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DURBAN APARTMENTS CORPORATION v. PIONEER INSURANCE

FACTS:

The petitioner Durban Apartments Corporation, which operates as City Garden Hotel, has been held solely liable for the loss of Jeffrey See's vehicle. See checked in at the hotel and entrusted his ignition key to the parking attendant, Vicente Justimbaste, to park his vehicle. Later that night, See was informed that his vehicle had been carnapped while parked unattended at a nearby parking area. Pioneer Insurance and Surety Corporation, as the insurer, filed a complaint against Durban Apartments and Justimbaste, seeking reimbursement for the money claim it paid to See. Durban Apartments denied responsibility and claimed that the loss was due to See's negligence.

In a separate set of facts, the plaintiff's vehicle, a Vitara, was allegedly carnapped while parked at the Equitable PCI Bank parking lot in front of a hotel. The plaintiff reported the incident to the police and filed a claim with his insurance company, Pioneer Insurance. Pioneer Insurance assigned Vesper Insurance Adjusters-Appraisers (Vesper) to conduct an investigation and assess the claim. Vesper verified the plaintiff's report, gathered the necessary documents, and submitted its findings to Pioneer Insurance. Based on the subrogation documents and the adjuster's report, Pioneer Insurance recommended a settlement amount of P1,163,250.00. The plaintiff accepted the settlement amount, signed a release of claim and subrogation receipt, and Pioneer Insurance tendered the settlement amount. Pioneer Insurance engaged the services of R.B. Sarajan & Associates as attorneys for P100,000.00 to pursue the claims against Durban Apartments and Justimbaste. The plaintiff contested the recommendation of Vesper to apply a 10% depreciation to the settlement amount, arguing that the vehicle was only used for eight months before its loss. Pioneer Insurance acceded to the plaintiff's contention, and the settlement amount of P1,163,250.00 was paid, which the plaintiff accepted.

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 attorney's fees in the amount of P120,000.00.

  4. Whether petitioner is liable to respondent for the loss of Jeffrey See's vehicle.

RULING:

  1. The Supreme Court ruled that the lower courts did not err in declaring the petitioner in default for failure to appear at the pre-trial conference and to file a pre-trial brief.

  2. The trial court correctly allowed the respondent to present evidence ex-parte.

  3. The petitioner is liable to the respondent for attorney's fees; however, the amount of P120,000.00 was reduced to P60,000.00.

  4. The petitioner is liable to the respondent for the loss of Jeffrey See's vehicle.

PRINCIPLES:

  1. Mandatory Nature of Pre-Trial Conference: Failure to appear at the pre-trial conference and to file a pre-trial brief as required by Rule 18 of the Rules of Court can result in a party being declared in default.

  2. Presentation of Evidence Ex Parte: When a party is declared in default, the court may allow the other party to present its evidence without the presence of the defaulting party.

  3. Contract of Deposit: A necessary deposit is considered constituted when a vehicle is entrusted by a guest to a hotel for safekeeping, creating an obligation on the hotel to ensure the safety of the vehicle.

  4. Award of Attorney’s Fees: Attorney's fees may be awarded if a party is compelled to litigate or incur expenses to protect its interest or when deemed just and equitable by the court.

  5. Subrogation: An insurer who indemnifies the insured is subrogated to the rights of the insured against the party responsible for the loss.