G.R. No. 179419 : January 12, 2011
DURBAN APARTMENTS CORPORATION, doing business under the name and style of City Garden Hotel, Petitioner,
v. PIONEER INSURANCE AND SURETY CORPORATION, Respondent.
D E C I S I O N
For review is the Decision1cralaw of
the Court of Appeals (CA) in CA-G.R. CV No. 86869, which affirmed the decision2cralaw of the Regional Trial Court
(RTC), Branch 66, Makati City, in Civil Case No. 03-857, holding petitioner Durban Apartments Corporation solely liable to respondent Pioneer
Insurance and Surety Corporation for the loss of Jeffrey See's (See's) vehicle.
The facts, as found by the CA, are simple.
On July 22, 2003, [respondent] Pioneer Insurance and Surety Corporation x x x, by right of subrogation, filed [with the RTC of Makati City] a
Complaint for Recovery of Damages against [petitioner] Durban Apartments Corporation, doing business under the name and style of City Garden Hotel,
and [defendant before the RTC] Vicente Justimbaste x x x. [Respondent averred] that: it is the insurer for loss and damage of Jeffrey S. See's [the
insured's] 2001 Suzuki Grand Vitara x x x with Plate No. XBH-510 under Policy No. MC-CV-HO-01-0003846-00-D in the amount of
1, 175, 000.00; on April 30, 2002, See arrived and checked in at the City Garden Hotel in Makati corner Kalayaan Avenues, Makati City before
midnight, and its parking attendant, defendant x x x Justimbaste got the key to said Vitara from See to park it[. O]n May 1, 2002, at about 1:00
o'clock in the morning, See was awakened in his room by [a] telephone call from the Hotel Chief Security Officer who informed him that his Vitara
was carnapped while it was parked unattended at the parking area of Equitable PCI Bank along Makati Avenue between the hours of 12:00 [a.m.] and
1:00 [a.m.]; See went to see the Hotel Chief Security Officer, thereafter reported the incident to the Operations Division of the Makati City
Police Anti-Carnapping Unit, and a flash alarm was issued; the Makati City Police Anti-Carnapping Unit investigated Hotel Security Officer, Ernesto
T. Horlador, Jr. x x x and defendant x x x Justimbaste; See gave his Sinumpaang Salaysay to the police investigator, and filed a Complaint Sheet
with the PNP Traffic Management Group in Camp Crame, Quezon City; the Vitara has not yet been recovered since July 23, 2002 as evidenced by a
Certification of Non- Recovery issued by the PNP TMG; it paid the
1, 163, 250.00 money claim of See and mortgagee ABN AMRO Savings Bank, Inc. as indemnity for the loss of the Vitara; the Vitara was lost due to the
negligence of [petitioner] Durban Apartments and [defendant] Justimbaste because it was discovered during the investigation that this was the
second time that a similar incident of carnapping happened in the valet parking service of [petitioner] Durban Apartments and no necessary
precautions were taken to prevent its repetition; [petitioner] Durban Apartments was wanting in due diligence in the selection and supervision of
its employees particularly defendant x x x Justimbaste; and defendant x x x Justimbaste and [petitioner] Durban Apartments failed and refused to
pay its valid, just, and lawful claim despite written demands.
Upon service of Summons, [petitioner] Durban Apartments and [defendant] Justimbaste filed their Answer with Compulsory Counterclaim alleging that:
See did not check in at its hotel, on the contrary, he was a guest of a certain Ching Montero x x x; defendant x x x Justimbaste did not get the
ignition key of See's Vitara, on the contrary, it was See who requested a parking attendant to park the Vitara at any available parking space, and
it was parked at the Equitable Bank parking area, which was within See's view, while he and Montero were waiting in front of the hotel; they made a
written denial of the demand of [respondent] Pioneer Insurance for want of legal basis; valet parking services are provided by the hotel for the
convenience of its customers looking for a parking space near the hotel premises; it is a special privilege that it gave to Montero and See; it
does not include responsibility for any losses or damages to motor vehicles and its accessories in the parking area; and the same holds true even
if it was See himself who parked his Vitara within the premises of the hotel as evidenced by the valet parking customer's claim stub issued to him;
the carnapper was able to open the Vitara without using the key given earlier to the parking attendant and subsequently turned over to See after
the Vitara was stolen; defendant x x x Justimbaste saw the Vitara speeding away from the place where it was parked; he tried to run after it, and
blocked its possible path but to no avail; and See was duly and immediately informed of the carnapping of his Vitara; the matter was reported to
the nearest police precinct; and defendant x x x Justimbaste, and Horlador submitted themselves to police investigation.
