construction Components International Inc. +CCII-, pro%iding that during the e$istence or after the term of this lease the lessor, should he decide to sell the property leased shall #rst oer the same to the lessee and the latter latter has has the prior priority ity to "uy "uy under under simil similar ar conditions. /. CCII CCII assigne assigned d its rights rights and o"liga o"ligatio tions ns under under the contr ontrac actt of lease ease in fa% fa%our our of Hyd Hydro Pipe ipes Philipp Philippines ines,, Inc. !ith the sig signed ned conform conformity ity and cons consen entt of the the Pache acheco cos. s. The The cont contra ract ct and and assignment of lease !ere annotated at the "ac) of the title. 0. A deed deed of e$ch e$chan ange ge !as e$ec e$ecut uted ed "et!e "et!een en the Pach acheco ecos and defen fendant ant Delph lpher Trade ades Corporation !here"y the former con%eyed to the latter latter the leased leased propert property y together together !ith another another parcel of land also in alenzuela for &'(( shares of stoc) of Delpher +total %alue of P*.'1'. 2n the the ground ground that it it !as not not gi%en gi%en the the #rst #rst option option to "uy the leased property pursuant to the pro%iso in the the leas lease e agre agreem emen ent, t, Hydr Hydro o Pipe Pipes s #led #led an amended complaint for recon%eyance of the lot in its its fa%o fa%our ur unde underr cond condit itio ions ns simi simila larr to thos those e !here"y !here"y Delpher Delpher ac3uire ac3uired d the proper property ty from from the Pachecos. 4. The The C5I C5I rule ruled d in fa%ou fa%ourr of Hydro Hydro Pipe Pipes. s. This This !as a6rmed on appeal "y the IAC. 7. Petit Petition ioners ers #led #led a petit petition ion for for certior certiorar arii !hich !hich !as initially denied "y the 8C "ut upon 19, the 8C ga%e it due course. :. ;dua ;duard rdo o en?amin Hernandez, and 8ps. Del#n and Pilar Pacheco, !ho o!ned in common the parce parcell of land land leased leased to Hydro Hydro Pipe Pipes s in order to perpetuate their control o%er the propert property y throug through h the corporat corporation ion and to a%oid ta$es@
". To acco accomp mpli lish sh this this,, t!o t!o piec pieces es of real eal estate, including the land leased to Hydro Pipes, !ere transferred to the corporation@ c. The The lease leased d pro proper perty ty !as transf transfer erred red to the the corporation "y %irtue of a deed of e$cha e$chang nge e of prope property rty@@ in e$ch e$chang ange e for thes these e prop proper erti ties es,, Pelag elagia ia and and Del# Del#n n ac3u ac3uir ired ed &'(( &'(( unis unissu sued ed no par par %alu %alue e shares of stoc) !hich are e3ui%alent to a '' ma?ority in the corporati corporation on "ecause "ecause the other o!ners only o!ned &((( shares d. At the the time time of inco incorp rpor orat atio ion, n, he )ne! )ne! all all a"out the contract of lease to Hydro Pipes. In the the petit petition ioners ersBB 19, 19, they they refer refer to this this scheme as estate planning E. Petit etitio ione ners rs cont conten end d that that ther there e !as !as actu actual ally ly no transfer of o!nership of the su"?ect parcel of land since since the Pacheco achecos s remai remained ned in contr control ol of the proper property ty.. The transfer transfer of o!nershi o!nership, p, if anythin anything, g, !as merely in form, "ut not in su"stance. a. Petition Petitioner er corpo corporati ration on is is a mere mere alter ego or conduit conduit of the Pachec Pacheco o coo!ners@ coo!ners@ hence the corporation and the coo!ners should "e deemed to "e the same, there "eing identity of interest. ". The The Pache acheco cos s did did not not sell sell the the prop proper erty ty. There !as no sale and they e$changed the land land for for shar shares es of stoc stoc)s )s in thei theirr o!n o!n corporation. *(. *(. 9espond espondent ents s argu argue e that that Delph Delpher er is a corpo corporat rate e entity separate and distinct from the Pachecos. It cannot "e said that Delpher is the PachecoBs alter ego or conduit. a. That Del#n, Del#n, ha%in ha%ing g treated treated Delpher Delpher as such such a separate and distinct corporate entity, is not not a part party y !ho !ho may may alle allege ge that that this this separa separate te corpo corporat rate e e$ist e$istenc ence e shoul should d "e disregarded. ". Ther There e !as actu actual al tran transf sfer er of o!ne o!ners rshi hip p interest o%er the leased property !hen the same ame !as !as tran trans sfer ferred to Delp elpher her in e$change for the latterBs shares of stoc). ISSUE: WON the Deed of Exchane exec!ted "# the Pachecos Pachecos and De$phe De$pher r %as %as &eant &eant to "e a contract of sa$e' %hich pre(!diced respondent)s riht of *rst ref!sa$+ ,NORATIO: RATIO: The Delpher Trades Corporation Corporation is a "usiness conduit of the Pachecos. Fhat they really did !as to in%est their properties and change the nature of their o!nership from unincorporated unincorporated to incorporated incorporated form "y organ organiz izing ing Delph Delpher er Trades rades Corpor Corporati ation on to ta)e ta)e control of their properties and at the same time sa%e on inheritance ta$es. The Deed of ;$change of property property cannot "e a considered a contract of sale since there !as no tran transf sfer er of actu actual al o!ne o!ners rshi hip p inte intere rest sts s "y the the Pacheco achecos s to a third third party party. The Pachec acheco o famil family y merely changed their o!nership from one form to another. There is nothing !rong or o"?ectiona"le o"?ectiona"le a"out the esta estate te plan planni ning ng sche scheme me resor esorte ted d to "y the the Pache acheco cos. s. The The lega legall righ rightt of a ta$p ta$pay ayer er to decrease the amount of !hat other!ise could "e his his ta$es ta$es or altog altogeth ether er a%oid a%oid them, them, "y means means !hich the la! permits, cannot "e dou"ted. •
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After incorporation, one "ecomes a stoc)holder of a corporation "y su"scription or "y purchasing stoc) directly from the corporation or from indi%idual o!ners thereof. o In e$change of their properties, the Pachecos ac3uired &'(( original unissued no par %alue shares of stoc)s of the Delpher Trades Corporation. Conse3uently, the Pachecos "ecame stoc)holders of the corporation "y su"scription. A nopar %alue share does not purport to represent any stated proportionate interest in the capital stoc) measured "y %alue, "ut only an ali3uot part of the !hole num"er of such share issuing corporation. The holder of nopar shares may see from the certi#cate itself that he is an ali3uot sharer in the assets of the corporation. >ut this character of proportionate interest is not hidden "eneath a false appearance of a gi%en sum in
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money, as in the case of par %alue shares. The capital stoc) of a corporation issuing only nopar %alue shares is not set forth "y a stated amount of money, "ut instead is e$pressed to "e di%ided into a stated num"er of shares, such as *((( shares. This indicates that a shareholder of *(( such shares is an ali3uot sharer in the assets of the corporation, no matter !hat %alue they may ha%e to the e$tent of *((*(((, or **(. Thus, "y remo%ing the par %alue of shares, the attention of persons interested in the #nancial condition of a corporation is focused upon the %alue of assets and the amount of its de"ts. There !as no attempt to state the true or current mar)et %alue of the real estate. and %alued at P/((.(( per s3uare meter !as turned o%er to the familyBs corporation for only P*0.(( a s3uare meter.
DISPOSITI.E: Petition granted.
