Spouses Mercader v Development Bank of the Philippines, et. al.

G.R. No. 130699; May 12, 2000

Davide, Jr., C.J.:

DOCTRINE:
The pre-trial is primarily intended to make certain that all issues necessary to the
disposition of a case are properly raised. The purpose is to obviate the element of
surprise, hence, the parties are expected to disclose at the pre-trial conference all issues
of law and fact which they intend to raise at the trial, except such as may involve privileged
or impeaching matter.

FACTS:
Petitioners spouses Mercader and Juan Maderazo, in this petition for review, seek to
impugn the CA decision which ordered them to deliver the possession of a certain lot to
respondent DBP, Cebu Branch without right of reimbursements for improvements
introduced thereon. They likewise seek to impugn the decision reversing the RTC ruling
in Civil Case No. R-18521.

Civil Case No. R-18521 was a case for specific performance filed by the Mercaders. The
complaint alleged that Juan Maderazo applied for a loan at the DBP secured by 2 parcels
of land; that the DBP required Maderazo to construct a 5-meter wide road right of way.
The lease contract for the ROW was for a 20-year period executed with the registered
owners of the adjoining lot, spouses Manreal. Maderazo expended P10,000 for the
construction thereof. After some time, the Manreals defaulted in paying their obligation to
the DBP, and the latter had taken steps to foreclose the adjoining lot, including the
improvements thereon. In the meantime, the adjoining lot was sold on public auction to
the DBP as the highest bidder.

During pre-trial stage, the trial court acknowledged the possibility of a compromise
agreement, gave time to the parties to study their proposals and counterproposals and
ordered the documents pertinent thereto deemed parts of the record of the case. After
several correspondences between parties, the trial court ordered the termination of the
pre-trial and set the case for hearing.

ISSUE: Are implied issues deemed included in the pre-trial?

HELD: YES. The pre-trial is primarily intended to make certain that all issues necessary
to the disposition of a case are properly raised. The purpose is to obviate the element of
surprise, hence, the parties are expected to disclose at the pre-trial conference all issues
of law and fact which they intend to raise at the trial, except such as may involve privileged
or impeaching matter.

In the case at bar, the pre-trial order included as integral to the complete adjudication of
the case the issue of whether the MERCADERs can demand specific performance from
the DBP relative to the lease-purchase option. Thus, the element of surprise that the
provision on pre-trial attempts to preclude was satisfied.