During the pre-trial conference on November 28, 2003, counsel for [respondent] Pioneer Insurance was present. Atty. Monina Lee x x x, counsel of
record of [petitioner] Durban Apartments and Justimbaste was absent, instead, a certain Atty. Nestor Mejia appeared for [petitioner] Durban
Apartments and Justimbaste, but did not file their pre-trial brief.
On November 5, 2004, the lower court granted the motion of [respondent] Pioneer Insurance, despite the opposition of [petitioner] Durban Apartments
and Justimbaste, and allowed [respondent] Pioneer Insurance to present its evidence ex parte before the Branch Clerk of Court.
See testified that: on April 30, 2002, at about 11:30 in the evening, he drove his Vitara and stopped in front of City Garden Hotel in Makati
Avenue, Makati City; a parking attendant, whom he had later known to be defendant x x x Justimbaste, approached and asked for his ignition key,
told him that the latter would park the Vitara for him in front of the hotel, and issued him a valet parking customer's claim stub; he and Montero,
thereafter, checked in at the said hotel; on May 1, 2002, at around 1:00 in the morning, the Hotel Security Officer whom he later knew to be
Horlador called his attention to the fact that his Vitara was carnapped while it was parked at the parking lot of Equitable PCI Bank which is in
front of the hotel; his Vitara was insured with [respondent] Pioneer Insurance; he together with Horlador and defendant x x x Justimbaste went to
Precinct 19 of the Makati City Police to report the carnapping incident, and a police officer came accompanied them to the Anti-Carnapping Unit of
the said station for investigation, taking of their sworn statements, and flashing of a voice alarm; he likewise reported the said incident in PNP
TMG in Camp Crame where another alarm was issued; he filed his claim with [respondent] Pioneer Insurance, and a representative of the latter, who
is also an adjuster of Vesper Insurance Adjusters-Appraisers [Vesper], investigated the incident; and [respondent] Pioneer Insurance required him
to sign a Release of Claim and Subrogation Receipt, and finally paid him the sum of
1, 163, 250.00 for his claim.
Ricardo F. Red testified that: he is a claims evaluator of [petitioner] Pioneer Insurance tasked, among others, with the receipt of claims and
documents from the insured, investigation of the said claim, inspection of damages, taking of pictures of insured unit, and monitoring of the
processing of the claim until its payment; he monitored the processing of See's claim when the latter reported the incident to [respondent] Pioneer
Insurance; [respondent] Pioneer Insurance assigned the case to Vesper who verified See's report, conducted an investigation, obtained the necessary
documents for the processing of the claim, and tendered a settlement check to See; they evaluated the case upon receipt of the subrogation
documents and the adjuster's report, and eventually recommended for its settlement for the sum of
1, 163, 250.00 which was accepted by See; the matter was referred and forwarded to their counsel, R.B. Sarajan & Associates, who prepared and
sent demand letters to [petitioner] Durban Apartments and [defendant] Justimbaste, who did not pay [respondent] Pioneer Insurance notwithstanding
their receipt of the demand letters; and the services of R.B. Sarajan & Associates were engaged, for
100, 000.00 as attorney's fees plus
3, 000.00 per court appearance, to prosecute the claims of [respondent] Pioneer Insurance against [petitioner] Durban Apartments and Justimbaste
before the lower court.
