GOLD LINE TOURS, INC.

, Petitioner,
vs.
HEIRS OF MARIA CONCEPCION LACSA, Respondents.

Advisers, Inc. (Goldline) and Rene Abania, alleged that the collision was due to the
reckless and imprudent manner by which Abania had driven the Goldline bus. 11
In support of the complaint, Miriam testified that Abania had been occasionally looking up
at the video monitor installed in the front portion of the Goldline bus despite driving his bus
at a fast speed;12 that in Barangay San Agustin, the Goldline bus had collided with a service
jeepney coming from the opposite direction while in the process of overtaking another
bus;13 that the impact had caused the angle bar of the jeepney to detach and to go through
the windshield of the bus directly into the chest of Concepcion who had then been seated
behind the drivers seat;14that concerned bystanders had hailed another bus to rush
Concepcion to the Ago Foundation Hospital in Naga City because the Goldline bus
employees and her co-passengers had ignored Miriams cries for help; 15 and that
Concepcion was pronounced dead upon arrival at the hospital. 16

DECISION
BERSAMIN, J.:
The veil of corporate existence of a corporation is a fiction of law that should not defeat the
ends of justice.
Petitioner seeks to reverse the decision promulgated on October 30, 2002 1 and the
resolution promulgated on June 25, 2003,2 whereby the Court of Appeals (CA) upheld the
orders issued on August 2, 20013 and October 22, 20014by the Regional Trial Court (RTC),
Branch 51, in Sorsogon in Civil Case No. 93-5917 entitled Heirs of Concepcion Lacsa,
represented by Teodoro Lacsa v. Travel & Tours Advisers, Inc., et al. authorizing the
implementation of the writ of execution against petitioner despite its protestation of being a
separate and different corporate personality from Travel & Tours Advisers, Inc. (defendant
in Civil Case No. 93-5917).

To refute the plaintiffs allegations, the defendants presented SPO1 Pedro Corporal of the
Philippine National Police Station in Pili, Camarines Sur, and William Cheng, the operator
of the Goldline bus.17 SPO1 Corporal opined that based on his investigation report, the
driver of the jeepney had been at fault for failing to observe precautionary measures to
avoid the collision;18 and suggested that criminal and civil charges should be brought
against the operator and driver of the jeepney.19 On his part, Cheng attested that he had
exercised the required diligence in the selection and supervision of his employees; and that
he had been engaged in the transportation business since 1980 with the use of a total of 60
units of Goldline buses, employing about 100 employees (including drivers, conductors,
maintenance personnel, and mechanics);20 that as a condition for regular employment,
applicant drivers had undergone a one-month training period and a six-month probationary
period during which they had gotten acquainted with Goldlines driving practices and
demeanor;21 that the employees had come under constant supervision, rendering improbable
the claim that Abania, who was a regular employee, had been glancing at the video monitor
while driving the bus;22 that the incident causing Concepcions death was the first serious
incident his (Cheng) transportation business had encountered, because the rest had been
only minor traffic accidents;23 and that immediately upon being informed of the accident,
he had instructed his personnel to contact the family of Concepcion. 24

In the orders assailed in the CA, the RTC declared petitioner and Travel & Tours Advisers,
Inc. to be one and the same entity, and ruled that the levy of petitioners property to satisfy
the final and executory decision rendered on June 30, 1997 against Travel & Tours
Advisers, Inc. in Civil Case No. 93-59175 was valid even if petitioner had not been
impleaded as a party.
Antecedents
On August 2, 1993, Ma. Concepcion Lacsa (Concepcion) and her sister, Miriam Lacsa
(Miriam), boarded a Goldline passenger bus with Plate No. NXM-105 owned and operated
by Travel &Tours Advisers, Inc. They were enroute from Sorsogon to Cubao, Quezon
City.6 At the time, Concepcion, having just obtained her degree of Bachelor of Science in
Nursing at the Ago Medical and Educational Center, was proceeding to Manila to take the
nursing licensure board examination.7 Upon reaching the highway at Barangay San Agustin
in Pili, Camarines Sur, the Goldline bus, driven by Rene Abania (Abania), collided with a
passenger jeepney with Plate No. EAV-313 coming from the opposite direction and driven
by Alejandro Belbis.8 As a result, a metal part of the jeepney was detached and struck
Concepcion in the chest, causing her instant death. 9

The defendants blamed the death of Concepcion to the recklessness of Bilbes as the driver
of the jeepney, and of its operator, Salvador Romano; 25 and that they had consequently
brought a third-party complaint against the latter.26
After trial, the RTC rendered its decision dated June 30, 1997, disposing:

On August 23, 1993, Concepcions heirs, represented by Teodoro Lacsa, instituted in the
RTC a suit against Travel & Tours Advisers Inc. and Abania to recover damages arising
from breach of contract of carriage.10 The complaint, docketed as Civil Case No. 93-5917
and entitled Heirs of Concepcion Lacsa, represented by Teodoro Lacsa v. Travel & Tours

ACCORDINGLY, judgment is hereby rendered:

(1) Finding the plaintiffs entitled to damages for the death of Ma. Concepcion Lacsa in
violation of the contract of carriage;

(2) Ordering defendant Travel & Tours Advisers, Inc. (Goldline) to pay plaintiffs:

Thereafter, the plaintiffs moved for the issuance of a writ of execution to implement the
decision dated June 30, 1997.30 The RTC granted their motion on January 31, 2000,31 and
issued the writ of execution on February 24, 2000.32

a. P30,000.00 expenses for the wake;

b. P 6,000.00 funeral expenses;

On May 10, 2000, the sheriff implementing the writ of execution rendered a Sheriffs
Partial Return,33 certifying that the writ of execution had been personally served and a copy
of it had been duly tendered to Travel & Tours Advisers, Inc. or William Cheng, through his
secretary, Grace Miranda, and that Cheng had failed to settle the judgment amount despite
promising to do so. Accordingly, a tourist bus bearing Plate No. NWW-883 was levied
pursuant to the writ of execution.

c. P50,000.00 for the death of Ma. Concepcion Lacsa;

d. P150,000.00 for moral damages;
e. P20,000.00 for exemplary damages;

The plaintiffs moved to cite Cheng in contempt of court for failure to obey a lawful writ of
the RTC.34 Cheng filed his opposition.35 Acting on the motion to cite Cheng in contempt of
court, the RTC directed the plaintiffs to file a verified petition for indirect contempt on
February 19, 2001.36

f. P8,000.00 for attorneys fees;

g. P2,000.00 for litigation expenses;
h. Costs of suit.

On April 20, 2001, petitioner submitted a so-called verified third party claim, 37 claiming
that the tourist bus bearing Plate No. NWW-883 be returned to petitioner because it was the
owner; that petitioner had not been made a party to Civil Case No. 93-5917; and that
petitioner was a corporation entirely different from Travel & Tours Advisers, Inc., the
defendant in Civil Case No. 93-5917.

(3) Ordering the dismissal of the case against Rene Abania;

(4) Ordering the dismissal of the third-party complaint.
SO ORDERED.27

It is notable that petitioners Articles of Incorporation was amended on November 8,

1993,38 shortly after the filing of Civil Case No. 93-5917 against Travel & Tours Advisers,
Inc.

The RTC found that a contract of carriage had been forged between Travel & Tours
Advisers, Inc. and Concepcion as soon as she had boarded the Goldline bus as a paying
passenger; that Travel & Tours Advisers, Inc. had then become duty-bound to safely
transport her as its passenger to her destination; that due to Travel & Tours Advisers, Inc.s
inability to perform its duty, Article 1786 of the Civil Code created against it the disputable
presumption that it had been at fault or had been negligent in the performance of its
obligations towards the passenger; that Travel & Tours Advisers, Inc. failed to disprove the
presumption of negligence; and that a rigid selection of employees was not sufficient to
exempt Travel & Tours Advisers, Inc. from the obligation of exercising extraordinary
diligence to ensure that its passenger was carried safely to her destination.

Respondents opposed petitioners verified third-party claim on the following grounds,

namely: (a) the third-party claim did not comply with the required notice of hearing as
required by Rule 15, Sections 4 and 5 of the Rules of Court; (b) Travel & Tours Advisers,
Inc. and petitioner were identical entities and were both operated and managed by the same
person, William Cheng; and (c) petitioner was attempting to defraud its creditors
respondents herein hence, the doctrine of piercing the veil of corporate entity was
squarely applicable.39
On August 2, 2001, the RTC dismissed petitioners verified third-party claim, observing
that the identity of Travel & Tours Adivsers, Inc. could not be divorced from that of
petitioner considering that Cheng had claimed to be the operator as well as the
President/Manager/incorporator of both entities; and that Travel & Tours Advisers, Inc. had
been known in Sorsogon as Goldline.40

Aggrieved, the defendants appealed to the CA.

On June 11, 1998,28 the CA dismissed the appeal for failure of the defendants to pay the
docket and other lawful fees within the required period as provided in Rule 41, Section 4 of
the Rules of Court (1997). The dismissal became final, and entry of judgment was made on
July 17, 1998.29

Petitioner moved for reconsideration,41 but the RTC denied the motion on October 22,
2001.42

Thence, petitioner initiated a special civil action for certiorari in the CA, 43 asserting:

Hence, this appeal, in which petitioner faults the CA for holding that the RTC did not act
without jurisdiction or grave abuse of discretion in finding that petitioner and Travel &
Tours Advisers, Inc., the defendant in Civil Case No. 5917, were one and same entity, and
for sustaining the propriety of the levy of the tourist bus with Plate No. NWW-883 in
satisfaction of the writ of execution. 47

THE RESPONDENT HONORABLE RTC JUDGE HAD ACTED WITHOUT

JURISDICTION OR COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING
TO LACK OF JURISDICTION IN ISSUING THE: (A) ORDER DATED 2 AUGUST
2001, COPY OF WHICH IS HERETO ATTACHED AS ANNEX A, DISMISSING
HEREIN PETITIONERS THIRD PARTY CLAIM; AND (B) ORDER DATED 22
OCTOBER 2001, COPY OF WHICH IS HERETO ATTACHED AS ANNEX B DENYING
SAID PETITIONERS MOTION FOR RECONSIDERATION; AND THAT THERE IS
NO APPEAL, OR ANY PLAIN, SPEEDY AND ADEQUATE REMEDY AVAILABLE TO
SAID PETITIONER.

