Castillo v Balinghasay

FACTS:
Medical Center Paranaque Inc is a domestic corporation organized with the Old
Corporation law, with 2000 shares divided into 1000 Class A Shares issued to the Incorporators
and 1000 Class B shares. The Articles of Incorporation was amended several times until 1992,
and the Authorized Capital stock was increased to P32,000,000. Class A shares remained 1000,
while Class B shares increased to 31,000. Under Art VII of the AoI, Only stockholders owning
Class A shares were allowed to vote and be voted for members of the board of directors.
In 2001, MCPI held its annual stockholders meeting for the election of a new set of board
of directors. In the past, owners of Class B shares were allowed to vote and be voted for. This
history notwithstanding, respondent declared that no Class B share is allowed to vote or be voted
for. Petitioners protested claiming Art VII was null and void for depriving Class B shareholders
of their right to vote.
Petitioners filed a complaint against respondents for injunction, accounting, and damages,
before RTC Paranaque, to annul the stockholders meeting and the election of the Class A
shareholders as members of the board of directors. Petitioners asserted that the deprivation of
voting rights from Class B shares was in violation of Sec 6 of the new Corporation Code,
because only preferred and redeemable shares may be deprived of voting rights.
RTC ruled that the stockholders meeting and election was valid and Class B shares had
no right to vote.
ISSUE:
WON holders of Class B shares may be deprived of the right to vote and be voted for as
directors?
HELD:
No. The AoI was amended until 1992. Art VII of the AoI provides except when
otherwise provided by law. The law which the phrase refers to is the new Corporation Code.
Sec 6 of the Corporation Code being deemed written into the AoI, it necessarily follows that
unless Class B shares are classified as preferred or redeemable shares, they may not be deprived
of their voting rights. There is no evidence that Class B shares are classified as preferred or
redeemable shares. The right of the stockholder to vote and be voted for is an inherent right to a
stockholder. It is a property right which cannot be denied or impaired without the stockholders
consent amending the charter or by-laws.