Title
Watercraft Ventures Corp. vs. Wolfe
Case
G.R. No. 231485
Decision Date
Sep 21, 2020
A dispute over unpaid boat storage fees between Watercraft Ventures and its former employee, Alfred Wolfe, centered on the existence of a storage agreement. Courts ruled petitioner failed to prove fees were owed, awarding respondent unpaid commissions instead, with modified interest rates.
shipyard manager
unpaid boat storage fees
lack of evidence
A

Case Summary (G.R. No. 231485)

Factual Background

Petitioner alleged that it operated a shipyard in the Subic Bay Freeport Zone and charged a boat storage fee of US$272.00 per month with a monthly interest of four percent for unpaid charges. Petitioner maintained that in June 1997 it employed Alfred Raymond Wolfe as Shipyard Manager and that Wolfe placed his sailboat, the Knotty Gull, in petitioner’s storage facilities. Petitioner asserted that Wolfe never paid storage fees despite knowledge of the charge. Petitioner further alleged that it and Wolfe executed an exclusive central listing agreement in November 2000 granting petitioner the exclusive right to sell the sailboat for six months at a ten percent commission, and that after terminating Wolfe on April 7, 2002 petitioner presented invoices and a statement of account indicating Wolfe’s liability for storage fees. Wolfe signed a Boat Pull Out Clearance dated June 29, 2002, and withdrew the sailboat without paying the claimed storage fees. Petitioner alleged repeated demands remained unheeded and that, by April 2, 2005, the claimed outstanding obligation had grown to P3,231,589.25.

Respondent’s Reply and Counterclaim

In his Answer with Compulsory Counterclaim, Wolfe denied liability for storage fees and described his employment as Service and Repair Yard Manager. He averred that in February 1998 the sailboat had been acquired pursuant to a three-way partnership involving him, petitioner’s then General Manager Barry Bailey, and then President Ricky Sandoval, with an agreement that no storage fees would be charged and that the vessel would serve as a training or “fill-in project.” Wolfe admitted he ultimately funded the purchase and remodeling and claimed he paid all repair expenses. He further alleged that petitioner used the vessel in its towing operations and derived income therefrom. Wolfe prayed for dismissal of the complaint and, as a counterclaim, for payment of P409,534.94 for commissions and advances, as well as damages, attorney’s fees, and costs. A writ of preliminary attachment was issued in the main action and later annulled in a separate Supreme Court case, G.R. No. 181721.

Ruling of the Regional Trial Court

The RTC rendered a Partial Judgment on February 7, 2012 ordering Wolfe to pay petitioner P807,480.00 for storage of the sailboat from May 1998 to April 30, 2002, with legal interest at six percent per annum from the decision and twelve percent per annum from finality until full payment, and awarded petitioner P100,000.00 as attorney’s fees. The RTC credited the Boat Pull Out Clearance and its notation that an outstanding balance of US$16,324.82 was “under negotiation.” The RTC held that the absence of a written contract did not exempt Wolfe from payment and that assessment of fees after several years of use or after termination was not improper. The RTC later modified the penalty charge to two percent and four percent monthly in an order dated August 22, 2012 and denied Wolfe’s motion for reconsideration.

Ruling of the Court of Appeals

The CA reversed and set aside the RTC Partial Judgment in its August 31, 2016 Decision. The CA ordered petitioner to pay Wolfe US$12,197.32 (in Philippine currency at the rate prevailing at time of payment) representing unpaid commissions and advances, with twelve percent per annum interest from termination until June 30, 2013 and six percent per annum thereafter until fully paid. The CA also awarded Wolfe moral damages of P200,000.00, exemplary damages of P200,000.00, and attorney’s fees of P100,000.00. The CA found significant that petitioner failed to prove the existence of any policy charging storage fees to every boat and that petitioner did not promptly demand payment, having first presented invoices only on the last day of Wolfe’s employment. The CA gave weight to petitioner’s own statement of account dated April 7, 2002, which indicated that petitioner owed money to Wolfe and showed a net payable to him for commissions and advances.

Issues Presented to the Supreme Court

Petitioner asserted multiple issues including whether the petition properly raised only pure questions of law under Rule 45, Rules of Court; whether the CA could grant relief not prayed for in Wolfe’s counterclaims; whether the CA correctly based liability on documents Wolfe allegedly denied; whether twelve percent interest applied; whether the annulment of the preliminary attachment rendered petitioner automatically liable for damages without a claim or hearing; and which party bore the burden of proving exemption from storage fees or payment of amounts claimed.

Standard of Review and Burden of Proof

The Supreme Court acknowledged the general prohibition under Rule 45, Rules of Court that a petition for review on certiorari may raise only pure questions of law but concluded that divergent factual findings between the RTC and the CA warranted reassessment of the evidence. The Court reiterated settled principles that the party who asserts a fact bears the burden of proving it and that in civil cases the burden is satisfied by preponderance of evidence or the greater weight of credible evidence. The Court cited authorities including MOF Company, Inc. v. Shin Yang Brokerage Corp. and Sps. Ramos v. Obispo for these propositions.

Supreme Court’s Evaluation of Evidence and Legal Reasoning

The Court found that petitioner failed to discharge its burden to prove entitlement to storage fees. Petitioner adduced no written agreement establishing the storage fee obligation, no proof of a general shipyard policy charging all docked boats, and no evidence of timely demands for payment prior to issuance of invoices on May 2, 2002. The Court held that petitioner’s demand appeared belated and that mere allegation without evidentiary support was insufficient. The Court emphasized that petitioner’s own Statement of Account “Payable to [Respondent] as of April 7, 2002” demonstrated that petitioner owed money to Wolfe and that Wolfe had affirmatively sought payment of petitioner’s unpaid obligations in his counterclaim. Once indebtedness was thus shown in petitioner’s own documents, the Court reasoned, the burden shifted to petitioner as debtor to prove payment, which it failed to do.

Interest Rate and Authorities Governing Award of Interest

The Court agreed with petitioner that the CA’s imposition of twelve percent per annum was improper and adopted the prevailing rule as clarified in Ignacio v. Ragasa and other precedents. The Court recited the modified guidelines derived from Nacar v. Gallery Frames and related jurisprudence, explaining that when an obligation does not constitute a loan or forbearance of money, interest on damages should be imposed at the rate of six percent per annum, and that the twelve percent rate applies only up to June 30, 2013, where applicable. The Court concluded that the present dispute did not involve a forbearance of money and therefore warranted application of six percent per annum interest.

Damages and Attorney’s Fees

The Court determined that the award of mora

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