In the meantime, respondents filed in the RTC a motion to direct the sheriff to implement
the writ of execution in view of the non-issuance of any restraining order either by this
Court or the CA.48 On February 23, 2007, the RTC granted the motion and directed the
sheriff to sell the Goldline tourist bus with Plate No. NWW-883 through a public auction. 49
Issue

On October 30, 2002, the CA promulgated its decision dismissing the petition for
certiorari,44 holding as follows:

Did the CA rightly find and conclude that the RTC did not gravely abuse its discretion in
denying petitioners verified third-party claim?

The petition lacks merit.

Ruling
As stated in the decision supra, William Ching disclosed during the trial of the case that
defendant Travel & Tours Advisers, Inc. (Goldline), of which he is an officer, is operating
sixty (60) units of Goldline buses. That the Goldline buses are used in the operations of
defendant company is obvious from Mr. Chengs admission. The Amended Articles of
Incorporation of Gold Line Tours, Inc. disclose that the following persons are the original
incorporators thereof: Antonio O. Ching, Maribel Lim Ching, witness William Ching, Anita
Dy Ching and Zosimo Ching. (Rollo, pp. 105-106) We see no reason why defendant
company would be using Goldline buses in its operations unless the two companies are
actually one and the same.

We find no reason to reverse the assailed CA decision.

In the order dated August 2, 2001, the RTC rendered its justification for rejecting the thirdparty claim of petitioner in the following manner:
xxx
The main contention of Third Party Claimant is that it is the owner of the Bus and
therefore, it should not be seized by the sheriff because the same does not belong to the
defendant Travel & Tours Advises, Inc. (GOLDLINE) as the third party claimant and
defendant are two separate corporation with separate juridical personalities. Upon the other
hand, this Court had scrutinized the documents submitted by the Third party Claimant and
found out that William Ching who claimed to be the operator of the Travel & Tours
Advisers, Inc. (GOLDLINE) is also the President/Manager and incorporator of the Third
Party Claimant Goldline Tours Inc. and he is joined by his co-incorporators who are
"Ching" and "Dy" thereby this Court could only say that these two corporations are one and
the same corporations. This is of judicial knowledge that since Travel & Tours Advisers,
Inc. came to Sorsogon it has been known as GOLDLINE.

Moreover, the name Goldline was added to defendants name in the Complaint. There was
no objection from William Ching who could have raised the defense that Gold Line Tours,
Inc. was in no way liable or involved. Indeed, it appears to this Court that rather than Travel
& Tours Advisers, Inc., it is Gold Line Tours, Inc., which should have been named party
defendant.
Be that as it may, We concur in the trial courts finding that the two companies are actually
one and the same, hence the levy of the bus in question was proper.
WHEREFORE, for lack of merit, the petition is DISMISSED and the assailed Orders are
AFFIRMED.

This Court is not persuaded by the proposition of the third party claimant that a corporation
has an existence separate and/or distinct from its members insofar as this case at bar is
concerned, for the reason that whenever necessary for the interest of the public or for the
protection of

SO ORDERED.
Petitioner filed a motion for reconsideration, 45 which the CA denied on June 25, 2003.46

enforcement of their rights, the notion of legal entity should not and is not to be used to
defeat public convenience, justify wrong, protect fraud or defend crime.

Be that as it may, We concur in the trial courts finding that the two companies are actually
one and the same, hence the levy of the bus in question was proper.51

Apposite to the case at bar is the case of Palacio vs. Fely Transportation Co., L-15121, May
31, 1962, 5 SCRA 1011 where the Supreme Court held:

The RTC thus rightly ruled that petitioner might not be shielded from liability under the
final judgment through the use of the doctrine of separate corporate identity. Truly, this
fiction of law could not be employed to defeat the ends of justice.

"Where the main purpose in forming the corporation was to evade ones subsidiary liability
for damages in a criminal case, the corporation may not be heard to say that it has a
personality separate and distinct from its members, because to allow it to do so would be to
sanction the use of fiction of corporate entity as a shield to further an end subversive of
justice (La Campana Coffee Factory, et al. v. Kaisahan ng mga Manggagawa, etc., et al., L5677, May 25, 1953). The Supreme Court can even substitute the real party in interest in
place of the defendant corporation in order to avoid multiplicity of suits and thereby save
the parties unnecessary expenses and delay. (Alfonso vs. Villamor, 16 Phil. 315)."

But petitioner continues to challenge the RTC orders by insisting that the evidence to
establish its identity with Travel and Tours Advisers, Inc. was insufficient.
We cannot agree with petitioner. As already stated, there was sufficient evidence that
petitioner and Travel and Tours Advisers, Inc.1wphi1 were one and the same entity.
Moreover, we remind that a petition for the writ of certiorari neither deals with errors of
judgment nor extends to a mistake in the appreciation of the contending parties evidence or
in the evaluation of their relative weight.52 It is timely to remind that the petitioner in a
special civil action for certiorari commenced against a trial court that has jurisdiction over
the proceedings bears the burden to demonstrate not merely reversible error, but grave
abuse of discretion amounting to lack or excess of jurisdiction on the part of the respondent
trial court in issuing the impugned order.53 The term grave abuse of discretion is defined as
a capricious and whimsical exercise of judgment so patent and gross as to amount to an
evasion of a positive duty or a virtual refusal to perform a duty enjoined by law, as where
the power is exercised in an arbitrary and despotic manner because of passion or
hostility.54 Mere abuse of discretion is not enough; it must be grave. 55 Yet, here, petitioner
did not discharge its burden because it failed to demonstrate that the CA erred in holding
that the RTC had not committed grave abuse of discretion. A review of the records shows,
indeed, that the RTC correctly rejected petitioners third-party claim. Hence, the rejection
did not come within the domain of the writ of certioraris limiting requirement of excess or
lack of jurisdiction.56

This is what the third party claimant wants to do including the defendant in this case, to use
the separate and distinct personality of the two corporation as a shield to further an end
subversive of justice by avoiding the execution of a final judgment of the court. 50
As we see it, the RTC had sufficient factual basis to find that petitioner and Travel and
Tours Advisers, Inc. were one and the same entity, specifically: (a) documents submitted
by petitioner in the RTC showing that William Cheng, who claimed to be the operator of
Travel and Tours Advisers, Inc., was also the President/Manager and an incorporator of the
petitioner; and (b) Travel and Tours Advisers, Inc. had been known in Sorsogon as
Goldline. On its part, the CA cogently observed:
As stated in the (RTC) decision supra, William Ching disclosed during the trial of the case
that defendant Travel & Tours Advisers, Inc. (Goldline), of which he is an officer, is
operating sixty (60) units of Goldline buses. That the Goldline buses are used in the
operations of

WHEREFORE, the Court DENIES the petition for review on certiorari, and AFFIRMS the
decision promulgated by the Court of Appeals on October 30, 2002. Costs of suit to be paid
by petitioner.

defendant company is obvious from Mr. Chengs admission. The Amended Articles of
Incorporation of Gold Line Tours, Inc. disclose that the following persons are the original
incorporators thereof: Antonio O. Ching, Maribel Lim Ching, witness William Ching, Anita
Dy Ching and Zosimo Ching. (Rollo, pp. 105-108) We see no reason why defendant
company would be using Goldline buses in its operations unless the two companies are
actually one and the same.

SO ORDERED.

Moreover, the name Goldline was added to defendants name in the Complaint. There was
no objection from William Ching who could have raised the defense that Gold Line Tours,
Inc. was in no way liable or involved. Indeed it appears to this Court that rather than Travel
& Tours Advisers, Inc. it is Gold Line Tours, Inc., which should have been named party
defendant.

BIBIANO O. REYNOSO, IV, petitioner,

vs.
HON. COURT OF APPEALS and GENERAL CREDIT
CORPORATION, respondents.

funds from depositors who are issued interest-bearing promissory notes. The amounts
deposited are then loaned out to various borrowers. Petitioner, in order to boost the business
activities of CCC-QC, deposited his personal funds in the company. In return, CCC-QC
issued to him its interest-bearing promissory notes.

DECISION

On August 15, 1980, a complaint for sum of money with preliminary attachment, 1 docketed
as Civil Case No. Q-30583, was instituted in the then Court of First Instance of Rizal by
CCC-QC against petitioner, who had in the meantime been dismissed from his employment
by CCC-Equity. The complaint was subsequently amended in order to include Hidelita
Nuval, petitioners wife, as a party defendant. 2 The complaint alleged that petitioner
embezzled the funds of CCC-QC amounting to P1,300,593.11. Out of this amount, at least
P630,000.00 was used for the purchase of a house and lot located at No. 12 Macopa Street,
Valle Verde I, Pasig City. The property was mortgaged to CCC, and was later foreclosed.

YNARES-SANTIAGO, J.:
Assailed in this petition for review is the consolidated decision of the Court of Appeals
dated July 7, 1994, which reversed the separate decisions of the Regional Trial Court of
Pasig City and the Regional Trial Court of Quezon City in two cases between petitioner
Reynoso and respondent General Credit Corporation (GCC).
Sometime in the early 1960s, the Commercial Credit Corporation (hereinafter, "CCC"), a
financing and investment firm, decided to organize franchise companies in different parts
of the country, wherein it shall hold thirty percent (30%) equity. Employees of the CCC
were designated as resident managers of the franchise companies. Petitioner Bibiano O.
Reynoso, IV was designated as the resident manager of the franchise company in Quezon
City, known as the Commercial Credit Corporation of Quezon City (hereinafter, "CCCQC").

