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    Keppel Cebu Shipyard Vs Pioneer Insurance

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    Leizandra Pugong
    The case involved an insurance company, Pioneer Insurance, seeking subrogation for payments made to its insured, WG&A Jebsens Shipmanagement, after WG&A's vessel was gutted by fire during repairs at Keppel Cebu Shipyard. The Supreme Court ruled that subrogation was proper because Pioneer paid the full insurance claim to WG&A, entitling Pioneer to step into the shoes of WG&A to recover damages. However, the Court only ordered Keppel to pay Pioneer ₱329 million, accounting for salvage value recovered from the vessel, with interest. The doctrine of subrogation allows an insurer who pays a claim to

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    Keppel Cebu Shipyard Vs Pioneer Insurance

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    Leizandra Pugong
    60 views4 pages
    The case involved an insurance company, Pioneer Insurance, seeking subrogation for payments made to its insured, WG&A Jebsens Shipmanagement, after WG&A's vessel was gutted by fire during repairs at Keppel Cebu Shipyard. The Supreme Court ruled that subrogation was proper because Pioneer paid the full insurance claim to WG&A, entitling Pioneer to step into the shoes of WG&A to recover damages. However, the Court only ordered Keppel to pay Pioneer ₱329 million, accounting for salvage value recovered from the vessel, with interest. The doctrine of subrogation allows an insurer who pays a claim to

    Original Title

    18. Keppel Cebu Shipyard vs Pioneer Insurance (1)

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    The case involved an insurance company, Pioneer Insurance, seeking subrogation for payments made to its insured, WG&A Jebsens Shipmanagement, after WG&A's vessel was gutted by fire during repairs at Keppel Cebu Shipyard. The Supreme Court ruled that subrogation was proper because Pioneer paid the full insurance claim to WG&A, entitling Pioneer to step into the shoes of WG&A to recover damages. However, the Court only ordered Keppel to pay Pioneer ₱329 million, accounting for salvage value recovered from the vessel, with interest. The doctrine of subrogation allows an insurer who pays a claim to

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    60 views4 pages

    Keppel Cebu Shipyard Vs Pioneer Insurance

    Uploaded by

    Leizandra Pugong
    The case involved an insurance company, Pioneer Insurance, seeking subrogation for payments made to its insured, WG&A Jebsens Shipmanagement, after WG&A's vessel was gutted by fire during repairs at Keppel Cebu Shipyard. The Supreme Court ruled that subrogation was proper because Pioneer paid the full insurance claim to WG&A, entitling Pioneer to step into the shoes of WG&A to recover damages. However, the Court only ordered Keppel to pay Pioneer ₱329 million, accounting for salvage value recovered from the vessel, with interest. The doctrine of subrogation allows an insurer who pays a claim to

    Copyright:

    © All Rights Reserved
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    of 4

    CASE TITLE

    G.R. No. G.R. Nos. Date: Ponente


    180880-81 Sept. 25, 2009 Nachura, J

    TOPIC Right of Subrogation


    (per syllabus/book)
    TICKLER
    (as in the case)

    RECIT READY – SUMMARY (OPTIONAL)

    FACTS:
    • Keppel Cebu Shipyard, Inc. (KCSI) and WG&A Jebsens
    Shipmanagement, Inc. (WG&A) executed a Shiprepair Agreement,
    whereby KCSI undertook repairs on WG&A’s MV “Superferry 3.”
    • WG&A insured the vessel with Pioneer Insurance and Surety
    Corporation (Pioneer) for $8,472,5281.78.
    • Eventually, the vessel was gutted by fire. WG&A declared the
    damage as a “total constructive loss” and filed an insurance claim
    with Pioneer, who paid the amount of $8,472,581.78.
    • Pioneer tried to collect from KCSI, who denied any responsibility from
    the loss of the subject vessel, leading Pioneer to file a Request for
    Arbitration before the Construction Industry Arbitration Commission
    (CIAC).
    • KCSI and WG&A reached an amicable settlement, and the former
    withdrew the claim, leading CIAC to dismiss the claim of WG&A
    against KCSI. Thus, the arbitration before the CIAC proceeded with
    only Pioneer as the remaining claimant.

    CIAC The CIAC rendered its Decision declaring both WG&A and KCSI guilty
    of negligence, with the following findings and conclusions—

    The Tribunal agrees that the contractual obligation of the Yard is to


    provide the welders and equipment to the promenade deck. [The]
    Tribunal agrees that the cutting of the bulkhead door was not a
    contractual obligation of the Yard.
    CA The CA dismissed the petition of Pioneer while granted the Petition of
    the Yard. Pioneer sought reconsideration. An amended decision was
    reached. The CA partially granted Pioneer’s motion for
    reconsideration and as the Yard is hereby ordered to pay Pioneer ₱25
    Million without legal interest. The CA also ruled that both parties are
    negligent.

