aritime REVIEW

Vol. VII No.5 A PUBLICATION OF THE MARITIME LEAGUE September-October 2000

SHIP OPERATIONS Debate rages on the issue of relaxing cabotage rules

PORTS Zarnboanga Freeport slugs it out

MARINE INSURANCE RP is under pressure to address problem of piracy ...... • •• SULPICIO LINES~ INC.

"A Pillar in the Industry, a Friend to the Country. "

CERTIFICATE No.58691

Sulpicio Lines, Inc. is soaring high on it's 27'h year of fruitful and dedicated service to the Philippine shipping industry. The organization banks on the wealth of it's experience and strength of it's commitment. Indeed an experienced mariner, tossed, battered and torn at certain points, the company rises, a learned survivor and stands firm on a foundation of reliable resources and the conviction to go on answering the needs of sea transport. At present, it serves 26 ports of call and over 12 tertiary routes to the more remote islands in the archipelago, a comm itment inherited from it's respected founder Don Sulpicio Go or Go Guioc So who was an experienced sailor, a seasoned administrator and a dedicated man of service.

Each of the company's luxury liners has superb facilities that offer utmost comfort and convenience to passengers as well as efficient handling of cargo to and from points in the nation. Traveling on board any of the latest add ition fleet has been, a matter of fact, likened to almost like traveling on ocean liners and cruise ships abroad.

Sulpicio Lines rides high, sa ils high, soars high on the waves of sterling shipping to brighter horizon of excellent marine transport service with a greater sense of responsibility, a deeper commitment and a staunch belief that it can steer the industry and country to progress from generation to generation ...

SULPICIO LINES, INC. the first domestic shipping company that has been audited by two of the external auditors accredited by Maritime Industry Authority (MARINA) the Bureau Veritas of Paris and the Bureau Veritas Quality International of London . Both have certified that the company's Safety Management System (SMS) has complied with the requirements of the International Safety Management _Code (ISM) and International Quality Assurance Management • Safety is the concern of all and has no rank. To be effective it has to Standard (ISO 9002-1994), respectively. Truly a fulfillment to its commitment of be management-led. Consonance to this, management is committed to making all personnel more safety conscious even as it encourages excellence in providing necessary links among the different islands in the all to become actively involved in identifying possible hazards, archipelago. The company still sails on to give you a more efficient, better, safer, implementing corrective actions and constantly monitoring all and quality marine transportation. facets of their working environment to ensure quality and safety conditions prevail. .. • - Mr. Carlos Go Executive Vice President and Chief Executive Officer CONTENTS

The Maritime League 8-12 SHIP OPERATIONS CHAIRMAN EMERITUS •Debate rages as to whether or not the relaxation of cabotage, by open­ Bon. Fidel V. Ramos ing up domestic shipping routes to foreign liners, will benefit the ship­ HONORARY CHAIRMAN ping industry Bon. Vicente C. Rivera Jr. •Max Estayo sees how cargo and passenger bookings dip in the do­ CHAIRMAN AND PRESIDENT mestic trade Commo. Carlos L. Agustin AFP (Ret.) 14PORTS BoARD OF TRu STEES Myra Lopez-Pablo describes how Zamboanga Freeport fares in at­ Rep. Plari~e l M. Abaya tracting locators amidst the bad publicity generated by the crisis in Vicente F. Aldanese Jr. Mindanao RAdm ~apoleon C. Baylon, AFP Capt. Alberto C. Compas, MM 18 MARINE INSURANCE Herminio S. Esguerra The law firm that has had a number of ships arrested in the Us and Edgar S. Go Panama vows to continue filing tort claims in foreign courts Doris Teresa M. Ho Commo. Reuben S. Lista, PCG 20 MANNING Hector E. Miole lan Sherwood points out significant accomplishments between em­ Carlos C. Salinas ployers and employees in his paper delivered during a manning and Rep. Vicente A. Sandoval training conference in London Philip S. Tuazon 24 COMMODITY FOCUS Editorial Board The steady imports of cheap cement from Taiwan have put losses to local cement manufacturers C HAIRMAN Commo. Carlos L. Agustin AFP (Ret.) REGULARS MEMBERS Edgar S. Go 05 Chairman's Page 19 Commentary Doris Teresa M. Ho 06 News update 30 Word from FVR Dante La Jimenez 16 LexMaritima Ernest Villareal

Editorial Staff

E DITOR Andy G. Dalisay ...... AssociATE E DITOR ...... Val V. Vicente

STAFFMEMBERS Myra Lopez-Pablo Max Estayo

E DITORIAL A ssiSTANTS Let Amante-Capatoy Joy J. Fabro

M 2lLUw: FRONT COVER The Maritime Review WG&A President & CEO Endika Aboitiz and Superferry 12 Rm. 201 Marine Technology Center Aduana cor. Arzobii:po Street The Maritime Review is published on behalf ofthe Maritime League lntrarnuros, Manila I 002 and is supplied to members as part of their annual membership Tel : (632) 527-9049, 527-6865 package. However, the opinions expressed by the writers do not E-mail: [email protected] necessarily reflect those of the Maritime League.

Maritime Review• September -October2000•3 Certified by: Recognized & Accredited by:

~ \lTf) TESDA II ~ DnV

~)~? J($~-- PHILIPPINE MERCHA~T MARINE SCHOOL ~~ OFLASPINASCITY

COURSES OFFERED: ADMISSION REQUIREMENTS: ./ BS in Marine Transportation FRESHMAN ./ BS in Marine Engineering (A graduate from High School) ./ BS in Customs Administration a. Form 138 duly accomplished and ./ BA in Port Management - signed by school authority ./ Computer Secretarial b. Certificate of Good Moral Character ./Associate in Marine Electronics c. 2 pes. 1Y2" x 1Y2" pictures ./ Marine Electronic Technician Course TRANSFEREES ./ Reefer Technician Course ./ Basic Seaman Course a. Honorable Dissmissal b. Transcript of Records ./ Pump man Tanker Vessel Course c. 2 pes. 1Y2" x 1Y2" pictures ./ Marine Welding Course d. Certificate of Good Moral Character ./ Machinery Repairman Course

FOR PARTICULARS, Inquire now at the Registrar's Office, PMMS-LPC, San Antonio Valley Road, Talon I, Las Pifias City • Tel. 805-0239/41 Loc. 15 or 805-0243. Maritime League Chairman CARLOS L. AGUSTIN Chairman's Page

Bowditch (H.O. Pub. No.9. Vol. 1; 1995)were twice as many tropical cyclones happen eacll liberally quoted in the message. year in the Western Pacific, compared to the On his second voyage to the New World. Atlantic. Columbus met a tropical stom1 but suffered no Tropical cyclones in the Bay of Bengal damage to his vessels. This experience proved and the Arabian Sea are most likely to occur valuable during his fourth voyage when a fully from October through May. The period from developed hurricane tltreatened his ships. He rec­ September to May marks the storm season in ognized a soutl1easterly swell. the direction ofhigh the South Pacific and South Indian Ocean, with I AM currently involved as a consultant in a cirrus clouds, and the hazy appearance of the at­ January through March the worst months. Despite many years of study. meteorolo­ project to develop a cluster of cities in the east­ mosphere as signs of an approaching stom1. He gists have trouble predicting movement oftropi­ em seaboard of Central Luzon, facing the Pa­ directed his vessels to shelter. while another com­ cal cyclones. In the early stages the storms de­ cific Ocean. Whenever my principal. Mr Romeo mander who ignored tl1e signs lost most of his velop along an ESE-WNW axis. and they tend G Roxas. or I. or the master planner. Felino ships and more than 500 crewmen. to move toward higher latitudes. but similari­ ''JWl'' Palafox briefed on the port whose study In the northern Atlantic. Gulf of Mexico. ties in movement end there. They show no lon­ my group prepared. the proverbial question was and eastem Pacific. meteorologists call stonus like gitudinal regularity in any tum to d1e north. almost always asked: Why are you building a this hurricanes. In tl1e western North Pacific. the Sometimes they accelerate (as much as l.500 port in an area heavily visited by typhoons? correct name is typhoon; in the Philippines. percent in 24 hours), and then suddenly decel­ Denying the prevailing situation is often bagyo; in western Australia willy-willy, and in erate. Other times. they stop and stay within a tempting, except that statistics will bear out the the Indian Ocean. a cyclone. CoiJectively, the 50-mile circle for as long as three days. anxiety manifested by concerned parties: indeed, analysts refer to them as tropical cyclones. They Tropical cyclones south of 30 degrees many typhoons do affect the Dingalan Bay. An occur everywhere. except in the Arctic and Ant­ north latitude are the most predictable. They usu­ annual track of typhoons from Navy meteoro­ arctic Oceans. ally travel at speeds between 12 and 16 knots logical studies and PAGASA records do show Whatever the name. ships at sea must but may reach 20 to 25 knots when subtropical that more stonus pass the area between Isabela make every effort to avoid tropical cyclones of highs are exceptionally strong. Meanwhile. and Camarines Norte on the eastern seaboard hurricane-or typhoon-intensity (64 knots or stom1s north of 30 degrees north latitude may than anywhere else in the Philippines. But what more). Even well equipped ships may fotu1der vary in speed between 0 and 60 knots. with rapid of it? because of the extreme violence of the wind and accelerations up to 70 knots. Just prior to the declaration ofmartial law. sea on their masts and superstructures. Hurricane-force winds (64 knots and I was involved in the hWlt for the NP A craft Although many sailors rarely experience higher) in the average tropical cyclone cover an reportedly coming in to land firearms in the a tropical cyclone at sea, thepmdent seaman nev­ area slightly more than I 00 miles in diameter. Isabel a coast. Without a significant typhoon, tl1e ertheless takes time to study sucll storm systems. Gale-force winds (34 to 64 knots) extend over seas were already rough. A couple of montl1s He leams the long-period. heavy swells arrive an area 400 miles in diameter. In large storms, later. after the actual ''landing" (the boat ran well before the first clouds (dettse cirrus and cir­ hurricane-force winds may stretch for 200 miles, aground in Digoyo Cove, north of Palanan. rostratus) mmoWlcing a typhoon. Active bands compared to 400 miles for gale-force winds. Records show a few Pacific typhoons have car­ lsabela in July. 1972) I again fOtmd myself in of ctunulo-nimbus clouds move along lines up ried hurricane-force winds in an area exceeding the area to support infantry elements Wlder the to a few hWldred miles ahead of the stomr-the 300 miles, with gale-force winds covering an newly-created Northeast Conunand, and to es­ distance varying with d1e size of the stom1. area of 600 miles in some quadrants. tablish the new Naval Station Bicobian. I com­ Following the clouds (on the day before No one really knows the strongest winds manded the RPS lloilo (PS32) and later the RPS the stonu). the tropical pattern is out of phase. of hurricanes and typhoons because most mea­ Cebu (PS28) - one after the otl1er for a period Air-mass ti1W1derstonns of the day before are suring devices can't stand speeds much higher of about 11 months and headed Task Group missing. The usual cumulus clouds are sup­ than 125 knots. However. reconnaissance planes 31.1. pressed. The skies are bright, and the tempera­ have reported winds in the 130-to-150-knot Surprisingly, during the Northeast Mon­ tures are above nomllll. Thett the barometer starts range. Some land stations also have made ac­ soon. the coastline was safer whenever a typhoon to drop slowly, and the wind may shift to an tm­ tual measurements as high as 150 knots. In a passed - so long as it passed north ofDingalan usual direction. In the trades. a north wind is most Florida Keys hurricane. engineers estimated tile Bay. and tl1is happens most of tl1e time. since WlUsual and generally signals danger. Also, any winds must have hit 170 to 215 knots. They the center of the typhoon belt is in Southern wind veering south duough west to north usu­ based their-guess on the extent of damages. Taiwan. This is so because the typhoon is caused ally spells trouble. At the edge of the eye. winds reach their by a depression - a low pressure area that sucks As the stom1 ·center gets closer. the ba­ strongest point. Then. within a distan.ce of as in the air. and thus Di.ngalan Bay falls alee or rometer falls more rapidly. the wind increases, little as a few hWldred feet, they may fall off away from the stom1y wind. which blew towards the seas grow mOtmtainous and finally an omi­ from 100 knots to 10. The average eye mea­ the northeast. A swath ofthe Pacific. Ocean from nous black wall ofclouds. called the bar of stom1, sures about 14 miles .in diameter. but it cm1 be the Luzon coast to a mile or two from shore was approaches. Sailors may ettCOWlter tropical cy­ as small as 4 miles or as large as 100. Winds of amply protected by tl1e Sierra Madre moWltain clones in the eastern North Pacific from June tropical cyclones generate some of the highest range. through October. Stom1S in this region nom1ally ocean waves. The average height is 35 to 40 This reminds me of an e-mail posting are as violent as those in the North Atlantic but feet, but giant stonus have created some mea­ which an acquaintance sent me concerning not as large. Meanwhile. tropical cyclones may suring 45 to 50 feet. A few have gone as high as stonns. which I reproduce below almost in its occur m1y month ofthe year in tl1e western North 60 to 90 feet. These larger waves occur on the entirety. Knight :1· Modern Seamanship (18th Pacific. but the vast majority takes place in July. right side of d1e stonu. along the direction of Edition) and American Practical Navigator. August. September. and October. More than movement. Maritime Review-September-October 2000·5 NEWS BRIEFS arifme update

