Keppel Cebu Shipyard vs. Pioneer Insurance and SuretySeptember 25, 2009Facts KCSI and !"#$ %ebsens Shipmana&ement, Inc. '!"#$( e)ecuted a Shiprepair $&reement *hereinKCSI *ould renovate and reconstruct !"#$+s - /Supererry 1 usin& its dry doc3in& acilities pursuant toits restrictive saety and security rules and re&ulations. Prior to the e)ecutiono the Shiprepair $&reement,/Supererry 1 *as already insured by !"#$ *ith Pioneer or 4S6,782,56.86. :he Shiprepair $&reementprovides, amon& others, or the ollo*in& terms'( that the o*ner shall inorm its insurer and shall include Keppel Cebu Shipyard as a co;assured inits insurance policyuest or $rbitration beore the Construction Industry $rbitration Commission 'CI$C( prayin& or thepayment o the amount paid to !"#$, the e)penses o the arbitration 'P500 million(, and dama&es. It urtherprayed that Clauses and 2 on the unsi&ned pa&e o the /Shiprepair $&reement as *ell as the hardly le&ibleClauses 20 and 22 'a( and other similar clauses printed in very =ne print on the unsi&ned dorsal pa&e thereo, beall declared ille&al and void ab initio.KCSI and !"#$ reached an amicable settlement, leadin& to the dismissal o the claim o !"#$a&ainst KCSI and the arbitration to proceed *ith Pioneer as the remainin& claimant. Pioneer alle&es that it is theeal party in interest and that Keppel had custody o and control over the -/Supererry 1 *hile said vessel*as in Bespondent Keppel+s premises. It li3e*ise alle&ed that the essel+s Saety anual cannot be reliedupon as proo o the aster+s continuin& control over the vessel < Dard is liable under the Eoctrine o Bes IpsaAo>uitur. oreover , the liability o Bespondent does not arise merely rom the application o the Eoctrineo Bes Ipsa Ao>uitur, but rom its ne&li&ence in this case. It uther all&ed that the shipo*ner had no le&al duty toapply or a hot*or3s permit since it *as not re>uired by the yard, and the o*ner+s hot*or3s *ere conducted by*elders *ho remained employees o the yard. In supplyin& *elders and e>uipment as per :he !or3 @rderEated 2 %anuary 2000, the Dard did so at its o*n ris3, and acted as a Aess :han Prudent Ship Bepairer.KCI on the other hand all&ed. that pioneer as claimant has no standin& to =le the Be>uest or $rbitrationand the :ribunalhas no ?urisdiction over the case. 2. :he Ship GBHepair $&reement *as not imposed upon the essel. :he essel3no*in&ly andvoluntarily accepted that a&reement. oreover, there are no si&nin& or otherormal deectsthat can invalidate the a&reement.1. :he pro)imate cause o the =re and dama&e to the essel *as not any ne&li&ence committedby $n&elino Seville?o in cuttin& the bul3head door or any other shortcomin& by the Dard. @nthe contrary, the pro)imate cause o the =re *as Er. %oni&a+s and the essel+sdeliberatedecision to have $n&elino Seville?o underta3e cuttin& *or3 in inherently dan&erousconditions created by them.

real party in interest and that Keppel had custody o and control over the -/Supererry 1 *hile said vessel*as in Bespondent Keppel+s premises. It li3e*ise alle&ed that the essel+s Saety anual cannot be reliedupon as proo o the aster+s continuin& control over the vessel < Dard is liable under the Eoctrine o Bes IpsaAo>uitur. oreover , the liability o Bespondent does not arise merely rom the application o the Eoctrineo Bes Ipsa Ao>uitur, but rom its ne&li&ence in this case. It uther all&ed that the shipo*ner had no le&al duty toapply or a hot*or3s permit since it *as not re>uired by the yard, and the o*ner+s hot*or3s *ere conducted by*elders *ho remained employees o the yard. In supplyin& *elders and e>uipment as per :he !or3 @rderEated 2 %anuary 2000, the Dard did so at its o*n ris3, and acted as a Aess :han Prudent Ship Bepairer.KCI on the other hand all&ed. that pioneer as claimant has no standin& to =le the Be>uest or $rbitrationand the :ribunalhas no ?urisdiction over the case. 2. :he Ship GBHepair $&reement *as not imposed upon the essel. :he essel3no*in&ly andvoluntarily accepted that a&reement. oreover, there are no si&nin& or otherormal deectsthat can invalidate the a&reement.1. :he pro)imate cause o the =re and dama&e to the essel *as not any ne&li&ence committedby $n&elino Seville?o in cuttin& the bul3head door or any other shortcomin& by the Dard. @nthe contrary, the pro)imate cause o the =re *as Er. %oni&a+s and the essel+sdeliberatedecision to have $n&elino Seville?o underta3e cuttin& *or3 in inherently dan&erousconditions created by them.7. ven assumin& that $n&elino Seville?o cut the bul3head door close to the dec3 Joor, andthat this circumstance rather than the e)tremely haardous conditions created by Er. %oni&aand the essel or that activity caused the =re, the Dard may still not be held liable or theresultin& dama&e.5. $ssumin& that the Dard is liable, it cannot be compelled to pay the ull amount o P10million paid by the Claimant as subro&ee, or an amount &reater than that *hich the essel