CASE #24
LAND LA ND BA BANK NK OF THE PH PHIL ILIP IPPI PINE NES, S, petitioner, petitioner, vs. TH THE E CO COUR URT T OF APPEALS, ECO MANAGEMENT CORPORATION and EMMANUEL C. OAT OATE, E, respondents.[G.R. No. 121!1. S"$"%&"' 4, 2((1)
Commercial Law – Corporation Law – Veil of Corporate Fiction – Corporate Name
In 1980, ECO Management Corporation (ECO) obtained loans amounting to about P26 million rom !and "an#$ ECO deaulted in its pa%ment but in 1981, ECO submitted a Pa%ment Plan &it' t'e 'ope o restruturing its loan$ 'e plan &as re*eted and !and "an# sued ECO$ It impleaded Emmanuel C$ O+ate, t'e ma*orit% sto#'older o ECO &'o is sering as t'e C'airman and treasurer o ECO$ 'e trial ourt ruled in aor o !and "an# but O+ate &as absoled rom liabilities$ 'e Court o -ppeals airmed t'e deision o t'e trial ourt$ !and "an# appealed as it &anted O+ate to be personall% liable on t'e ollo&ing grounds (amo (among ng ot'e ot'ers rs). ). a) ECO ECO stan stands ds or or Emma Emmanu nuel el C$ O+at O+ate, e, b) O+at O+ate e is t'e t'e ma*o ma*orit rit% % sto#'older, ) ECO &as ormed ostensibl% to allo& O+ate to a/uire loans rom !and "an# &'i' 'e used or 'is personal adantage, d) O+ate 'olds t&o positions in t'e orporation, and e) ECO neer 'eld an% board meeting &'i' *ust s'o&s onl% O+ate &as in ontrol o t'e orporation$ ISSUE:
'et'er or not O+ate s'ould be 'eld personall%$
o$ !and "an# &as not able to produe suiient eidene to proe its laim$ orporation, upon oming into eistene, is inested b% la& &it' a personalit% separate and distint rom t'ose persons omposing it as &ell as rom an% ot'er legal entit% to &'i' it ma% be related$ 'e orporate ition is onl% disregarded &'en t'e ition is used to deeat publi oneniene, oneniene, *usti% &rong, protet raud, deend rime, onuse legitimate legitimate legal or *udiial issues, perpetrate deeption or ot'er&ise irument t'e la&$ 'is is li#e&ise true &'ere t'e orporate entit% is being used as an alter ego, ad*unt, or business onduit or t'e sole beneit o t'e sto#'olders or o anot'er orporate entit%$ one o t'e oregoing &as proed b% !and "an#$ HELD:
'e mere at t'at O+ate o&ned t'e ma*orit% o t'e s'ares o ECO is not a ground to on onlu lude de t'at t'at O+at O+ate e and and ECO ECO is one one and and t'e t'e same same$$ Mere Mere o&ne o&ners rs'i 'ip p b% a sing single le sto#'older o all or nearl% all o t'e apital sto# o a orporation is not b% itsel suiient reason or disregarding t'e ition o separate orporate personalities$ -nent t'e issue o t'e orporate name, t'e at t'at O+ate3s initials oinide &it' t'e orporate orporate name ECO is not suiient suiient to disregard disregard t'e orporate orporate ition$ ition$ Een i ECO does
stand or 4Emmanuel C$ O+ate5, it does not mean t'at t'e said orporation is merel% a dumm% o O+ate$ - orporation ma% assume an% name proided it is la&ul$ 'ere is not'ing illegal in a orporation a/uiring t'e name or as in t'is ase, t'e initials o one o its s'are'olders$