2 VIVA CREW JAILED

TWO crewmembers of Viva Shipping Lines (VSL) have been sentenced to a prison term of eight to 14 years after a judge found them guilty of frustrated murder for throwing overboard two stowaways in the shark infested waters of Tablas Strait. The judge said in his 24-page decision that Eusebio Mejico and Nonelon Arias conspired to throw overboard the two teenagers (Raymundo Villena and Bernard Alcala) on 11 July 1996 from the ferry Viva Pefiafrancia III when the two boys failed to show their tickets for the trip. Another former crew of the ship is still at large and has been issued an arrest warrant. The two teenagers identified the third missing suspect as the one who 17.18 million in containers. Breakbulk to more than 270 ships of various types, pushed them to the dark waters of Tab las cargo increased by 7.06 per cent during owned by 65 companies and sail under 19 Strait after they were boxed and man­ the January-June period from 51.97 different flags. Linds Edralin Boughton handled. The case of the two teenagers million tons, while containerized ship­ has been appointed as general manager of earned national condemnation in the ments grew by 3.56 per cent from 16.59 the Manila office. country for Viva Shipping Lines. million tons. Barber's operation in the Philip­ Reports of abuses, including rape Total shipcalls increased by 10.35 pines includes overseeing of training and murder on board other VSL-owned per cent to 153,485 during the first half of programs to enhance the competence of ferries, which operate in the Batangas­ this year from 139,093 last year. Domes­ Filipino seagoing personnel. For the past Calapan route, surfaced following the tic ship arrivals grew by 10.45 per cent 16 years the company was only using publication of the two boys' ordeal. from 134,556 last year to 148,611 this NFD International Manning agents in the year, while international vessel arrivals deployment of Filipino seafarers. CARGO HIKES IN FIRST grew by 7.43 per cent from 4,537 last year to 4,874 this year. Total passenger EASTBOUND TRANS-PAC HALF traffic for the first semester also inched up by 4.29 per cent from l~st year 22.83 RATES STALLED · CARGO movem~nts in Philippine ports million to 23.81 million this year. rose by an average of six percent during EASTBOUND freight rates on the trans­ the first half of the year compared with BARBER SETS UP MANILA Pacific liner trades have been eroded this the same period last year. Foreign trade year despite record cargo volumes and the grew by almost 12 per cent, which was OFFICE introduction in May of a $400 per FEU pulled down by an almost flat growth in general rate increase by member lines of domestic trade. SHIP management firm Barber Interna­ the Domestic cargo increased by nearly tional Ltd. has set up an office in Manila. Transpacific Stabilisation Agree­ two per cent due to fewer shipments from The company said the decision arose from ment (TSA). Mindanao brought by the ongoing the fact that Filipino seafarers make up a The statement came from Peter terrorist conflict in the area. According to substantial percentage of Barber Nixon, senior VP for the Pacific trades at the Philippine Ports Authority, total cargo International's crew in its managed fleet P&O Nedlloyd, who said that despite the throughput for the first half of 2000 rose worldwide. May increase and the imposition of a to 72.82 million tons compared with Department of Labor and Employ­ $300 peak season surcharge, rates from 68.56 million tons last year. ment secretary Bienvenido Laguesma Asia have "slipped a bit". Foreign shipments rose from 30.99 graced the occasion as the guest of honor The rate slippage is ·also despite a million tons to 34.61 million tons this during its ope~ing ceremony on Septem­ widening gap between eastbound and year. Domestic cargo increased by 1. 7 per ber 07. Barber belongs to Wilh westbound cargo volume~ which is cent to 38.21 million tons this year from Wilhemsen group of Norway that expected to see eastbound volumes 37.57. million tons. provides ship management, manning, exceed westbound by over 4.4 million The PPA said that 76 per cent of technical consultancy and other services TEU next year, says Nixon. This year the cargo volume or 56 million tons are within the maritime sector. westbound volumes are estimated at 3.2 breakbulk with only 13.6 per cent or It is responsible for providing crew million TEU compared with 7.1M TEU 6•September-October 2000•Maritime Review NEWS BRIEFS BUNKER SUPPLIER eastbound. SLATES CTS travellers, has not been patronizing short­ Although unsuccessful in holding distance travel as much as it used to . Two rate increases this year, the TSA has of the ferries to be sold are 300-passenger, DNV Petroleum Services' campaign to get announced it intends to mount a general 1999-built Tricat 50 and Jet Stream 1, both custody transfer sampling (CTS) rate increase effective from May 1, 2001. built by FBM Aboitiz Marine. at the ship's manifold accepted as It recommends increases of $525 per FEU A spokesman said the company the industry norm was shot down by a to US West coast ports; $600 per FEU to plans to replace the vessels with smaller major suppliers' representative at the designated points in West coast states; ones. He added that the unabated rise in Sibcon 2000 conference in Singapore. $600 per FEU to the East coast and $750 fuel costs has brought enormous financial Senior DNVPS consultant Kjell per FEU to inland points via the East pressure for the company, even if it Haugland said that multiple samples, extra coast. applied corresponding increases in fare signed labels and various sampling rates. PFFC has already sold two vessels to locations were causing confusion in the PPA URGED TO REVISE the UK's Wightlink recently. bunker sector. He said that CTS, in which NORTH HARBOR DATA the ship' s manifold was the usual bunker sampling point, would reduce fraud and ICTSI TO SELL FOREIGN THE Philippine Ports Authority (PPA) disputes and bring significant time and AFFILIATE has been urged to revise the data such as cost savings. cargo volume and revenues it used for its However, Donald Coghill, BP Port operator International Container privatization plan for Manila North Marine's manager of fuels technical Terminal Services Inc. (ICTSI) said it is Harbor, the country's largest domestic services and support, hit out against the willing to sell its international subsidiary port. proposal. "I think it is very dangerous in a as a leading option open to the company. The Domestic Shipping Associa­ dispute to depend on just one sample. We The announcement comes on the back of a tion, a group of liner operators that should be entering into this in the spirit of strong performance of ICTSI International regularly uses the North Harbor, said the partnership with our clients," he said. Holdings Corp (IIHC), which has received PPA needed to revise the assumptions it "My problem is not where you take offers from foreign groups to acquire used in the term of reference (TOR), the sample but that you only want to take IIHC. which is being used by interested bidders one. We have to enter into a spirit of However, ICTSI would not disclose in the port bidding' s pre-qualification compromise." the firms interested to buy its subsidiary process. but officials hinted that these are foreign DSA president Josephine Uranza PFFC TO SLASH FLEET financial institutions. ICTSI officials explained that though the PPA used the estimated that the port operator could actual figures up to 1993, it did n~r.....­ easily generate some PhP500 million to PHILIPPINE Fast Ferry Corp (PFFC), the update the proj ections for the volume of PhP600 million from the sale of IIHC. country's major fast craft operator, is trade to derive the proj ected volume for The international subsidiary, which selling over half its fleet of catamaran 2000. Projections made by the PPA has always been a major earner for ICTSI, ferries in a bid to rationalise operations. showed numbers that would have required contributed PhP3.5 billion to the company Company sources said high fuel prices and the volumes in North Harbor to grow by during the first six months of this year. declining passenger volumes had forced it 44 per cent, according to DSA. The revenues consist of container terminal to dispose of six of its 1lferries at a The group, which joined with the operations in Buenos Aires, Veracruz in minimum $2 million apiece. ATI-ICTSI consortium in bidding for the Mexico, Dammam in Saudi Arabia and PFFC said its passenger market, management and operation of the port, Ensenada in Mexico. believes that the figures should be much mainly of middle-class and tourist lower because it would have an impact on the projected revenues the winning bidder would be expected to make. Expectedly the projections made in the TOR became the main objection of the consortium when the PP A issued a draft TOR early this year. Though the consor­ tium is still intact to bid for the project, and is still awaiting for the PPA to release the final bidding documents. "We think the PPA has to do another study in order to derive more realistic estimates," says Uranza ofDSA. The PPA is requiring a PhP1 billion capital require­ ment to develop, manage and operate the port on a 25-year contract. Foreign groups and companies would be allowed to bid, but only in partnership with 60 per cent Filipino owned companies or groups.

