A GRAND COVER-UP:
WHITEWASHING THE NEW HINASE ALIAS MT SOLAR 1 CASE

Mr. President:

Last 14 September 2006, the Special Board of Maritime Inquiry (SBMI) of the Department of Transportation and Communications, through its Secretary, released its findings and recommendations on the largest oil spill in Philippines history.

This SBMI report on the tragic incident that has affected four towns in Guimaras Island and two towns in Iloilo Province, thereby contaminating fishing grounds, beaches, sea-grass beds and seaweed farms, is a tragedy in itself.

I am appalled by the deliberate haste with which the report was done in a matter of two weeks. This has resulted in a haphazard report, which has only raised more questions rather than answers.

According to the SBMI:

PETRON is liable for overloading of industrial fuel oil, thereby causing instability of the vessel and rendering it unseaworthy for the voyage;

Sunshine Maritime Development Inc., the alleged disponent owner of the vessel is also liable for completely disregarding all mandated regulations, policies and requirements for the seaworthiness of the vessel;

The ships captain is administratively liable for not having the necessary training to handle oil tankers, for making an erroneous decision to set sail from Guimaras despite the bad weather, and failing to ensure the vessels seaworthiness; and

MARINA and Philippine Coast Guard (PCG) were found to have committed lapses in the performance of their duties.

Mr. President, on paper these findings are all in order. But are they telling us the real story behind this tragedy? They are not.

The MT Solar 1 was a vessel destined to create havoc. From the moment it entered Philippine waters, its seaworthiness had been severely compromised and prejudiced.

Allow me now to tell the real story behind this tragedy. I shall begin it with a fact a ship is presumed to be built to be seaworthy.

In the case of Santiago Lighterage Corporation vs. Court of Appeals (GR no.139629, dated 21 June 2004), our Supreme Court defined seaworthiness when it said,

A vessel must have that degree of fitness which an ordinary, careful and prudent owner would require his vessel to have at the commencement of her voyage, having regard to all the probable circumstances of it. Thus, the degree of seaworthiness varies in relation to the contemplated voyage. Crossing the Atlantic calls for stronger equipment than sailing across the Visayan sea. It is essential to consider that once the necessary degree of seaworthiness has been ascertained, this obligation is an absolute one, i.e., the undertaking that the vessel is actually seaworthy. It is no excuse that the ship owner took every possible precaution to make her so, if in fact he failed.

Mr. President, when an unfortunate incident strikes, there are supposed to be safety nets that should prevent its occurrence and ensure the seaworthiness of the vessel. These maritime safety nets consist of the following:

The crew of the vessel;

The ship owner;

The cargo owner; and

The government of the flag state.

On all counts, the safety nets that should have prevented MT Solar 1 from sinking in the waters of Guimaras Island on 11 August 2006 failed. Mr. President, it was, in ordinary parlance, a systems failure.

This failure was overlooked by the SBMI. We ask why? Is it being done to hide from the people the liabilities of the agencies in government, or is it a cover-up or an attempt to whitewash another maritime tragedy?

The liability of the vessel crew

At the time of the occurrence, MT Solar 1 was manned by eighteen (18) people led by its Master Captain Norberto Aguro. Two (2) of them remain missing and are presumed to have died with the sinking of the vessel.

We now know that, while Captain Aguro had completed the Advance Training Program on Chemical Tanker Operations, he does not have Advance Training on Oil Tanker Operations which is required for the Master on board oil tanker. Thus, his Certificate of Competency (COC) limits him to serve on board chemical tankers only. He has had experience as Master on board foreign flagged chemical and LPG tanker vessels, but none on board an oil tanker.

The SBMI in their report said that, this lack of training and qualifications of the captain of the vessel was further compounded by his making an erroneous decision to set sail from Guimaras despite the mildly inclement weather, and failing to ensure the vessels seaworthiness.

