Part 1 General Principles you need to know about Commercial Law Review

A corporation, as a juridical entity, primarily acts through its board of directors, which exercises its corporate powers. In this capacity, the general rule is that, in the absence of authority from the board of directors, no person, not even its officers, can validly bind a corporation. (Olongapo City v SUBIC WATER AND SEWERAGE CO GR 171626, August 6, 2014)

In People’s Aircargo and Warehousing Co., Inc. v. Court of Appeals,63 we held that under Section 23 of the Corporation Code, the power and responsibility to decide whether a corporation can enter into a binding contract is lodged with the board of directors, subject to the articles of incorporation, by-laws, or relevant provisions of law.

A corporate officer or agent may represent and bind the corporation in transactions with third persons to the extent that [the] authority to do so has been conferred upon him, and this includes powers which have been intentionally conferred, and also such powers as, in the usual course of the particular business, are incidental to, or may be implied from, the powers intentionally conferred, powers added by custom and usage, as usually pertaining to the particular officer or agent, and such apparent powers as the corporation has caused persons dealing with the officer or agent to believe that it has conferred. Cebu Mactan Members Center, Inc. v. Tsukahara, G.R. No. 159624, July 17, 2009

It is basic in corporation law that a corporation is a juridical entity vested with a legal personality separate and distinct from those acting for and in its behalf and, in general, from the people comprising it. Heirs of Tan Uy v. International Exchange Bank, G.R. No. 166282 & 166283, February 13, 2013, 690 SCRA 519, 525.

The corporate veil should not and cannot be pierced unless it is clearly established that the separate and distinct personality of the corporation was used to justify a wrong, protect fraud, or perpetrate a deception. Heirs of Tan Uy v. International Exchange Bank, G.R. No. 166282 & 166283, February 13, 2013, 690 SCRA 519, 525.

In Concept Builders, Inc. v. NLRC, 67 the Court enumerated the

possible probative factors of identity which could justify the application of the doctrine of piercing the corporate veil. These are:

(1) Stock ownership by one or common ownership of both corporations;

(2) Identity of directors and officers;

(3) The manner of keeping corporate books and records; and

( 4) Methods of conducting the business. 68

The burden of proving the presence of any of these probative factors lies with the one alleging it. Unfortunately, if petitioner simply claimed that one corporation took over another's (water) operations in a place (Olongapo City) and apart from this allegation, petitioner failed to demonstrate any link to justify the construction that the corporation (Subic Water) and another (OCWD) are one and the same, the doctrine of separate juridical personality will lie. (Olongapo City v SUBIC WATER AND SEWERAGE CO GR 171626, August 6, 2014