Ferdinand Cacnio testified that: he is an adjuster of Vesper; [respondent] Pioneer Insurance assigned to Vesper the investigation of See's case,
and he was the one actually assigned to investigate it; he conducted his investigation of the matter by interviewing See, going to the City Garden
Hotel, required subrogation documents from See, and verified the authenticity of the same; he learned that it is the standard procedure of the said
hotel as regards its valet parking service to assist their guests as soon as they get to the lobby entrance, park the cars for their guests, and
place the ignition keys in their safety key box; considering that the hotel has only twelve (12) available parking slots, it has an agreement with
Equitable PCI Bank permitting the hotel to use the parking space of the bank at night; he also learned that a Hyundai Starex van was carnapped at
the said place barely a month before the occurrence of this incident because Liberty Insurance assigned the said incident to Vespers, and Horlador
and defendant x x x Justimbaste admitted the occurrence of the same in their sworn statements before the Anti-Carnapping Unit of the Makati City
Police; upon verification with the PNP TMG [Unit] in Camp Crame, he learned that See's Vitara has not yet been recovered; upon evaluation, Vesper
recommended to [respondent] Pioneer Insurance to settle See's claim for
1, 045, 750.00; See contested the recommendation of Vesper by reasoning out that the 10% depreciation should not be applied in this case considering
the fact that the Vitara was used for barely eight (8) months prior to its loss; and [respondent] Pioneer Insurance acceded to See's contention,
tendered the sum of
1, 163, 250.00 as settlement, the former accepted it, and signed a release of claim and subrogation receipt.
The lower court denied the Motion to Admit Pre-Trial Brief and Motion for Reconsideration field by [petitioner] Durban Apartments and Justimbaste
in its Orders dated May 4, 2005 and October 20, 2005, respectively, for being devoid of merit.3cralawredlaw
Thereafter, on January 27, 2006, the RTC rendered a decision, disposing, as follows: chanrob1esvirtwallawlibrary
WHEREFORE, judgment is hereby rendered ordering [petitioner Durban Apartments Corporation] to pay [respondent Pioneer Insurance and Surety
Corporation] the sum of
1, 163, 250.00 with legal interest thereon from July 22, 2003 until the obligation is fully paid and attorney's fees and litigation expenses
On appeal, the appellate court affirmed the decision of the trial court, viz.: chanrob1esvirtwallawlibrary
WHEREFORE, premises considered, the Decision dated January 27, 2006 of the RTC, Branch 66, Makati City in Civil Case No. 03-857 is hereby AFFIRMED insofar as it holds [petitioner] Durban Apartments Corporation solely liable to [respondent] Pioneer Insurance and Surety
Corporation for the loss of Jeffrey See's Suzuki Grand Vitara.
Hence, this recourse by petitioner.
The issues for our resolution are: chanrob1esvirtwallawlibrary
1. Whether the lower courts erred in declaring petitioner as in default for failure to appear at the pre-trial conference and to file a pre-trial
2. Corollary thereto, whether the trial court correctly allowed respondent to present evidence ex-parte; chanroblesvirtualawlibrary
3. Whether petitioner is liable to respondent for attorney's fees in the amount of
120, 000.00; and
4. Ultimately, whether petitioner is liable to respondent for the loss of See's vehicle.
The petition must fail.
We are in complete accord with the common ruling of the lower courts that petitioner was in default for failure to appear at the pre-trial
conference and to file a pre-trial brief, and thus, correctly allowed respondent to present evidence ex-parte. Likewise, the lower courts
did not err in holding petitioner liable for the loss of See's vehicle.
Well-entrenched in jurisprudence is the rule that factual findings of the trial court, especially when affirmed by the appellate court, are
accorded the highest degree of respect and are considered conclusive between the parties.6cralaw A review of such findings by
this Court is not warranted except upon a showing of highly meritorious circumstances, such as: (1) when the findings of a trial court are grounded
entirely on speculation, surmises, or conjectures; (2) when a lower court's inference from its factual findings is manifestly mistaken, absurd, or
impossible; (3) when there is grave abuse of discretion in the appreciation of facts; (4) when the findings of the appellate court go beyond the
issues of the case, or fail to notice certain relevant facts which, if properly considered, will justify a different conclusion; (5) when there is
a misappreciation of facts; (6) when the findings of fact are conclusions without mention of the specific evidence on which they are based, are
premised on the absence of evidence, or are contradicted by evidence on record.7cralaw None of the foregoing
exceptions permitting a reversal of the assailed decision exists in this instance.