In his amended Answer, petitioner denied having unlawfully used funds of CCC-QC and
asserted that the sum of P1,300,593.11 represented his money placements in CCC-QC, as
shown by twenty-three (23) checks which he issued to the said company.3
The case was subsequently transferred to the Regional Trial Court of Quezon City, Branch
86, pursuant to the Judiciary Reorganization Act of 1980.
On January 14, 1985, the trial court rendered its decision, the decretal portion of which
states:

CCC-QC entered into an exclusive management contract with CCC whereby the latter was
granted the management and full control of the business activities of the former. Under the
contract, CCC-QC shall sell, discount and/or assign its receivables to CCC. Subsequently,
however, this discounting arrangement was discontinued pursuant to the so-called "DOSRI
Rule", prohibiting the lending of funds by corporations to its directors, officers,
stockholders and other persons with related interests therein.

Premises considered, the Court finds the complaint without merit. Accordingly, said
complaint is hereby DISMISSED.
By reason of said complaint, defendant Bibiano Reynoso IV suffered degradation,
humiliation and mental anguish.

On account of the new restrictions imposed by the Central Bank policy by virtue of the
DOSRI Rule, CCC decided to form CCC Equity Corporation, (hereinafter, "CCC-Equity"),
a wholly-owned subsidiary, to which CCC transferred its thirty (30%) percent equity in
CCC-QC, together with two seats in the latters Board of Directors.

On the counterclaim, which the Court finds to be meritorious, plaintiff corporation is

hereby ordered:
a) to pay defendant the sum of P185,000.00 plus 14% interest per annum from October 2,
1980 until fully paid;

Under the new set-up, several officials of Commercial Credit Corporation, including
petitioner Reynoso, became employees of CCC-Equity. While petitioner continued to be
the Resident Manager of CCC-QC, he drew his salaries and allowances from CCC-Equity.
Furthermore, although an employee of CCC-Equity, petitioner, as well as all employees of
CCC-QC, became qualified members of the Commercial Credit Corporation Employees
Pension Plan.

b) to pay defendant P3,639,470.82 plus interest thereon at the rate of 14% per annum from
June 24, 1981, the date of filing of Amended Answer, until fully paid; from this amount
may be deducted the remaining obligation of defendant under the promissory note of
October 24, 1977, in the sum of P9,738.00 plus penalty at the rate of 1% per month from
December 24, 1977 until fully paid;

As Resident Manager of CCC-QC, petitioner oversaw the operations of CCC-QC and

supervised its employees. The business activities of CCC-QC pertain to the acceptance of

c) to pay defendants P200,000.00 as moral damages;

d) to pay defendants P100,000.00 as exemplary damages;

On February 13, 1992, the Regional Trial Court of Quezon City denied the Omnibus
Motion.12 On March 5, 1992, it issued an Order directing the issuance of an alias writ of
execution.13

e) to pay defendants P25,000.00 as and for attorney's fees; plus costs of the suit.
SO ORDERED.

Previously, on February 21, 1992, General Credit Corporation instituted a complaint before
the Regional Trial Court of Pasig against Bibiano Reynoso IV and Edgardo C. Tanangco, in
his capacity as Deputy Sheriff of Quezon City,14docketed as Civil Case No. 61777, praying
that the levy on its parcel of land located in Pasig, Metro Manila and covered by Transfer
Certificate of Title No. 29940 be declared null and void, and that defendant sheriff be
enjoined from consolidating ownership over the land and from further levying on other
properties of General Credit Corporation to answer for any liability under the decision in
Civil Case No. Q-30583.

Both parties appealed to the then Intermediate Appellate Court. The appeal of Commercial
Credit Corporation of Quezon City was dismissed for failure to pay docket fees. Petitioner,
on the other hand, withdrew his appeal.
Hence, the decision became final and, accordingly, a Writ of Execution was issued on July
24, 1989.4 However, the judgment remained unsatisfied,5 prompting petitioner to file a
Motion for Alias Writ of Execution, Examination of Judgment Debtor, and to Bring
Financial Records for Examination to Court. CCC-QC filed an Opposition to petitioners
motion,6 alleging that the possession of its premises and records had been taken over by
CCC.

The Regional Trial Court of Pasig, Branch 167, did not issue a temporary restraining order.
Thus, General Credit Corporation instituted two (2) petitions for certiorari with the Court of
Appeals, docketed as CA-G.R. SP No. 2751815and CA-G.R. SP No. 27683. These cases
were later consolidated.

Meanwhile, in 1983, CCC became known as the General Credit Corporation.

On July 7, 1994, the Court of Appeals rendered a decision in the two consolidated cases,
the dispositive portion of which reads:

On November 22, 1991, the Regional Trial Court of Quezon City issued an Order directing
General Credit Corporation to file its comment on petitioners motion for alias writ of
execution.7 General Credit Corporation filed a Special Appearance and Opposition on
December 2, 1991,8 alleging that it was not a party to the case, and therefore petitioner
should direct his claim against CCC-QC and not General Credit Corporation. Petitioner
filed his reply,9 stating that the CCC-QC is an adjunct instrumentality, conduit and agency
of CCC. Furthermore, petitioner invoked the decision of the Securities and Exchange
Commission in SEC Case No. 2581, entitled, "Avelina G. Ramoso, et al., Petitioner versus
General Credit Corp., et al., Respondents," where it was declared that General Credit
Corporation, CCC-Equity and other franchised companies including CCC-QC were
declared as one corporation.

WHEREFORE, in SP No. 27518 we declare the issue of the respondent court's refusal to
issue a restraining order as having been rendered moot by our Resolution of 7 April 1992
which, by way of injunctive relief, provided that "the respondents and their representatives
are hereby enjoined from conducting an auction sale (on execution) of petitioner's
properties as well as initiating similar acts of levying (upon) and selling on execution other
properties of said petitioner". The injunction thus granted, as modified by the words in
parenthesis, shall remain in force until Civil Case No. 61777 shall have been finally
terminated.
In SP No. 27683, we grant the petition for certiorari and accordingly NULLIFY and SET
ASIDE, for having been issued in excess of jurisdiction, the Order of 13 February 1992 in
Civil Case No. Q-30583 as well as any other order or process through which the petitioner
is made liable under the judgment in said Civil Case No. Q-30583.

On December 9, 1991, the Regional Trial Court of Quezon City ordered the issuance of an
alias writ of execution.10On December 20, 1991, General Credit Corporation filed an
Omnibus Motion,11 alleging that SEC Case No. 2581 was still pending appeal, and
maintaining that the levy on properties of the General Credit Corporation by the deputy
sheriff of the court was erroneous.

No damages and no costs.

In his Opposition to the Omnibus Motion, petitioner insisted that General Credit
Corporation is just the new name of Commercial Credit Corporation; hence, General Credit
Corporation and Commercial Credit Corporation should be treated as one and the same
entity.

SO ORDERED.16
Hence, this petition for review anchored on the following arguments:
1. THE HONORABLE COURT OF APPEALS ERRED IN CA-G.R. SP NO. 27683
WHEN IT NULLIFIED AND SET ASIDE THE 13 FEBRUARY 1992 ORDER AND

OTHER ORDERS OR PROCESS OF BRANCH 86 OF THE REGIONAL TRIAL COURT

OF QUEZON CITY THROUGH WHICH GENERAL CREDIT CORPORATION IS
MADE LIABLE UNDER THE JUDGMENT THAT WAS RENDERED IN CIVIL CASE
NO. Q-30583.

Precisely because the corporation is such a prevalent and dominating factor in the business
life of the country, the law has to look carefully into the exercise of powers by these
artificial persons it has created.
Any piercing of the corporate veil has to be done with caution. However, the Court will not
hesitate to use its supervisory and adjudicative powers where the corporate fiction is used
as an unfair device to achieve an inequitable result, defraud creditors, evade contracts and
obligations, or to shield it from the effects of a court decision. The corporate fiction has to
be disregarded when necessary in the interest of justice.

2. THE HONORABLE COURT OF APPEALS ERRED IN CA-G.R. SP NO. 27518

WHEN IT ENJOINED THE AUCTION SALE ON EXECUTION OF THE PROPERTIES
OF GENERAL CREDIT CORPORATION AS WELL AS INITIATING SIMILAR ACTS
OF LEVYING UPON AND SELLING ON EXECUTION OF OTHER PROPERTIES OF
GENERAL CREDIT CORPORATION.

In First Philippine International Bank v. Court of Appeals, et al., 19 we held:

3. THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT GENERAL

CREDIT CORPORATION IS A STRANGER TO CIVIL CASE NO. Q-30583, INSTEAD
OF, DECLARING THAT COMMERCIAL CREDIT CORPORATION OF QUEZON CITY
IS THE ALTER EGO, INSTRUMENTALITY, CONDUIT OR ADJUNCT OF
COMMERCIAL CREDIT CORPORATION AND ITS SUCCESSOR GENERAL CREDIT
CORPORATION.

When the fiction is urged as a means of perpetrating a fraud or an illegal act or as a vehicle
for the evasion of an existing obligation, the circumvention of statutes, the achievement or
perfection of a monopoly or generally the perpetration of knavery or crime, the veil with
which the law covers and isolates the corporation from the members or stockholders who
compose it will be lifted to allow for its consideration merely as an aggregation of
individuals.

