G.R. No. 231485, September 21, 2020
Watercraft Ventures Corporation, represented by its Vice President, Rosario E. Rañoa, Petitioner, vs. Alfred Raymond Wolfe, Respondent.

FACTS

Petitioner Watercraft Ventures Corporation, a yacht maintenance company, filed a collection case against its former employee, respondent Alfred Raymond Wolfe, for unpaid boat storage fees for his sailboat, the Knotty Gull, from 1997 to 2002. Petitioner claimed that despite respondent’s employment, he was not exempt from paying the standard monthly storage fee. After his termination in 2002, petitioner invoiced him for accumulated fees. Respondent countered that the sailboat was purchased under a three-way partnership agreement with petitioner’s former officers, stipulating no storage fees as it was to be used as a training project for staff. He asserted he paid all repair costs, received no storage invoices during his employment, and that petitioner even used the boat for its towing operations.
The Regional Trial Court (RTC) ruled in favor of petitioner, ordering respondent to pay storage fees, citing a “Boat Pull Out Clearance” he signed acknowledging an outstanding balance under negotiation. The Court of Appeals (CA) reversed the RTC, finding no credible evidence of an agreement to pay storage fees. The CA noted the absence of prior billing, the peculiar timing of the demand after employment termination, and the conditional annotation on the clearance. It also awarded moral and exemplary damages and attorney’s fees to respondent.

ISSUE

Whether the Court of Appeals erred in reversing the RTC’s finding that respondent is liable for storage fees and in awarding damages to respondent.

RULING

The Supreme Court partly granted the petition, affirming the CA’s exoneration of respondent from the main storage fee claim but deleting the award of damages. On the principal obligation, the Court upheld the CA’s finding that petitioner failed to prove the existence of a storage agreement. The burden of proof lies with the party alleging the fact. Petitioner could not present any contract, regular invoice, or contemporaneous demand for payment during the entire period the boat was stored. The singular “Boat Pull Out Clearance,” annotated that the amount was “under negotiation,” did not constitute an admission of liability but rather an acknowledgment of a disputed claim. The long silence and failure to bill for over four years negated the existence of a clear and enforceable obligation.
However, the Court deleted the CA’s award of moral and exemplary damages and attorney’s fees to respondent. Moral damages require clear evidence of bad faith or a willful injury. The Court found that respondent merely alleged the suit was harassment but failed to substantiate any malicious intent by petitioner. Since the award of moral damages had no basis, the consequential award of exemplary damages, which is dependent on an award of moral, temperate, or compensatory damages, must also be deleted. Attorney’s fees were likewise deleted as the CA’s decision provided no justification for their grant. The Court modified the disposition, ordering petitioner to pay respondent a separate, uncontested amount for advances made, with legal interest.