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Keppel Cebu Shipyard V Pioneer Insurance Gr180880-81
Keppel Cebu Shipyard V Pioneer Insurance Gr180880-81
- versus -
[if !supportLists]1.
[endif]The Owner shall inform its
insurer of Clause 20[if !supportFootnotes][7][endif] and 22 (a)[if !
supportFootnotes][8][endif] (refer at the back hereof) and shall
include Keppel Cebu Shipyard as a co-assured in its
insurance policy.
!
[if !supportLists]2.
[endif]The Owner shall waive its right
to claim for any loss of profit or loss of use or
damages consequential on such loss of use resulting
from the delay in the redelivery of the above vessel.
[if !supportLists]3.
[endif]Owners sub-contractors or
workers are not permitted to work in the yard without
the written approval of the Vice President Operations.
[if !supportLists]5.
[endif]On arrival, the Owner
Representative, Captain, Chief Officer and Chief
Engineer will be invited to attend a conference with
our Production, Safety and Security personnel
whereby they will be briefed on, and given copies of
Shipyard safety regulations.
[if !supportLists]6.
[endif]An adequate number of officers
and crew must remain on board at all times to ensure
the safety of the vessel and compliance of safety
regulations by crew and owner employed workmen.
[if !supportLists]8.
[endif]The yard must be informed and
instructed to provide the necessary security
arrangement coverage should there be inadequate or
no crew on board to provide the expressed safety and
security enforcement.
[if !supportLists]9.
[endif]The Owner shall be liable to
Keppel Cebu Shipyard for any death and/or bodily
injuries for the [K]eppel Cebu Shipyards employees
and/or contract workers; theft and/or damages to
Keppel Cebu Shipyards properties and other liabilities
which are caused by the workers of the Owner.
(Signed)
16 June 2000
US$8,472,581.78
------------------------------------------------
on 08 February 2000
By: (Signed)
______________________________________
Witnesses: (Signed)
______________________________________
(Signed)
______________________________________
[if !supportLists]2.
[endif]To pay to claimant WG&A, INC. and/or
Aboitiz Shipping Corporation and WG&A Jebsens Shipmanagement, Inc.
the sum of P500,000,000.00 plus interest thereon from the date of filing
[of the] Request for Arbitration or date of the arbitral award, as may be
found proper;
[if !supportLists]3.
[endif]To pay to the claimants herein the sum of
P3,000,000.00 for and as attorneys fees; plus other damages as may be
established during the proceedings, including arbitration fees and other
litigation expenses, and the costs of suit.
It is likewise further prayed that Clauses 1 and 2 on the
unsigned page 1 of the Shiprepair Agreement (Annex
A) as well as the hardly legible Clauses 20 and 22 (a)
and other similar clauses printed in very fine print on
the unsigned dorsal page thereof, be all declared
illegal and void ab initio and without any legal effect
whatsoever.[if !supportFootnotes][10][endif]
Is by Operation of Law
[if !supportLists]A.
[endif]The evidence presented
during the hearings indubitably proves that respondent
not only took custody but assumed responsibility and
control over M/V Superferry 3 in carrying out the drydocking and repair of the vessel.
[if !supportLists]B.
[endif]The presence on board the M/
V Superferry 3 of its officers and crew does not
relieve the respondent of its responsibility for said
vessel.
[if !supportLists]C.
[endif]Respondent Keppel assumed
responsibility over M/V Superferry 3 when it brought
the vessel inside its graving dock and applied its own
safety rules to the dry-docking and repairs of the
vessel.
[if !supportLists]D.
[endif]The practice of allowing a
shipowner and its sub-contractors to perform
maintenance works while the vessel was within
respondents premises does not detract from the fact
that control and custody over M/V Superferry 3 was
transferred to the yard.
[if !supportLists]A.
[endif]The Control Test The yard
exercised control over Sevillejo. The power of
control is not diminished by the failure to
exercise control.
[if !supportLists]B.
[endif]There was no independent
work contract between Joniga and Sevillejo
Joniga was not the employer of Sevillejo, as
Sevillejo remained an employee of the yard at
the time the loss occurred.
[if !supportLists]C.
[endif]The mere fact that Dr. Joniga
requested Sevillejo to perform some of the
Owners hot works under the 26 January 2000
work order did not make Dr. Joniga the
employer of Sevillejo.
[if !supportLists]A.
[endif]The yard, not Dr. Joniga, gave
the welders their marching orders, and
[if !supportLists]B.
[endif]Dr. Jonigas authority to
request the execution of owners hot works in
the passenger areas was expressly recognized
by the Yard Project Superintendent Orcullo.
According to Claimant:
[if !supportLists]A.
inadequate.
[if !supportLists]B.
[endif]Yard Fire Fighting Efforts and
Equipment Were Inadequate.
[if !supportLists]C.
[endif]Yard Safety Practices and
Procedures Were Unsafe or Inadequate.
[if !supportLists]D.
[endif]Yard Safety Assistants and
Firewatch-Men were Overworked.
[if !supportLists](i)
jackets theory.
[if !supportLists](ii)
[endif]Hole-in-the[-]floor theory.