At the outset, it must be stressed that there is no longer any controversy over petitioners
claims against his former employer, CCC-QC, inasmuch as the decision in Civil Case No.
Q-30583 of the Regional Trial Court of Quezon City has long become final and executory.
The only issue, therefore, to be resolved in the instant petition is whether or not the
judgment in favor of petitioner may be executed against respondent General Credit
Corporation. The latter contends that it is a corporation separate and distinct from CCC-QC
and, therefore, its properties may not be levied upon to satisfy the monetary judgment in
favor of petitioner. In short, respondent raises corporate fiction as its defense. Hence, we
are necessarily called upon to apply the doctrine of piercing the veil of corporate entity in
order to determine if General Credit Corporation, formerly CCC, may be held liable for the
obligations of CCC-QC.

Also in the above-cited case, we stated that this Court has pierced the veil of corporate
fiction in numerous cases where it was used, among others, to avoid a judgment credit; 20 to
avoid inclusion of corporate assets as part of the estate of a decedent; 21 to avoid liability
arising from debt;22 when made use of as a shield to perpetrate fraud and/or confuse
legitimate issues;23 or to promote unfair objectives or otherwise to shield them. 24
In the appealed judgment, the Court of Appeals sustained respondents arguments of
separateness and its character as a different corporation which is a non-party or stranger to
this case.
The defense of separateness will be disregarded where the business affairs of a subsidiary
corporation are so controlled by the mother corporation to the extent that it becomes an
instrument or agent of its parent. But even when there is dominance over the affairs of the
subsidiary, the doctrine of piercing the veil of corporate fiction applies only when such
fiction is used to defeat public convenience, justify wrong, protect fraud or defend crime. 25

The petition is impressed with merit.

A corporation is an artificial being created by operation of law, having the right of
succession and the powers, attributes, and properties expressly authorized by law or
incident to its existence.17 It is an artificial being invested by law with a personality separate
and distinct from those of the persons composing it as well as from that of any other legal
entity to which it may be related.18 It was evolved to make possible the aggregation and
assembling of huge amounts of capital upon which big business depends. It also has the
advantage of non-dependence on the lives of those who compose it even as it enjoys certain
rights and conducts activities of natural persons.

We stated in Tomas Lao Construction v. National Labor Relations Commission,26 that the
legal fiction of a corporation being a judicial entity with a distinct and separate personality
was envisaged for convenience and to serve justice. Therefore, it should not be used as a
subterfuge to commit injustice and circumvent the law.
Precisely for the above reasons, we grant the instant petition.

It is obvious that the use by CCC-QC of the same name of Commercial Credit Corporation
was intended to publicly identify it as a component of the CCC group of companies
engaged in one and the same business, i.e., investment and financing. Aside from CCCQuezon City, other franchise companies were organized such as CCC-North Manila and
CCC-Cagayan Valley. The organization of subsidiary corporations as what was done here is
usually resorted to for the aggrupation of capital, the ability to cover more territory and
population, the decentralization of activities best decentralized, and the securing of other
legitimate advantages. But when the mother corporation and its subsidiary cease to act in
good faith and honest business judgment, when the corporate device is used by the parent
to avoid its liability for legitimate obligations of the subsidiary, and when the corporate
fiction is used to perpetrate fraud or promote injustice, the law steps in to remedy the
problem. When that happens, the corporate character is not necessarily abrogated. It
continues for legitimate objectives. However, it is pierced in order to remedy injustice, such
as that inflicted in this case.

The complaint in Civil Case No. Q-30583, instituted by CCC-QC, was even verified by the
director-representative of CCC. The lawyers who filed the complaint and amended
complaint were all in-house lawyers of CCC.
The challenged decision of the Court of Appeals states that CCC, now General Credit
Corporation, is not a formal party in the case. The reason for this is that the complaint was
filed by CCC-QC against petitioner. The choice of parties was with CCC-QC. The
judgment award in this case arose from the counterclaim which petitioner set up against
CCC-QC.
The circumstances which led to the filing of the aforesaid complaint are quite
revealing.1wphi1 As narrated above, the discounting agreements through which CCC
controlled the finances of its subordinates became unlawful when Central Bank adopted the
DOSRI prohibitions. Under this rule the directors, officers, and stockholders are prohibited
from borrowing from their company. Instead of adhering to the letter and spirit of the
regulations by avoiding DOSRI loans altogether, CCC used the corporate device to
continue the prohibited practice. CCC organized still another corporation, the CCC-Equity
Corporation. However, as a wholly owned subsidiary, CCC-Equity was in fact only another
name for CCC. Key officials of CCC, including the resident managers of subsidiary
corporations, were appointed to positions in CCC-Equity.

Factually and legally, the CCC had dominant control of the business operations of CCCQC. The exclusive management contract insured that CCC-QC would be managed and
controlled by CCC and would not deviate from the commands of the mother corporation. In
addition to the exclusive management contract, CCC appointed its own employee,
petitioner, as the resident manager of CCC-QC.

In order to circumvent the Central Banks disapproval of CCC-QCs mode of reducing its
DOSRI lender accounts and its directive to follow Central Bank requirements, resident
managers, including petitioner, were told to observe a pseudo-compliance with the phasing
out orders. For his unwillingness to satisfactorily conform to these directives and his
reluctance to resort to illegal practices, petitioner earned the ire of his employers.
Eventually, his services were terminated, and criminal and civil cases were filed against
him.

Petitioners designation as "resident manager" implies that he was placed in CCC-QC by a

superior authority. In fact, even after his assignment to the subsidiary corporation,
petitioner continued to receive his salaries, allowances, and benefits from CCC, which later
became respondent General Credit Corporation. Not only that. Petitioner and the other
permanent employees of CCC-QC were qualified members and participants of the
Employees Pension Plan of CCC.
There are other indications in the record which attest to the applicability of the identity rule
in this case, namely: the unity of interests, management, and control; the transfer of funds
to suit their individual corporate conveniences; and the dominance of policy and practice by
the mother corporation insure that CCC-QC was an instrumentality or agency of CCC.

Petitioner issued twenty-three checks as money placements with CCC-QC because of

difficulties faced by the firm in implementing the required phase-out program. Funds from
his current account in the Far East Bank and Trust Company were transferred to CCC-QC.
These monies were alleged in the criminal complaints against him as having been stolen.
Complaints for qualified theft and estafa were brought by CCC-QC against
petitioner.1wphi1 These criminal cases were later dismissed. Similarly, the civil complaint
which was filed with the Court of First Instance of Pasig and later transferred to the
Regional Trial Court of Quezon City was dismissed, but his counterclaims were granted.

As petitioner stresses, both CCC and CCC-QC were engaged in the same principal line of
business involving a single transaction process. Under their discounting arrangements,
CCC financed the operations of CCC-QC. The subsidiary sold, discounted, or assigned its
accounts receivables to CCC.
The testimony of Joselito D. Liwanag, accountant and auditor of CCC since 1971, shows
the pervasive and intensive auditing function of CCC over CCC-QC. 27 The two
corporations also shared the same office space. CCC-QC had no office of its own.

Faced with the financial obligations which CCC-QC had to satisfy, the mother firm closed
CCC-QC, in obvious fraud of its creditors. CCC-QC, instead of opposing its closure,
cooperated in its own demise. Conveniently, CCC-QC stated in its opposition to the motion
for alias writ of execution that all its properties and assets had been transferred and taken
over by CCC.

Under the foregoing circumstances, the contention of respondent General Credit

Corporation, the new name of CCC, that the corporate fiction should be appreciated in its
favor is without merit.
Paraphrasing the ruling in Claparols v. Court of Industrial Relations,28 reiterated
in Concept Builders Inc. v. National Labor Relations,29 it is very obvious that respondent
"seeks the protective shield of a corporate fiction whose veil the present case could, and
should, be pierced as it was deliberately and maliciously designed to evade its financial
obligation of its employees."
If the corporate fiction is sustained, it becomes a handy deception to avoid a judgment debt
and work an injustice. The decision raised to us for review is an invitation to multiplicity of
litigation. As we stated in Islamic Directorate vs. Court of Appeals,30 the ends of justice are
not served if further litigation is encouraged when the issue is determinable based on the
records.
A court judgment becomes useless and ineffective if the employer, in this case CCC as a
mother corporation, is placed beyond the legal reach of the judgment creditor who, after
protracted litigation, has been found entitled to positive relief. Courts have been organized
to put an end to controversy. This purpose should not be negated by an inapplicable and
wrong use of the fiction of the corporate veil.
WHEREFORE, the decision of the Court of Appeals is hereby REVERSED and ASIDE.
The injunction against the holding of an auction sale for the execution of the decision in
Civil Case No. Q-30583 of properties of General Credit Corporation, and the levying upon
and selling on execution of other properties of General Credit Corporation, is LIFTED.
SO ORDERED.

GENERAL CREDIT CORPORATION (now PENTA CAPITAL FINANCE

CORPORATION), Petitioner,
vs.
ALSONS DEVELOPMENT and INVESTMENT CORPORATION and CCC
EQUITY CORPORATION, Respondents.

Some four years later, the Alcantara family assigned its rights and interests over the bearer
note to ALSONS which thenceforth became the holder thereof. 7 But even before the
execution of the assignment deal aforestated, letters of demand for interest payment were
already sent to EQUITY, through its President, Wilfredo Labayen, who pleaded inability to
pay the stipulated interest, EQUITY no longer then having assets or property to settle its
obligation nor being extended financial support by GCC.

DECISION
What happened next, as narrated in the assailed Decision of the CA, may be summarized,
as follows:

GARCIA, J.:
In this petition for review on certiorari under Rule 45 of the Rules of Court, petitioner
General Credit Corporation, now known as Penta Capital Finance Corporation, seeks to
annul and set aside the Decision1 and Resolution2 dated April 11, 2002 and August 20,
2002, respectively, of the Court of Appeals (CA) in CA-G.R. CV No. 31801, affirming the
November 8, 1990 decision of the Regional Trial Court (RTC) of Makati City in its Civil
Case No. 12707, an action for a sum of money thereat instituted by the herein respondent
Alsons Development and Investment Corporation against the petitioner and respondent
CCC Equity Corporation.