Petitioner urges us, however, that "strong [and] compelling reason[s]" such as the prevention of miscarriage of justice warrant a suspension of the
rules and excuse its and its counsel's non-appearance during the pre-trial conference and their failure to file a pre-trial brief.
We are not persuaded.
Rule 18 of the Rules of Court leaves no room for equivocation; appearance of parties and their counsel at the pre-trial conference, along with the
filing of a corresponding pre-trial brief, is mandatory, nay, their duty. Thus, Section 4 and Section 6 thereof provide: chanrob1esvirtwallawlibrary
SEC. 4. Appearance of parties.-It shall be the duty of the parties and their counsel to appear at the pre-trial. The non-appearance of a
party may be excused only if a valid cause is shown therefor or if a representative shall appear in his behalf fully authorized in writing to enter
into an amicable settlement, to submit to alternative modes of dispute resolution, and to enter into stipulations or admissions of facts and
SEC. 6. Pre-trial brief.-The parties shall file with the court and serve on the adverse party, in such manner as shall ensure their
receipt thereof at least three (3) days before the date of the pre-trial, their respective pre-trial briefs which shall contain, among others: chanrob1esvirtwallawlibrary
x x x
Failure to file the pre-trial brief shall have the same effect as failure to appear at the pre-trial.
Contrary to the foregoing rules, petitioner and its counsel of record were not present at the scheduled pre-trial conference. Worse, they did not
file a pre-trial brief. Their non-appearance cannot be excused as Section 4, in relation to Section 6, allows only two exceptions: (1) a valid
excuse; and (2) appearance of a representative on behalf of a party who is fully authorized in writing to enter into an amicable settlement, to
submit to alternative modes of dispute resolution, and to enter into stipulations or admissions of facts and documents.
Petitioner is adamant and harps on the fact that November 28, 2003 was merely the first scheduled date for the pre-trial conference, and a certain
Atty. Mejia appeared on its behalf. However, its assertion is belied by its own admission that, on said date, this Atty. Mejia "did not have in his
possession the Special Power of Attorney issued by petitioner's Board of Directors." chanroblesvirtualawlibrary
As pointed out by the CA, petitioner, through Atty. Lee, received the notice of pre-trial on October 27, 2003, thirty-two (32) days prior to the
scheduled conference. In that span of time, Atty. Lee, who was charged with the duty of notifying petitioner of the scheduled pre-trial conference, 8cralaw petitioner, and Atty. Mejia
should have discussed which lawyer would appear at the pre-trial conference with petitioner, armed with the appropriate authority therefor. Sadly,
petitioner failed to comply with not just one rule; it also did not proffer a reason why it likewise failed to file a pre-trial brief. In all,
petitioner has not shown any persuasive reason why it should be exempt from abiding by the rules.
The appearance of Atty. Mejia at the pre-trial conference, without a pre-trial brief and with only his bare allegation that he is counsel for
petitioner, was correctly rejected by the trial court. Accordingly, the trial court, as affirmed by the appellate court, did not err in allowing
respondent to present evidence ex-parte.
Former Chief Justice Andres R. Narvasa's words continue to resonate, thus: chanrob1esvirtwallawlibrary
Everyone knows that a pre-trial in civil actions is mandatory, and has been so since January 1, 1964. Yet to this day its place in the scheme of
things is not fully appreciated, and it receives but perfunctory treatment in many courts. Some courts consider it a mere technicality, serving no
useful purpose save perhaps, occasionally to furnish ground for non-suiting the plaintiff, or declaring a defendant in default, or, wistfully, to
bring about a compromise. The pre-trial device is not thus put to full use. Hence, it has failed in the main to accomplish the chief objective for
it: the simplification, abbreviation and expedition of the trial, if not indeed its dispensation. This is a great pity, because the objective is
attainable, and with not much difficulty, if the device were more intelligently and extensively handled.
