Case Digest (G.R. No. 150976)
Facts:
Cecilia Castillo, et al. v. Angeles Balinghasay, G.R. No. 150976, October 18, 2004, Supreme Court First Division, Quisumbing, J., writing for the Court. Petitioners are several Class B stockholders and Medical Center Paranaque, Inc. (MCPI); respondents are Class A stockholders of MCPI.MCPI was organized in September 1977 and its original Articles of Incorporation (approved by the SEC on October 26, 1977) classified its 2,000 shares into Class A (1,000) and Class B (1,000), providing that “Only holders of Class A shares can have the right to vote and the right to be elected as directors or as corporate officers.” An amendment dated July 31, 1981 (SEC-approved June 7, 1983) expanded the capital stock and retained the exclusive voting and elective rights for Class A shares. A further amendment dated September 9, 1992 (SEC-approved September 22, 1993) increased authorized capital and added the phrase “Except when otherwise provided by law” to the provision limiting voting and elective rights to Class A shareholders.
At the February 9, 2001 annual meeting, respondent Rustico Jimenez, invoking Article VII, declared that Class B shareholders were not qualified to run or be voted upon as directors; the Class A candidates were announced winners. Petitioners protested, alleging that Article VII deprived Class B shareholders of voting and elective rights in violation of the Corporation Code (B.P. Blg. 68). On March 22, 2001 petitioners filed a Complaint for Injunction, Accounting and Damages (Civil Case No. CV-01-0140) at the Regional Trial Court (RTC) of Paranaque, Branch 258, asserting two causes of action: (1) annulment of the February 9, 2001 directors’ declaration and conduct of a new election affording voting and elective rights to all stockholders irrespective of class, and (2) a shareholder derivative challenge to a contract for the operation of an ultrasound unit (MCPI later impleaded as party-plaintiff for the second cause).
The RTC ordered that a partial judgment could be rendered on the first cause of action; after memoranda, it issued a Partial Judgment dated November 26, 2001 declaring the February 9, 2001 election VALID and DISMISSING the first cause of action, reasoning that Article VII validly classified shares and the Articles of Incorporation constitute an intra-corporate contract enforceable between the corporation and its stockholders. The RTC rejected petitioners’ estoppel and founders-share arguments as lacking merit or factual basis....(Subscriber-Only)
Issues:
- Under the Corporation Code, may Article VII of MCPI’s Articles of Incorporation validly deprive holders of Class B shares of the right to vote and be elected as directors?
- Does the non-impairment clause or the corporation’s date of incorporation bar application of Section 6 of the Corporation Code to MCPI (i.e., does Section 148 render the Code ...(Subscriber-Only)
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)