1. On January 14, 1986, before the RTC of Makati, ALSONS, having failed to collect on
the bearer note aforementioned, filed a complaint for a sum of money8 against EQUITY
and GCC. The case, docketed as Civil Case No. 12707, was eventually raffled to Branch 58
of the court. As stated in par. 4 of the complaint, GCC is being impleaded as partydefendant for any judgment ALSONS might secure against EQUITY and, under the
doctrine of piercing the veil of corporate fiction, against GCC, EQUITY having been
organized as a tool and mere conduit of GCC.
2. Answering with a cross-claim against GCC, EQUITY stated by way of special and
affirmative defenses that it (EQUITY):

The facts:
Shortly after its incorporation in 1957 as a finance and investment company, petitioner
General Credit Corporation (GCC, for short), then known as Commercial Credit
Corporation (CCC), established CCC franchise companies in different urban centers of the
country.3 In furtherance of its business, GCC had, as early as 1974, applied for and was able
to secure license from the then Central Bank (CB) of the Philippines and the Securities and
Exchange Commission (SEC) to engage also in quasi-banking activities. 4 On the other
hand, respondent CCC Equity Corporation (EQUITY, for brevity) was organized in
November 1994 by GCC for the purpose of, among other things, taking over the operations
and management of the various franchise companies. At a time material hereto, respondent
Alsons Development and Investment Corporation (ALSONS, hereinafter) and Conrado,
Nicasio, Editha and Ladislawa, all surnamed Alcantara, and Alfredo de Borja (hereinafter
the Alcantara family, for convenience), each owned, just like GCC, shares in the aforesaid
GCC franchise companies, e.g., CCC Davao and CCC Cebu.

a) was purposely organized by GCC for the latter to avoid CB Rules and Regulations on
DOSRI (Directors, Officers, Stockholders and Related Interest) limitations, and that it acted
merely as intermediary or bridge for loan transactions and other dealings of GCC to its
franchises and the investing public; and
b) is solely dependent upon GCC for its funding requirements, to settle, among others,
equity purchases made by investors on the franchises; hence, GCC is solely and directly
liable to ALSONS, the former having failed to provide EQUITY the necessary funds to
meet its obligations to ALSONS.
3. GCC filed its ANSWER to Cross-claim, stressing that it is a distinct and separate entity
from EQUITY and alleging, in essence that the business relationships with each other were
always at arms length. And following the denial of its motion to dismiss ALSONS
complaint, on the ground of lack of jurisdiction and want of cause of action, GCC filed its
Answer thereto and set up affirmative defenses with counterclaim for exemplary damages
and attorneys fees.

In December 1980, ALSONS and the Alcantara family, for a consideration of Two Million
(P2,000,000.00) Pesos, sold their shareholdings a total of 101,953 shares, more or less
in the CCC franchise companies to EQUITY.[5] On January 2, 1981, EQUITY issued
ALSONS et al., a "bearer" promissory note for P2,000,000.00 with a one-year maturity
date, at 18% interest per annum, with provisions for damages and litigation costs in case of
default.6

Issues having been joined, trial ensued. Presented by ALSONS, but testifying as adverse
witnesses, were CB and GCC officers. Among other things, ALSONS evidence, which
included the EQUITY-issued "bearer" promissory note marked as Exhibit "K" and over
sixty (60) other marked and subsequently admitted documents, 9 were to the effect that five
(5) incorporators, each contributing P100,000.00 as the initial paid up capital of the

10

company, organized EQUITY to manage, as it did manage, various GCC franchises through
management contracts. Before EQUITYs incorporation, however, GCC was already into
the financing business as it was in fact managing and operating various CCC franchises.
Presented in evidence, too, was the September 29, 1982 letter-reply of one G. Villanueva,
then GCC President, to EQUITY President Wilfredo Labayen, bearing on the sale of
EQUITY shares to third parties, part of the proceeds of which the Alcantaras wanted
applied to liquidate the promissory note in question. In said letter, Mr. Villanueva explained
that the GCC Board denied the Alcantaras request to be paid out of such proceeds, but
nonetheless authorized EQUITY to pay them interest out of EQUITYs operation income,
in preference over what was due GCC.10

IT IS SO ORDERED. (Words in brackets added.)

Therefrom, GCC went on appeal to the CA where its appellate recourse was docketed as
CA-G.R. CV No. 31801, ascribing to the trial court the commission of the following errors:
1. In holding that there is a "Parent-Subsidiary" corporate relationship between EQUITY
and GCC;
2. In not holding that EQUITY and GCC are distinct and separate corporate entities;
3. In applying the doctrine of "Piercing the Veil of Corporate Fiction" in the case at bar; and

Albeit EQUITY presented its president, it opted to adopt the testimony of some of
ALSONS witnesses, inclusive of the documentary exhibits testified to by each of them, as
its evidence.

4. In not holding ALSONS in estoppel to question the corporate personality of EQUITY.

On April 11, 2002, the appellate court rendered the herein assailed Decision, 11 affirming
that of the trial court, thus:

For its part, GCC called only Wilfredo Labayen to testify. It stuck to its underlying defense
of separateness and presented documentary evidence detailing the organizational structures
of both GCC and EQUITY. And in a bid to negate the notion that it was conducting its
business illegally, GCC presented CB and SEC-issued licenses authoring it to engage in
financing and quasi-banking activities. It also adduced evidence to prove that it was never a
party to any of the actionable documents ALSONS and its predecessors-in-interest had in
their possession and that the November 27, 1985 deed of assignment of rights over the
promissory note was unenforceable.

WHEREFORE, premises considered, the Decision of the Regional Trial Court, Branch 58,
Makati in Civil Case No. 12707 is hereby AFFIRMED.
SO ORDERED.
In time, GCC moved for reconsideration followed by a motion for oral argument, but both
motions were denied by the CA in its equally assailed Resolution of August 20, 2002. 12

Eventually, the trial court, on its finding that EQUITY was but an instrumentality or adjunct
of GCC and considering the legal consequences and implications of such relationship, came
out with its decision on November 8, 1990, rendering judgment for ALSONS, to wit:

Hence, GCCs present recourse anchored on the following arguments, issues and/or
submissions:
1. The motion for oral argument with motion for reconsideration and its supplement were
perfunctorily denied by the CA without justifiable basis;

WHEREFORE, the foregoing premises considered, judgment is hereby rendered in favor of

plaintiff [ALSONS] and against the defendants [EQUITY and GCC] who are hereby
ordered, jointly and severally, to pay plaintiff:

2. There is absolutely no basis for piercing the veil of corporate fiction;

1. the principal sum of Two Million Pesos (P2,000,000.00) together with the interest due
thereon at the rate of eighteen percent (18%) annually computed from Jan. 2, 1981 until the
obligation is fully paid;

3. Respondent Alsons is not a real party-in-interest as the promissory note payable to bearer
subject of the collection suit is but a simulated document and/or refers to another party.
Moreover, the subject promissory note is not admissible in evidence because it has not been
duly authenticated and it is an altered document;

2. liquidated damages due thereon equivalent to three percent (3%) monthly computed from
January 2, 1982 until the obligation is fully paid;

4. The fact of full payment stated in the ten (10) deeds of sale of the shares of stock is
conclusive on the sellers, and by the patrol evidence rule, the alleged fact of its nonpayment cannot be introduced in evidenced; and

3. attorneys fees in an amount equivalent to twenty four percent (24%) of the total
obligation due; and
4. the costs of suit.

11

5. The counter-claim filed by GCC against Alsons should be granted in the interest of
justice.

In the case at bench, records reveal that the appellate court, in line with the prescription of
its own rules, required the parties to just submit, as they did, their respective memoranda to
properly ventilate their separate causes. Under this scenario, the petitioner cannot be validly
heard, having been deprived of due process.

The petition and the arguments and/or issues holding it together are without merit. The
desired reversal of the assailed decision and resolution of the appellate court is accordingly
DENIED.

Just like the first, the last three (3) arguments set forth in the petition will not carry the day
for the petitioner. In relation therewith, the Court notes that these arguments and the issues
behind them were not raised before the trial court. This appellate maneuver cannot be
allowed. For, well-settled is the rule that issues or grounds not raised below cannot be
resolved on review in higher courts.14 Springing surprises on the opposing party is
antithetical to the sporting idea of fair play, justice and due process; hence, the proscription
against a party shifting from one theory at the trial court to a new and different theory in the
appellate level. On the same rationale, points of law, theories, issues not brought to the
attention of the lower court or, in fine, not interposed during the trial cannot be raised for
the first time on appeal.15

Instead of raising distinctly formulated questions of law, as is expected of one seeking a

review under Rule 45 of the Rules of Court of a final CA judgment, 13 petitioner GCC starts
off by voicing disappointment over the "perfunctory" denial by the CA of its twin motions
for reconsideration and oral argument. Petitioner, to be sure, cannot plausibly expect a
reversal action premised on the cursory way its motions were denied, if such indeed were
the case. Such manner of denial, while perhaps far from ideal, is not even a recognized
ground for appeal by certiorari, unless a denial of due process ensues, which is not the case
here. And lest it be overlooked, the CA prefaced its assailed denial resolution with the
clause: "[F]inding no reversible error committed to warrant the modification and/or reversal
of the April 11, 2002 Decision," suggesting that the appellate court gave the petitioners
motion for reconsideration the attention it deserved. At the very least, the petitioner was
duly apprised of the reasons why reconsideration could not be favorably considered. An
extended resolution was not really necessary to dispose of the motion for reconsideration in
question.

