Supreme Court

Manila
 
SECOND DIVISION
 
DURBAN APARTMENTS CORPORATION, G.R. No. 179419
doing business under the name and style of  
City Garden Hotel, Present:
Petitioner,  
  CARPIO, J.,
  Chairperson,
  NACHURA,
  PERALTA,
- versus - ABAD, and
  MENDOZA, JJ.
   
   
   
PIONEER INSURANCE AND SURETY Promulgated:
CORPORATION,  
Respondent. January 12, 2011

x------------------------------------------------------------------------------------x
 
 
DECISION
 
NACHURA, J.:
 
 
For review is the Decision[1] of the Court of Appeals (CA) in CA-G.R. CV No. 86869, which affirmed
the decision[2] 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 Sees (Sees) 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. Sees
[the insureds] 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 P1,175,000.00; 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 oclock 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 P1,163,250.00 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 Sees 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 Sees 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 customers 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 customers 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 P1,163,250.00 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 Sees claim when the latter reported the incident to [respondent] Pioneer
Insurance; [respondent] Pioneer Insurance assigned the case to Vesper who verified
Sees 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 adjusters report, and
eventually recommended for its settlement for the sum of P1,163,250.00 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 P100,000.00 as attorneys fees plus P3,000.00 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 Sees 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 Sees Vitara has
not yet been recovered; upon evaluation, Vesper recommended to [respondent] Pioneer
Insurance to settle Sees claim for P1,045,750.00; 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 Sees contention, tendered the sum
of P1,163,250.00 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.[3]
 
 
Thereafter, on January 27, 2006, the RTC rendered a decision, disposing, as follows:
 
WHEREFORE, judgment is hereby rendered ordering [petitioner Durban Apartments
Corporation] to pay [respondent Pioneer Insurance and Surety Corporation] the sum
of P1,163,250.00 with legal interest thereon from July 22, 2003 until the obligation is
fully paid and attorneys fees and litigation expenses amounting to P120,000.00.
 
SO ORDERED.[4]
 
On appeal, the appellate court affirmed the decision of the trial court, viz.:
 
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 Sees Suzuki Grand Vitara.
 
SO ORDERED.[5]
 
 
Hence, this recourse by petitioner.
 
The issues for our resolution are:
 
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 brief;
 
2. Corollary thereto, whether the trial court correctly allowed respondent to present evidence ex-parte;
 
3. Whether petitioner is liable to respondent for attorneys fees in the amount of P120,000.00; and
 
4. Ultimately, whether petitioner is liable to respondent for the loss of Sees 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 Sees 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.[6] 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 courts 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.[7] 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 counsels 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:
 
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 documents.
 
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:
 
xxxx
 
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 petitioners Board of Directors.
 
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, [8] 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. Narvasas words continue to resonate, thus:
 
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.
 
xxxx
 
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 ones 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 clients 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 lawyers or delegates presence.[9]
 
 
We are not unmindful that defendants (petitioners) 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.[10] Otherwise, it would be inutile to continue with the
plaintiffs 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:
 
[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.[11]
 
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 inns:
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 contract.
 
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 their effects.
 
 
Plainly, from the facts found by the lower courts, the insured See deposited his vehicle for
safekeeping with petitioner, through the latters employee, Justimbaste. In turn, Justimbaste issued a
claim stub to See. Thus, the contract of deposit was perfected from Sees 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 Sees vehicle.
 
Lastly, petitioner assails the lower courts award of attorneys fees to respondent in the amount
of P120,000.00. Petitioner claims that the award is not substantiated by the evidence on record.
 
We disagree.
 
While it is a sound policy not to set a premium on the right to litigate,[12] we find that respondent
is entitled to reasonable attorneys fees. Attorneys fees may be awarded when a party is compelled to
litigate or incur expenses to protect its interest, [13] or when the court deems it just and equitable. [14] In
this case, petitioner refused to answer for the loss of Sees vehicle, which was deposited with it for
safekeeping. This refusal constrained respondent, the insurer of See, and subrogated to the latters
right, to litigate and incur expenses. However, we reduce the award of P120,000.00 to P60,000.00 in
view of the simplicity of the issues involved in this case.
 
WHEREFORE, 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 attorneys fees is reduced
to P60,000.00. Costs against petitioner.
SO ORDERED.