Chan vs.
Maceda
Facts:
1. Bonifacio S. Maceda, Jr., herein respondent, obtained a P7.3 million
loan from the Development Bank of the Philippines for the
construction of his New Gran Hotel Project in Tacloban City.
2. Respondent Maceda entered into a building construction contract
with Moreman Builders Co., Inc., (Moreman). They agreed that the
construction would be finished not later than December 22, 1977.
3. Respondent Maceda purchased various construction materials and
equipment in Manila. Moreman, in turn, deposited them in the
warehouse of Wilson and Lily Chan, herein petitioners. The deposit
was free of charge.
4. Unfortunately, Moreman failed to finish the construction of the
hotel at the stipulated time. Hence, respondent filed with the CFI of
Manila, an action for rescission and damages against Moreman (Civil
Case No. 113498).
5. The CFI rendered its Decision rescinding the contract between
Moreman and respondent and awarding to the latter P445,000.00 as
actual, moral and liquidated damages; P20,000.00 representing the
increase in the construction materials; and P35,000.00 as attorney's
fees.
6. Meanwhile, during the pendency of the case, respondent Maceda
ordered petitioners Chan to return to him the construction materials
and equipment which Moreman deposited in their warehouse.
Petitioners, however, told them that Moreman withdrew those
construction materials in 1977.
7. Hence, on December 11, 1985, respondent filed with the Regional
Trial Court, Branch 160, Pasig City, an action for damages with an
application for a writ of preliminary attachment against petitioners
(Civil Case No. 53044)
Issue: WON respondent Maceda has the right to demand the release of the
said materials and equipment and claim for damages? NO.
Ruling: It must be stressed that respondent's claim for damages is based on
petitioners' failure to return or to release to him the construction materials
and equipment deposited by Moreman to their warehouse.
Under Article 1311 of the Civil Code, contracts are binding upon the parties
(and their assigns and heirs) who execute them. When there is no privity of
contract, there is likewise no obligation or liability to speak about and thus
no cause of action arises.
Specifically, in an action against the depositary, the burden is on the plaintiff
to prove the bailment or deposit and the performance of conditions
precedent to the right of action. A depositary is obliged to return the thing to
the depositor, or to his heirs or successors, or to the person who may have
been designated in the contract.
In the present case, the record is bereft of any contract of deposit, oral or
written, between petitioners Chan and respondent Maceda. If at all, it was
only between petitioners Chan and Moreman. And granting arguendo that
there was indeed a contract of deposit between petitioners Chan and
Moreman, it is still incumbent upon respondent to prove its existence and
that it was executed in his favor. However, respondent miserably failed to do
so. The only pieces of evidence respondent presented to prove the contract
of deposit were the delivery receipts.
Significantly, they are unsigned and not duly received or authenticated by
either Moreman, petitioners or respondent or any of their authorized
representatives. Hence, those delivery receipts have no probative value at all.
While our laws grant a person the remedial right to prosecute or institute a
civil action against another for the enforcement or protection of a right, or
the prevention or redress of a wrong, every cause of action ex-contractu must
be founded upon a contract, oral or written, express or implied.
Moreover, respondent also failed to prove that there were construction
materials and equipment in petitioners' warehouse at the time he made a
demand for their return.

Considering that respondent failed to prove (1) the existence of any contract
of deposit between him and petitioners, nor between the latter and
Moreman in his favor, and (2) that there were construction materials in
petitioners' warehouse at the time of respondent's demand to return the
same, we hold that petitioners have no corresponding obligation or liability
to respondent with respect to those construction materials and there is no
right whatsoever to claim for damages.

Dispositive: WHEREFORE, the petition is GRANTED. The challenged Decision

of the Court of Appeals dated June 17, 1999 is REVERSED and SET ASIDE.
Costs against respondent.

SO ORDERED.