There are, to be sure, exceptions to the rule respecting what may be raised for the first time
on appeal. Lack of jurisdiction over when the issues raised present a matter of public
policy16 comes immediately to mind. None of the well-recognized exceptions obtain in this
case, however.
Lest it be overlooked vis--vis the same last three arguments thus pressed, both the trial
court and the CA, based on the evidence adduced, adjudged the petitioner and respondent
EQUITY jointly and severally liable to pay what respondent ALSONS is entitled to under
the "bearer" promissory note. The judgment argues against the notion of the note being
simulated or altered or that respondent ALSONS has no standing to sue on the note, not
being the payee of the "bearer" note. For, the declaration of liability not only presupposes
the duly established authenticity and due execution of the promissory note over which
ALSONS, as the holder in due course thereof, has interest, but also the untenability of the
petitioners counterclaim for attorneys fees and exemplary damages against ALSONS. At
bottom, the petitioner predicated such counter-claim on the postulate that respondent
ALSONS had no cause of action, the supposed promissory note being, according to the
petitioner, either a simulated or an altered document.

Petitioners lament about being deprived of procedural due process owing to the denial of
its motion for oral argument is simply specious. Under the CA Internal Rules, the appellate
court may tap any of the three (3) alternatives therein provided to aid the court in resolving
appealed cases before it. It may rely on available records alone, require the submission of
memoranda or set the case for oral argument. The option the Internal Rules thus gives the
CA necessarily suggests that the appellate court may, at its sound discretion, dispense with
a tedious oral argument exercise. Rule VI, Section 6 of the 2002 Internal Rules of the CA,
provides:
SEC. 6 Judicial Action on Certain Petitions.- (a) In petitions for review, after the receipt of
the respondents comment on the petition, the Court [of Appeals] may dismiss the
petition if it finds the same to be patently without merit , otherwise, it shall give due
course to it.

In net effect, the definitive conclusion of the appellate court affirmatory of that of the trial
court was that the bearer promissory note (Exh. "K") was a genuine and authentic
instrument payable to the holder thereof. This factual determination, as a matter of long and
sound appellate practice, deserves great weight and shall not be disturbed on appeal, save
for the most compelling reasons,17 such as when that determination is clearly without
evidentiary support or when grave abuse of discretion has been committed. 18 This is as it
should be since the Court, in petitions for review of CA decisions under Rule 45 of the
Rules of Court, usually limits its inquiry only to questions of law. Stated otherwise, it is not

xxx xxx xxx

If the petition is given due course, the Court may consider the case submitted for decision
or require the parties to submit their memorandum or set the case for oral argument. xxx.
After the oral argument or upon submission of the memoranda the case shall be deemed
submitted for decision.

12

the function of the Court to analyze and weigh all over again the evidence or premises
supportive of the factual holdings of lower courts.19

are so conducted as to make it merely an instrumentality, agency, conduit or adjunct of

another corporation.29

As nothing in the record indicates any of the exceptions adverted to above, the factual
conclusion of the CA that the P2 Million promissory note in question was authentic and
was issued at the first instance to respondent ALSONS and the Alcantara family for the
amount stated on its face, must be affirmed. It should be stressed in this regard that even the
issuing entity, i.e., respondent EQUITY, never challenged the genuineness and due
execution of the note.

The CA found valid grounds to pierce the corporate veil of petitioner GCC, there being
justifiable basis for such action. When the appellate court spoke of a justifying factor, the
reference was to what the trial court said in its decision, namely: the existence of "certain
circumstances [which], taken together, gave rise to the ineluctable conclusion that
[respondent] EQUITY is but an instrumentality or adjunct of [petitioner] GCC."
The Court agrees with the disposition of the appellate court on the application of the
piercing doctrine to the transaction subject of this case. Per the Courts count, the trial court
enumerated no less than 20 documented circumstances and transactions, which, taken as a
package, indeed strongly supported the conclusion that respondent EQUITY was but an
adjunct, an instrumentality or business conduit of petitioner GCC. This relation, in turn,
provides a justifying ground to pierce petitioners corporate existence as to ALSONS claim
in question. Foremost of what the trial court referred to as "certain circumstances" are the
commonality of directors, officers and stockholders and even sharing of office between
petitioner GCC and respondent EQUITY; certain financing and management arrangements
between the two, allowing the petitioner to handle the funds of the latter; the virtual
domination if not control wielded by the petitioner over the finances, business policies and
practices of respondent EQUITY; and the establishment of respondent EQUITY by the
petitioner to circumvent CB rules. For a perspective, the following are some relevant
excerpts from the trial courts decision setting forth in some detail the tipping
circumstances adverted to therein:

This brings us to the remaining but core issue tendered in this case and aptly raised by the
petitioner, to wit: whether there is absolutely no basis for piercing GCCs veil of corporate
identity.
A corporation is an artificial being vested by law with a personality distinct and separate
from those of the persons composing it20 as well as from that of any other entity to which it
may be related.21 The first consequence of the doctrine of legal entity of the separate
personality of the corporation is that a corporation may not be made to answer for acts and
liabilities of its stockholders or those of legal entities to which it may be connected or vice
versa.22
The notion of separate personality, however, may be disregarded under the doctrine
"piercing the veil of corporate fiction" as in fact the court will often look at the
corporation as a mere collection of individuals or an aggregation of persons undertaking
business as a group, disregarding the separate juridical personality of the corporation
unifying the group. Another formulation of this doctrine is that when two (2) business
enterprises are owned, conducted and controlled by the same parties, both law and equity
will, when necessary to protect the rights of third parties, disregard the legal fiction that two
corporations are distinct entities and treat them as identical or one and the same. 23

It must be noted that as characterized by their business relationship, [respondent] EQUITY

and [petitioner] GCC had common directors and/or officers as well as stockholders. This is
revealed by the proceedings recorded in SEC Case No. 25-81 entitled "Avelina Ramoso, et
al., vs. GCC, et al., where it was established, thru the testimony of EQUITYs own
President that more than 90% of the stockholders of EQUITY were also stockholders
of GCC .. Disclosed likewise is the fact that when [EQUITYs President] Labayen
sold the shareholdings of EQUITY in said franchise companies, practically the entire
proceeds thereof were surrendered to GCC, and not received by EQUITY (EXHIBIT "RR")
xxx.

Whether the separate personality of the corporation should be pierced hinges on obtaining
facts, appropriately pleaded or proved. However, any piercing of the corporate veil has to
be done with caution, albeit the Court will not hesitate to disregard the corporate veil when
it is misused or when necessary in the interest of justice. 24 After all, the concept of
corporate entity was not meant to promote unfair objectives.

It was likewise shown by a preponderance of evidence that not only had GCC financed
EQUITY and that the latter was heavily indebted to the former but EQUITY was, in
fact, a wholly owned subsidiary of GCC. Thus, as affirmed by EQUITYs President,
the funds invested by EQUITY in the CCC franchise companies actually came from CCC
Phils. or GCC (Exhibit "Y-5"). that, as disclosed by the Auditors report for 1982, past
due receivables alone of GCC exceeded P101,000,000.00 mostly to GCC affiliates
especially CCC EQUITY. ; that [CBs] Report of Examination dated July 14, 1977 shows

Authorities are agreed on at least three (3) basic areas where piercing the veil, with which
the law covers and isolates the corporation from any other legal entity to which it may be
related, is allowed.25 These are: 1) defeat of public convenience, 26 as when the corporate
fiction is used as vehicle for the evasion of an existing obligation; 27 2) fraud cases or when
the corporate entity is used to justify a wrong, protect fraud, or defend a crime; 28 or 3) alter
ego cases, where a corporation is merely a farce since it is a mere alter ego or business
conduit of a person, or where the corporation is so organized and controlled and its affairs

13

that EQUITY which has a paid-up capital of only P500,000.00 was the biggest borrower
of GCC with a total loan of P6.70 Million .

latter having been so controlled by the parent that its separate identity is hardly discernible
thus becoming a mere instrumentality or alter ego of the former. Consequently, as the
parent corporation, [petitioner] GCC maybe (sic) held responsible for the acts and contracts
of its subsidiary [respondent] EQUITY - most especially if the latter (who had anyhow
acknowledged its liability to ALSONS) maybe (sic) without sufficient property with which
to settle its obligations. For, after all, GCC was the entity which initiated and benefited
immensely from the fraudulent scheme perpetrated in violation of the law. (Words in
parenthesis in the original; emphasis and bracketed words added).

xxx xxx xxx

It has likewise been amply substantiated by [respondent ALSONS] evidence that not only
did GCC cause the incorporation of EQUITY, but, the latter had grossly inadequate
capital for the pursuit of its line of business to the extent that its business affairs were
considered as GCCs own business endeavors. xxx.

Given the foregoing considerations, it behooves the petitioner, as a matter of law and
equity, to assume the legitimate financial obligation of a cash-strapped subsidiary
corporation which it virtually controlled to such a degree that the latter became its
instrument or agent. The facts, as found by the courts a quo, and the applicable law call for
this kind of disposition. Or else, the Court would be allowing the wrong use of the fiction
of corporate veil.

xxx xxx xxx

ALSONS has likewise shown that the bonuses of the officers and directors of
EQUITY was based on its total financial performance together with all its affiliates both
firms were sharing one and the same office when both were still operational and that the
directors and executives of EQUITY never acted independently but took their orders
from GCC.

WHEREFORE, the instant petition is DENIED and the appealed Decision and Resolution
of the Court of Appeals are accordingly AFFIRMED.