[if !supportLists](iii)
[if !supportLists](iv)
theory.
[if !supportLists](v)
!
[if !supportLists](a)
[endif]There is no valid arbitration
agreement between the Yard and the Vessel Owner.
On January 26, 2000, when the ship repair agreement
(which includes the arbitration agreement) was signed
by WG&A Jebsens on behalf of the Vessel, the same
was still owned by Aboitiz Shipping. Consequently,
when another firm, WG&A, authorized WG&A
!
[if !supportLists](b)
[endif]The Claimant is not a real
party in interest and has no standing because it has not
been subrogated to the Vessel Owner. For the reason
stated above, the insurance policies on which the
Claimant bases its right of subrogation were not
validly obtained. In any event, the Claimant has not
been subrogated to any rights which the Vessel may
have against the Yard because:
[if !supportLists]i.
[endif]The Claimant has not proved
payment of the proceeds of the policies to any specific
party. As a consequence, it has also not proved
payment to the Vessel Owner.
[if !supportLists]ii.
[endif]The Claimant had no legally
demandable obligation to pay under the policies and
did so only voluntarily. Under the policies, the
Claimant and the Vessel agreed that there is no
[if !supportLists]iii.
[endif]There was also no
subrogation under Article 1236 of the Civil Code.
First, if the Claimant asserts a right of payment only
by virtue of Article 1236, then there is no legal
subrogation under Article 2207 and it does not
succeed to the Vessels rights under the Ship [R]epair
Agreement and the arbitration agreement. It does not
have a right to demand arbitration and will have only
a purely civil law claim for reimbursement to the
extent that its payment benefited the Yard which
should be filed in court. Second, since the Yard is not
liable for the fire and the resulting damage to the
Vessel, then it derived no benefit from the Claimants
payment to the Vessel Owner. Third, in any event, the
Claimant has not proved payment of the proceeds to
the Vessel Owner.
!
[if !supportLists]2.
[endif]The Ship [R]epair Agreement
was not imposed upon the Vessel. The Vessel
knowingly and voluntarily accepted that agreement.
!
[if !supportLists]3.
[endif]The proximate cause of the fire
and damage to the Vessel was not any negligence
committed by Angelino Sevillejo in cutting the
bulkhead door or any other shortcoming by the Yard.
On the contrary, the proximate cause of the fire was
Dr. Jonigas and the Vessels deliberate decision to have
Angelino Sevillejo undertake cutting work in
inherently dangerous conditions created by them.
[if !supportLists](a)
[endif]The Claimants material
witnesses lied on the record and the Claimant
presented no credible proof of any negligence by
Angelino Sevillejo.
!
[if !supportLists](b)
[endif]Uncontroverted evidence
proved that Dr. Joniga neglected or decided not to
obtain a hot work permit for the bulkhead cutting and
also neglected or refused to have the ceiling and the
flammable lifejackets removed from underneath the
area where he instructed Angelino Sevillejo to cut the
bulkhead door. These decisions or oversights
[if !supportLists](c)
[endif]The Yards expert witness, Dr.
Eric Mullen gave the only credible account of the
cause and the mechanics of ignition of the fire. He
established that: i) the fire started when the cutting of
the bulkhead door resulted in sparks or hot molten
slag which fell through pre-existing holes on the deck
floor and came into contact with and ignited the
flammable lifejackets stored in the ceiling void
directly below; and ii) the bottom level of the
bulkhead door was immaterial, because the sparks and
slag could have come from the cutting of any of the
sides of the door. Consequently, the cutting itself of
the bulkhead door under the hazardous conditions
created by Dr. Joniga, rather than the positioning of
the doors bottom edge, was the proximate cause of the
fire.
[if !supportLists](d)
[endif]The Manila City case is
irrelevant to this dispute and in any case, does not
establish governing precedent to the effect that when a
ship is damaged in dry dock, the shipyard is presumed
at fault. Apart from the differences in the factual
setting of the two cases, the Manila City
pronouncements regarding the res ipsa loquitur
[if !supportLists](e)
[endif]The Vessels deliberate acts
and its negligence created the inherently hazardous
conditions in which the cutting work that could
otherwise be done safely ended up causing a fire and
the damage to the Vessel. The fire was a direct and
logical consequence of the Vessels decisions to: (1)
take Angelino Sevillejo away from his welding work
at the Promenade Deck restaurant and instead to
require him to do unauthorized cutting work in Deck
A; and (2) to have him do that without satisfying the
requirements for and obtaining a hot work permit in
violation of the Yards Safety Rules and without
removing the flammable ceiling and life jackets
below, contrary to the requirements not only of the
Yards Safety Rules but also of the demands of
standard safe practice and the Vessels own explicit
safety and hot work policies.
[if !supportLists](f)
[endif]The vessel has not presented
any proof to show that the Yard was remiss in its fire
fighting preparations or in the actual conduct of
fighting the 8 February 2000 fire. The Yard had the
necessary equipment and trained personnel and
[if !supportLists]4.