A maritime expert has offered up the following opinion, which I would like to read into the record:

Nearing the southern tip of Panay, the vessel developed a starboard list after being battered by waves (obviously wave heights in excess of her freeboard) that can damage and compromised exposed deck fittings such as vent valves, etc., Correctly, the captain seeked shelter in Iloilo but could not drop anchor as the windlass was grounded. So, afloat and drifting, the crew pumped out the chain locker and other spaces to bring the ship to even keel. I do not know if the captain satisfied himself that after pumping out to the vessel, what was the cause of the list or ingress of water. Did he deal with and feel safe enough to continue the voyage? It is my opinion that the vessel at that time had already sustained some structural failure not normally noticed except through an underwater inspection. The vessel should not have sailed without first carrying out repairs on the windlass and verifying the cause of the listing. The ship was no longer seaworthy by virtue alone of not being able to anchor because of the windlass deficiency. Quite often, against the better judgment of a Captain on the scene, pressures are brought to bear that compel the vessel to take short cuts and suffer the consequences.

These can be the demands from the owner or cargo owners and oftentimes aggravated due to incentive bonuses to deliver the goods.

Mr. President, this professional opinion, as well as other information that we have come into light, suggests that the sinking of the vessel was not due to her lacking a double hull. It is almost certain that water entered the cargo compartments or other spaces causing the vessel to lose buoyancy. Double hull vessels offer some protection but only in the event of shallow water grounding or minor collisions at slow speeds. This is especially true of small vessels such as our inter-island tonnage where the keel to inner bottom distances are not significantly deep. On the other hand, double hulled vessels are more prone to retain explosive gases in the void spaces and therefore more dangerous especially when carrying flammable and volatile petroleum products. Cataclysmic explosions can wreck a tanker and cause a major oil spill.

The liability of the ship owner

Who is the real beneficial owner of the vessel? How was the vessel brought into the country? Was she chartered and if so, where are the enabling documents to allow for taxes and fees including a waiver to engage in cabotage trade?

Was the vessel imported into the country? Was the vessel bareboat chartered to Philippine operators and if so, under what authority? Were the appropriate taxes such as the 4.5 % bareboat taxes paid?

This is what we know so far. During the hearing conducted last August 4 by the Senate Committee on Environment, the owners of Sunshine Maritime Development Inc., admitted the following:

The ship is registered in Panama;

Sunshine Maritime Development Inc., does not own the vessel. They are only the disponent owners of the vessel. They are only lease purchasing it. According to the 24 August 2005 decision of the MARINA granting the Certificate of Public Convenience (CPC), MT Solar 1 is being leased from New Hinase Maritime S.A., for a period of only eight years, or up to December 2009.

This is supported by the fact that, based on the records of French Classification Society - Bureau Veritas, the ship is owned by New Hinase Kisen Inc., and not Sunshine Maritime Development, Inc.

How can a ship that is of foreign registry ply Philippine waters carrying Philippine cargo owned by a corporation with substantial government interest? This act is a violation of section 6 of Republic Act 9295 which provides that, No foreign vessels shall be allowed to transport passengers or cargo between ports or places within the Philippine territorial waters, except upon the grant of special permit by the MARINA when no domestic vessels is available or suitable to provide the needed shipping service and public interest warrants the same.

What were the considerations involved in allowing the vessel to carry cargo along Philippine waters?

Is the exception now the rule?

Mr. President, assuming that, the vessel was chartered under a bareboat program, the MARINA should still be held accountable for violating its own rules. Under MARINA Memorandum Circular no. 42 series of 1998, a company may be allowed to bareboat charter a maximum of two (2) vessels only, in excess of the two, the company must place an additional paid-up capital based on the size of the vessel. A qualification that Sunshine Maritime Development Corporation failed to comply.

The liability of the cargo owner

The owner of the cargo, PETRON, has been silent on how it engaged the vessel. Was the vessel time-chartered? Was it on a contract of affreightment? On a consecutive voyage charter? Or a single charter? In any case, any of these types of charters vests some control in PETRON as to the movement of the vessel, how to prosecute a voyage, where to load, where to discharge cargo, and even which type of cargo to carry and the quantities to load.

The fact that, the SBMI has established that PETRON overloaded the vessel proves its liability. The New Hinase alias Solar I was found to be overloaded considering that it left Bataan with a draft of 5.1 meters, when it was only supposed to have a draft of 4.85 meters.