The evidence has also indubitably established that EQUITY was organized by GCC
for the purpose of circumventing [CB] rules and regulations and the Anti-Usury Law. Thus,
as disclosed by the Advance Report on the result of Central Banks Operations
Examination conducted on GCC as of March 31, 1977 (EXHIBITS "FFF" etc.), the
latter violated [CB] rules and regulations by : (a) using as a conduit its non-quasi bank
affiliates . (b) issuing without recourse facilities to enable GCC to extend credit to
affiliates like EQUITY which go beyond the single borrowers limit without the need of
showing outstanding balance in the book of accounts. (Emphasis over words in brackets
added.)

Costs against the petitioner.

SO ORDERED.

It bears to stress at this point that the facts and the inferences drawn therefrom, upon which
the two (2) courts below applied the piercing doctrine, stand, for the most part, undisputed.
Among these is, to reiterate, the matter of EQUITY having been incorporated to serve, as it
did serve, as an instrumentality or adjunct of GCC. With the view we take of this case,
GCC did not adduce any evidence, let alone rebut the testimonies and documents presented
by ALSONS, to establish the prevailing circumstances adverted to that provided the
justifying occasion to pierce the veil of corporate fiction between GCC and EQUITY. We
quote the trial court:
Verily, indeed, as the relationships binding herein [respondent EQUITY and petitioner
GCC] have been that of "parent-subsidiary corporations" the foregoing principles and
doctrines find suitable applicability in the case at bar; and, it having been satisfactorily and
indubitably shown that the said relationships had been used to perform certain functions not
characterized with legitimacy, this Court feels amply justified to "pierce the veil of
corporate entity" and disregard the separate existence of the percent (sic) and subsidiary the

14

GOLD LINE TOURS, INC., Petitioner,

vs.
HEIRS OF MARIA CONCEPCION LACSA, Respondents.

Advisers, Inc. (Goldline) and Rene Abania, alleged that the collision was due to the
reckless and imprudent manner by which Abania had driven the Goldline bus. 11
In support of the complaint, Miriam testified that Abania had been occasionally looking up
at the video monitor installed in the front portion of the Goldline bus despite driving his bus
at a fast speed;12 that in Barangay San Agustin, the Goldline bus had collided with a service
jeepney coming from the opposite direction while in the process of overtaking another
bus;13 that the impact had caused the angle bar of the jeepney to detach and to go through
the windshield of the bus directly into the chest of Concepcion who had then been seated
behind the drivers seat;14that concerned bystanders had hailed another bus to rush
Concepcion to the Ago Foundation Hospital in Naga City because the Goldline bus
employees and her co-passengers had ignored Miriams cries for help; 15 and that
Concepcion was pronounced dead upon arrival at the hospital. 16

DECISION
BERSAMIN, J.:
The veil of corporate existence of a corporation is a fiction of law that should not defeat the
ends of justice.
Petitioner seeks to reverse the decision promulgated on October 30, 2002 1 and the
resolution promulgated on June 25, 2003,2 whereby the Court of Appeals (CA) upheld the
orders issued on August 2, 20013 and October 22, 20014by the Regional Trial Court (RTC),
Branch 51, in Sorsogon in Civil Case No. 93-5917 entitled Heirs of Concepcion Lacsa,
represented by Teodoro Lacsa v. Travel & Tours Advisers, Inc., et al. authorizing the
implementation of the writ of execution against petitioner despite its protestation of being a
separate and different corporate personality from Travel & Tours Advisers, Inc. (defendant
in Civil Case No. 93-5917).

To refute the plaintiffs allegations, the defendants presented SPO1 Pedro Corporal of the
Philippine National Police Station in Pili, Camarines Sur, and William Cheng, the operator
of the Goldline bus.17 SPO1 Corporal opined that based on his investigation report, the
driver of the jeepney had been at fault for failing to observe precautionary measures to
avoid the collision;18 and suggested that criminal and civil charges should be brought
against the operator and driver of the jeepney.19 On his part, Cheng attested that he had
exercised the required diligence in the selection and supervision of his employees; and that
he had been engaged in the transportation business since 1980 with the use of a total of 60
units of Goldline buses, employing about 100 employees (including drivers, conductors,
maintenance personnel, and mechanics);20 that as a condition for regular employment,
applicant drivers had undergone a one-month training period and a six-month probationary
period during which they had gotten acquainted with Goldlines driving practices and
demeanor;21 that the employees had come under constant supervision, rendering improbable
the claim that Abania, who was a regular employee, had been glancing at the video monitor
while driving the bus;22 that the incident causing Concepcions death was the first serious
incident his (Cheng) transportation business had encountered, because the rest had been
only minor traffic accidents;23 and that immediately upon being informed of the accident,
he had instructed his personnel to contact the family of Concepcion. 24

In the orders assailed in the CA, the RTC declared petitioner and Travel & Tours Advisers,
Inc. to be one and the same entity, and ruled that the levy of petitioners property to satisfy
the final and executory decision rendered on June 30, 1997 against Travel & Tours
Advisers, Inc. in Civil Case No. 93-59175 was valid even if petitioner had not been
impleaded as a party.
Antecedents
On August 2, 1993, Ma. Concepcion Lacsa (Concepcion) and her sister, Miriam Lacsa
(Miriam), boarded a Goldline passenger bus with Plate No. NXM-105 owned and operated
by Travel &Tours Advisers, Inc. They were enroute from Sorsogon to Cubao, Quezon
City.6 At the time, Concepcion, having just obtained her degree of Bachelor of Science in
Nursing at the Ago Medical and Educational Center, was proceeding to Manila to take the
nursing licensure board examination.7 Upon reaching the highway at Barangay San Agustin
in Pili, Camarines Sur, the Goldline bus, driven by Rene Abania (Abania), collided with a
passenger jeepney with Plate No. EAV-313 coming from the opposite direction and driven
by Alejandro Belbis.8 As a result, a metal part of the jeepney was detached and struck
Concepcion in the chest, causing her instant death. 9

The defendants blamed the death of Concepcion to the recklessness of Bilbes as the driver
of the jeepney, and of its operator, Salvador Romano; 25 and that they had consequently
brought a third-party complaint against the latter.26
After trial, the RTC rendered its decision dated June 30, 1997, disposing:

On August 23, 1993, Concepcions heirs, represented by Teodoro Lacsa, instituted in the
RTC a suit against Travel & Tours Advisers Inc. and Abania to recover damages arising
from breach of contract of carriage.10 The complaint, docketed as Civil Case No. 93-5917
and entitled Heirs of Concepcion Lacsa, represented by Teodoro Lacsa v. Travel & Tours

ACCORDINGLY, judgment is hereby rendered:

(1) Finding the plaintiffs entitled to damages for the death of Ma. Concepcion Lacsa in
violation of the contract of carriage;

15

(2) Ordering defendant Travel & Tours Advisers, Inc. (Goldline) to pay plaintiffs:

Thereafter, the plaintiffs moved for the issuance of a writ of execution to implement the
decision dated June 30, 1997.30 The RTC granted their motion on January 31, 2000,31 and
issued the writ of execution on February 24, 2000.32

a. P30,000.00 expenses for the wake;

b. P 6,000.00 funeral expenses;

On May 10, 2000, the sheriff implementing the writ of execution rendered a Sheriffs
Partial Return,33 certifying that the writ of execution had been personally served and a copy
of it had been duly tendered to Travel & Tours Advisers, Inc. or William Cheng, through his
secretary, Grace Miranda, and that Cheng had failed to settle the judgment amount despite
promising to do so. Accordingly, a tourist bus bearing Plate No. NWW-883 was levied
pursuant to the writ of execution.

c. P50,000.00 for the death of Ma. Concepcion Lacsa;

d. P150,000.00 for moral damages;
e. P20,000.00 for exemplary damages;

The plaintiffs moved to cite Cheng in contempt of court for failure to obey a lawful writ of
the RTC.34 Cheng filed his opposition.35 Acting on the motion to cite Cheng in contempt of
court, the RTC directed the plaintiffs to file a verified petition for indirect contempt on
February 19, 2001.36

f. P8,000.00 for attorneys fees;

g. P2,000.00 for litigation expenses;
h. Costs of suit.

On April 20, 2001, petitioner submitted a so-called verified third party claim, 37 claiming
that the tourist bus bearing Plate No. NWW-883 be returned to petitioner because it was the
owner; that petitioner had not been made a party to Civil Case No. 93-5917; and that
petitioner was a corporation entirely different from Travel & Tours Advisers, Inc., the
defendant in Civil Case No. 93-5917.

(3) Ordering the dismissal of the case against Rene Abania;

(4) Ordering the dismissal of the third-party complaint.
SO ORDERED.27

It is notable that petitioners Articles of Incorporation was amended on November 8,

1993,38 shortly after the filing of Civil Case No. 93-5917 against Travel & Tours Advisers,
Inc.

The RTC found that a contract of carriage had been forged between Travel & Tours
Advisers, Inc. and Concepcion as soon as she had boarded the Goldline bus as a paying
passenger; that Travel & Tours Advisers, Inc. had then become duty-bound to safely
transport her as its passenger to her destination; that due to Travel & Tours Advisers, Inc.s
inability to perform its duty, Article 1786 of the Civil Code created against it the disputable
presumption that it had been at fault or had been negligent in the performance of its
obligations towards the passenger; that Travel & Tours Advisers, Inc. failed to disprove the
presumption of negligence; and that a rigid selection of employees was not sufficient to
exempt Travel & Tours Advisers, Inc. from the obligation of exercising extraordinary
diligence to ensure that its passenger was carried safely to her destination.

