DELPHER TRADES CORPORATION vs.

IAC
G.R. No. L-69259 January 26, 1988

Facts:

Delfin Pacheco and sister Pelagia were the owners of a parcel of land in Polo (now Valenzuela).
On April 3, 1974, they leased to Construction Components International Inc. the property and
providing for a right of first refusal should it decide to buy the said property.

Construction Components International, Inc. assigned its rights and obligations under the
contract of lease in favor of Hydro Pipes Philippines, Inc. with the signed conformity and
consent of Delfin and Pelagia. In 1976, a deed of exchange was executed between lessors Delfin
and Pelagia Pacheco and defendant Delpher Trades Corporation whereby the Pachecos conveyed
to the latter the leased property together with another parcel of land also located in Malinta
Estate, Valenzuela for 2,500 shares of stock of defendant corporation with a total value of P1.5M.

On the ground that it was not given the first option to buy the leased property pursuant to the
proviso in the lease agreement, respondent Hydro Pipes Philippines, Inc., filed an amended
complaint for reconveyance of the lot.
Trivia lang: Delpher Trades Corp is owned by the Pacheco Family, managed by the sons and
daughters of Delfin and Pelagia. Their primary defense is that there is no transfer of ownership
because the Pachecos remained in control of the original co-owners. The transfer of ownership, if
anything, was merely in form but not in substance.

Issue:

WON the Deed of Exchange of the properties executed by the Pachecos and the Delpher Trades
Corporation on the other was meant to be a contract of sale which, in effect, prejudiced the
Hydro Phils right of first refusal over the leased property included in the deed of exchange?
NO

Held:

By their ownership of the 2,500 no par shares of stock, the Pachecos have control of the
corporation. Their equity capital is 55% as against 45% of the other stockholders, who also
belong to the same family group. In effect, the Delpher Trades Corporation is a business conduit
of the Pachecos. What they really did was to invest their properties and change the nature of their
ownership from unincorporated to incorporated form by organizing Delpher Trades Corporation
to take control of their properties and at the same time save on inheritance taxes.

The Deed of Exchange of property between the Pachecos and Delpher Trades Corporation
cannot be considered a contract of sale. There was no transfer of actual ownership interests by
the Pachecos to a third party. The Pacheco family merely changed their ownership from one form
to another. The ownership remained in the same hands. Hence, the private respondent has no
basis for its claim of a light of first refusal under the lease contract.

REYES, et. al.

vs.

DE LEON (Case No. 22)

Digested by Jommel JaucianSpouses Lanuza sold their two-story house to petitioner

and Aurelia Navarro together with the leasehold rights to the lot, a television set
and a refrigerator in consideration of the sum of P3,000, with a right to repurchase
such properties for the same amount for a period of 3 months(this was made even
without the signature of the wife nor registration to the Registry of Deeds).Such
period was extended to 12 July 1961 (this time with the wifes signature). However,
after the execution of the Deed of Sale, the Spouses mortgaged the same house in
favor of Martin de Leon to secure the payment of P2,720 within one year (this was
registered in the Registry of Deeds). When the spouses failed to pay their obligation,
de Leon filed a petition for extra- judicial foreclosure of mortgage, while on the other
hand Reyes and Navarro filed a petition for the consolidation of ownership of the
house on the ground that the period of redemption expired on July 12, 1961 without
the vendees exercising their right of repurchase. On October 23, the house was sold
to De Leon as the only bidder at the sheriffs sale, in which the former immediately
took possession of the property. He also intervened in court and asked for the
dismissal of the petition filed by Reyes and Navarro on the ground that the
unrecorded pacto de retro sale could not affect his rights as a third party. He
further argued that the sale in question is not only voidable but void ab initio for
having been made by Lanuza without the consent of his wife.

ISSUE: Who has the right over the contested property?

RULING: It is de Leon who has the right over the property. Although it is true that a
conveyance of real property of the conjugal partnership made by the husband
without the consent of his wife is merely voidable, Article 173 of the Civil Code gives
the wife ten years within which to bring an action for annulment, and as such it
could also be ratified as the wife did in the case at bar when she signed the
annotation that the redemption period is extended up to 12 July 1961. Furthermore,
a provision in the Deed of Sale in question which states that if the Lanuzas fail to
pay said amount of P3,000.00 within the stipulated period of three months, their
right to repurchase the said properties shall be forfeited and the ownership thereto
automatically pass to Mrs. Maria Bautista Vda. de Reyes without any Court
intervention and they can take possession of the same is contrary to the nature of
a true pacto de retro sale under which a vendee acquires ownership of the thing
sold immediately upon execution of the sale, subject only to the vendor's right of
redemption, since what has been established is an odious pactum commissorium
which enables the mortgages to acquire ownership of the mortgaged properties
without need of foreclosure proceedings. Therefore, such sale is a nullity, being
contrary to law.

Another point made by the Supreme Court is that the mortgage was first registered
than the Deed of Sale. By following the principle of prior tempore potior jure (he
who is first in time is preferred in right), the latter cannot prevail over the registered
mortgage of De Leon.