Business Org. II Digests

Adelio C. Cruz vs Quiterio L. Dalisay

Adm. Matter No. R-181-P July 31, 1987

Administrative Matter in the Supreme Court.

Doctrine: Doctrine of Piercing the Veil of Corporate Entity

   A corporation has a personality distinct and separate from its individual stockholders or members.

Facts:

A sworn complaint dated July 23, 1984 was filed by Adelio Cruz charging Quiterio Dalisay, Senior Deputy Sheriff of Manila, with malfeasance in office, corrupt practices and serious irregularities allegedly committed as follows:

a. Respondent attached and/or levied the money belonging to complainant Cruz when he was not himself   the judgment debtor in the final judgment of an NLRC case sought to be enforced but rather the company known as “Qualitrans Limousine Service, Inc.”; and

b. Respondent also caused the service of the alias writ of execution upon complainant who is a resident of Pasay City, despite knowledge that his territorial jurisdiction covers Manila only and does not extend to Pasay City.

Respondent in his reply explained that when he garnished complainant’s cash deposit at the Philtrust bank he was merely performing a ministerial duty. And that while it is true that said writ was addressed to Qualitrans Limousine Service, Inc., it is also a fact that complainant had executed an affidavit before the Pasay City assistant fiscal stating that he is the owner/ president of Qualitrans. Because of that declaration, the counsel for the plaintiff in the labor case advised him to serve notice of garnishment on the Philtrust bank.

Issue: Whether or not the personal property of Cruz (complainant) is properly levied or attached as owner of   the corporation?

Held: NO

Respondent’s actuation in enforcing a judgment against complainant who is not a judgment debtor in the case calls for disciplinary action. What is incumbent upon respondent is to ensure that only the portion of a decision ordained or decreed in the dispositive part should be the subject of the execution. The tenor of the NLRC judgment and the implementing writ is clear enough. It directed Qualitrans Limousine Service, Inc. in its judgment and not the owner thereof.

Respondent, however, choose to “pierce the veil of corporate entity” usurping a power belonging to the court and assumed improvidently that since the complainant is the owner/president of Qualitrans Limousine Service, Inc., they are one and the same. It is a well settled doctrine both in law and 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 the corporation does not render the property he owns or possesses the property of the corporation, since that president, as an individual, and the corporation are separate entities.