Respondents opposed petitioners verified third-party claim on the following grounds,

namely: (a) the third-party claim did not comply with the required notice of hearing as
required by Rule 15, Sections 4 and 5 of the Rules of Court; (b) Travel & Tours Advisers,
Inc. and petitioner were identical entities and were both operated and managed by the same
person, William Cheng; and (c) petitioner was attempting to defraud its creditors
respondents herein hence, the doctrine of piercing the veil of corporate entity was
squarely applicable.39
On August 2, 2001, the RTC dismissed petitioners verified third-party claim, observing
that the identity of Travel & Tours Adivsers, Inc. could not be divorced from that of
petitioner considering that Cheng had claimed to be the operator as well as the
President/Manager/incorporator of both entities; and that Travel & Tours Advisers, Inc. had
been known in Sorsogon as Goldline.40

Aggrieved, the defendants appealed to the CA.

On June 11, 1998,28 the CA dismissed the appeal for failure of the defendants to pay the
docket and other lawful fees within the required period as provided in Rule 41, Section 4 of
the Rules of Court (1997). The dismissal became final, and entry of judgment was made on
July 17, 1998.29

Petitioner moved for reconsideration,41 but the RTC denied the motion on October 22,
2001.42

16

Thence, petitioner initiated a special civil action for certiorari in the CA, 43 asserting:

Hence, this appeal, in which petitioner faults the CA for holding that the RTC did not act
without jurisdiction or grave abuse of discretion in finding that petitioner and Travel &
Tours Advisers, Inc., the defendant in Civil Case No. 5917, were one and same entity, and
for sustaining the propriety of the levy of the tourist bus with Plate No. NWW-883 in
satisfaction of the writ of execution. 47

THE RESPONDENT HONORABLE RTC JUDGE HAD ACTED WITHOUT

JURISDICTION OR COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING
TO LACK OF JURISDICTION IN ISSUING THE: (A) ORDER DATED 2 AUGUST
2001, COPY OF WHICH IS HERETO ATTACHED AS ANNEX A, DISMISSING
HEREIN PETITIONERS THIRD PARTY CLAIM; AND (B) ORDER DATED 22
OCTOBER 2001, COPY OF WHICH IS HERETO ATTACHED AS ANNEX B DENYING
SAID PETITIONERS MOTION FOR RECONSIDERATION; AND THAT THERE IS
NO APPEAL, OR ANY PLAIN, SPEEDY AND ADEQUATE REMEDY AVAILABLE TO
SAID PETITIONER.

In the meantime, respondents filed in the RTC a motion to direct the sheriff to implement
the writ of execution in view of the non-issuance of any restraining order either by this
Court or the CA.48 On February 23, 2007, the RTC granted the motion and directed the
sheriff to sell the Goldline tourist bus with Plate No. NWW-883 through a public auction. 49
Issue

On October 30, 2002, the CA promulgated its decision dismissing the petition for
certiorari,44 holding as follows:

Did the CA rightly find and conclude that the RTC did not gravely abuse its discretion in
denying petitioners verified third-party claim?

The petition lacks merit.

Ruling
As stated in the decision supra, William Ching disclosed during the trial of the case that
defendant Travel & Tours Advisers, Inc. (Goldline), of which he is an officer, is operating
sixty (60) units of Goldline buses. That the Goldline buses are used in the operations of
defendant company is obvious from Mr. Chengs admission. The Amended Articles of
Incorporation of Gold Line Tours, Inc. disclose that the following persons are the original
incorporators thereof: Antonio O. Ching, Maribel Lim Ching, witness William Ching, Anita
Dy Ching and Zosimo Ching. (Rollo, pp. 105-106) We see no reason why defendant
company would be using Goldline buses in its operations unless the two companies are
actually one and the same.

We find no reason to reverse the assailed CA decision.

In the order dated August 2, 2001, the RTC rendered its justification for rejecting the thirdparty claim of petitioner in the following manner:
xxx
The main contention of Third Party Claimant is that it is the owner of the Bus and
therefore, it should not be seized by the sheriff because the same does not belong to the
defendant Travel & Tours Advises, Inc. (GOLDLINE) as the third party claimant and
defendant are two separate corporation with separate juridical personalities. Upon the other
hand, this Court had scrutinized the documents submitted by the Third party Claimant and
found out that William Ching who claimed to be the operator of the Travel & Tours
Advisers, Inc. (GOLDLINE) is also the President/Manager and incorporator of the Third
Party Claimant Goldline Tours Inc. and he is joined by his co-incorporators who are
"Ching" and "Dy" thereby this Court could only say that these two corporations are one and
the same corporations. This is of judicial knowledge that since Travel & Tours Advisers,
Inc. came to Sorsogon it has been known as GOLDLINE.

Moreover, the name Goldline was added to defendants name in the Complaint. There was
no objection from William Ching who could have raised the defense that Gold Line Tours,
Inc. was in no way liable or involved. Indeed, it appears to this Court that rather than Travel
& Tours Advisers, Inc., it is Gold Line Tours, Inc., which should have been named party
defendant.
Be that as it may, We concur in the trial courts finding that the two companies are actually
one and the same, hence the levy of the bus in question was proper.
WHEREFORE, for lack of merit, the petition is DISMISSED and the assailed Orders are
AFFIRMED.

This Court is not persuaded by the proposition of the third party claimant that a corporation
has an existence separate and/or distinct from its members insofar as this case at bar is
concerned, for the reason that whenever necessary for the interest of the public or for the
protection of

SO ORDERED.
Petitioner filed a motion for reconsideration, 45 which the CA denied on June 25, 2003.46

17

enforcement of their rights, the notion of legal entity should not and is not to be used to
defeat public convenience, justify wrong, protect fraud or defend crime.

Inc. was in no way liable or involved. Indeed it appears to this Court that rather than Travel
& Tours Advisers, Inc. it is Gold Line Tours, Inc., which should have been named party
defendant.

Apposite to the case at bar is the case of Palacio vs. Fely Transportation Co., L-15121, May
31, 1962, 5 SCRA 1011 where the Supreme Court held:

Be that as it may, We concur in the trial courts finding that the two companies are actually
one and the same, hence the levy of the bus in question was proper.51

"Where the main purpose in forming the corporation was to evade ones subsidiary liability
for damages in a criminal case, the corporation may not be heard to say that it has a
personality separate and distinct from its members, because to allow it to do so would be to
sanction the use of fiction of corporate entity as a shield to further an end subversive of
justice (La Campana Coffee Factory, et al. v. Kaisahan ng mga Manggagawa, etc., et al., L5677, May 25, 1953). The Supreme Court can even substitute the real party in interest in
place of the defendant corporation in order to avoid multiplicity of suits and thereby save
the parties unnecessary expenses and delay. (Alfonso vs. Villamor, 16 Phil. 315)."

The RTC thus rightly ruled that petitioner might not be shielded from liability under the
final judgment through the use of the doctrine of separate corporate identity. Truly, this
fiction of law could not be employed to defeat the ends of justice.
But petitioner continues to challenge the RTC orders by insisting that the evidence to
establish its identity with Travel and Tours Advisers, Inc. was insufficient.
We cannot agree with petitioner. As already stated, there was sufficient evidence that
petitioner and Travel and Tours Advisers, Inc.1wphi1 were one and the same entity.
Moreover, we remind that a petition for the writ of certiorari neither deals with errors of
judgment nor extends to a mistake in the appreciation of the contending parties evidence or
in the evaluation of their relative weight.52 It is timely to remind that the petitioner in a
special civil action for certiorari commenced against a trial court that has jurisdiction over
the proceedings bears the burden to demonstrate not merely reversible error, but grave
abuse of discretion amounting to lack or excess of jurisdiction on the part of the respondent
trial court in issuing the impugned order.53 The term grave abuse of discretion is defined as
a capricious and whimsical exercise of judgment so patent and gross as to amount to an
evasion of a positive duty or a virtual refusal to perform a duty enjoined by law, as where
the power is exercised in an arbitrary and despotic manner because of passion or
hostility.54 Mere abuse of discretion is not enough; it must be grave. 55 Yet, here, petitioner
did not discharge its burden because it failed to demonstrate that the CA erred in holding
that the RTC had not committed grave abuse of discretion. A review of the records shows,
indeed, that the RTC correctly rejected petitioners third-party claim. Hence, the rejection
did not come within the domain of the writ of certioraris limiting requirement of excess or
lack of jurisdiction.56

This is what the third party claimant wants to do including the defendant in this case, to use
the separate and distinct personality of the two corporation as a shield to further an end
subversive of justice by avoiding the execution of a final judgment of the court. 50
As we see it, the RTC had sufficient factual basis to find that petitioner and Travel and
Tours Advisers, Inc. were one and the same entity, specifically: (a) documents submitted
by petitioner in the RTC showing that William Cheng, who claimed to be the operator of
Travel and Tours Advisers, Inc., was also the President/Manager and an incorporator of the
petitioner; and (b) Travel and Tours Advisers, Inc. had been known in Sorsogon as
Goldline. On its part, the CA cogently observed:
As stated in the (RTC) decision supra, William Ching disclosed during the trial of the case
that defendant Travel & Tours Advisers, Inc. (Goldline), of which he is an officer, is
operating sixty (60) units of Goldline buses. That the Goldline buses are used in the
operations of
defendant company is obvious from Mr. Chengs admission. The Amended Articles of
Incorporation of Gold Line Tours, Inc. disclose that the following persons are the original
incorporators thereof: Antonio O. Ching, Maribel Lim Ching, witness William Ching, Anita
Dy Ching and Zosimo Ching. (Rollo, pp. 105-108) We see no reason why defendant
company would be using Goldline buses in its operations unless the two companies are
actually one and the same.

WHEREFORE, the Court DENIES the petition for review on certiorari, and AFFIRMS the
decision promulgated by the Court of Appeals on October 30, 2002. Costs of suit to be paid
by petitioner.
SO ORDERED.

Moreover, the name Goldline was added to defendants name in the Complaint. There was
no objection from William Ching who could have raised the defense that Gold Line Tours,

18