Maritime Review-September-October 2000• 7 SHIP OPERATIONS Down but not out

THE debate rages as to whether or not the The Public Service Law recognized decree. Operators-because of the lack of relaxation of cabotage, by opening up the need for government to protect the competition, and with the guaranteed return domestic shipping routes to foreign liners, investment of a shipping company by giving on their investment-became complacent, will benefit the shipping industry. Members preference to a prior operator and prohibit­ enjoying profits while neglecting to develop of the Philippine shipping industry strongly ing a competing operator from entering and modernize their respective fleets. believe it will not, and conversely, will only another operator's assigned route. Government, content with accepting add to its woes. The law guaranteed the domestic its own share of profits, failed to develop "The issue of cabotage transcends shipping companies' return on their and upgrade the ports. It allowed under­ commercial considerations. Shipping lines investment by allowing them to develop capitalized and ill-equipped cargo handling have been viewed as vital arteries of trade along particular routes without any operators to continue operating in the ports. commerce in the This eventually led to Philippines because we inefficient shipping are an archipelago with services and inadequate more than 7,000 facilities in the ports. islands," says the In order to jump­ Philippine Interisland start the slowly dying Shipping Association shipping industry, the (PI SA). government issued It insists that Executive Order 185 in "government cannot 1994, allowing the entry relinquish control over of new operators into inter-island navigation domestic water transport to foreigners because routes. In addition, the this will mean the government issued economic control and Executive Order 213, political domination of granting the deregulation our country by of domestic shipping rates foreigners. It will for first and second class encourage smuggling passenger accommoda­ not only of goods but tions and for containerized also of human cargo. cargo. The country will have competition. The law effectively recognized The implementation no fleet to carry relief and evacuate people in the need for regulated monopolies so that of these executive orders became the times of national emergency, and the each company could enjoy a certain security domestic shipping industry's wake-up call. security of the country will be put at risk." to enable it to recoup its investments. Virtually overnight, there emerged operators A thorough review of the shipping The industry developed under this with faster vessels plying previously industry's history offers a clear-eyed legal framework and it eventually saw the monopolized routes, creating greater perspective as to the path it should take to shift in operations from cargo on pallets to competition among shipping companies. enable it to resuscitate itself from near­ cargo in containers. The system employed The new situation forced existing collapse. by stevedores who once had pick up a stick operators, especially those plying major The Philippine shipping industry is contained in a cup in order to transfer it to routes, to upgrade their fleets. With the divided into two sectors: domestic and another cup as he crossed the gang plank to economy in a boom mode, already existing overseas. Each sector is governed by its own unload the cargo he was carrying on his back ship owners borrowed liberally from banks set of laws, with each sector facing problems to signify the actual number of sacks he had to buy faster ships that are modernized to peculiar tO\ its trade and legal situation. Both carried across and unloaded, was replaced by meet the challenge posed by new shipping sectors are nevertheless threatened by the cranes and forklifts in the 1970s. companies. relaxation of cabotage. Government saw the desire of the Fast ferries plied the shorter inter-­ vessel operators to improve the merchant island routes and roll-on-roll-off ships were THE DOMESTIC SECTOR marine fleet. It recognized the heavy capital introduced in the longer domestic routes. requirement needed to pursue a moderniza­ These vessels are required by the govern­ Domestic shipping was first subject to tion program for the industry. In order to ment to be classed and compliant with regulation under the American regime, when assist the industry, it passed a Bareboat international safety rules and conventions. the Public Service Law was passed in 1936. Charter Decree which allowed domestic The shift to better vessels and newer Under this law, the Public Service Commis­ shipping operators, under certain conditions, tonnage did not, however, reach the sion, whose regulatory fimctions over the to charter foreign vessels to be operated by operators in the little known routes in the shippi!lg industry have since been trans­ Filipinos in inter-island routes. far-flung regions of the Philippines. ferred to the Maritime Industry Authority, The decree did not produce the Wooden-hulled vessels continue to operate was creat~d to assign fixed routes and desired effect because few domestic in these routes. These vessels are not determine the rates of shipping providers. operators availed of the benefits of the required to comply with internationally

8·September-October 2000•Maritime Review A ROOM WI H A VI EW

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CArt. No. «131 72

"AN IL A, r HIL IHIN ES IU ENOI UIEt. HGUTIU HUClUl. "UICO UUC NI , PAlliUM DA""'" · IUDI AUIIA ENIEUDA•, "UICO SHIP OPERATIONS I accepted safety rules and regulations. to suffer. The continued viability of domestic the fleet. Improvement of their fleets is limited by the shipping operations is their vital concern. When the Philippines rose from the availability of capital and the affordability of ravages of war and gained its independence technology to replace these vessels. THE OVERSEAS SECTOR from the Americans in 1946, it became Barely had ship owners brought in necessary to develop an overseas fleet new and more efficient ships into their The continued regulation of the domestic Government saw the need to create a merchant domestic fleets, when the financial crisis hit in marine fleet that could carry the country's 1997. expanding international trade and, at The downturn forced the same time, serve as a naval and domestic shipping operators to r~ The banks were not happy with the military auxiliary in time of war or assess their situation. They were national emergency. It realized that faced with dollar denominated loans, ship mortgage decree because the this objective could not be attained an unstable foreign exchange rate, law required the satisfaction of unless the government helped the rising interest rates, high taxes, over....­ certain preferred claims before the private sector by providing much regulation from the government, needed long-term financial aid and competition from foreign vessel luan obtained to purchase the other types of fiscal incentives. operators and domestic airline essel co.Jid be satisfied when the This objective brought about operators who were enjoying various vessel was forec osed the enactment of the Philippine government exemptions, incentives Overseas Shipping Act of 1995 and subsidies which were not which allowed the development of available to the domestic operators, the overseas shipping sector by inefficient port and cargo handling facilities, shipping sector by Government has set it apart granting incentives to ship builders who would increasing fuel costs, and expensive maint~ from the overseas shipping sector. Overseas construct vessels for overseas trade, by nance costs and spare parts. These financial operators have had the advantage of operating providing much needed long-term financial aid woes have further been burdened by decreasing in a deregulated environment dictated by free and other types of fiscal incentives. cargo volumes and over-tonnage. market forces and international conventions. It This objective brought about the All these problems have forced the is, however, tied to the domestic sector when it enactment of the Philippine Overseas Shipping domestic ship operators to examine its position faces the common problem of sourcing much­ Act of 1995 which allowed the development of against the economic disadvantages it is forced needed capital to purchase vessels and improve the overseas shipping sector by granting

Promoting the growth of Philippine shipping locally and globally

I ~~THE PHILIPPINE INTERISLAND SHIPPING ASSOCIATION

The Philippine Interisland Shipping Association represents a broad cross-section of shipowners and shipping associations engaged in container/RORO, dry bulk, tankers, lighterage/towage and passenger ferry boat operations. Our Vision The Philippine Maritime Industry can be a global player competing aggressively 'in domestic trades as well as in the region and worldwide. Today, many countries covet the Philippine Flag's freedom to trade globally and its access to Filipino seaman, who serve on 20 percent of the world's fleet. Our maritime associations believe that the potential of the Philippine shipping industry as a viable and competitive service can be quickly unleashed once urgent action is undertaken jointly by th e private sector and the government. Globalization for the Philippine shipping industry should be interpreted as Filipino shipowners with high standards of safety, competing regionally and worldwide. Member Associations: Domestic Shipowners Association (DSA) , Lighterage Association of the Philippines (LAP), Philippine Petroleum Sea Transport Association (PHILPESTA), Visayan Association of Ferryboat and Coastwise Services Operators (VAFCSO) PI SA is a member of the Maritime League, Inc., Philippine Chamber of Commerce and Industry (PCCI) , and Employers Confederation of the Philippines (ECOP).

You may contact us through · Brendo C. Elegio Unit 2602 Penthouse, Cityland 10 Tower 1 6815 H.V. Dela Costa St. , Cor. Ayala Avenue, Salcedo Village, Makat 1C1 ty. Ph ili ppines Tel. No. 817-5293/Fax No . 817-5324/E-mai: pisa@evoserve com

1O ·September-October 2000•Maritime Review SHIP OPERATIONS

problems, the industry has come under attack from foreign ship owners, who want a piece of the actions in the country's shipping industry. Under siege, members of the Philippine shipping industry have banded together to come up with a unified vision: to make the shipping industry a global player, totally controlled by private capital, competing on the basis of supply and demand and free market forces, unfettered by restrictions from government. This vision is articulated in the shipping industry's business plan recently submitted to the Department of Trade and Industry and the Department of Transporta­ tion and Communications. It discusses the various issues and puts forward a specific five-year action plan to address those issues. The Philippine shipping industry has the potential to become a global player, competing aggressively in domestic as well as regional and international trade. It only incentives to ship builders who would construct could be made available to the industry. needs a level playing field as it has often vessels for overseas trade, by providing much Faced with the problem of seeking to articulated in recent months and a sustained acquire newer vessels, the only measure of program of development to enable it to meet needed long-term financial aid and other types the new challenges brought about by offiscal.incentives. The Overseas Shipping relief given to the overseas shipping industry has been the Bareboat Charter Decree. The globalization and trade liberalization. The Act also allowed Filipino operators to avail of decree has allowed Filipino ship owners to legal framework must be changed and loans through the National Development charter newer vessels for its international government must step in and assist the Company for the acquisition of vessels at operations. This decree, however, is time­ industry to attain the needed revisions to the preferred interest rates and extended repayment locked and has been extended several times. law. terms and by giving income tax exemptions for The overseas operators are apprehensive that a period of thirty years. their luck may eventually run out and the government may not Overseas operators who financed their be able to provide vessels through this law had to agree that they them with alterna­ would not sell or encumber their vessels during tive means to source the loan repayment period without the consent vessels. SOliD SHIPPING liNES CORPORATION of the NDC. Since the loans were long-term To continue TERMINAL OFFICE: MAIN OFFICE NAVOTASCY/CTS and the disposition of the vessels was difficult, the development of PIER 8, NORTH hARBOR 471 SAN FERNANDO ST. 42 NORTH BAY BOULEVARD the overseas ® TONDO, MANILA • BINONDO, MANILA accepting FCULCL CArgoes the set-up restricted there-fleeting and shipping industry Tel. Nos: 245-0585 to 87 Tel. Nos: 241-9787 Tel Nos: 282-7374 modernization of the overseas sector and Fax No: 245-3023 Fax No: 242-2974 Fax No: 282-7376 government has prevented it from freely competing with other granted the sector international operators who could readily exemptions from PORTS OF CALL DEPARTURE source newer vessels. import duties and MANnA In the 1970s, the government realized taxes for fuel, vessel that the Philippine Overseas Shipping Act was spare parts and inadequate to meet the needs of the overseas equipment, and from MANILA TO DAVAO Every Tuesday, sector and that the life span of the incentives income taxes, for a (3 X weekly direct service) Thursday & granted by the law was about to expire. It period of 10 years or Saturday needed to act quickly in order to save the until 2002, from the 10:00 P.M. Philippine overseas fleet from eventual implementation in 1992 of the extinction. The government did two things: it MANILA TO GEN. SANTOS Every Tuesday & enacted the Ship Mortgage Decree in 1978 and Overseas Shipping · (2 X weekly direct service) extended the application of the Bareboat Development Act. Friday Charter Decree to the overseas sector. Again, the incen­ 10 :00 P.M. The Ship Mortgage Decree allowed ship tives are time­ - owners to offer the vessel they were acquiring locked, and the MANILA TO CAGAYAN DE ORO Every Wednesday & as security for the loan they had obtained to development of the (2 X weekly direct service) Satuday purchase the ship. The banks were not happy sector still leaves 10:00 P.M. with this decree, however, because the law much room for required the satisfaction of certain preferred improvement. claims before the loan obtained to purchase the Issues facing Names of Vessels: vessel could be satisfied when the vessel was the domestic and foreclosed. The security offered by the laws overseas shipping Solid Ace Solid Link Solid Sky was, thus, seldom resorted to. Overseas industry today are operators have repeatedly pushed for the clearly rooted in its Solid Bay Solid Moon Solid Star amendment of the decree so that the greater history. While both Solid Gold Solid Pearl Solid Sun security could be offered to both local and sectors are working Solid Jade foreign bankers, and cheaper sources of fimds · to resolve their Maritime Review•September-October 2000• 11 From the South Harbor, ort of Manila to the new crossroads of trade...

