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Legal Analysis for Law Students

The Spouses Hiteroza filed a derivative suit against Charito, the president of Christ's Achievers Montessori Inc., alleging schemes that dissipated the school's assets and would paralyze operations, amounting to fraud. The RTC ruled without a pre-trial, which is required by the Interim Rules. The case did not qualify for an exception allowing judgment without pre-trial. The issuance of judgment before pre-trial was premature. Appointing a receiver for the school was also premature because factual issues had not been addressed in the proper pre-trial proceedings.

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147 views1 page

Legal Analysis for Law Students

The Spouses Hiteroza filed a derivative suit against Charito, the president of Christ's Achievers Montessori Inc., alleging schemes that dissipated the school's assets and would paralyze operations, amounting to fraud. The RTC ruled without a pre-trial, which is required by the Interim Rules. The case did not qualify for an exception allowing judgment without pre-trial. The issuance of judgment before pre-trial was premature. Appointing a receiver for the school was also premature because factual issues had not been addressed in the proper pre-trial proceedings.

Uploaded by

vertine beler
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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2013-0425

Remedial Law Review 2 Atty. Gabriel Dela Pena

CASE CRITIQUE

Spouses Hiteroza v. Cruzada

G.R. No. 203527, 28 September 2016

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.

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. 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.

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