Draft refers to the distance between the bottom of the tanker and the portion that is level with the water line. An increased draft indicates a heavier load.

Petron was found to have overloaded the tanker because it was only supposed to fill it up to 98-percent capacity, but computations showed it loaded the Solar I up to 98.7-percent capacity.

The tanker also lost its reserve buoyancy after it was allowed by MARINA to load more weight compared to that allowed by private classification society Bureau Veritas.

The Bureau Veritas recommended load line was 1,220 millimeters, but the MARINA-approved certificate allowed the Solar I a mere a 700-mm load line. The lower the load line, the more weight the vessel could carry.

The SBMI also found that the compartments in the front of the vessel were filled with approximately 75 tons of seawater, while the top deck was filled with about 200 tons of seawater, thereby increasing the load on the tanker and contributing to its sinking

This fact of overloading the vessel cannot be downplayed, in the light of evidence gathered by a remotely operated underwater vehicle that surveyed the wreck found a triangular hole on the left side of the New Hinase alias Solar I, along with scratches and open valves on its cargo hold.

If PETRON allowed this overloading, did it also allow the pilferage of its own cargo ? As a corporation where our people has substantial interest in, this is a clear case of economic sabotage.

The liability of Government

Beyond the liabilities of the crew, the ship owner and the cargo owner, the greater liability rests on the agencies of government mandated by law to ensure compliance with safety standards and regulations.

To the SBMI that conducted the investigation, the liabilities are mere lapses. This is condemnable. I shall not mince words in calling this report as another bureaucratic exercise of white washing and covering up the truth to evade liability.

This tragedy has resulted in the death already of a child who died of inhaling the toxic fumes emitted by the oil spill, the death of two (2) crew members of the vessel, and substantial damages to the environment and the Filipino people, which are incapable of pecuniary estimation.

These are not just lapses. These are serious crimes which deserve punishment.

I base this on the following facts which cannot be denied:

MARINA allowed the registration of the vessel without exercising due diligence. In Certificate of Vessel Registry Number 047182 dated 14 April 2005, we note that there is no mention at all that, the vessel was modified or converted. If only the MARINA had diligently done its duty, they could have easily seen that the New Hinase alias MT Solar 1 was a converted vessel.

Its former names were New Hinase and Chie Maru no.8. According to Lloyds Register of Shipping Vessels, the MT Solar was initially a tanker in 1988 under the name Chie Maru no.8. In 1989, it was converted into a Chemical Tanker under the name New Hinase. From a Chemical Tanker, it was again reconverted into an oil tanker presumably in the Philippines. This is highly questionable and anomalous. Ang laki, ang haba at ang bigat ng barko ay pabago-bago.

Is it just possible that the vessel during conversion may have had structural alteration, i.e. enlargement of tank spaces, removal of separation bulkheads and if so, were these carefully assessed to insure that the hull girder strength, structural integrity and stability characteristics were maintained or altered to meet the contemplated service? Were there tests performed after conversion, and sea trials conducted to ascertain that the statical stability, deadweight and loadline are in accordance with current class and state regulations.

MARINA allowed the vessel to ply Philippine waters despite the fact that, it was already suspended from its class. This is highly anomalous. The New Hinase alias MT Solar 1 was suspended from its class by Bureau Veritas from December 29, 2005 to July 2006, and yet when it was suspended, it was allowed to travel and move cargo eighteen (18) times from the Port of Lamao, Limay, Bataan to various points of destination such as Iloilo, Cagayan de Oro, Davao, Cebu, Iligan and Leyte. Under normal circumstances, a vessel that has been suspended from its class should be grounded and not allowed to travel.

This is consistent with international law provisions such as the United Nations Convention on the Law of the Seas (UNCLOS). Under UNCLOS, once a ship is registered, the flag State has certain duties laid out. In particular, under Article 94, the flag State must effectively exercise its jurisdiction and control in administrative, technical and social matters over ships flying its flag and take such measures for ships flying its flag as are necessary to ensure safety at sea..