    Petitioner [ALLEGATIONS] Respondent [ALLEGATIONS]


    Pioneer (as Claimant) is the real party The Claimant is not a real party in
    in interest in this case and that Pioneer interest and has no standing because
    has been subrogated to the claim of it has not been subrogated to the
    its assured. The Claimant claims that it Vessel Owner. For the reason stated
    has the preponderance of evidence above, the insurance policies on
    over that of the Respondent. which the Claimant bases its right of
    Claimant cited documentary subrogation were not validly
    references on the Statutory Source of obtained. In any event, the Claimant
    the Principle of Subrogation. has not been subrogated to any rights
    which the Vessel may have against
    the Yard

    Pioneer asseverates that there existed KCSI counters that a total constructive
    a total constructive loss so that it had loss was not adequately proven by
    to pay WG&A the full amount of the Pioneer, and that there is no proof of
    insurance coverage and, by payment of the insurance proceeds.
    operation of law, it was entitled to be KCSI insists on the validity of the
    subrogated to the rights of WG&A to limited-liability clause up to
    claim the amount of the loss ₱50,000,000.00, because WG&A
    acceded to the provision when it
    executed the Shiprepair Agreement.
    KCSI also claims that the salvage
    value of the vessel should be
    deducted from whatever amount it
    will be made to pay to Pioneer.

    ISSUE 1: Whether subrogation proper? To what extent can subrogation be


    made?

    RULING 1:
    SC DOCTRINE
    Considering the extent of the Subrogation is the substitution of
    damage, WG&A opted to one person by another with
    abandon the ship and claimed the reference to a lawful claim or right,
    value of its policies. Pioneer, finding so that he who is substituted
    the claim compensable, paid the succeeds to the rights of the other
    claim, with WG&A issuing a Loss in relation to a debt or claim,
    and Subrogation Receipt including its remedies or securities.
    evidencing receipt of the payment The principle covers a situation
    of the insurance proceeds from wherein an insurer has paid a loss
    Pioneer. On this note, we find as under an insurance policy is entitled
    unacceptable the claim of KCSI to all the rights and remedies
    that there was no ample proof of belonging to the insured against a
    payment simply because the third party with respect to any loss
    person who signed the Receipt covered by the policy. It
    appeared to be an employee of contemplates full substitution such
    Aboitiz Shipping Corporation. The that it places the party subrogated
    Loss and Subrogation Receipt in the shoes of the creditor, and he
    issued by WG&A to Pioneer is the may use all means that the creditor
    best evidence of payment of the could employ to enforce payment.
    insurance proceeds to the former,
    and no controverting evidence
    was presented by KCSI to rebut the
    presumed authority of the signatory
    to receive such payment. We have
    held that payment by the insurer to
    the insured operates as an
    equitable assignment to the insurer
    of all the remedies that the insured
    may have against the third party
    whose negligence or wrongful act
    caused the loss. The right of
    subrogation is not dependent
    upon, nor does it grow out of, any
    privity of contract. It accrues simply
    upon payment by the insurance
    company of the insurance claim.
    The doctrine of subrogation has its
    roots in equity. It is designed to
    promote and to accomplish justice;
    and is the mode that equity adopts
    to compel the ultimate payment of
    a debt by one who, in justice,
    equity, and good conscience,
    ought to pay.

    FINAL DISPOSITION:
    WHEREFORE, the Petition of Pioneer Insurance and Surety Corporation in G.R. No.
    180896-97 and the Petition of Keppel Cebu Shipyard, Inc. in G.R. No. 180880-81
    are PARTIALLY GRANTED and the Amended Decision dated December 20, 2007
    of the Court of Appeals is MODIFIED. Accordingly, KCSI is ordered to pay Pioneer
    the amount of ₱360,000,000.00 less ₱30,252,648.09, equivalent to the salvage
    value recovered by Pioneer from M/V "Superferry 3," or the net total amount of
    ₱329,747,351.91, with six percent (6%) interest per annum reckoned from the time
    the Request for Arbitration was filed until this Decision becomes final and
    executory, plus twelve percent (12%) interest per annum on the said amount or
    any balance thereof from the finality of the Decision until the same will have been
    fully paid. The arbitration costs shall be borne by both parties on a pro rata basis.
    Costs against KCSI.

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