G.R. No. 159108 ; June 18, 2012
GOLD LINE TOURS, INC., Petitioner, vs. HEIRS OF MARIA CONCEPCION LACSA, Respondents.

FACTS

On August 2, 1993, Maria Concepcion Lacsa and her sister boarded a Goldline bus owned and operated by Travel & Tours Advisers, Inc. (TTAI). The bus collided with a jeepney in Camarines Sur, resulting in Concepcion’s death. Her heirs filed a breach of contract of carriage suit against TTAI and its driver. The RTC rendered a final and executory decision on June 30, 1997, holding TTAI liable for damages. During execution, the heirs sought to levy a property registered to Gold Line Tours, Inc. (GLTI). GLTI protested, claiming it was a separate corporate entity from TTAI and was not a party to the original case.
The RTC authorized the levy, ruling that GLTI and TTAI were one and the same entity. The Court of Appeals affirmed this, finding that GLTI was merely a continuation or alter ego of TTAI, which had ceased operations. GLTI appealed to the Supreme Court, arguing the lower courts pierced its corporate veil without basis and in violation of due process since it was never impleaded.

ISSUE

Whether the Court of Appeals erred in upholding the RTC’s piercing of GLTI’s corporate veil to satisfy the judgment against TTAI.

RULING

The Supreme Court denied the petition and affirmed the CA decision. The legal logic rests on the doctrine of piercing the corporate veil, which is applicable when the corporate fiction is used to defeat public convenience, justify wrong, protect fraud, or defend crime. The Court found the doctrine properly applied here. The evidence established that TTAI and GLTI were not genuinely separate entities. Both corporations were engaged in the same bus transportation business under the “Goldline” trade name, operated from the same address, and were owned by the same family. Crucially, TTAI ceased operations after the judgment against it, and GLTI appeared to be its mere continuation, using the same buses and franchise to run the business, thereby evading its predecessor’s liability.
The Court emphasized that the separate juridical personality is a privilege that cannot be used as a shield to commit injustice. Allowing GLTI to escape the judgment debt, given the identity of business, ownership, and operation, would sanction a gross evasion of liability and subvert the ends of justice. The execution against GLTI’s property was valid as it was, in legal contemplation, the property of the judgment debtor, TTAI. The ruling ensures that a corporation cannot defraud creditors by merely creating a new corporate form while maintaining the same business and control.