By allowing the New Hinase alias MT Solar 1 to travel despite its suspension from class, MARINA directly violated section 22 of Republic Act 9295 which provides that, All vessels, whether newly built or previously owned, which are acquired on or after the effectivity of this Act be classified by a government recognized classification society on the date of acquisition prior to its operation in the domestic trade.

MARINA allowed the registration of the vessel despite the fact that, it was only provisionally classed by international classification society Bureau Veritas. In Provisional Classification Certificate no. MNL0/JBL/20060125917 AM, the ship New Hinase alias Solar 1 owned by New Hinase Kisen Co., Ltd., was provisionally classed for its hull and machinery only from April 2006 to 6 October 2006.

MARINA allowed the registration of a foreign owned vessel. All documents prove that it is foreign owned. In the Certificado Internacional de Arqueo or the International Tonnage Certificate no.69 0871 issued by the Panama Bureau of Shipping, the port of registry of the New Hinase alias Solar 1 is Panama.

This is in violation of section 6 of Republic Act 9295 and its Implementing Rules and Regulations issued on November 30, 2004 which provides that, No foreign vessels shall be allowed to transport passengers or cargo between ports or places within the Philippine territorial waters, except upon the grant of a special permit by the MARINA when no domestic vessels is available or suitable to provide the needed shipping service and public interest so warrants.

MARINA allowed the vessel to ply Philippine waters despite the fact that, its Cargo Ship Safety Construction Certificate had already expired. The Cargo Ship Safety Construction Certificate of the New Hinase alias MT Solar 1 expired on 07 June 2006. The oil spill incident occurred on 11 August 2006. This is in violation of Section 5, Rule VI of the Implementing Rules and Regulations of Republic Act 9295, which requires that, All ships are required to carry on board the relevant or applicable ship safety certificates as specified in Section 7.1.7 of Rule IV. Under Section 7.1.7, subsection a.2, a cargo ship safety certificate is required.

MARINA allowed the overloading the vessel. The tanker also lost its reserve buoyancy after it was allowed by MARINA to load more weight compared to that allowed by private classification society Bureau Veritas. The Bureau Veritas recommended load line was 1,220 millimeters, but the MARINA-approved certificate allowed the Solar I had a 700-mm load line. The lower the load line, the more weight the vessel could carry.

The MARINA officials who knowingly or unknowingly facilitated these acts should be held criminally and administratively liable. Our laws are clear.

Section 3 of Republic Act 3019 otherwise known as the Anti-Graft and Corrupt Practices Act punishes and declares as unlawful, the act of causing any undue injury to any private party, including the Government, or giving any private party any unwarranted benefits, advantage or preference in the discharge of his official administrative or judicial functions through manifest partiality, evident bad faith or gross inexcusable negligence.

Mr. President, all these woes besetting the maritime industry are the result as well of the apparent absence of any clear delineation of responsibility in maritime administration. It is so fragmented and there is competition as to different functional jurisdictions. The lack of inter-agency cooperation and coordination are the primary causes of why a safe shipping industry can hardly make strides forward.

We have an alphabet soup of government agencies undertaking maritime administration, namely:

Philippine Coast Guard;

Maritime Industry Authority (MARINA);

Philippine Ports Authority;

Maritime Training Council (established pursuant to the Letter of Instruction no.1404 signed by President Marcos in January 11, 1984)

National Maritime Safety Coordinating Council (established pursuant to Executive Order no.314 signed by President Ramos last March 28, 1996)

Department of Foreign Affairs

Philippine National Police

Coast and Geodetic Survey Department of the National Mapping Research and Information Agency (NAMRIA)

Bureau of Fisheries and Aquatic Resources

The overlapping of functions and competition among these agencies has only resulted in confusion.

While the MARINA, under Republic Act 9295, is the principal government agency tasked for the development of the shipping industry, it is undermanned and not technically competent. There are 600 ports all over the country, and yet there are only a total of 500 people in MARINA.

Mr. President, I submit that a comprehensive review on the maritime industry is in order. The absence of laws on safety standards in the Philippines shipping industry is not the reason why the maritime industry is being compromised, it is the lack of coordination and enforcement. And as the endless maritime disasters have proven, this has led to further corrupt practices which result in the loss of life and the reckless and wanton destruction of our environment and natural resources.