[endif]Even assuming that Angelino
Sevillejo cut the bulkhead door close to the deck floor,
and that this circumstance rather than the extremely
hazardous conditions created by Dr. Joniga and the
Vessel for that activity caused the fire, the Yard may
still not be held liable for the resulting damage.
[if !supportLists](a)
[endif]The Yards only contractual
obligation to the Vessel in respect of the 26 January
2000 Work Order was to supply welders for the
Promenade Deck restaurant who would then perform
welding work per owner[s] instruction. Consequently,
once it had provided those welders, including
Angelino Sevillejo, its obligation to the Vessel was
fully discharged and no claim for contractual breach,
or for damages on account thereof, may be raised
against the Yard.
!
[if !supportLists](b)
[endif]The Yard is also not liable to
the Vessel/Claimant on the basis of quasi-delict.
[if !supportLists]
i.
[endif]The
Vessel exercised supervision and control over
Angelino Sevillejo when he was doing work at the
Promenade Deck restaurant and especially when he
was instructed by Dr. Joniga to cut the bulkhead door.
Consequently, the Vessel was the party with actual
control over his tasks and is deemed his true and
effective employer for purposes of establishing Article
2180 employer liability.
!
[if !supportLists]
ii.
[endif]Even assuming that the Yard was Angelino
Sevillejos employer, the Yard may nevertheless not be
held liable under Article 2180 because Angelino
Sevillejo was acting beyond the scope of his tasks
assigned by the Yard (which was only to do welding
for the Promenade Deck restaurant) when he cut the
bulkhead door pursuant to instructions given by the
Vessel.
[if !supportLists]
iii.
[endif]The
Yard is nonetheless not liable under Article 2180
because it exercised due diligence in the selection and
supervision of Angelino Sevillejo.
[if !supportLists](a)
[endif]Under the law, the Yard may
not be held liable to the Claimant, as subrogee, for an
amount greater than that which the Vessel could have
recovered, even if the Claimant may have paid a
higher amount under its policies. In turn, the right of
the Vessel to recover is limited to actual damage to the
MV Superferry 3, at the time of the fire.
!
[if !supportLists](b)
[endif]Under the Ship [R]epair
Agreement, the liability of the Yard is limited to P50
million a stipulation which, under the law and
decisions of the Supreme Court, is valid, binding and
enforceable.
[if !supportLists](c)
[endif]The Vessel breached its
obligation under Clause 22 (a) of the Yards Standard
[if !supportLists]1.
[endif]Claimants counsel contends
that the cutting of the bulkhead door was covered by
the 26 January 2000 Work Order.
[if !supportLists]2.
[endif]Claimants counsel contends
that Dr. Joniga told Gerry Orcullo about his intention
to have Angelino Sevillejo do cutting work at the
Deck A bulkhead on the morning of 8 February 2000.
[if !supportLists]3.
[endif]Claimants counsel contends
that under Article 1727 of the Civil Code, The
contractor is responsible for the work done by persons
employed by him.
[if !supportLists]4.
[endif]Claimants counsel contends
that [t]he second reason why there was no job spec or
job order for this cutting work, [is] the cutting work
was known to the yard and coordinated with Mr.
Gerry Orcullo, the yard project superintendent.
[if !supportLists]5.
[endif]Claimants counsel also
contends, to make the Vessels unauthorized hot works
activities seem less likely, that they could easily be
detected because Mr. Avelino Aves, the Yard Safety
Superintendent, admitted that No hot works could
really be hidden from the Yard, your Honors, because
the welding cables and the gas hoses emanating from
the dock will give these hotworks away apart from the
assertion and the fact that there were also safety
assistants supposedly going around the vessel.
The Yard and The WG&A are hereby ordered to pay the
arbitration costs pro-rata.
SO ORDERED.[if !supportFootnotes][16][endif]
SO ORDERED.[if !supportFootnotes][18][endif]
II
D. IT IS INIQUITOUS TO ALLOW
THE YARD TO LIMIT LIABILITY, IN
THAT:
( i ) T H E YA R D H A D
CUSTODY AND CONTROL OVER
THE VESSEL (M/V SUPERFERRY 3)
ON 08 FEBRUARY 2000 WHEN IT
WAS GUTTED BY FIRE;
III
E. THE NEGLIGENCE OF
A N G E L I N O S E V I L L E J O WA S T H E
PROXIMATE CAUSE OF THE LOSS.
IV
!
VI
On the other hand, KCSI cites the following grounds for the
allowance of its petition, to wit:
xxxx
xxxx
!
(a) If more than three-fourths thereof in value is actually lost,
or would have to be expended to recover it from the
peril;
CONSUELO YNARES-SANTIAGO
Acting Chief Justice
Chairperson
MINITA V. CHICO-NAZARIO
Associate Justice
PRESBITERO J. VELASCO, JR.
Associate Justice
DIOSDADO M. PERALTA
Associate Justice
C E R T I FI CAT I O N
Pursuant to Section 13, Article VIII of the Constitution, I
certify that the conclusions in the above Decision had been
reached in consultation before the case was assigned to the
writer of the opinion of the Courts Division.
CONSUELO YNARES-SANTIAGO
Acting Chief Justice