MANILA, Philippines--Jesus is Lord Movement leader Eduardo "Eddie" Villanueva has been dropped from the multi-million-peso suit against the Channel 11 operator ZOE Broadcasting Network Inc., which he heads, but the Court of Appeals has allowed the civil case filed by the VTV Corporation to continue.

The appellate court upheld the ruling of the Makati regional trial court denying ZOE's motion to dismiss the case brought by VTV Corporation to recover the P20 million it invested in ZOE, following the rescission of the their agreement.

But it modified the order by removing Villanueva, a former presidential candidate, from among the respondents, saying that he was distinct from the corporation.

ZOE and VTV signed a memorandum of understanding (MOU) in 1999 where it was agreed that ZOE would sell to VTV airtime on Channel 11 from 12 a.m. to 11:59 p.m., from Monday to Sunday except for six hours a day, for 15 years.

Under the MOU, VTV would pay P275 million to ZOE in installments, and VTV would solely manage Channel 11 for ZOE. In case the contract was mutually rescinded, ZOE would reimburse VTV's payments.

After VTV paid P20 million to ZOE, it failed to get more investors, and the two parties agreed to terminate the agreement so that ZOE could enter into deals with other firms.

When VTV failed to get back its P20 million, it filed the suit for damages before the Makati RTC in 2005 to recover the money as well as P1 million in attorney's fees. ZOE and Villanueva sought to dismiss the case, but the Makati court refused. The issue was brought to the higher court.

In its decision dropping Villanueva from the suit, the appellate court said that he signed the MOU as ZOE President and not as an individual.

"Hence, he cannot be held personally liable to the private respondent [VTV] in case of breach of MOU as there was no privity of contract between him and the private respondent," it said in a March 18 decision penned by Justice Jose Reyes Jr.

It also said that even though Villanueva remained as ZOE's President and a major stockholder, he was still distinct from the corporation and could not be held liable as an individual.

It pointed out that the law would only regard it as an association of persons when the legal corporate entity has been used to conceal fraud or illegality.

In this case, Villanueva as a major stockholder does not necessarily mean that he controls the whole of ZOE and the corporation should not be regarded as a separate entity, according to the appellate court.

It added that VTV also failed to show that Villanueva used ZOE to commit wrongdoing or to deceive VTV.

But in allowing the civil case against ZOE to continue, the appellate court said VTV was able to show the basis of the complaint against the broadcasting company.

It said VTV's cause of action against ZOE was shown by the latter's alleged refusal to reimburse the P20 million that the former had paid after the rescission of their contract. The allegations of VTV were deemed sufficient for the RTC to decide on its complaint, it added.