G.R. No. 159108 - Gold Line Tours, Inc. vs. Heirs of Lacsa

Case Summary (G.R. No. 159108)

Factual Background

On August 2, 1993, Ma. Concepcion Lacsa boarded a Goldline passenger bus owned and operated by Travel & Tours Advisers, Inc. en route from Sorsogon to Cubao, Quezon City. At Barangay San Agustin in Pili, Camarines Sur, the Goldline bus driven by Rene Abania collided head-on with a jeepney driven by Alejandro Belbis. A detached metal part of the jeepney struck Concepcion in the chest, causing her instant death. Concepcion had just obtained a Bachelor of Science in Nursing and was proceeding to Manila to take the licensure examination.

Trial Court Proceedings and Decision

On August 23, 1993, the heirs filed Civil Case No. 93-5917 against Travel & Tours Advisers, Inc. and Abania for damages arising from breach of contract of carriage. Plaintiffs alleged reckless conduct by Abania. Witness testimony for plaintiffs described inattentive driving and the sequence of events that led to Concepcion’s death. Defendants presented testimony, including that of SPO1 Pedro Corporal and William Cheng, who maintained that the jeepney driver was at fault and that Cheng had exercised due diligence in hiring and supervising employees. The RTC found that a contract of carriage existed and that Travel & Tours Advisers, Inc. failed to rebut the disputable presumption of negligence under Article 1786 of the Civil Code. On June 30, 1997, the RTC awarded plaintiffs damages and costs, ordered dismissal as to Abania, and dismissed a third-party complaint.

Appeal and Finality

Defendants appealed to the Court of Appeals. On June 11, 1998, the CA dismissed the appeal for failure to pay docket and other lawful fees as required by Rule 41, Section 4, Rules of Court. The dismissal became final, and entry of judgment was made on July 17, 1998. Plaintiffs moved for, and the RTC granted, a writ of execution to implement the final judgment.

Execution, Sheriff’s Return, and Levy

The writ of execution was issued on February 24, 2000 and, by sheriff’s partial return dated May 10, 2000, was personally served on Travel & Tours Advisers, Inc. or William Cheng through his secretary. Cheng failed to satisfy the judgment. The sheriff levied a tourist bus bearing Plate No. NWW-883 pursuant to the writ. Plaintiffs later moved to cite Cheng for contempt for failing to comply with the writ. Meanwhile, a party claiming ownership of the levied bus emerged.

Third-Party Claim and RTC Orders

On April 20, 2001, GOLD LINE TOURS, INC. filed a verified third-party claim asserting ownership of the bus Plate No. NWW-883 and contending that it had not been impleaded in Civil Case No. 93-5917 and was a separate corporate entity from Travel & Tours Advisers, Inc. Records show that petitioner amended its Articles of Incorporation on November 8, 1993. Respondents opposed the third-party claim on grounds including noncompliance with notice requirements under Rule 15, Sections 4 and 5, Rules of Court, identity of the two corporations and common management under William Cheng, and that petitioner sought to defraud creditors so that the doctrine of piercing the veil applied. The RTC reviewed documents and denied the third-party claim on August 2, 2001, reasoning that William Ching (also referred to as Cheng in the record) was both operator of Travel & Tours Advisers, Inc. and President/Manager/incorporator of GOLD LINE TOURS, INC., that the two corporations were effectively one and the same, and that corporate fiction cannot be used to defeat justice. The RTC denied reconsideration on October 22, 2001.

Petition for Certiorari in the Court of Appeals

GOLD LINE TOURS, INC. filed a special civil action for certiorari in the Court of Appeals, contending that the RTC acted without jurisdiction or committed grave abuse of discretion in dismissing its third-party claim and in denying reconsideration. The petition asserted the absence of plain, speedy, and adequate remedy. The CA dismissed the petition on October 30, 2002, holding that the petition lacked merit and concurring with the trial court’s factual finding that the two corporations were one and the same. The CA noted admissions at trial that Travel & Tours Advisers, Inc. operated sixty Goldline buses, the Amended Articles of Incorporation of Gold Line Tours, Inc. listing incorporators that included a William Ching, and the absence of objection when the name Goldline was used in the complaint. The CA concluded the levy was proper. A motion for reconsideration to the CA was denied on June 25, 2003.

Issue Presented to the Supreme Court

The central issue was whether the Court of Appeals correctly concluded that the Regional Trial Court did not commit grave abuse of discretion in dismissing petitioner's verified third-party claim and in authorizing execution against petitioner’s property despite petitioner not being impleaded in Civil Case No. 93-5917.

