Gold Line Tours v. Heirs of Lacsa
REITERATIONFacts
The Antecedents: On August 2, 1993, Ma. Concepcion Lacsa, a nursing graduate en route to Manila for the licensure examination, boarded a Goldline passenger bus owned and operated by Travel & Tours Advisers, Inc. The bus, driven by Rene Abania, collided with a jeepney in Pili, Camarines Sur. A detached part of the jeepney struck Concepcion, causing her death. Her heirs subsequently filed a civil case against Travel & Tours Advisers, Inc. and Abania for breach of contract of carriage, alleging the collision was due to Abania's reckless driving. The defense claimed the jeepney driver was at fault and asserted due diligence in employee selection and supervision. The Regional Trial Court (RTC) found Travel & Tours Advisers, Inc. liable, ordering it to pay damages, while dismissing the case against Abania and the third-party complaint. Procedural History: The defendants appealed the RTC's decision to the Court of Appeals (CA), but the appeal was dismissed for failure to pay docket fees. The dismissal became final, and upon motion by the plaintiffs, the RTC issued a writ of execution. The sheriff levied a tourist bus owned by Gold Line Tours, Inc. (petitioner) to satisfy the judgment against Travel & Tours Advisers, Inc. Petitioner filed a third-party claim, asserting it was a separate entity from the judgment debtor and not a party to the case. The RTC dismissed this claim, finding petitioner and Travel & Tours Advisers, Inc. to be the same entity, operated and managed by William Cheng, and that Travel & Tours Advisers, Inc. was known as Goldline in Sorsogon. Petitioner's motion for reconsideration was denied. Subsequently, petitioner filed a special civil action for certiorari with the CA, which affirmed the RTC's orders, holding that the two companies were indeed one and the same and the levy was proper. The Petition: Petitioner seeks review of the CA's decision, arguing that the CA erred in affirming the RTC's finding that petitioner and Travel & Tours Advisers, Inc. were identical entities, and in sustaining the levy of its property to satisfy the judgment. Petitioner contends that the CA and RTC acted without jurisdiction or with grave abuse of discretion in piercing the corporate veil. The petition raises the issue of whether the CA correctly concluded that the RTC did not gravely abuse its discretion in denying petitioner's verified third-party claim, asserting that the evidence presented was insufficient to establish the identity of the two corporations and thus justify piercing the corporate veil.
Issue(s)
Whether the Court of Appeals erred in holding that the Regional Trial Court did not gravely abuse its discretion in denying petitioner’s verified third-party claim. Whether petitioner Gold Line Tours, Inc. and Travel & Tours Advisers, Inc. are one and the same entity for the purpose of enforcing the judgment against Travel & Tours Advisers, Inc.
Ruling
The petition is denied. The decision of the Court of Appeals is affirmed.
Ratio Decidendi
On the issue of whether the Court of Appeals erred in holding that the Regional Trial Court did not gravely abuse its discretion in denying petitioner’s verified third-party claim: The Supreme Court found no reason to reverse the CA's decision. The RTC had sufficient factual basis to reject Gold Line's third-party claim. Evidence showed that William Cheng, who claimed to be the operator of Travel & Tours Advisers, Inc., was also the President/Manager and an incorporator of Gold Line Tours, Inc. Furthermore, Travel & Tours Advisers, Inc. had been known in Sorsogon as "Goldline." The Court reiterated that the fiction of separate corporate identity cannot be used to defeat the ends of justice, justify wrong, protect fraud, or defend crime. The RTC correctly ruled that Gold Line could not be shielded from liability under the final judgment by invoking the doctrine of separate corporate identity. The Court emphasized that a petition for certiorari does not deal with errors of judgment or mistakes in the appreciation of evidence, and the petitioner failed to demonstrate grave abuse of discretion amounting to lack or excess of jurisdiction. On the issue of whether petitioner Gold Line Tours, Inc. and Travel & Tours Advisers, Inc. are one and the same entity for the purpose of enforcing the judgment against Travel & Tours Advisers, Inc.: The Court affirmed the findings of both the RTC and the CA that the two companies were one and the same entity. The CA cogently observed that William Cheng disclosed during trial that Travel & Tours Advisers, Inc. (Goldline) operated sixty units of Goldline buses, making it obvious that the Goldline buses were used in the operations of the defendant company. The Amended Articles of Incorporation of Gold Line Tours, Inc. listed William Cheng as an incorporator, along with other members of the Ching and Dy families. The CA saw no reason why the defendant company would be using Goldline buses unless the two companies were actually one and the same. Moreover, the name "Goldline" was added to the defendant's name in the complaint without objection from William Ching, suggesting that Gold Line Tours, Inc. should have been the party defendant. The Court concluded that the levy of the bus in question was proper because the two companies were indeed one and the same.
Main Doctrine
The fiction of separate corporate personality cannot be used to defeat the ends of justice, particularly in enforcing a final judgment, when the evidence shows that the entities are one and the same and the corporate veil is being used to shield fraud or evade obligations.