Keppel Cebu Shipyard v. Pioneer Insurance And Surety Corporation

NACHURA, J.:

Before us are the consolidated petitions filed by the parties-Pioneer Insurance and Surety Corporation1 (Pioneer) and Keppel Cebu Shipyard, Inc.2 (KCSI)-to review on certiorari the Decision3 dated December 17, 2004 and the Amended Decision4 dated December 20, 2007 of the Court of Appeals (CA) in CA-G.R. SP Nos. 74018 and 73934. On January 26, 2000, KCSI and WG&A Jebsens Shipmanagement, Inc. (WG&A) executed a Shiprepair Agreement5 wherein KCSI would renovate and reconstruct WG&A's M/V "Superferry 3" using its dry docking facilities pursuant to its restrictive safety and security rules and regulations.

Prior to the execution of the Shiprepair Agreement, "Superferry 3" was already insured by WG&A with Pioneer for US$8,472,581.78. The Shiprepair Agreement reads- SHIPREPAIR AGREEMENT 6 Company: WG & A JEBSENS SHIPMANAGEMENT INC.

Address: Harbour Center II, Railroad & Chicago Sts. Port Area, City of Manila We, WG & A JEBSENS SHIPMGMT. Owner/Operator of M/V "SUPERFERRY 3"

and KEPPEL CEBU SHIPYARD, INC. (KCSI) enter into an agreement that the Drydocking and Repair of the above-named vessel ordered by the Owner's Authorized Representative shall be carried out under the Keppel Cebu Shipyard Standard Conditions of Contract for Shiprepair, guidelines and regulations on safety and security issued by Keppel Cebu Shipyard. In addition, the following are mutually agreed upon by the parties: 1.

The Owner shall inform its insurer of Clause 207 and 22 (a)8 (refer at the back hereof) and shall include Keppel Cebu Shipyard as a co-assured in its insurance policy. 2. 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.

3. Owner's sub-contractors or workers are not permitted to work in the yard without the written approval of the Vice President - Operations. 4.

In consideration of Keppel Cebu Shipyard allowing Owner to carry out own repairs onboard the vessel, the Owner shall indemnify and hold Keppel Cebu Shipyard harmless from any or all claims, damages, or liabilities arising from death or bodily injuries to Owner's workers, or damages to the vessel or other property however caused. 5. 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.

6. 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. 7.

The ship's officers/crew or owner appointed security personnel shall maintain watch against pilferage and acts of sabotage. 8. 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.

9. The Owner shall be liable to Keppel Cebu Shipyard for any death and/or bodily injuries for the [K]eppel Cebu Shipyard's employees and/or contract workers; theft and/or damages to Keppel Cebu Shipyard's properties and other liabilities which are caused by the workers of the Owner. 10.

The invoice shall be based on quotation reference 99-KCSI-211 dated December 20, 1999 tariff dated March 15, 1998. 11. Payment term shall be as follows: 12.

The Owner and Keppel Cebu Shipyard shall endeavor to settle amicably any dispute that may arise under this Agreement.

Should all efforts for an amicable settlement fail, the disputes shall be submitted for arbitration in Metro Manila in accordance with provisions of Executive Order No. 1008 under the auspices of the Philippine Arbitration Commission. (Signed) BARRY CHIA SOO HOCK