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ARIES ARRASTRE SERVICE, INC. MARIVELES GRAIN TERMINAL 'INCORPORATED Bgy. Pilar, Batangas City Baseco Compound, Mariveles, Bataan Tel: {6443) 723-33-93 Tel : (6347) 935-49-30 Fax: (6443) 723-05-71 Fax: (6347) 935-43-38 E-mrul: [email protected]. ph E-.mail: [email protected] PORTS Freeport slugs it out

Six years after the passing into law that created a special economic and freeport zone in Mindanao, Zamboanga Freeport stands proud as one of its kind in the war-torn area. Myra Lopez-Pablo shows how it fares in attracting locators amidst the bad publicity gene_rated by the secessionist problem.

THE successful transformation of Subic Bay from an abandoned military post of the American navy into the country' s registered a combined capital ofP691 on gross income, they are exempt form all premiere economic zone must have served million. local and national taxes. In addition, as an inspiration to the City of At present, three other locators are foreign workers will be given permanent Zamboanga to struggle to have the same registered with the Zamboanga City resident or working visas including his or kind which they can call their own. Special Economic Zone Authority, the her spouse and unmarried dependents of Six years after the enactment of corporate body created by RA 7903 to not more than 21 years of age. Republic Act No. 7903, a law creating a manage and operate the ecozone. These are The zone is open both to Filipino special economic and freeport zone in Ticom Company Inc., Han Wook Panel and foreign investors who can choose from Zamboanga, the zone stands proudly as Phils. Corp. and Bendimil International a variety of lot sizes available. Until year the single economic and freeport zone in Inc. 2004, the zone promises to keep estate lot the entire regions of Visayas and The authority recently approved the rate at the minimum at only Pl.OO or $0.03 Mindanao combined. application of BCC International Export­ per square meter. The feisty former congresswoman Import Corp. It is in the process of The groundwork is now being laid now City Mayor Maria Clara L. Lobregat reviewing the applications of Marcel for the development of the second was the force behind the campaign that Carrageenan Corp. and Mandangan industrial park covering 572.16 hectares, won congressional approval of RA 7903 Merchandising and Construction Inc. which will be the site for the proposed through sheer persistence and a pitbull Press Secretary Ricardo Puno world-class international seaport complex. spirit. admitted that the freeport shares in the The landmark will feature a theme park, Since it is situated right smack in the negative effect of the bad publicity commercial center, hotel and restaurant, middle of Mindanao and accessible to all spawned by the peace and order crisis in terminal for fast crafts and international modes of transportation, the author saw the Sulu, despite the incentives and privileges passenger cruise ships. great potential locked in a government it is willing to offer, with the slow and low Memorandum of agreement was fallow measuring 16,000 hectares, 15,391 turnout of investors. Nevertheless, he is signed with the Department of Justice and hectares of which are in the highland, for hopeful that the trend will change once the the Department of Environment and trade, investment and eco-tourism. Once a region of Mindanao starts to implement the Natural Resources (DENR) for the bustling business hub, the ZamboEcozone P20 billion budget package for its relocation of the San Ramon Prison and is also envisioned to participate more infrastructure and development projects. Penal Farm to a DENR-controlled 1,260- actively and tap the lucrative markets in A ZamboEcozone officer said the hectare area in Upper Bungiao and Upper. the BIMP-EAGA. effect of the Sulu crisis on investor Curuan. First to ground break was a Filipino­ confidence has not yet reached an alarming In the absence of government Indian venture, Faberco Holdings Inc., in level as far as they are concerned. This financial support, the freeport is depending 1997 that deals with equipment recondi­ year alone, the Authority has received four on private investors to bankroll majority of tioning and a multi-products distribution to five letter of intents from prospective its priority projects under a build-operate­ system. This is now a holding company of investors based in Indonesia, China and tnmsfer scheme. These are as follow: two companies operating in the zone, the Zamboanga. The firms engaged in a Multi-Products Distribution Systems, Inc. diverse type of businesses such as fishing •n construction of international freeport and Peninsula Duty- Free Shop. boat manufacture, tobacco factory and tree •npower plant This was followed in August 1997 nursery. •n water treatment plant by Mabuhay Philippines Satellite Corp. Like the Subic Bay freeport, the •n water reservoir which built a tracking, telemetry and Zamboanga freeport is treated as a separate •n construction of training center control (TI&C) satellite station in the zone customs territory, allowing the free flow, •n construction of commercial center to back up its main TI&C facility in Subic entry and movement of imported machin­ •n construction of amenities within the Freeport. This company carved a name for ery and other goods. Would-be locators park sending into the orbit the first Filipino can enjoy the benefits of four to six years •n construction of a hospital satellite, Aguila II. The two companies tax holiday. Aside from a 5% flat tax rate •n construction of a retirement village 14·September-October 2000•Maritime Review MARINE SAFETY

LR sets deadline for IMO sets phase-out dates new requirements for single-hull tankers

SERVICE suppliers have been re­ INTERNATIONAL Maritime Organization's Marine Environmental Protection Committee, quired to comply with the new stan­ which has been meeting to discuss phasing out single-hull tankers has come up with some draft dard requirements of International measures. Pre-Marpol tankers will be phased out gradually between January 1, 2003 and Janu­ Association of Classification Societ­ ary 1, 2007, depending on their year of delivery. ies (lACS) beginning December 10, This will be implemented by flag states. This basically removes the HBL option that 2000, according to Lloyd ' s Register currently exists under Marpol, and it is similar to the Greek proposals to IMO, although two (LR). years less severe than Europe Oil Pollution Act (EurOPA). Service suppliers are firms that There are two possible schemes for dealing with the rest. Post-Marpol tankers built be­ provide services on behalf of owners fore 1986 will be phased out at 25 years age. Those built in 1986 or after will be phased out of ships or mobile offshore units, the between 2012 and 2015 under scheme A, or between 2012 and 2017 under a more lenienf results of which are used by LR sur­ scheme B. veyors in making decisions affecting This equates most closely to proposals put to IMO by the International Chamber of class and certification. They are es­ Shipping and Greece. It is far more lenient than the EurOPA date of2010. sentially firms engaged in services Meanwhile, 'category 3' tankers (crude tankers of less than 20,000 DWT and product under the following categories: tankers ofless than 30,000 DWT) will be phased out gradually up to 2017. This date is two •thickness measurements on ships year's more lenient than that suggested under EurOPA. and mobile offshore units, There is currently no indication of how the EC has reacted, and whether it still intends to •tightness testing of hatches with ul­ go unilateral. "The EU said absolutely nothing in the public session," said one observer. trasonic equipment, •in-water surveys of ships and mobile offshore units, PPA, port users clit:"JCh accords •examination of ro-ro sh"ps' bow, stern, side and inner doors, on harbor safety •surveys and maintenance of fire-ex­ tinguishing equipment and systems, FOUR new agreements have been forged be­ Pollution from Ships, (MARPOL 73/78). The •service of inflatable liferafts, inflat­ tween the private sector and the Philippine objective is not just to prevent marine pollu­ able lifejackets, hydrostatic release Ports Authority (PPA) that will redound tion, but also to ensure an integrated approach units, etc, to safer and healthier ports nationwide during that includes treatment or recycling and the •surveys, servicing and testing of ra­ the recent National Port Safety Convention. ultimate handling and disposal of non-pollut­ dio communication equipment, These agreements include the establish­ ants on land. •service and testing of centralized gas ment of reception facilities in major ports, de­ The PPA is spearheading the move to set welding and cutting equipment, velopment and implementation of a solid waste up port reception facilities in accordance with •surveys and maintenance of self­ management system that will involve the co­ international standards. It will prepare the terms controlled breathing apparatus. operation of the local government units, set­ ofreference for interested bidders who have the These requirements include a ting up of an oil spill contingency plan in co­ expertise and the financial capability of putting wide range of minimum standards ordination with the Philippine Coast Guard, and up these cost-intensive facilities. that must be met, including levels of the review and updating of the dockworkers On solid waste management, it will be training for personnel and adequacy safety and health standards by a tripartite as­ recalled that the PPA is already implementing of equipment and facilities. A docu­ sembly. such system in its Manila offices. However, mented quality assurance must also Reception facilities are infrastructures the intention is to make the application of the be in place. that manage waste generated by ships. It in­ matrix/system nationwide. It will also encour­ By adopting and implementing cludes the complete cycle from collection, treat­ age the LGU s where the ports are located to get the lACS initiative, LR aims to reduce ment and final disposal of ship waste in an en­ involved and set up their own systems of waste the risk of inadequate levels of inspec­ vironmentally safe manner in accordance with management. tion being carried out. This should existing standards and laws. The resolution of an oil spill contingency give owners and operators the benefit The Philippines is a signatory to the In­ plan becomes critical in view of the many inci­ of increased levels of confidence in ternational Convention for the Prevention of dents of oil spills from ships, which compound the quality and consistency of service the marine pollution. Oil spills kill levels of the suppliers that they em­ fish and corals and pollute the sea­ ploy. shores. LR says service suppliers must The objective is to set up con­ achieve compliance with the require­ tingency plan or program of action in ments if they wish their services to coordination with the Coast Guard, continue to be utilized beyond the De­ so that in the event ofan oil spill, there cember 10 deadline. All service sup­ will be quick response and the people pliers seeking approval have been ad­ in the port will have the capability and vised to contact their local LR office. the know-how of containing the oil spill. Maritime Review•September-October 2000•15 LEX MARITIMA Public consultation -a must in rule-making ByAtty.VergeldeDios

ALMOST everybody knows that in Bill of Rights that "no person shall be administrative quasi-judicial proceedings deprived of life, liberty or property without "due process" requires prior notice and due process of law." hearing before a person can be penalized The Supreme Court has had occasion for an alleged violation. But very few to apply the quoted provisions in the case people know that in administrative rule­ of Misamis Oriental Association of Coco making, the same principle applies prior Traders, Inc. (MOACT) vs. Department of public consultation is a must. One who is Finance, et al (L-108524, Nov. 10, 1991). adversely affected by an administrative In that case, MOACT, a domestic an agricultural food or non-food product rule/regulation which has been issued association whose members are engaged in for purposes of this provision of the NIRC. without prior public consultation can go to the buying and selling of copra, sought to On June 11 , 1991, the Bureau of court to invalidate it as violative of enjoin the co ll ection by the Bureau of Internal Revenue issued the circular in administrative due process. Internal Revenue of the Value Added Tax question classifying copra as an agricul­ The Administrative Code of 1987 (VAT) on the sale of copra by members of tural non-food product and declaring it provides: "Sec. 9, Public Participation- If the association. MOACT alleged that prior "exempt form VAT only is the sale is not otherwise required by law, an agency to the issuance of Revenue Memorandum made by the primary producer pursuant to shall, as far as practicable, publish or Circular 47-91 on June 11 , 1991 , copra was Section 103 (a) of the NIRC." The circulate· notices of proposed rules and classified as agricultural food product under reclassification had the effect of denying afford interested parties the opportunity to Section 103 (b) of the National Internal to MOACT the exemption it previously submit their views prior to the adoption of Revenue Code (NIRC) and therefore enjoyed when copra was classified any rule." exempt from VAT at all stages of produc­ agricultural food product under Section This provision of law implements the tion or distribution. 103 (b) ofthe NIRC. constitutional guarantee contained in the The BIR, on the other hand, contends MOACT complained that it was that under Section denied due process because it was not 103 (a) ofNIRC, heard before the questioned circular was the sale of issued. agricultural non­ Citing the provision of the Adminis­ Parsons food products in trative Code of 1987, the Supreme Court their original state ruled that there would have been force in International is exempt from MOACT's argument if the circular in VAT only ifthe question were in the nature of a legislative limited sale is made by the rule because in the same way that laws Quality is our bridge to the future primary producer must have the benefit of public hearing, it or owner of the is generally required that before a We provide the "Total Solution" to the unique and com ­ land from which legislative rule is adopted there must be a plex needs of our cl ients the same are hearing. But the questioned circular is not. Our AIM is to form a seamless partnership with ou r produced. The sale It is a mere interpretative rule. It merely cu stomers so that their made by any other interpreted the meaning of "agricultural requi re ments become person or entity, food product" in Section 103 (b) of the ou r challenges and ou r NIRC. Since copra is not food per se, it multi- disciplined Like a trader or falls under the classification of "agricul­ capabilities provide dealer, is not their solutions. exempt from the tural non-food product." tax. On the other The reason for the distinction between Our CULTURE is one hand, under a legislative rule and an interpretative rule is of performance and that a legislative rule is in the nature of integrity. Clients rely Section 103 (b), subordinate legislation designed to imple­ on our absolute the sale of standards of QUALITY; agricultural food ment a primary legislation by providing the and we continue to products in their details thereof. On the other hand, interpreta­ challenge the limits of original state is tive rule is just a construction or interpreta­ technology and engi­ exempt from VAT tion of the provisions oflaw'by the imple­ neering. at all stages of menting agency. While MOACT lost in this case, the Corp.orate Office: 100 West Walnut Street, Pasadena, production or CA 91124 • Phone: (1-626)440 2000 ·Manila Regional distribution Supreme Court ruling is still valuable for Office: 375 Senator Gil Puyat Avenue, Makati City 1200 regardless of who individuals or entities who may be adversely • Phone: (632) 896 9066 • Fax (632) 897 9252 the seller is. affected by any administrative "legislative" The question (as opposed to "interpretative") rule issued is whether copra is without the benefit of prior public hearing. 16·September-October 2000•Mantime Review LUZON PACIFIC GATEWAY READIED FOR BIDDING

