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Cruz vs. Dalisay Digest

The National Labor Relations Commission ordered Qualitrans Limousine Service, Inc. to reinstate terminated employees and pay back wages. The sheriff then garnished the personal bank account of Adelio Cruz, the owner and president of Qualitrans, to satisfy the back wages owed by the company. However, the court held that piercing the corporate veil and treating the corporation and its owner as one entity requires a finding of fraud or injustice, which was not present. As individuals and corporations are separate legal entities, the sheriff incorrectly garnished Cruz's personal account to pay the debts of Qualitrans.

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844 views1 page

Cruz vs. Dalisay Digest

The National Labor Relations Commission ordered Qualitrans Limousine Service, Inc. to reinstate terminated employees and pay back wages. The sheriff then garnished the personal bank account of Adelio Cruz, the owner and president of Qualitrans, to satisfy the back wages owed by the company. However, the court held that piercing the corporate veil and treating the corporation and its owner as one entity requires a finding of fraud or injustice, which was not present. As individuals and corporations are separate legal entities, the sheriff incorrectly garnished Cruz's personal account to pay the debts of Qualitrans.

Uploaded by

Krizzia Gojar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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CRUZ v DALISAY

HELD:
No. Respondent sheriff Dalisay incorrectly chose to pierce the

In 1984, the National Labor Relations Commission issued an

veil of corporate entity and usurped a power belonging to the

order against Qualitrans Limousine Service, Inc. (QLSI)

court.

ordering the latter to reinstate the employees it terminated and

He wrongly assumed that since Cruz is the owner/president of

to pay them backwages.

the company, that they are one and the same.

Quiterio Dalisay, Deputy Sheriff of the court, to satisfy the


backwages, then garnished the bank account (Philtrust bank) of

As a legal entity, a corporation has a personality distinct


and separate from its individual stockholder/members.

Just because that he is the president of the corporation does not

Adelio Cruz who was not the judgment debtor. Rather, the

mean that the property he owns or possesses is also the

judgment debtor in that case was the company QLSI .

property of the corporation.

Dalisay justified his act by arguing that:


a. Cruz was the owner and president of QLSI
b. The counsel for the discharged employees advised him to
garnish the account of Cruz

Since the president, as an individual, and the corporation are


separate entities.

Notes:

A corporation incurs its own liabilities and is legally


responsible for payment of its obligations. In other words, by
virtue of the separate juridical personality of a corporation,
the corporate debt or credit is not the debt or credit of the
stockholder. This protection from liability for shareholders is
the principle of limited liability

Equally well-settled is the principle that the corporate mask


may be removed or the corporate veil pierced when the
corporation is just an alter ego of a person or of another
corporation. For reasons of public policy and in the interest of
justice, the corporate veil will justifiably be impaled only when
it becomes a shield for fraud, illegality or inequity
committed against third persons.

ISSUE: Should the personal property of Cruz (president) of the


corporation be levied?

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