Adelio Cruz vs Quiterio Dalisay

A.M. No. No. R-181-P – 236 Phil. 520 – 152 SCRA 482 – Mercantile Law – Corporation Law – Piercing the Veil of Corporate Fiction – Exercised by the Wrong Person 

In 1984, the National Labor Relations Commission issued an order against Qualitrans Limousine Service, Inc. (QLSI) ordering the latter to reinstate the employees it terminated and to pay them backwages. Quiterio Dalisay, Deputy Sheriff of the court, to satisfy the backwages, then garnished the bank account of Adelio Cruz. Dalisay justified his act by averring that Cruz was the owner and president of QLSI. Further, he claimed that the counsel for the discharged employees advised him to garnish the account of Cruz.

ISSUE: Whether or not the action of Dalisay is correct.

HELD: No. What Dalisay did is tantamount to piercing the veil of corporate fiction. He actually usurped the power of the court. He also overstepped his duty as a deputy sheriff. His duty is merely ministerial and it is incumbent upon him to execute the decision of the court according to its tenor and only against the persons obliged to comply. In this case, the person judicially named to comply was QLSI and not Cruz. It is a well-settled doctrine both in law and in equity that as a legal entity, a corporation has a personality distinct and separate from its individual stockholders or members. The mere fact that one is president of a corporation does not render the property he owns or possesses the property of the corporation, since the president, as individual, and the corporation are separate entities.

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