Pacific Coast Development to Rise in Dingalan (Aurora)-General Nakar (Quezon) area

0 President Joseph Estrada declared the Pacific Coast Project as a flagship project on 21 October 1999. Green Circle Properties Inc. (GCPI) has reserved at least 5,000 hectares for a proposed Joint Venture corporation which will develop, own and operate the port, airport and an industrial complex in the municipality of Dingalan, Aurora. 0 The President, on recommendation of the Secretaries of Trade and of Tourism as well as he Philippine Economic Zone Authority (PEZA) and the RI ZLAQUE Co mmission, signed Proclamation 233 on 27January 2000, entitled ucreating and Designating Certain Lands of the Private Domain Situated in Brgy Umiray, Dingalan, Aurora Province and Brgy Umiray, Gen . Nakar, Quezon Province as a Sped al Economic Zone and Tourism Estate Pursuant to Republic Act 7916.'' 0 The noted architectural firm Palafox Associates principally prepared the master plan for the. development of the Pacific Coast Cities Project, which will decongest Metro Manila, provide an environmentally friendly, modern, congestion-free and progressive expansion area and promote trade and economic growth well into the 21st century.

Strategic Advantage. The development study cites a specific strategic advantage of a port in Dingalan: vessels from Northeast Asia (Japan, the Koreas, Taiwan and Russia) going to and from Australia, Indonesia and Papua New Guinea can have a Philippine way point without calling at Manila. Shipment of goods to and from the United States and Canada can likewise be facilitated w ith this development, especially if a st rategic alliance can be developed with one or two North American ports. It adds, "The opporturities offered by these possibilities are mind-boggling".

Dingalan has a strategic location on the Pacific Coast

Terms of Reference for the selection of a joint venture partner have been completed. There will be a launching, briefing and discussion with interested or prospective Joint Venture partner on October 10, 2000.

The prospective partner must: ( 1) be experienced in the financing and development of large infrastructure projects; (2) have sizable capitalization of company or consortium; (3) be willing to buy ownership of corporation, which has a at least a 5,000-hectare asset base.

From the purchase of half of the joint venture, the new company will utilize USD 25 million to build the port road from Montalban, Rizal across the Sierra Madre Mountains to Dingalan

For more information, interested Project Development Office parties may contact: New Pacific Coast Cities Project Green Circle Properties and Resources 15/F Equitable Tower Building Paseo de Roxas, Makati City Tel 886-0226 Fax 886-0229 MARINE INSURANCE

'Tort claims RP urg~d to combat piracy will go on' THE Philippine government is coming under pressure to address the problem of THE law finn that has had a number of piracy as it shows little initiative to implement its laws on piracy on the high ships arrested in the US and Panama has seas and seems reluctant to prosecute of­ vowed to continue filing tort claims in fenders. foreign courts, despite appeal from The Japanese government for in­ foreign owners and the recent revision stance, sent a special mission to the Phil­ of a standard employment contract for ippines in the second half of September Filipino seafarers. to press for a mutual co-operation agree­ Pedro L. Linsangan, who heads ment to combat the growing menace of the law office Linsangan and Linsangan, piracy and related sea robbery pr()blems. represents Filipino seafarers in claims The mission was headed by the deputy involving disability or injury suffered director-general ofForeign Affairs of Ja­ aboard ships. He says that the number of pan along with representatives from Min­ cases being filed in Panama has doubled istry of Transport, Japan Coast Guard, in as short a time in a year. and its funding agency Japan Interna­ Though it is becoming difficult, he But Linsangan insists otherwise. So tional Cooperation Agency. says, to arrest a ship in a US port. But when the Philippine Overseas Employment The Philippines is rated by the the number of arrests and settlements in Administration (POEA) revised its Kuala Lumpur-based International Mari­ Panama are enough for foreign owners, standard employment contract for Filipino time Bureau (1MB) as the second hottest P&I clubs and crewing agents alike to seafarers, he did not think twice before spot of piracy in Southeast Asia after In­ brand such incidents as a black mark on questioning the constitutionality of the donesia. For example, it found itself at the Philippines crewing sector. revision. He filed a petition before the the center of one of the biggest unsolved Linsangan does not believe his Supreme Court to review the legitimacy of cases involving the recovery of a cargo "crusade" is ruining the country's Labor Department Order No. 4 Series of of alumintJm ingots worth $4M from the lucrative manning industry, saying one 2000, which amends the 'Standard Terms hijacked Alondra Rainbow. and Conditions Governing the Employ­ The National Bureau of ment of Filipino Seafarers On Board Investigation's (NBI) failure to file Oceangoing Vessels.' charges against possible suspects in the Linsangan is the only one of Under Section 20(G) of the revised Alondra cargo case is said to have his k1nd 1n pursuit of such contract, the seafarer is required to prompted the Japanese government to money claims in foreign court acknowledge that he is also waiving his send a special mission to Manila. right to claim other damages including tort The 4,000 tons of aluminl!ffi in­ damages upon payment of contractual gots were part of the 7,000-ton cargo re­ benefits. This means that a seafarer can no moved and transshipped by the pirates needs only to look at the figures of the longer file a suit in foreign court to recover to the Philippines through Sub~c Freeport unabated manpower supply in the sea­ other sort of damages. after the Japanese-owned Alondra Rain­ based sector. One cannot blame those However, Linsagan argues that bow was hijacked in October last year. arrests, Linsangan said, asking why it is while the claim for compensation and Despite all evidence of-smuggling and piracy the NBI has unable to take appro­ only now that owners have started benefits is based on contract, the claim for priate actions. complaining. Similar complaints tort damages is not. "Tort makes'a person The Japanese embassy in Manila, involving seafarers' claims have started liable for damages he caused to another by which recently appealed to President in early 1990s, he says, referring to the reason of fault or negligence," Linsangan Estrada for the probe and speedy recov­ case of the mv Pine Forest in 1991 opines, citing Article 2176 of the Civil ery of the cargo, has become impatient. whose full Filipino crew won a multi­ Code of the Philippines. The Japanese mission met Philippine of­ The code provides that "whoever by million award when a US court found ficials from the Department of Foreign act or omission causes damage to another, the owners guilty of double bookkeep- Affairs, Philippine Navy, Coast Guard, there being fault or negligence, is obliged in g. Maritime Industry Authority, and NBI. to pay for the damage done." He cites the Compared that with the $150,000 to A cabinet committee on piracy, $200,000 for a single tort claim that his following classic example: "The beneficia­ which the Philippine Navy convened, has law finn has won thus far, Linsangan ries of a Filipino seafarer, for instance, not yielded significant inputs since its suggests that tort claims are no worse. dies because of the failure of the employer creation several months ago, according Linsangan is the only one of his kind in to provide safety gear can claim not only to sources within the committee. It is pursuit of such money claims in foreign death compensation and benefits based on composed of maritime related agencies court, which the P&I clubs and ship the standard employment contract but also and is supposed to formulate and recom­ owners refer to as "usual claims that have tort damages because the seafarer suffered mend a mitional policy and program of long been settled through payments made a wrongful death caused by the negligence actions that will address the problem. fully in accordance with the contract." of the employer." 18•September-October 2000•Maritime Review COMMENTARY Praise the seafarers BY FR. SAVINO BERNARDI, C.S.

