DURBAN APARTMENTS CORPORATION v. PIONEER INSURANCE, GR No.

179419,
2011-01-12
Facts
This arose after a hotel guest, and Pioneer’s insured, Jeffrey S. See checked into the City Garden
hotel in Makati. The hotel’s parking attendant and co-defendant got the keys to the guest’s
vehicle and parked it an adjacent lot owned by a third party.  The guest was subsequently
awakened so as to be advised that his car had been taken. The guest made the necessary
reports and thereafter filed a claim for insurance with Pioneer which paid the same as
indemnity for the vehicle’s loss.  Pioneer alleged that the loss was an offshoot of the hotel’s
negligence and accordingly filed a claim by means of subrogation, against the hotel and its
parking valet. It was established that there was a previous similar incident and yet “no
necessary precautions were taken to prevent its repetition”.  Pioneer argued that the hotel
“was wanting in due diligence in the selection and supervision of its employees particularly its
parking valet.”

On a procedural note, Pioneer was allowed to present evidence ex parte in view of the hotel’s
failure to file a pre-trial brief and to appear at pre-trial.

The Hotel argued that the insured was not a guest of the hotel but a visitor therein, that its
valet did not get his keys but it was the insured who requested him to find a space wherever
one was available, that valet parking was provided for convenience of its customers and that it
was a special privilege that was given to the insured.  The vehicle was taken without using the
key which was even turned over to the owner. Its valet even tried to run after the carnappers to
no avail.

 The guest testified that he drove his vehicle in front of the hotel where the parking attendant
approached and asked him for his key, and issued a “valet parking customer’s claim stub.”  He
then checked in at the hotel with a companion.  At around 1 a.m., he was advised of the
carnapping incident.   An adjuster testified that based on his investigation, the hotel would
assist guests in parking, and with only 12 parking slots, entered into an agreement with an
adjacent bank to use the latter’s space at night. He discovered that a van had been carnapped
from the same lot barely a month before.

The lower court ruled in favor of Pioneer and ordered Durban to pay the “sum of P1,163,250
with legal interest thereon from July 22, 2003 until the obligation is fully paid and attorney’s
fees and litigation expenses amounting to P120,000.00.”   This was affirmed by the Court of
Appeals.

ISSUES

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. Whether the trial court correctly allowed respondent to present evidence ex-parte;

3. Whether petitioner is liable to respondent for the loss of Sees vehicle.

RULING

The High Court upheld the ruling that the hotel 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.”  It also affirmed the finding that it was liable for the loss of the vehicle.

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:
 
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.

Despite the finding of default, the Supreme Court emphasized 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.” 
It found that the allegations of Pioneer in the complaint were substantiated, “i.e., a contract of
necessary deposit existed between the insured xxx 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, Vicente Justimbaste, about his Vitara when
he entrusted its ignition key to the latter. 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. “
          
Interesting is the finding that the bank’s parking area was deemed an “annex” to the hotel.  A
hotel’s use of an adjacent lot appears to subject the same to its control.  

The Court cited Article 1962, in relation to Article 1998, of the Civil Code:
           
“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.”

The insured deposited the vehicle for safekeeping with the hotel, through its employee.  This
employee issued a claim stub to the insured. The contract of deposit was perfected from the
delivery of the vehicle, when the keys were handed over to the hotel’s employee, and which he
“received with the obligation of safely keeping and returning it.”   

This could conceivably be used as basis for users of mall and other public parking lots to claim
indemnity for loss or damage to their vehicles.  It would be interesting to see if the practice of
placing disclaimers of liability in the parking stub, as well as in signages, would be upheld by the
courts as binding on the users. It does stand to reason that when you are made to park and pay,
parking lot providers owe a degree of care to insure your vehicle is kept safe and sound.  And if
they fail to adhere to this standard, then they should be sorry they didn’t, as in this case.

Wherefore, the petition is denied. The decision of the Court of Appeals is affirmed.