Marina’s circular

By Frank 'Boy' Pestaño

Chessmoso

Thursday, June 5, 2014

NOT all the things that Ferdinand Marcos created during his martial law regime were bad. Many of them continue to exist until today because they serve a purpose. One of them is the Maritime Industry Authority (Marina) which Marcos established in 1974 to accelerate the integrated development of the maritime industry in the country.

Marina must have done a good job carrying out its mandate because when Congress passed the Domestic Shipping Development Act some 30 years later, it granted additional powers to the agency. One of them was the authority to require every ship operator to obtain “such other compulsory insurance coverage necessary to adequately cover claims for damages.”

That was the basis of Marina’s issuance on Feb. 4, 2009 of Circular 2009-01 requiring
shipping companies to secure Protection and Indemnity (P & I) cover for their vessels.

Marina said this was necessary in order to ensure that domestic ship owners are able to meet their financial responsibility for any legal liability.

Circular 2009-1 declared that P & I insurance coverage was compulsory for any type of vessel that is 20GT and wooden-hulled ships that are 35 GT and above. The rule was simple: no P & I coverage, no authority to operate in the domestic trade.

Yesterday, the local Marina head, Director Nanette Dinopol was, however, reported by The Freeman as saying that P & I cover is in fact only optional. The same newspaper report said that the Marina has issued a “Cease and Desist Order” against compulsory P & I coverage.

I am not sure how an agency can CDO itself but Dinopol did not deny that since March 1, 2010, ship owners were no longer required to secure P & I coverage for their vessels.

I searched the Marina website just in case I missed the order suspending the implementation of Circular 2009-1. I did not find any such thing. The circular has been amended at least thrice since its issuance but none abolished or even
temporarily suspended the enforcement of the compulsory P & I coverage.

The first amendment, which was issued on Feb. 27, 2009 merely extended the filing of the Oath of Undertaking to comply with the provisions of 2009-1, aside from granting additional 5 percent discount on tonnage fee to those who were able to file their oath on time.

The second amendment, made on July 16, 2009, extended the deadline to secure mandatory marine insurance cover for wreck removal and oil pollution to Oct. 31 of the same year.

The third one, dated Oct. 19, 2009, expanded the coverage of Circular 2009-1 by directing that vessels using persistent oil and non-persistent oil and Philippine registered tankers and barges should secure insurance against liability from pollution and wreck removal.

In 2010, the year the P & I insurance coverage supposedly became optional, the Marina issued only two circulars affecting the domestic shipping sector. In 2011, there were also two such issuances, in 2012, one and last year, three. None touched the issue of mandatory P & I insurance coverage.

The equivalent of P & I in land transportation is TPL or third party liability insurance, which vehicle owners must secure otherwise they can’t register them. The “own damage” policy, on the other hand, is optional because it covers only risks to your own vehicle.

“Own damage” protection is secured by shipowners and operators through a hull and machinery insurance. While many of them are unhappy being compelled to insure themselves against damage to third parties, including the environment, they have no such qualms securing themselves from losses to their pockets.

Isn’t these something amiss somewhere?

(frank.otherside@yahoo.com)