having a parade and it proved to be with a chosen theme: "MARINONG extremely successful. FILIPINO: Panindigan N'yo ang Tiwala ng After the much-applauded "silent Mundo" (Filipino Seafarers, Stand for the drill" performance of MAAP and PMMA trust the world gives you). This is to say cadets inside Gate 1, South Harbor, the that we believe in the commitment to celebration continued inside the Coast improvement by the maritime educational Guard compound. It was indeed a struggle sector, the present professional standard of to fit such a crowd into the limited our seafarers and in the positive personal compound where the Holy Mass was and cultural qualities, which sustain our ON September 24, the whole Filipino celebrated. A moving moment came when Filipinos in their hard work at sea. nation was united in our celebratory voice the author prayed for the deceased Filipino · In this vein of trust and encourage­ for Filipino seafarers. The event of the 5"' seafarers as all ships in port hunk their ment, the NSD Committee has established National Seafarer's Day was celebrated horns for about five minutes. The sounds the "Outstanding Seafarers of the Year with a particularly solemn program in the were probably heard far and wide in the Award" (OSYA) since 1998. This year the cities of Manila, Cebu and Davao in city of Manila and touched off deep awards were given to five seafarers. They cooperation with many government and emotions from all of us, particularly from are Capt. Hernando S. Eusebio, C/E non-government organizations, maritime the hundreds of families who lost their dear Generoso T. Mamaril and Engr. Tomas N. ones at sea. Orola for an outstanding maritime career at school~ and agencies from the maritime industry. The occasion, originally desig­ Messages from government represen­ sea and management. C/E Bienvenido R. nated by former President Fidel V. Ramos tatives addressed particularly the question Maranan for an outstanding career at sea with a presidential proclamation as the last of the hopeful inclusion of the Philippines and in education, and Bosun Michael Sunday of September, coincides with the in the the IMO's white list of complying Stephen P. Yap for saving the life of a National Maritime Week and serves as the states by February 2002. Senator Ramon fellow seaman at sea. We congratulate them kick-of event for the following week-long Magsaysay Jr. in his keynote address as we hope that they could serve as an program of activities. tackled the question as a matter that inspiration to many others to strive for This year the National Maritime deserves the serious attention and commit­ higher achievements. Week adopted the theme"Building ment of all sectors due to its profound Maritime Partnership ". The celebration of implications. Sen. Magsaysay is renowned In his homily during the Mass, the two events were aptly joint to comple­ for his long standing-support to the Filipino Bishop Arguelles touched upon the need ment each other by the fact that a strong seafarers and the various sectors of and importance of the moral and religious partnership need to be recognized and employment and maritime development. He qualities of the seafarers. He also stressed protected between manpower working in wished that the successful outcome of the the seldom-mentioned relevance of striving the maritime industry and the various "White List" expectations for the Philip­ for good manners and right conduct at sea. managerial and entrepreneurial aspects of pines to usher an even more promising The proper and non-confrontational human the same industry. future for our country in this industry. approach of a seafarer at sea establishes the More than 1,000 maritime students MARINA deputy administrator Mrs. basis of respect, harmony and cooperation came from 10 maritime schools in Manila Elenita Delgado touched on the question among the crewmembers often differ'in and from as far away as Mariveles, Bataan with a positive outlook due to the good nationality, culture and religion. Their quest (The Maritime Academy of Asia and the upgrading efforts conducted in the past for a job at sea has put them together in a Pacific) and San Narciso, Zambales (The years in maritime education as well as from situation where they must form a camarade­ Philippine Merchant Marine Academy). the personal, cultural and religious values rie of sort in order to live and work together . The two schhols were particularly ap­ our Filipino seafarers. For this reason as a team with a sufficient level of human plauded for their inspiring "silent drill" alone, many ship owners often manifest satisfaction and work efficiency and safety. performance. Another contingent of about their preference for them, she said. The family being the strong motivating 800 participants represented many maritime At present there are 200,000 Filipino force for their choice of profession becomes offices, agencies, training centers and seafarers employed on oceangoing ships another stabilizing factor in situations of maritime unions. with an annual remittance of more than $2 stress, tension or temptation in their work . The celebration began at 7:00am, billion. Such a positive injection into the and life away from home for prolonged with a Grand Parade from Quirino Grand economy of the Philippines would be period of times. The religious conscious­ Stand marching down Roxas Boulevard to seriously endangered and tens of thousands ness and strength of faith, Bishop Arguelles the Philippine Coast Guard compound of families would see their dream of a said, are the source of deep inner peace, where the event has been celebrated for the better future shattered in case of a negative trust and vision when life at sea may last four years. Each group was carrying its outcome. The time for a concerted effort become shallow, tum sour or threatened by from all concerned parties is now since the o~ identifying streamers. Three hands, the disasters or dangers. The Filipino seafarers, Coast Guard, the Navy and the Marines, time is running out fast. stated the. bishop, have the edge over other made the whole parade not only impressive The organizing committee of the seafarers on this score also because of their but enjoyable as well. This was the first National Seafarers' Day has adopted a strongly rooted life in the Christian faith time that the NSD organizers ventured into positive approach and a prophetic vision and reverence of God. aritime Review-September-October 2QOOo 19 MANNING . The IMEC-ITF accord

IAN C. SHERWOOD points out significant accomplishments made between employers and employees in an excerpt from a paper forwarded during a recent manning and training confer­ ence conducted by the International Shipping Federation in London

WHEN the International Maritime Employ­ between employees in the past. The agreed any lawful request not to enter premises, ers Committee agreed to discussions with ground rules provided for discussions dock, pier or ocean terminal. The company ITF we put together a strong team including between employees and employers in the will not take any punitive measures against experts on industrial relations from Cyprus, past. any seafarer who respects such dock-workers Italy, Austria, and Luxembourg as well as The agreed ground rules provided for trade dispute." from the UK and the Isle of Man. I am the discussions between the two sides on all • Because of the IMEC commitment to only London-based person on the team. aspects of the conditions of employment the negotiations we were able to point out IMEC is a group of international necessary for ITF to issue a Blue Certificate, that we needed to avoid seafarers being employers formed in 1993. There are 30 including the benchmark. drawn into disputes, which were not of their, companies in membership from 11 different So what did we achieve? or indeed their employers making. And countries who are responsible for crewing Firstly, there are the areas where we which would have put seafarers in an .some 1,800 ships employing over 60,000 feel we have significantly improved the TCC impossible position, because in order to seafarers of 50 nationalities operating under terms, introducing a balanced approach comply they would have to breach their 43 different flags. One of our major goals is which we believe more accurately reflects contract. We were able to point out that we to improve industrial relations. Having conditions in the industry today. Amongst needed to avoid a situation where, through agreed that statement it meant that we the improvements achieved are: no fault of the employers, a dispute which couldn't ignore the ITF. a) Non-seafarers work- principally arose in a particular port could result in our The early days of IMEC were taken cargo-handling seafarers not being able to work normally, up with long debates on how to go about ITF started out seeking compensation clearly a situation which we needed to avoid opening up a dialogue with ITF, something I for such work to be double overtime in as it was neither practicable nor justifiable. can tell you we were all nervous about. But normal hours, triple overtime hours. As time went on it became clear that when ITF announced their decision to The final agreement provides for in order to achieve any agreement at all there impose a 16.6% increase on the AB single overtime in ordinary hours and double would have to be something on a "dock­ benchmark from January 2000, this proved overtime for overtime hours. This was an workers clause", and we were eventually the catalyst when IMEC members decided important principle for IMEC as we saw no able to look at some compromise wording. that we really had to explore with ITF the justification for triple overtime. The final wording for the IMEC agreement possibility of opening up a dialogue to b) Under the same heading, the is: discuss not only the benchmark but the TCC original ITF position was that: "Where a vessel is in a port where an agreement, with a view to reaching, for the "Any seafarer shall be entitled to official trade dispute involving an ITF- · first time in our industry, a truly negotiated act lawfully in respecting any dock-workers affiliated dock- workers union is taking settlement covering many of the issues trade dispute including but not limited to place, seafarers shall not be instructed or which had been the cause of conflict respecting any picket line or complying with induced to take cargo-handling and/or other work traditionally and historically done by members of that union which would affect the resolution of such a dispute." The words we believe fulfill the objective that we sought to achieve from ftle. beginning, which is to allow our seafarers, and our operations, to continue as normal without being pulled into disputes which are not our making and beyond our ability to control. c) Officers overtime Another difficult issue is where ITF consistently try to move away from fixed overtime for officers to an <>pen overtime regime. After long discussions the agreement,which is in thre.e parts now provides as follows: "Agreements which provide for hourly overtime payments for officers should observe the principles set out

20·September-October 2000•Maritime Review MANNING concerning the overtime payments for ratings. ·Agreements which provide for consolidated wage rates for officers, including compensation for work performed outside the normal working week, should contain provisions for dealing with: the maintenance of records of the officers rest periods; and the wage rate at which wage­ related allowances not shown in the wage schedule e.g. sick pay are calculated. " But the most important part is: "Agreements already in force providing for consolidated wage rates shall remain in effect as provided for above." This arrangement, we believe, protects agreements that are already in force where consolidated rates for officers including overtime are already operating, which for IMEC was an extremely important principle to keep. d) Hours The original ITF text proposed a 40- hour week for everybody. We argued strongly that there are still a number of agreements already held with ITF where a 44-hour week is accepted. In the end our agreement is eight hours per day Monday to Friday inclusive or eight hours per day Monday to Friday and 4 hours on Saturday". e) Manning discussion on manning levels is necessary, undefined and irrespective of cause. More This was another area where some discussion will take place with the ITF importantly, the phrase "or arising from hard bargaining took place. The initial ITF affiliated union in the country of supply (i.e. employment" goes back to the many debates proposal suggested that the ship should: In India or Philippines), and not as originally we have had before, and brings into pay no case be manned at a lower level than conceived, arbitrarily though a centrally claims that can be made years after employ­ manning scale based on the applicable imposed and inflexible manning structure, or ment has ceased. In other words, the end of standard laid down in the ITF policy on through negotiation with a union in the the contract did not signal the end of an manning of ships. country of beneficial ownership. employer's exposure to liability. In fact, This meant, in affect, that ITF alone t) Death/Disability Compensation liability was potentially wide open and would determine the manning of our ships. After our heated discussions on claims could be received at any future time. The joint agreement, which is, we believe, clauses dealing with non-seafarers work, the For our part, employers also sought some much more user-friendly and practical says: second most difficult discussions concerned exclusion for cause as a result of attempted "The ship shall be competently and entitlements for compensation for a suicide, willful neglect or misbehavior. adequately manned · seafarer's After a great deal of debate this and in no case disability and/or compromise wording emerged: "A seafarer manned at a lower loss of life. Here who suffers permanent disability as a result level than in there were two of an accident whilst in the employment of accordance with very important the company but excluding permanent relevant and points of disability due to willful acts, shall be entitled applicable principle where to compensation." international laws, we rigorously The-employers have been able to rules and regula­ argued changes define the level of injury, which triggers tions. In addition should be made. compensation as permanent disability, and the manning of The the open-ended parts of the clause have each ship shall be starting_p_oint for disappeared altogether. Th~; employers also determined following agreement between the the seafarers representatives was that a felt that excluding willful acts from company and the ITF affiliate with whom seafarer should be awarded compensation automatic entitlement to compensation was a the agreement is concluded". after suffering an injury, as a result of any fair compromise, and something that our We believe this covers both the views cause whatsoever whilst in employment or insurers could also support. of the employers and those of the employees. arising from employment with the company. g) Who decides level of injury It requires that the safe manning certificate is This gave entitlement to compensation being Another area of debate on the taken into account and that, where further payable after any injury, the extent of it was question of compensation was decided the

Maritime Review• September -October 2000•21 MANNING level of injury. ITF originally proposed that the union has been given adequate notice. we decided to put our heads on the block. this should be an ITF appointed doctor, but lMEC members believe that this wording Many companies are opposed to what our text now specifies that the disability represents a huge leap forward compared to lMEC have started, and have said so suffered by the seafarer shall be determined the original demands, with the rights of the publicly: More have maintained a low by a doctor appointed by the company. safety representative, as originally suggested, profile. What is not in doubt is that many of Further conflict which we were able to no longer appearing. those opposed to the lMEC position are good resolve satisfactorily was to restore the right There are several other improvements quality employers who pay their seafarers that payment in respect of claims for ill health that were secured, which although not having above market rates, and give their seafarers or compensation after death can be deducted the same significance as those I have'already conditions and benefits above industry norm. from any settlement in respect of additional discussed, nevertheless represent steps in the They continue to oppose ITF for the very right _direction towards pragmatism, justifiable reason that they do not believe that balance and practicality. i TF has the right to dictate to them the terms There would have been under which they employ their seafarers. At no negotiation: it would have lMEC, we have the utmost respect for been take it for those requiring a companies that take that view, but I hope that Blue certificate. Past evidence those who have that opinion, will equally • suggests that most companies have tespect for lMEC, who have chosen to would take it. But there is more. try to take our industry' s industrial relations Those with foresight will forward to a more stable and less hostile recognize that benefits will also environment. flow from a more stable I may have given the impression that I relationship with the ITF. was a little hesitant and reluctant: I was when We would like to invite originally asked to take the chair. But I have other organizations which share to say that as the negotiations moved lMEC members standards and forward, I found the job to be challenging compensation made in law. aspirations to join us in the future dialogue and stimulating. I also had around me a team h) Personal protective equipment with the ITF and their affiliates, adding their of highly experienced professionals and a The original ITF text proposed a individual strength to the current lMEC first class Secretariat. What we achieved was comprehensive list of items that employers membership. The stronger we are, the steadier a team effort, and I would like to pay tribute were obliged to provide. There was no argument with that, but the administration and some of the strings attached were unnecessar­ Another area that occupied some ily complicated. considerable time were the What we successfully negotiated was original proposals on a shipboard that personal protective equipment should be safety committee issued in accordance with ISM/ IMO regulations or any applicable national regulations specifYing additional equipment. i) Shipboard Safety Committee Another area that occupied some considerable time were the original proposals on a shipboard safety committee. Originally ITF wanted the right to appoint, or have elected, a safety representative rights: - have access to all parts of the ship; - be able to participate in the investi- gation of accidents and near accidents; - have access to all necessary documentation including investigation reports and past minutes of - the safety and health committees; receive appropriate training; and not be subject to dismissal or other prejudicial measures for carrying out functions assigned to the role of safety representative. lMEC members had no problem with we will be. Surely, it is time to change and to my colleague negotiators and the fine the principle of crew participation in move away from the old historic hostility, and Secretariat from Marisec, without whom shipboard safety committees but did have open the door to a modem and stable what we have achieved would not have been some problem with the strings attached. The industrial relations climate. That was lMEC' s possible. wording now agreed simply says: The target from the beginning, and I believe that We are all proud to have played a part company acknowledges the right of the crew ITF also aspired to this. in what have been historic and to elect a safety representative to the on-board All that said, we know that not groundbreaking discussions. Of course, it safety and health committee. everybody in the industry shares the takes at least two sides to have an argument We have also agreed that any represen­ enthusiasm of lMEC in trying to take and to reach agreement and without an tative shall not be dismissed or subject to any industrial relations forward in the way that I equivalent commitment from the ITF and its disciplinary procedures as the result of the have set out. Indeed, as I mentioned at the affiliates the eventual outcome, which has all seafarers duty as a safety representative unless beginning, there was a great deal of soul the benefits I have highlighted for both searching amongst lMEC members before parties, would not have been achieved .

