Case Summary (G.R. No. 74521)
Key Dates and Procedural Posture
- Factual incident: night of April 30–May 1, 2002 (vehicle carnapped while parked in hotel parking annex).
- Case filing: Complaint for Recovery of Damages filed July 22, 2003 by respondent (by subrogation).
- Pre-trial scheduled: November 28, 2003 (petitioner’s counsel absent; substitute counsel attended without written special authority and without pre-trial brief).
- RTC decision: January 27, 2006 (judgment ordering petitioner to pay P1,163,250.00 plus legal interest from July 22, 2003 and attorney’s fees/litigation expenses).
- CA decision: Affirmed RTC insofar as petitioner’s liability (G.R. No. 179419 appealed to the Supreme Court).
- Supreme Court final disposition: Petition denied; CA decision affirmed with modification reducing attorney’s fees award to P60,000.00; costs against petitioner.
Factual Findings (as accepted by the trial and appellate courts)
- See arrived at City Garden Hotel and entrusted his vehicle’s ignition key to the hotel parking attendant (Justimbaste) who issued a valet parking claim stub. The attendant placed keys in a safety key box.
- The vehicle was parked at Equitable PCI Bank’s parking area under an arrangement permitting the hotel to use the bank’s parking after banking hours (the bank parking functioned as an annex to the hotel).
- Between midnight and 1:00 a.m., the vehicle was carnapped from that parking area. See was promptly informed, reported the incident to the Makati Police Anti-Carnapping Unit and to PNP Traffic Management Group (Camp Crame), and filed the necessary statements. The vehicle was not recovered as of the time of the investigation (certification of non-recovery).
- Respondent insurer paid See and mortgagee ABN AMRO the sum of P1,163,250.00 as indemnity and obtained a release and subrogation from See; respondent then demanded indemnity from the hotel but received no payment, prompting suit.
- Investigations revealed a prior carnapping incident involving the hotel’s valet service (a Hyundai Starex taken about a month earlier), and evidence that hotel employees including the security officer and the parking attendant had been investigated and had given sworn statements.
Issues Presented
- Whether petitioner was properly declared in default for failure to appear at pre-trial and to file a pre-trial brief.
- Whether the trial court correctly allowed respondent to present evidence ex parte.
- Whether petitioner is liable for attorney’s fees in the amount awarded (P120,000.00 awarded by RTC; later reduced).
- Whether petitioner is liable to respondent (by subrogation) for the loss of See’s vehicle.
Standard of Review and Deference to Trial Court Findings
- The Supreme Court reiterated the established rule that factual findings of the trial court, especially when affirmed by the appellate court, enjoy high respect and are conclusive between parties. Reversal is warranted only under narrow exceptional circumstances (findings based solely on conjecture, manifestly mistaken inferences, grave abuse in appreciation of facts, misapprehension of facts, findings unsupported by specific evidence, or when appellate findings go beyond the issues). The Court found none of these exceptions present here, and therefore gave deference to the RTC and CA factual determinations.
Pre-trial Obligations, Default, and Ex-parte Presentation
- Rule 18 of the Rules of Court makes pre-trial appearance and filing of pre-trial briefs mandatory. Section 4 requires parties and counsel to appear; non-appearance may be excused only for a valid cause or where a representative with written special authority appears. Section 6 requires the filing of pre-trial briefs at least three days before pre-trial; failure to file has the same effect as failure to appear.
- The hotel’s counsel did not appear with valid written authority (the substitute counsel present had no special power of attorney) and did not file a pre-trial brief. The Court relied on longstanding jurisprudence (including the Development Bank v. CA and narvasa’s exposition) that a representative lacking written special authority cannot substitute for the party for substantive pre-trial agreements; absent such authority, the party is considered as having failed to appear and may be declared in default.
- Because petitioner was properly declared in default, the trial court properly allowed respondent to present its evidence ex parte. The Court emphasized, however, that the plaintiff must still substantiate its claims even where the defendant is in default; preclusion of defense does not obviate the plaintiff’s burden of proof.
Existence of a Contract of Deposit and Hotel Liability
- The courts found that the essential elements of a deposit were present: See delivered the ignition key (and thereby entrusted the vehicle for safekeeping) to the hotel’s parking attendant, who received it and issued a valet parking claim stub. Under Civil Code Art. 1962, a deposit is constituted when a person receives a thing belonging to another with the obligation to keep it safely and return it.
- Article 1998 of the Civil Code treats effects deposited by travelers in hotels or inns as “necessary deposit,” making hotel-keepers responsible for them as depositaries provided notice was given to the hotel or its employees and the guest took precautions advised by hotel-keepers. Here, notice was given (through handing keys to the attendant and issuance of a claim stub), and the hotel assumed custody by placing keys in its safety key box and parking the vehicle in an area used by the hotel as an annex.
- The trial and appellate courts relied on these provisions and on the factual matrix (delivery of keys, claim stub, use of bank parking as hotel annex, prior similar carnapping incident) to conclude that a contract of necessary deposit existed and that the hotel was liable for the loss due to its failure in due diligence in selection and supervision of employees and in taking adequate precautions after a prior similar incident. Consequently, petitioner was held liable to respondent (subrogee) for indemnity paid to the insured.