Let us begin with the matters which demand resolution. With regards to the incident involving MT Solar 1, I therefore ask that:

The OMBUDSMAN conduct a fact finding investigation on why MARINA allowed a foreign registered vessel managed by a fly by night company without any proven track record to transport cargo in Philippine waters, when there are legitimately registered Philippine vessels available; the circumstances on why it allowed a converted vessel to operate in Philippine waters; and why it allowed a vessel with a crew holding expired certifications and lacking training to operate an oil tanker. Pending investigation, I ask that the Ombudsman place the concerned officials under preventive suspension.

The Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC) conduct an investigation on Sunshine Maritime Development Inc., particularly its payment of taxes and duties in connection with the entry of a foreign registered vessel.

The Securities and Exchange Commission (SEC) to pierce the veil of corporate entity of Sunshine Maritime to determine its real owners and ensure prosecution under the Anti-Dummy Law;

A Special Board of Inquiry be created. We cannot trust MARINA and the Coast Guard to make an independent determination of the cause and circumstances in the sinking of the vessel, because it is their negligence and corruption which allowed this incident to happen.

Over the long term, I ask that the Senate seriously consider the passage of a bill creating an Oil Spill Liability Fund based on the United States Oil Pollution Act.

Under the Oil Pollution Act of 1990, the owner or operator of a facility from which oil is discharged (also known as the responsible party) is liable for the costs associated with the containment or cleanup of the spill and any damages resulting from the spill. The Environmental Protection Agency's (EPA) first priority is to ensure that responsible parties pay to clean up their own oil releases. However, when the responsible party is unknown or refuses to pay, funds from the Oil Spill Liability Trust Fund can be used to cover removal costs or damages resulting from discharges of oil.

The primary source of revenue for the fund will be a reasonable charge on per barrel fee on imported and domestic oil. Other revenue sources for the fund include interest on the fund, cost recovery from the parties responsible for the spills, and any fines or civil penalties collected.

I believe that my distinguished colleagues will be particularly interested in the establishment of such a fund, Mr. President. There is much to do, and much that can still happen; and much will need to be undertaken if we are to make up for the executives having been caught so flat-footed by this disaster.

I also ask that, the Senate act on the pending maritime conventions that has yet to be ratified. According to reports, there are forty eight (48) maritime conventions and treaties, and yet the Philippines has ratified only eleven (11).

Finally, I ask that the Senate consider a review on the respective mandates, duties and responsibilities of the MARINA and the PCG. Republic Act 9295 has effectively emasculated the PCG, and yet the agency that took over its functions has proven to be ineffective.

Mr. President, where the executive has substituted rhetoric for substantive action, not much can be done, except to deny the executive credit for behavior for which little if no credit is due.

We have all marveled at how Filipinos from all walks of life have tried mightily, and sincerely, to do something, anything, to lend a helping hand. From hair to donations, everyone has been willing to do something. But it is governments job to harness our national energies, consolidate our national efforts, and provide direction to our official activities.

The executive has focused, as it always does, on what is on the surface; in this case, the oil slick, without thinking of the many other things it ought to consider, and without a coordinating effort to consolidate the various actions that must be done. I would even go as far as saying that the Secretary of the Environment displayed instincts more environmentally sound than the chief executive. He said, and rightly so, that bacterial agents should be used for cleaning up oil spills. But the President of the Philippines has given more consideration to Petron, than she has to either our scientific or environmental communities; she has been more interested in appearing busy, than applying herself to coordination, evaluation, and action.

The incident involving the New Hinase alias Solar 1 is a microcosm of our state of affairs. Whether it be the issue of political killings, human rights abuses, charter change and electoral reforms, the executive has chosen instead to just ride the waves and ensure its own political survival to the detriment of the people.

So we must take up the slack; we must provide leadership where there is none; and we must look to the interest of our maritime industry, our confused and demoralized maritime authorities, and a frightened and outraged citizenry. We must lead; we must act; we must deliberate and be deliberate in doing what is required of us.

In the end, this too shall pass and the unrighteous shall fall.

I thank you.