22•September-October 2000•Maritime Review Gvee:t~ fv.o-wv:

N,Orth StarPort Development Corporation

Cargo Terminal Operator for Piers 2, 4 & 10 North Harbor, Manila

Engr. Albert H. Suansing President Nene H. Suansing Gorospe SVP Finance/ Adm Area Manager- Area II

Head Office: Pier 4, North Harbor, Ton do Manila ,Philippines Telephones: 245-2843 I 245-2975 fax 245-2843 COMMODITY FOCUS Dumped cement kills local makers

STEADY imports of cheap cement from that dumping would get worse in 2001 Philippine market." It predicts that this Taiwan are expected to put the Philippine when TCC implements its plan to could wreak havoc in the industry that cement industry's cumulative losses into increase its export to the Philippines. already has trouble competing with TCC, a record high when Taiwan begins TCC currently has a production which now accounts for nine per cent of the shipping at least 1.5 million tons of capacity of 6 million tons a year and this is Philippines 11 million tons market. cement to the Philippines next year. expected to double when it completes the The additional 1.5 million tons, A position paper forwarded by the construction of a new cement plant, says according to Philcemcor, will bring TCC 's Philippine Cement Manufacturers Corp Philcemcor. It states that the new TCC export capacity to the Philippines to 2.5 (Philcemcor) said they have million tons a year or 23 per cent of already suffered PhP14.9 billion the Philippines cement market. And Cement dumping would get as of July this year due to lost the market has failed to catch up. market share and effects of price worse in 2001 As it is, cement prices have suppression brought by the ~~~ failed to cope with the recovery of Taiwanese cement influx. Since prices of other construction exporting to the Philippines, materials following the Asian crisis Philcemcor said Taiwan Cement and given the current level of Corp (TCC) has shipped a total of regional prices. Taiwan had been 1.506M tonnes of cement between reportedly selling its cement to the 1999 and August 2000. Philippines at $20.89 per ton at the Philcemcor, the country's time when Taiwan prices were organization of 19 cement between $60 and $65 per ton. manufacturers, issued the position Even ifTCC's that it was paper in reply to an official statement plant will "effectively double the exporting cement at $36per ton FOB, from TCC, which has been the subj ect of company's production capacity and it has Philcemcor said the price level could still investigation by the Department of Trade earmarked 25 per cent of the new capacity be considered dumped levels because for an anti-dumping case. The group said (equivalent to 1. 5 million tons) for the cement was still more expensive in Taiwan . ... as government plans to impose restriction Steel plant closure hits freights THE Philippine government may he can easily flood the market with restrict the size of cement silos to be imported cement. Shipment capacity A SHORTAGE of steel billets looms built at the country' s major ports in a installed in the country is said to over the Philippines construction in­ bid to save local cement producers have been already equivalent to dustry following the permanent clo­ fr om the adverse impact of the thecapacity of a number of local sure of th e country' s largest material's dumping. cement plants, many of which have steelmake r, National Steel Corp The Department of Trade and closed down. (NSC). Industry said it would no longer issue Members of Philippine Ma-nu­ The shortage has jacked up permits for additional capacity on facturers Corp (Philcemcor) said that prices to $ 195 per ton from $135 per terminals hosting the silos. At present if the government does not implement ton last year, and steel billets from the silos at different ports in the measures to check imports, dumping Russia and the Ukraine, dumped last country can store equivalent to an will go unabated. The com&ined year at low prices, now command eight-plant operations. Local cement capacity of the terminals of T~wan higher values. producers are complaining that they Cement Corp, now the subject of a The lost annual output ofNSC' s have been displaced by shipment from dumping case by Philcemcor and 300.000 tons , about one-third of the Taiwan. imports from other countries like local market demand. has also hit Dumped cement now accounts Japan, now total 4.62 millions tons, freight revenues of domestic lines for 15 per cent of countrywide market which is slightly lower than the 4.785 with contracts of affreightment for and 45 per cent of Metro Manila million ton capacity of major cement the transport of steel products from market. Unless dump ing is controlled, firms in Mindanao. NSC ' s Iligan City, Mindanao plant to government may have to clamp down Taiwan Cement Corp and Japan Visayas and Metro Manila. Down­ on imports by ceasing to issue permits Cement are using two ·silos at the stream industries, which used to en­ for the additional capacity of the silos. Manila j oy lower import prices, are now at However, observers contend Harbour Centre with capacities the mercy of suppliers, and users such that it is not the capacity that really of 20,000 and 15 ,000 tonnes. Because as ·rolling mills must seek long-term matters in having a silo but the of faster turnaround time of its vessels contracts wHll Russia and the Ukraine turnaround of shipments. For in­ due to its proximity Taiwan is said to to ensure a steady and competitive stance, if the shipper who owns a silo have jacked up its monthly capacity supply. can import for times in a month then by five times to 100,000 tons. 24·September-October 2000•Maritime Review DIARY

MARITIME CALENDAR

November December 2001 6-7 6-7 January Gulf Ports 2000 Indian Ports 2000 1 •Muscat, Oman (host: Salalah Ports Service) •Mumbai, India New Year's Day 12 6-7 Long Beach (California) Marathon Ship Mobile Business Forum 2000 (First CEO February Repair and Conversion 2000 Summit) •Grand Hall Olympia, London +44-0-1923- •RAI Amsterdam, The Netherlands +31-40- BOI Investor Matching Fair - Waterfront 690640 (www.shiprepairex.com) 2594300 fax 2572098n Development Projects 17 (www.mbf2000.com) •PTIC Complex, Manila 13th Maritime Breakfast Forum 8-10 First Meeting Group of Experts on SAR and •AMOSUP Seamen's Center, Intramuros Societe Forum- Crosby Conference Illegal Acts at Sea 27-28 •Hong Kong 15 Conference and Exhibition for the Electric 11-12 2nd Pasig River Symposium Power Supply Industry (CEPSI 2000) Asia Forum •Ateneo Professional Schools, Rockwell •PICC, Manila •Hainan, China Center, Makati City 27-29 17-20 Aquatech & Environment Philippines 2000 Golden Jubilee International Lecture Series March Conference (2nd Philippine Solid Waste •Colombo, Sri Lanka 4-11 ~ Conference and Exhibition 25 President's Cup Regata •PICC, Manila. For inquiries, contact +63-2- Christmas Day •Manila Yacht Club (Manila-Subic) 636-6933 and fax 633-9327

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Maritime Review-September-October 2000·25 CORPORATE DEVELOPMENTS Owners, execs meet Roxas SHIPOWNERS and shipping executives led by Philippine Interisland Shipping Associa­ tion (PISA) President Doris Magsaysay Ho recently made a courtesy call and met with Department of Trade and Industry (DTI) Secretary Manuel A. Roxas II. Seated are Negros Navigation Company chairman and CEO Daniel Lacson, PISA president and Magsaysay Maritime Corp. CEO Doris Magsaysay Ho, DTI secretary Manuel Roxas II, and William Gothong & Aboitiz (WG&A) president and CEO Endika Aboitiz. Standing from left are Filipino Shipowners Association (FSA) executive secretary Jito Arreza, PISA executive director Brendo Elegio, Sulpicio Lines EVP Eusebio Go, DTI Undersecretary Raul shipping industry competitive amidst proposed policies. But they believe all these Hernandez, Lighterage Association of the globalization, and emphasized that they have would go to nothing if there is no visible Philippines (LAP) president Celso Reyes, initiated corrective measures in the form of support coming from the government. Solid Shipping Lines general manager Quirimon Tan, Domestic Shipowners Association (DSA) executive director WG&A launches SuperFerry 14 Anthony 0' Hare, and Philippine Petroleum DOMESTIC shipping operator WG&A Philippines has launched its newest lind most modem Sea Transport Association (PHILPESTA) vessel to continue providing the public with safe and comfortable journeys. SuperFerry 14 will chairman Edgardo Lacson. The shipowners service the Manila-Bacolod-Iloilo-Cebu route. presented proposals on how to make the SuperFerry boasts of modem amenities and facilities that are the first in the local ship­ ping industry. As the first to sail in Philippine seas equipped with escalator, it also offers fully air-conditioned accommodations, from economy, tourist class, business class, cabin state rooms and suites. With the upgraded amenities, passengers are assured of value for their THE PHILIPPINE REGISTER OF SHIPPING, INC. money as WG&A remains committed to upholding the highest stan­ A Filipino Classification Society dards of maritime safety, according to corporate communications man- Its Mission: ager Gina Virtusio. She says SF 14 is the latest proof ofWG&A's commitment to • PRS is engaged in conducting studies, developing and establishing rules provide the ship riding public with the best shipping services. Dubbed and standards for classification, certification and survey of vessels. It is the "Festival" ship, the SF 14 offers spacious dining salons named the private secto~s response to the ever-pressing need for higher but realistic standards for promotion of safety of life and property at sea after the biggest cultural festivals in the country: Sinulog for tourist and the protection of the maritime environment. class which also doubles as videoke bar, Dinagyang for economy and • It seeks to support the government's efforts in ensuring the struc­ Ati-atihan for first class accommodations. SF 14 also has a coffee' bar and restaurant in Binirayan. tural integrity of vessels, reliability of their machinery and equip­ ment and the protection of the marine environment. The ship has a business center that can take care of the travel­ ling businessman's needs and a recreation hall where when can go • Being a non-profit organiza~ on , it seeks to develop projects that will interactive via various video games. SF 14 has a total passenger ca­ benefit the maritime industry as a whole and to provide a total develop­ ment training program with the aim of upgrading the skills and compe­ pacity of 1,126 and can accommodate up to 118 TEU of cargo. It also tence of local merchant marine personnel and marttime technicians. has a bay for 1 0-15 rolling cargoes. It has a manpower complement of 160 well-trained and highly qualified staff composed of 40 technical • With its present resources and comp~tent surveyors and techni­ crew and 120 hotel personnel. cal staff, it will vigorously continue to endeavor, disseminate and implement its maritime safety programs in the shipping industry sector in close coordincation with the government. New League members • Finally, it will always abide by the maritime industry's highest stan- A NEW batch for both corporate and individual categories has signed dards of professionalism and ethics. in membership for The Maritime League. Its Vision: Individual members include Crisostomo F . Abanes, PRS shall always endeavor to work in bringing sea-safety con- undersecretary and chief of staff of the Department of Transportation sciousness among the shipping community through its: and Communications; Christopher P. Maambong, president of Bril­ • Established Maritime Safety Standards liant Seas Shipping Corp; Ronald E. Heffron, regional manager/part­ • Designed Maritime Safety Training Program ner of Han Padron Associates of Long Beach, California; and Octavio S. Maloles II, board chairman and president of O.S. Maloles II Real • Closely-coordinated efforts with the govemment and the maritime sector. Estate Investment Co.; Alberto Encomienda secretary general of Cen­ PHILIPPINE REGISTER OF SHIPPING, INC. ter for Maritime & Ocean Affairs at the DFA; and Desiderio G. Yupano, Rm . 314 PPL Bldg., United N:uions Avenue Cor. San Marcelino St., Manila president of Quality and Safety Management Systems. Tel. Nos. 50..79-79 / 58·27·11 Loc. 59 • TeleFu: 522·3640 Pioneer Insurance & Surety Corp. and BIS Manila are the new entities that have joined in the corporate category. 26Maritime Review•September-October 2000 MARITIME LAW DOJ exonerates Sulpicio

