Chan v Maceda / April 30, 2003 / Sandoval-Gutierrez, J.

SUBJECT MATTER: Deposit

CASE SUMMARY: After purchasing building construction materials and equipment for his new project, Maceda allegedly had
Moreman deposit them to the warehouse of Wilson and Liliy Chan free of charge. The claim for damages is based on Chan’s
failure to return or to release the construction materials and equipment deposited by Moreman to their warhous. The delivery
receipts presented lack probative value so as to prove the existence of the contract for they are unsigned and not duly
authenticated by Moreman or by Maceda. SC granted Chan’s petition and held that Maceda failed to prove the (1) 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 Chan’s warehouse at the time of the demand.

DOCTRINE: Art 1311 CC states that 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.
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.

FACTS:
 Bonifacio Maceda Jr, obtained a 7.3M loan from DBP for the construction of his New Gran Hotel Project. He entered
into a building construction contract with Moreman Builders.
 Maceda purchased construction materials and equipment in Manila, which were deposited by Moreman in the
warehouse of Wilson and Liliy Chan, free of charge.
 Due to Moreman’s failure to complete the project at the stipulated time, Maceda filed a case for rescission and damages
against them.

Case for rescission and damages (filed by Maceda):

CFI
 Ruled in favor of Maceda.
 Rescinded the contract and awarding Maceda P445k as actual, moral, and liquidated damages, P20k as the increase in
the construction materials, and P35k as attorney’s fees.
CA
 Dismissed appeal of Moreman.
SC
 While case was pending with the SC, Maceda demanded from the Chan’s the deposited materials but Chan said that
Moreman withdrew these materials in 1977.

Action for damages and preliminary attachment with an application for a writ of preliminary attachment (filed by Maceda):
RTC
 Maceda filed an action for damages and preliminary attachment with an application for a writ of preliminary attachment
against Chan.
 After 4 years, the RTC dismissed the case for failure to prosecute.
 After another 5 years, a motion for reconsideration was filed but was denied by RTC.
 On appeal, the RTC granted the MFR.
 Chan filed a motion to dismiss, while Maceda filed a motion to declare Chan in default.
 RTC declared Chan in default.
CA
 Chan filed a petition for certiorari to annul RTC’s order of default.
 Dismissed petition.
SC
 Affirmed the assailed order of the Court of Appeals

Return of records to RTC:

 Maceda presented his witnesses to show that indeed bags of cement were deposited in the warehouse of Chan:
1. Leonardo Conge, a labor contractor, testified that on he was contracted by Lily Chan to get bags of cement from
the New Gran Hotel construction site and to store the same into the latter’s warehouse in Tacloban City. He also
 hauled about 400 bundles of steel bars from the same construction site, upon order of petitioners. Corresponding
delivery receipts were presented.
2. Alfredo Maceda testified that he was Maceda’s Disbursement and Payroll Officer who supervised the construction
Hotel. While conducting the inventory he found that the approximate total value of the materials stored in
petitioners’ warehouse was P214,310.00. This amount was accordingly reflected in the certification signed by
Mario Ramos, store clerk and representative of Moreman.
3. Damiano Nadera testified on the current cost of the architectural and structural requirements needed to complete
the construction of the New Gran Hotel.
 Ruled in favor of Maceda and stated that since the bags were stored by Moreman builders without any lien or
encumbrance, Chan was duty bound to release it.
 Article 21 of the Civil Code provides: ‘Art. 21. Any person who willfully caused loss or injury to another in a manner
that is contrary to morals, good customs or public policy shall compensate the latter for the damage.’
 Maceda is entitled to:
o payment of actual damages = P1,930,080.00.
o payment of 12,500 bags of cement and 400 bundles of steel bars = P2,549,000.00
o moral damages of P150,000.00; exemplary damages of P50,000.00 and attorney’s fees of P50,000.00 and to
pay the costs
 Claim of Chan for payment of damages with respect to the materials appearing in the balance sheets as of February 3,
1978 in the amount of P3,286,690.00 not upheld
CA
 Affirmed in toto the decision of the RTC
SC
 In this current petition, Maceda maintained that petitioners, as depositaries under the law, have both the fiduciary and
extraordinary obligations not only to safely keep the construction material deposited, but also return them with all their
products, accessories, and accession, pursuant to Articles 1972, 1979, 1983, and 1988 of CC.

ISSUE:
1. WON procedural infirmities should have been a ground to dismiss the case - YES
2. WON there was a contract of deposit - NO

HELD:
1. YES. The case was originally dismissed for Maceda’s failure to prosecute after 4 years of its filing. Moreover, the
original MFR was filed 5 years after the decision, thus far beyond the 15-day reglementary period. The second MFR is
also a prohibited pleading but the trial court still granted it. This is a gross error on the part of the trial court.
2. NO. The claim for damages is based on Chan’s failure to return or to release the construction materials and equipment
deposited by Moreman to their warhouse. Questions to resolve:
a. Has Maceda presented proof that the construction materials and equipment were actually in Chan’s warehouse
when he asked that the materials be turned over?
 Art 1311 CC states that 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. 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.
 The delivery receipts presented also lack probative value so as to prove the existence of the contract for they
are unsigned and not duly authenticated by Moreman or by Maceda.
 Maceda also failed to prove that there were construction materials and equipment in petitioner’s warehouse at
the time he made a demand for their return.

b. If did Maceda have the right to demand the release of said materials or claim for damages?
 Maceda failed to prove the (1) 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 Chan’s warehouse at the
time of the demand.
 In relation to the claim of damages, actual damages must be proven with a reasonable degree of certainty,
which in this case, Maceda failed to present.

Petition GRANTED.