Cebu Shipyard v William Lines (Torts)

CEBU SHIPYARD v WILLIAM LINES (1999)
[G.R. No. 132607. May 5, 1999] CEBU SHIPYARD AND ENGINEERING WORKS, INC., petitioner, vs. WILLIAM LINES, INC. and PRUDENTIAL GUARANTEE and ASSURANCE COMPANY, INC., respondents.

FACTS:
Cebu Shipyard and Engineering Works, Inc. (CSEW) is a domestic corporation engaged in the business of dry-docking and repairing of marine vessels while the private respondent, Prudential Guarantee and Assurance, Inc. (Prudential), also a domestic corporation is in the non-life insurance business.
William Lines, Inc. (plaintiff below) is in the shipping business. It was the owner of M/V Manila City, a luxury passenger-cargo vessel, which caught fire and sank on February 16, 1991. At the time of the unfortunate occurrence sued upon, subject vessel was insured with Prudential for P45,000,000.00 pesos for hull and machinery. The Hull Policy included an “Additional Perils (INCHMAREE)” Clause covering loss of or damage to the vessel through the negligence of, among others, ship repairmen. On February 5, 1991, William Lines, Inc. brought its vessel, M/V Manila City, to the Cebu Shipyard in Lapulapu City for annual dry-docking and repair.
On February 6, 1991, an arrival conference was held between representatives of William Lines, Inc. and CSEW to discuss the work to be undertaken on the M/V Manila City.
The contracts, denominated as Work Orders, were signed thereafter
While the M/V Manila City was undergoing dry-docking and repairs within the premises of CSEW, the master, officers and crew of M/V Manila City stayed in the vessel, using their cabins as living quarters. Other employees hired by William Lines to do repairs and maintenance work on the vessel were also present during the dry-docking.
On February 16, 1991, after subject vessel was transferred to the docking quay, it caught fire and sank, resulting to its eventual total loss.
On February 21, 1991, William Lines, Inc. filed a complaint for damages against CSEW, alleging that the fire which broke out in M/V Manila City was caused by CSEW’s negligence and lack of care.
On July 15, 1991 was filed an Amended Complaint impleading Prudential as co-plaintiff, after the latter had paid William Lines, Inc. the value of the hull and machinery insurance on the M/V Manila City. As a result of such payment Prudential was subrogated to the claim of P45 million, representing the value of the said insurance it paid.

DECISION OF LOWER COURTS:
(1) Trial Court: finding the petitioner herein, Cebu Shipyard and Engineering Works, Inc. (CSEW) negligent and liable for damages to the private respondent, William Lines, Inc., and to the insurer, Prudential Guarantee Assurance Company, Inc.
(2) CA: affirmed trial court.

DEFENSE:
On February 13, 1991, the CSEW completed the drydocking of M/V Manila City at its grave dock. It was then transferred to the docking quay of CSEW where the remaining repair to be done was the replating of the top of Water Ballast Tank No. 12 (Tank Top No. 12) which was subcontracted by CSEW to JNB General Services.
While in the process of rigging the second steel plate, the JNB workers noticed smoke coming from the passageway along the crew cabins. When one of the workers, Mr. Casas, proceeded to the passageway to ascertain the origin of the smoke, he noticed that smoke was gathering on the ceiling of the passageway but did not see any fire as the crew cabins on either side of the passageway were locked. He immediately sought out the proprietor of JNB, Mr. Buenavista, and the Safety Officer of CSEW, Mr. Aves, who sounded the fire alarm.

ISSUE:
Whether CSEW is liable

RULING:
Yes.
Under the circumstances of the case, the doctrine of res ipsa loquitur applies. For the doctrine of res ipsa loquitur to apply to a given situation, the following conditions must concur:
(1) the accident was of a kind which does not ordinarily occur unless someone is negligent; and
(2) that the instrumentality or agency which caused the injury was under the exclusive control of the person charged with negligence.
(3) the injury suffered must not have been due to any voluntary action or contribution on the part of the person injured.
What is more, in the present case the trial court found direct evidence to prove that the workers and/or employees of CSEW were remiss in their duty of exercising due diligence in the care of subject vessel. The direct evidence substantiates the conclusion that

CSEW was really negligent. Thus, even without applying the doctrine of res ipsa loquitur, in light of the direct evidence on record, the ineluctable conclusion is that the petitioner, Cebu Shipyard and Engineering Works, Inc., was negligent and consequently liable for damages to the respondent, William Lines, Inc.
the fact that CSEW benefits from the said stipulation does not automatically make it as a co-assured of William Lines. The intention of the parties to make each other a co-assured under an insurance policy is to be gleaned principally from the insurance contract or policy itself and not from any other contract or agreement because the insurance policy denominates the assured and the beneficiaries of the insurance