Despite the withdrawal of criminal However, Sulpicio filed a counter charges, the shipping firm still has to deal affidavit and disputed the charges for lack of with damage suits filed by survivors and factual and legal basis. The shipping line heirs of the fatalities. relied on the fmdings of the Board of Marine The claim for damages could reach Inquiry (BMI) as the official body tasked to to PhP50 million. The Princess ofthe investigate maritime accidents. Orient was bound for Cebu City when it The BMI report showed that the sank on the night of September 18, 1998 Prinl!ess of the Orient was seaworthy as the between Cavite and Batangas a few hours coast guard cleared the ship for voyage. It after it sailed from Manila North Harbor at said the vessel sank because of the erroneous the height of a typhoon. maneuvering of the ship captain. The survivors testified that there was The DoJ adopted the BMI fmdings. neither abandon-ship order nor blowing of It upheld the owners statement that there was horns and announcement through the ship's no basis to charge the shipping firm with public assembly system that the vessel was reckless imprudence "because criminal in distress. liability during the voyage rests on the ship The complaints before the DoJ was captain and the rest of the crew." based on the results of an investigation However, the master of the vessel has conducted by the Maritime Industry not been found since the tragedy. He was Authority (Marina). During its investiga­ reportedly among those who perished in the tion, the Marina panel ruled that the accident. Princess of the Orient was not seaworthy for the voyage and the owners recklessly allowed the vessel to sail during adverse Exxon Valdez Tiffi Justice Department (DoJ) has junked weather. the criminal case against domestic shipping Marina also ruled that there was a appeal thrownout operator Sulpicio Lines Inc. in the 1998 failure to secure the containerized cargoes, sinking of the Princess ofthe Orient that left causing the vessel to tilt allowing the water THE US Supreme Court has refused to more than 100 people dead. DoJ reversed to enter the ship through the service door release Exxon Mobil Corp from its the decision of a special prosecutor, saying that fmally caused the sinking. There was obligation to pay $5 billion in damages for Sulpicio could not be held criminally liable also careless disregard of duties and failure the 1989 Exxon Valdez oil spill in Alaska. for the ships crew's lapses and negligence. to observe extraordinary diligence required In its appeal, lawyers acting on "If indeed there was a failure to by law, which resulted in the deaths and behalf of the oil major urged the judges to exercise utmost diligence in the handling oft injuries of passengers and damage to throw out the punitive damages award on property, according to the Marina panel. the grounds of irregularities during jury .deliberations. However, the court let the SC junks Hutchison~s petition award stand yesterday without making further comment. THE Philippines Supreme Court has 1997. . Exxon Mobil does not have to pay thrown out the petition of Hutchison Hutchison then asked the Olongapo anything yet because a variety of appeals Whampoa to scrap a multi-million dollar regional trial court to intervene and stop are still pending, said company spokesman deal between Subic Bay Metropolitan the bidding. It scored the SBMA for Tom Cirigliano. "This doesn't have any Authority (SBMA) and two other port failing and refusing to negotiate and effect whatsoever on us having to pay the operators to develop and manage Subic execute a concession agreement with the $5 billion," he said. [The Exxon Valdez is Bay container terminal. Hongkong-based port operator despite now called the SIR Mediterranean and is In a recent decision, the High declaring it as the winning bidder. operated by Seariver Maritime. Tribunal ruled against Hutchison and As the winning bidder, Hutchison dismissed its petition for lack of merit, argued, it acquired the exclusive right to saying the company did not even have the negotiate with the government. The lower "When the President (of the Philippines) legal personality to contest the award court rejected Hutchison' s petition and issued the memorandum setting aside the granted by SBMA to International allowed the SBMA to rebid the contract award previously declared by the SBMA Container Terminal Services Inc. (ICTSI) that resulted in the pre-qualification of in favor of Hutchison Whampoa ... the and Royal Port Services Inc (RPSI). ICTSI and RPSI. A moth later in same was within the auihority of the Hutchison's petition stemmed from Novemer 1997, Hutchison successfully President and was a valid exercise of his a public auction held in 1996 in which secured a temporary restraining order prerogative," the SC ruled. ICTSI was disqualified while RPSI lost to (TRO) from the Supreme Court stopping The High Court also determined that Hutchison. A few months later SBMA re­ the SBMA from declaring any winner. Hutchison had no legal capacity to seek evaluated the bids. Instead of forging a Nearly three years after the issuance redress from the country's courts because contract with Hutchison, SBMA decided to of the TRO, the Supreme Court dismissed it was a foreign corporation doing business conduct a new bidding for the project in Hutchison's petition for lack of merit. in the country without a license.

Maritime Review•September·October 2000•27 MARITIME ISSUES C.L. AGUSTIN I Building maritime public-private partnerships: Reviving the MTFMD

"BUll,DING Maritime Public-Private next meeting either at the AMOSUP almost exactly of the same form. Partnerships" was the topic during the 11th Training Center (headed by former Trustee Another example is in the area of Monthly Breakfast Forum on September V ADM Eduardo Santos, then FOIC, PN). using "political will" on the part of a local 25 of the Traders Maritime Forum, for Our major activity this year related to government, often the cause of faulty which we were requested to submit a development was the holding of the implementation of infrastructure develop­ statement. Waterfront Development Exhibition and ment projects because of the LGU We thanked Convenor Leo Congress, or Waterfront 2000 for short, interface. We can clearly see the effect of Santiago for inviting us to give our views held at the PICC last 2-4 March 2000. I political will as shown in the Marikina on the day's theme as a prelude to the believe we succeeded somewhat in showing River·development project ofMarikina onset of Maritime Week, and were also the need for waterfront infrastructure City. proud to say that we had a hand in the development that the Board of Investments Indeed, as I had stated in the establishment of Philippine Maritime has picked it up from there, and has preceding paragraph, the legislative and Week in relation to the call of the IMO organized a Waterfront Development the government have·granted much Secretary General, Mr William O'Neil in Investor Matching Exhibition and Meeting, leeway yet opposing self-serving forces 1996 to organize such a joint effort of all to be conducted in the first quarter of2001 continue to upset the good objectives, IMO Member Nations in the latter part of (in February), to be attended by interna­ which are there for implementation. For September of each year. tional players. We have attended the instance, we all agree, as the World Bank I corrected the impression that iiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiii- and ADB indeed do, that North Harbor we speak for the Shipping and Ports must be privatized. We also agree that Advisory Council (SPAC). I suppose Sometimes the views of the this is a difficult matter to resolve, Leo Santiago got this impression maritime public are dimmed by since opposing interests will be because of the on-going Maritime misconceptions and difficult to reconcile. But they can be Breakfast Forum series, of which the reconciled. Maritime League is one of the misperceptions both by the public The "Note" contained in Mr convenors or we might say a co- and the private sector. Santiago's letter invitation says a lot: proponent together with the Council. " ... there were attempts past and Actually, the Shipping and Ports present to harness (the) private sector Advisory Council has not been active preliminary meetings for the conference, ,. support via advisory councils, task forces, lately. Whether or not this is one of the and, knowing the potential it will have for and similar organizations out to tap organizations (Leo does mention those the future of tourism, Secretary Gemma private sector support to achieve faster dormant wadvisory councils") being Cruz Araneta has been quite proactive in industry growth and development. Several criticized by Leo in his invitational letter supporting and organizing the Forum, efforts were wasted as said councils or to all of us, we do not know. But which the BOI had initiated. task forces failed to result in urgent and fortunately the former and present DOJ:C Having personally done a study on sustained activities due to factors Undersecretaries specifically given the infrastructure development after my traceable to, among others, turf protection, task of chairing the SPAC, or have the government service, I am more and more lack of commitment, and not so clear maritime responsibility in DOTC, from convinced that we have the relevant laws areas of cooperation and collaboration." USEC Primitivo Cal to USEC Herminio and regulations in place for public-private This is the reason why we hail the Coloma to lately USEC Crisostomo partnership, particularly in privatization. decision ofDOTC to reactivate the Multi­ Abanes, have agreed to continue with the But sometimes the views of the maritime lateral Task Force on Maritime Develop­ series, the last one of which was held in public are dimmed by misconceptions and ment (MTFMD) as announced by USEC September and hosted by the DOTC at the misperceptions both by the public and the Crisostomo Abanes on 8 September 2000. Officers' Club at Camp Aguinaldo, private sector. I am reminded of the many What remains to be seen is whether the Task Quezon City. "experts" who stood before us to speak of Force will perform its intended function and In pursuing the SPAC-Maritime privatization as they or others did it, for cause the necessary actions to happen or League Bi-Monthly Maritime Breakfast instance in ports. How Port Klang (Malay­ again be an exercise in futility. Forum series, we hope to continue getting sia) and Vera Cruz (Mexico), for instance, It is our hope that this Forum the private sector and the maritime were privatized was hailed as great succeeds in whatever way it can to nudge bureaucracy to exchange views, share achievements worthy of emulation by all. the agencies and such Councils, Task Forces information and knowledge, and try to The World Bank told me so, and caused me and Inter-agency Committees into action. resolve issues in the spirit of cooperation to visit those places as well as peruse the Leo and other players want to go even and teamwork to achieve our common studies themselves, only to make me realize farther, and they are now orchestrating an goals - which is maritime development that in truth and in fact, my predecessor in industry-wide effort to promote the and enhancement of maritime safety. PPA had actually preceded those actions industry's active participation in the AMOSUP President Captain Greg Oca through the privatization of the MICT a few legislative process by having a sectoral was impressed enough to offer to host the years earlier; the newer versions were represel}tative. 28·September-October 2000~Maritime Review D s _A

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