INTERLINING CORP., et al. V.

PHILIPPINE TRUST COMPANY

FACTS:

Here, a petition for review on certiorari was raised seeking to set aside the CA decision in C.V.
No. 41129.

In April 1980, PHILTRUST granted a credit line and sent a domestic letter of credit and trust
receipt to Interlining Corp. for the importation of raw materials for its business. A month later,
other petitioners (one of whom is Gonzales) executed an Undertaking of Suretyship agreement
binding themselves to guarantee, jointly and severally with petitioner corporation, all such
amount as may be due to respondent PHILTRUST by virtue of the availment of its credit
facilities.

INTERLINING availed of respondents credit facilities several times and eventually made partial
payments but still failed to settle its entire obligation which amounted already to over P2 million
by June of 1984 despite several demands from PHILTRUST prompting the latter to file a
complaint before RTC MANILA for the collection of a sum of money against INTERLINING.
On April 7, 1989, the trial court issued its Pre-trial Conference Order relieving other petitioners
from their obligations because there was arrangement made between the plaintiff and defendant
corporation. PHILTRUSTs counsel submitted a motion stating therein two (2) issues for
consideration by the trial court submitted later on for resolution, viz:

a) whether or not petitioners herein can be made jointly or severally liable to plaintiff
b) whether or not there is novation

Finally, RTC Manila ordered INTERLINING to answer solely for its obligation. The court
absolved other individual petitioners from their joint and solidary liability for the debt of
petitioner-corporation although there was no novation of the loan contract between the parties. It
held that the total liability for the obligation was assumed by INTERLINING as per parties
stipulation on April 8, 1991.

Respondent moved for reconsideration but was denied hence sought recourse before CA.

CA set aside the decision of the lower court and ruled that since the respondent did not stipulate
on the exclusion of the solidary liability issue, the individual petitioners should be held solidarily
liable with PHILTRUST but still for the amount adjudged by the trial court. Petitioners herein
raised a motion for reconsideration but was denied hence this petition for review before the
Highest Court.
ISSUE:
Whether or not the counsel of respondent agreed to stipulate as to the release of the individual
petitioners from their solidary liability?

RULING:

NO. The Court finds no merit in the petition at all. The conduct of a pre-trial in civil actions has
been mandatory as early as January 1, 1964, upon the effectivity of the Revised Rules of Court.
Pre-trial is a procedural device intended to clarify and limit the basic issues between the
parties. It thus paves the way for a less cluttered trial and resolution of the case. Its main
objective is to simplify, abbreviate and expedite the trial, or totally dispense with it, as in
the case at bar.

A careful and thorough review of the records, particularly the pre-trial hearings conducted on
March 6, 1989 and April 8, 1991 and the subsequent pleadings in the case, reveals that
respondents counsel did not agree to relieve the individual petitioners of their obligation. During
the pre-trial, the counsels merely enumerated and stated their proposed stipulations but no such
or official agreement had been made on the proposed facts. In such case, the CA was justified in
ruling that there was no official agreement whatsoever that had been made hence no pact should
be honored among the parties involved in regard to the release of the individual petitioners from
their solidary liability.