Durban Apartments Corporation vs. Pioneer Insurance and Surety Corporation

A contract of necessary deposit is perfected when a hotel guest entrusts a vehicle's ignition key to the hotel's valet parking attendant, making the hotel liable as a depositary for the vehicle's loss. Additionally, a party's non-appearance at a pre-trial conference cannot be excused by a representative lacking written special authority to enter into stipulations or admissions, and failure to file a pre-trial brief has the same effect as failure to appear.

Jeffrey See, a guest at City Garden Hotel, utilized the hotel's valet parking service. His vehicle was carnapped from the hotel's designated parking area. See's insurer, Pioneer Insurance, paid the claim and, by right of subrogation, sued the hotel corporation and the parking attendant for damages based on negligence.

• Original Filing: RTC, Branch 66, Makati City, Civil Case No. 03-857
• Lower Court Decision: January 27, 2006 — RTC declared Durban Apartments solely liable for the loss of the vehicle.
• Appeal: CA-G.R. CV No. 86869 — CA affirmed the RTC decision.
• SC Action: Petition for Review on Certiorari filed by Durban Apartments.

• The Valet Incident: On April 30, 2002, Jeffrey See arrived at City Garden Hotel. Parking attendant Vicente Justimbaste asked for See's ignition key, issued a valet parking customer's claim stub, and parked the vehicle at the Equitable PCI Bank parking area (which the hotel used at night).
• The Carnapping: Around 1:00 AM on May 1, 2002, See was informed his vehicle was carnapped. The vehicle was never recovered.
• The Insurance Claim: Pioneer Insurance paid See P1,163,250.00 and, by subrogation, filed a complaint for recovery of damages against Durban Apartments and Justimbaste, alleging negligence and failure to take precautions despite a prior similar incident.
• The Pre-trial Default: During the pre-trial conference on November 28, 2003, Durban Apartments' counsel of record was absent. A certain Atty. Mejia appeared but did not file a pre-trial brief and did not possess a Special Power of Attorney from the petitioner's Board of Directors.
• Ex Parte Presentation: The RTC denied Durban Apartments' motion to admit a pre-trial brief and allowed Pioneer Insurance to present evidence ex parte.

• The lower courts erred in declaring petitioner in default; the appearance of Atty. Mejia should excuse non-appearance, and "compelling reasons" warrant a suspension of the rules.
• The lower courts erred in allowing respondent to present evidence ex parte.
• Petitioner is not liable for the loss of the vehicle because valet parking is a special privilege that does not include responsibility for loss.
• The award of P120,000.00 in attorney's fees is not substantiated by the evidence.

• The RTC correctly declared petitioner in default due to failure to appear with proper authority and failure to file a pre-trial brief.
• A contract of necessary deposit existed between See and the hotel, making the hotel liable for the loss under Art. 1998 of the Civil Code.
• Attorney's fees are justified under Art. 2208 of the Civil Code because respondent was compelled to litigate.

• Procedural Issues:
  • Whether the lower courts erred in declaring petitioner in default for failure to appear at the pre-trial conference and to file a pre-trial brief.
  • Whether the trial court correctly allowed respondent to present evidence ex parte.
• Substantive Issues:
  • Whether petitioner is liable to respondent for the loss of See's vehicle.
  • Whether petitioner is liable for attorney's fees.

• Procedural:
  • The SC held the lower courts did not err. Pre-trial appearance and the filing of a pre-trial brief are mandatory under Rule 18 of the Rules of Court.
  • Under Section 4, non-appearance can only be excused by a valid cause or a representative with written special authority to enter into amicable settlement, submit to ADR, and enter into stipulations. Atty. Mejia lacked this special authority.
  • Under Section 6, failure to file a pre-trial brief has the same effect as failure to appear at the pre-trial.
  • The ex parte presentation of evidence was proper. The SC noted that a defendant's default does not automatically result in judgment for the plaintiff; the plaintiff must still substantiate the allegations in the complaint, which respondent successfully did.
• Substantive:
  • The SC held petitioner liable for the loss of the vehicle. A contract of necessary deposit was perfected when See handed over the ignition key to the hotel's parking attendant, who issued a claim stub.
  • Under Art. 1998 of the Civil Code, the deposit of effects by travelers in hotels is a necessary deposit, and hotel keepers are responsible as depositaries provided notice was given to them or their employees.
  • The SC reduced the attorney's fees from P120,000.00 to P60,000.00 due to the simplicity of the issues involved, but affirmed the award under Art. 2208(2) and (11) because respondent was compelled to litigate to protect its interest.

• Mandatory Pre-trial Appearance and Authority of Representative — Appearance of parties and counsel at pre-trial is mandatory. A representative appearing in lieu of a party must have special authority in writing to enter into amicable settlement, submit to ADR, and enter into stipulations. Without this special authority, the representative's appearance is invalid, and the party is considered to have failed to appear.
• Mandatory Pre-trial Brief — Failure to file a pre-trial brief has the same effect as failure to appear at the pre-trial conference.
• Necessary Deposit in Hotels/Inns — The deposit of effects made by travelers in hotels or inns is regarded as necessary. The keepers of hotels or inns are responsible as depositaries, provided notice was given to them or their employees of the effects brought by the guests. Entrusting a vehicle's ignition key to a hotel's valet parking attendant constitutes a contract of necessary deposit.

• Rule 18, Sections 3, 4, and 6, Rules of Court — Sec. 3 imposes the duty on counsel to notify the party of the pre-trial. Sec. 4 mandates the appearance of parties and their counsel at pre-trial, allowing non-appearance only if excused by valid cause or a representative with written special authority. Sec. 6 requires the filing of a pre-trial brief and states that failure to file has the same effect as failure to appear.
• Article 1962, Civil Code — Defines a deposit as constituted from the moment a person receives a thing belonging to another with the obligation of safely keeping and returning it.
• Article 1998, Civil Code — Regards the deposit of effects by travelers in hotels or inns as necessary, making hotel keepers responsible as depositaries provided notice was given to them or their employees.
• Article 2208, paragraphs 2 and 11, Civil Code — Justifies the award of attorney's fees when a party is compelled to litigate to protect its interest (par. 2) or when the court deems it just and equitable (par. 11).