Petitioner's Contentions

Petitioner contended that it was a distinct juridical entity separate from Travel & Tours Advisers, Inc. and that the evidence was insufficient to pierce the corporate veil or to justify levy upon petitioner's bus. Petitioner argued that the RTC and CA erred in finding identity of the two companies and in permitting execution against property not belonging to the judgment debtor.

Respondents' Contentions

Respondents maintained that the two corporations were managed and operated by the same person and persons, that both entities used the Goldline name in operations, and that petitioner sought to evade liability by invoking separate corporate personalities. Respondents also argued defects in procedure by petitioner and invoked the equitable doctrine permitting disregard of corporate fiction to prevent injustice.

Supreme Court Ruling

The Supreme Court denied the petition for review on certiorari and affirmed the Court of Appeals decision promulgated October 30, 2002. The Court ordered petitioner to pay the costs of suit. The Court found no reason to reverse the CA and held that the RTC had sufficient factual basis to conclude the two corporations were one and the same and to reject petitioner’s third-party claim.

Legal Basis and Reasoning

The Court accepted the RTC’s factual findings that records showed William Cheng (also spelled Ching) identified as operator of Travel & Tours Advisers, Inc. was also President/Manager and an incorporator of GOLD LINE TOURS, INC., and that Travel & Tours Advisers, Inc. had long been known in Sorsogon as Goldline. The Court endorsed the CA’s observation that trial admissions and the Amended Articles of Incorporation supported identity of operation and management, a

Case Syllabus (G.R. No. 159108)

Parties and Posture

Gold Line Tours, Inc. was the petitioner in a special civil action for certiorari seeking review of the orders of the Regional Trial Court and the decision of the Court of Appeals.
Heirs of Maria Concepcion Lacsa, represented by Teodoro Lacsa, were the respondents and the judgment creditors in Civil Case No. 93-5917.
The petition challenged the RTC orders of August 2, 2001 and October 22, 2001 and the CA decision of October 30, 2002 that sustained the levy of a bus owned by petitioner to satisfy a final judgment against Travel & Tours Advisers, Inc..
The central relief sought was to prevent the execution sale of a bus levied pursuant to the writ of execution issued in favor of the respondents.

Key Facts

On August 2, 1993, Ma. Concepcion Lacsa and her sister boarded a Goldline passenger bus with Plate No. NXM-105 owned and operated by Travel & Tours Advisers, Inc. for travel from Sorsogon to Cubao.
The bus, driven by Rene Abania, collided head-on with a jeepney with Plate No. EAV-313 driven by Alejandro Belbis, and a detached metal part struck and killed Ma. Concepcion Lacsa instantly.
On August 23, 1993, the heirs instituted Civil Case No. 93-5917 against Travel & Tours Advisers, Inc. and Rene Abania for damages arising from breach of contract of carriage.
Trial testimony included the passenger's sister alleging inattentive driving and a police witness attributing fault to the jeepney driver, while William Cheng (the bus operator) testified to regularized hiring, training, supervision, and corporate operations involving sixty Goldline buses.
The parties disputed the cause of the accident and the degree of negligence of the bus driver and the jeepney driver.

Trial Court Ruling

The RTC rendered judgment on June 30, 1997 finding Travel & Tours Advisers, Inc. liable for the death of Ma. Concepcion Lacsa and awarding specific amounts for wake expenses, funeral expenses, death, moral damages, exemplary damages, attorneys' fees, litigation expenses, and costs.
The RTC dismissed the case against Rene Abania and dismissed the third-party complaint brought by defendants against the jeepney operator.
The RTC applied Art. 1786 of the Civil Code to invoke the disputable presumption of carrier fault and found that Travel & Tours Advisers, Inc. failed to overcome the presumption.

Procedural History

The defendants appealed the RTC judgment to the Court of Appeals, but the CA dismissed the appeal on June 11, 1998 for failure to pay docket and lawful fees, and the dismissal became final with entry of judgment on July 17, 1998.
A writ of execution was issued by the RTC on February 24, 2000, and the sheriff's partial return dated May 10, 2000 certified the levy of a tourist bus bearing Plate No. NWW-883.
Gold Line Tours, Inc. filed a verified third-party claim on April 20, 2001 asserting ownership of the levied bus and that it was a corporation separate from Travel & Tours Advisers, Inc..
The RTC dismissed the thi