Attorney’s Fees: Entitlement and Quantum
- The Civil Code (Art. 2208) authorizes award of attorney’s fees when a party is compelled to litigate or when the court finds it just and equitable. The trial court awarded P120,000.00 for attorney’s fees and litigation expenses, reasoning that respondent had to litigate because petitioner refused t
Case Syllabus (G.R. No. 74521)
Procedural History
- Petition for review filed with the Supreme Court from the Decision of the Court of Appeals in CA-G.R. CV No. 86869, which affirmed the decision of the Regional Trial Court (RTC), Branch 66, Makati City, in Civil Case No. 03-857.
- Originating complaint: On July 22, 2003, respondent Pioneer Insurance and Surety Corporation, by right of subrogation, filed a Complaint for Recovery of Damages against petitioner Durban Apartments Corporation (doing business as City Garden Hotel) and defendant Vicente Justimbaste.
- RTC rendered judgment on January 27, 2006 ordering petitioner to pay P1,163,250.00 with legal interest from July 22, 2003 and attorney’s fees and litigation expenses of P120,000.00.
- Court of Appeals affirmed the RTC decision insofar as it held petitioner solely liable to respondent for the loss of Jeffrey See’s Suzuki Grand Vitara.
- Petitioner filed a petition for review with the Supreme Court raising issues enumerated below.
Facts as Found by the Courts (Chronology and Core Factual Findings)
- April 30, 2002: Insured Jeffrey S. See arrived and checked in at City Garden Hotel, Makati, before midnight.
- Upon arrival, a parking attendant later identified as Vicente Justimbaste obtained the ignition key to See’s 2001 Suzuki Grand Vitara and issued a valet parking customer’s claim stub.
- The Vitara was parked at Equitable PCI Bank’s parking area pursuant to an arrangement wherein the bank permitted hotel guests to use its parking at night because the hotel had only twelve available parking slots.
- May 1, 2002, at about 1:00 a.m.: See was awakened by a telephone call from the Hotel Chief Security Officer informing him that his Vitara had been carnapped while parked unattended at the Equitable PCI Bank parking area between 12:00 a.m. and 1:00 a.m.
- See, Horlador (Hotel Chief Security Officer), and Justimbaste went to Precinct 19 of the Makati City Police and to the Makati City Police Anti-Carnapping Unit for investigation; a flash alarm was issued and See gave a Sinumpaang Salaysay; the incident was also reported to the PNP Traffic Management Group (TMG) in Camp Crame, where another alarm was issued.
- As of July 23, 2002, the Vitara had not been recovered as evidenced by a Certification of Non-Recovery issued by the PNP TMG.
- Respondent Pioneer Insurance paid See and mortgagee ABN AMRO Savings Bank, Inc. the amount of P1,163,250.00 as indemnity for the loss of the Vitara and claimed subrogation rights against petitioner and Justimbaste.
- During the investigation, it was discovered that a similar carnapping (a Hyundai Starex van) had occurred at the same place about a month before; Horlador and Justimbaste admitted the prior occurrence in their sworn statements.
- Respondent alleged negligence on the part of petitioner for want of due diligence in the selection and supervision of its employees and for failing to take necessary precautions despite prior incidents; petitioner and Justimbaste allegedly refused to pay the claim despite written demands.
- Petitioner and Justimbaste’s defense included allegations that See did not check in as a guest but was a guest of Ching Montero, that Justimbaste did not get the ignition key, and that valet parking services were a gratuitous privilege not including responsibility for losses; they also asserted that the vehicle was parked within See’s view and that Justimbaste saw the Vitara speeding away and attempted to pursue it.
Pre-trial Attendance, Default, and Ex-parte Evidence Presentation
- Notice of pre-trial served on counsel on October 27, 2003; pre-trial scheduled for November 28, 2003.
- Counsel of record for petitioner, Atty. Monina Lee, was absent at the pre-trial; an Atty. Nestor Mejia appeared purportedly for petitioner but did not have petitioner’s Special Power of Attorney and did not file a pre-trial brief.
- Petitioner and Justimbaste failed to file a pre-trial brief; their Motion to Admit Pre-Trial Brief and Motion for Reconsideration were denied by the RTC as devoid of merit (Orders dated May 4, 2005 and October 20, 2005).
- On November 5, 2004, despite petitioner’s opposition, the trial court allowed respondent to present its evidence ex parte before the Branch Clerk of Court, concluding petitioner was in default for failure to appear and to file a pre-trial brief.
- Supreme Court agreed with RTC and CA that petitioner was in default and that ex-parte presentation by respondent was correctly allowed, citing Rules of Court, Rule 18, Section 4 and Section 6 regarding mandatory appearance and filing of pre-trial briefs.
Evidence Adduced by Respondent (Witnesses and Key Testimony)
- Jeffrey S. See (insured):
- Testified that he arrived at City Garden Hotel about 11:30 p.m. on April 30, 2002; a parking attendant (Justimbaste) requested his ignition key, told him the attendant would park the Vitara, and issued a valet parking customer’s claim stub.
- Reported the carnapping between 12:00 a.m. and 1:00 a.m. on May 1, 2002; went to the Makati City Police Anti-Carnapping Unit and to PNP TMG; filed claim with respondent; signed Release of Claim and Subrogation Receipt; received payment of P1,163,250.00 from respondent.
- Ricardo F. Red (claims evaluator of respondent):
- Monitored processing of See’s claim; respondent assigned Vesper Insurance Adjusters-Appraisers to investigate; Vesper verified See’s