x x x
Consistently with the mandatory character of the pre-trial, the Rules oblige not only the lawyers but the parties as well to appear for this
purpose before the Court, and when a party "fails to appear at a pre-trial conference (he) may be non-suited or considered as in default." The
obligation "to appear" denotes not simply the personal appearance, or the mere physical presentation by a party of one's self, but connotes as
importantly, preparedness to go into the different subject assigned by law to a pre-trial. And in those instances where a party may not himself be
present at the pre-trial, and another person substitutes for him, or his lawyer undertakes to appear not only as an attorney but in substitution of
the client's person, it is imperative for that representative of the lawyer to have "special authority" to make such substantive agreements as only
the client otherwise has capacity to make. That "special authority" should ordinarily be in writing or at the very least be "duly established by
evidence other than the self-serving assertion of counsel (or the proclaimed representative) himself." Without that special authority, the lawyer
or representative cannot be deemed capacitated to appear in place of the party; hence, it will be considered that the latter has failed to put in
an appearance at all, and he [must] therefore "be non-suited or considered as in default, " notwithstanding his lawyer's or delegate's presence.9cralawredlaw
We are not unmindful that defendant's (petitioner's) preclusion from presenting evidence during trial does not automatically result in a judgment
in favor of plaintiff (respondent). The plaintiff must still substantiate the allegations in its complaint.10cralaw Otherwise, it would be
inutile to continue with the plaintiff's presentation of evidence each time the defendant is declared in default.
In this case, respondent substantiated the allegations in its complaint, i.e., a contract of necessary deposit existed between the insured
See and petitioner. On this score, we find no error in the following disquisition of the appellate court: chanrob1esvirtwallawlibrary
[The] records also reveal that upon arrival at the City Garden Hotel, See gave notice to the doorman and parking attendant of the said hotel, x x x
Justimbaste, about his Vitara when he entrusted its ignition key to the latter. x x x Justimbaste issued a valet parking customer claim stub to
See, parked the Vitara at the Equitable PCI Bank parking area, and placed the ignition key inside a safety key box while See proceeded to the hotel
lobby to check in. The Equitable PCI Bank parking area became an annex of City Garden Hotel when the management of the said bank allowed the
parking of the vehicles of hotel guests thereat in the evening after banking hours.11cralawredlaw
Article 1962, in relation to Article 1998, of the Civil Code defines a contract of deposit and a necessary deposit made by persons in hotels or
Art. 1962. A deposit is constituted from the moment a person receives a thing belonging to another, with the obligation of safely keeping it and
returning the same. If the safekeeping of the thing delivered is not the principal purpose of the contract, there is no deposit but some other
Art. 1998. The deposit of effects made by travelers in hotels or inns shall also be regarded as necessary. The keepers of hotels or inns shall be
responsible for them as depositaries, provided that notice was given to them, or to their employees, of the effects brought by the guests and that,
on the part of the latter, they take the precautions which said hotel-keepers or their substitutes advised relative to the care and vigilance of
Plainly, from the facts found by the lower courts, the insured See deposited his vehicle for safekeeping with petitioner, through the latter's
employee, Justimbaste. In turn, Justimbaste issued a claim stub to See. Thus, the contract of deposit was perfected from See's delivery, when he
handed over to Justimbaste the keys to his vehicle, which Justimbaste received with the obligation of safely keeping and returning it. Ultimately,
petitioner is liable for the loss of See's vehicle.
Lastly, petitioner assails the lower courts' award of attorney's fees to respondent in the amount of
120, 000.00. Petitioner claims that the award is not substantiated by the evidence on record.
While it is a sound policy not to set a premium on the right to litigate, 12cralaw we find that respondent is
entitled to reasonable attorney's fees. Attorney's fees may be awarded when a party is compelled to litigate or incur expenses to protect its
interest, 13cralaw or when the court
deems it just and equitable.14cralaw In this case, petitioner
refused to answer for the loss of See's vehicle, which was deposited with it for safekeeping. This refusal constrained respondent, the insurer of
See, and subrogated to the latter's right, to litigate and incur expenses. However, we reduce the award of
120, 000.00 to
60, 000.00 in view of the simplicity of the issues involved in this case.
, the petition is DENIED. The Decision of the Court of Appeals in CA-G.R. CV No. 86869 is AFFIRMED with the MODIFICATION that the award of attorney's fees is reduced to
60, 000.00. Costs against petitioner.
ANTONIO EDUARDO B. NACHURA
CARPIO, J., Chairperson,PERALTA,