G.R. No. 203527, 28 September 2016

FACTS:

Christ’s Achievers Montessori Inc. is a non-stock, non-profit corporation that operates a school in San Jose del Monte, Bulacan.

On February 25, 2010, the Sps. Hiteroza filed a Complaint for a derivative suit with prayer for the creation of a management committee, the appointment of a receiver, and a claim for damages against Charito, the President and Chairman of the school.

The Sps. Hiteroza alleged that Charito employed schemes and acts resulting in dissipation, loss, or wastage of the school’s assets that, if left unchecked, would likely cause paralysis of the school operations, amounting to fraud and misrepresentation detrimental and prejudicial to the school’s interests.The particular alleged schemes and acts of Charito that brought about the Sps. Hiteroza’s prayer for the creation of a management committee and the appointment of a receiver. A case was filed in the RTC however the judgment was done without a pre-trial.

ISSUE:

Whether or not the appointment of a receiver was improper?

RULING:

We partially grant the petition.

The May 14, 2010 RTC decision is not a final judgment since the case is not ripe for decision. No pre-trial has been conducted pursuant to the Interim Rules and the parties have not submitted their pre-trial briefs.
Section 4, Rule 4 of the Interim Rules provides that a judgment before pre-trial, as in the present case, may only be rendered after the parties’ submission of their respective pre-trial briefs.

SEC. 4. Judgment before pre-trial. – If, after submission of the pre-trial briefs, the court determines that, upon consideration of the pleadings, the affidavits and other evidence submitted by the parties, a judgment may be rendered, the court may order the parties to file simultaneously their respective memoranda within a non-extendible period of twenty (20) days from receipt of the order. Thereafter, the court shall render judgment, either full or otherwise, not later than ninety (90) days from the expiration of the period to file the memoranda. (emphases supplied)

Complementing Section 4 is Section 1, Rule 4 of the Interim Rules which provides for the mandatory conduct of a pre-trial conference.

SECTION 1. Pre-trial conference; mandatory nature. – Within five (5) days after the period for availment of, and compliance with, the modes of discovery prescribed in Rule 3 hereof, whichever comes later, the court shall issue and serve an order immediately setting the case for pre-trial conference and directing the parties to submit their respective pre-trial briefs. The parties shall file with the court and furnish each other copies of their respective pre-trial brief in such manner as to ensure its receipt by the court and the other party at least five (5) days before the date set for the pre-trial. x x x.

The conduct of a pre-trial is mandatory under the Interim Rules.Except in cases of default,Sections 1 and 4 of Rule 4 of the Interim Rules require the conduct of a pre-trial conference and the submission of the parties’ pre-trial briefs before the court may render a judgment on intra-corporate disputes.

Rule 7 of the Interim Rules (Inspection of Corporate Books and Records) dispenses with the need for a pre-trial conference or the submission of a pre-trial brief before the court may render a judgment. This Rule, however, applies only to disputes exclusively involving the rights of stockholders or members to inspect the books and records and/or to be furnished with the financial statements of a corporation.

In the present case, Rule 7 of the Interim Rules does not apply since the Sps. Hiteroza’s complaint did not exclusively involve the denial of the Sps. Hiteroza’s right to inspect the school’s records, but also several other allegations of Charito’s fraud and misrepresentation in the School’s management. There has been no conduct of a pre-trial conference or the submission of the parties’ respective pre-trial briefs before the issuance of the May 14, 2010 RTC decision. The issuance of the May 14, 2010 RTC decision was, thus, premature.

Even a cursory examination of the issue on whether the CA correctly nullified the assailed RTC Order directing the appointment of the school’s receiver immediately leads us to conclude that this is a question of fact that is not within the authority of this Court to decide. More importantly, the factual issue has not been ventilated in the proper proceedings before the trial court because the case did not even reach the pre-trial stage. Thus, the appointment of the school’s receiver is premature.

*Case Digest by Claudette Anne G. Sayson JD IV, S.Y. 2019-2020