REPUBLIC Act (RA) 9295, otherwise known as the Domestic Shipping Development Act of 2004, is known for having deregulated the rates for passenger and cargo vessels. It is also noted for having authorized Maritime Industry Authority (Marina) regional offices to issue Certificates of Public Convenience (CPCs). Chapter 5, Section 14 of the Domestic Shipping Development Act of 2004 provides for the legal basis of the compulsory insurance coverage for passengers and cargo of all domestic ship operators. Under Section 3, a domestic ship operator or owner “shall mean a citizen of the Philippines, or a commercial partnership wholly owned by Filipinos, or a corporation at least 60 percent of the capital of which is owned by Filipinos which is duly authorized by the Marina to engage in the business of domestic shipping.”
Domestic shipping, on the other hand, is defined as “the transport of passengers or cargo, or both, by ships duly registered and licensed under Philippine law to engage in trade and commerce between Philippine ports and within Philippine territorial or internal waters, for hire or compensation, with general or limited clientele, whether permanent, occasional or incidental, with or without fixed routes, and done for contractual or commercial purposes.”
Section 14 makes it a requirement for a domestic ship operator to acquire: “1) Adequate insurance coverage for each passenger in an amount to be computed in accordance with existing laws, rules and regulations, and the total amount of such coverage shall be equivalent to the total number of passenger accommodations being offered by the vessel; 2) Adequate insurance coverage for cargo in an amount to be computed in accordance with existing laws, rules and regulations, and the total amount of such coverage shall be equivalent to the total cargo capacity being offered by the vessel; and 3) If a domestic ship operator should offer both passenger and cargo service, the total insurance coverage shall be in the total sum equivalent to that stipulated in paragraphs [1] and [2] of this section.”
Section 14 further adds that “if a domestic ship operator should operate more than one vessel, the amount of insurance coverage required under this section, for purposes of proving financial capacity shall be the amount equivalent to the total number of passenger accommodations, or total cargo capacity, or both, of the largest operating vessel which the domestic ship operator may have.” Provided that “the total insurance coverage which may be required of any domestic ship operator shall not exceed the value of such vessel.” Under Sections 16 and 18, Marina shall have the power to impose penalties against those who will fail to maintain the required insurance coverage.
Pursuant to the Implementing Rules (Section 7.4.3.15) of RA 9295, adopted on October 26, 2009, prior to the issuance of a CPC, the applicant must submit insurance coverage for “a) Passenger Insurance Coverage with an aggregate limit of liability in the amount of P200,000 per passenger; and b) Marine Insurance Coverage.” Under Rule 5 (Compulsory Insurance Coverage), it is an annual requirement to submit the following: “14.1. Adequate insurance coverage for each passenger in an amount not less than P200,000 per passenger; and the total amount of such coverage shall be equivalent to the total authorized number of passengers of the ship; 14.2. The Marina shall require every domestic shipowner or operator to secure adequate cargo liability insurance.”
In addition to compulsory passenger and cargo insurance, Section 15 (Rule 5 of the Implementing Rules) also requires as mandatory the “marine insurance covering liabilities arising out from oil pollution” (Oil Pollution Coverage). This was implemented through Marina Circular (MC) 184, dated February 21, 2003, (Revised Rules Governing Mandatory Cover Against Civil Liability for Oil Pollution Damage). This was mandated under the International Convention on Civil Liability for Oil Pollution Damage (CLC Convention, or CLC Protocol 92). As provided in MC 184, “(a)ll Philippine-registered ships, defined under [paragraph] I are required to be covered by insurance or other financial security for not less than the limits herein set to answer for the liability for pollution damage under the CLC 92.”
As to the amount of benefits, it was originally pegged at P20,000 under MC 40. In 1998 MC 40-A was issued increasing the coverage to P50,000 per passenger. In 1999 it was again increased to P100,000 per passenger under MC 149, with an aggregate limit based on the total passenger capacity. Under MC 149, all passengers were covered whether manifested or unmanifested, ticketed or unticketed. However, under MC 2009-18, only manifested passengers shall be covered by the insurance; while unmanifested passengers “shall be deemed self-insured by the shipowner/operator for the same amount of P200,000 per passenger,” and the same shall be settled or paid within a period of five days from the recovery of the bodies. Eventually, under the Implementing Rules of RA 9295, the coverage was increased to “not less than” P200,000.
Interestingly, MC 2009-18 also required a compulsory survivorship insurance coverage of P50,000 for each survivor of maritime accidents (Compensation for Survivors of Sea Accidents). This was, however, suspended by Marina Board Resolution 60, dated March 8, 2010, and deferred for further review.
As of 2008, there were 22 insurance companies, appearing in the IC records, with approved Marina Compulsory Group Personal Accident Insurance policies. Marina, on the other hand, has only approved six companies with Marina compulsory passenger insurance. These are: Commonwealth Insurance Corp., Phil. British Assurance Co. Inc., Phil. Fire and Marine Insurance Corp., QBE Seaboard-Eastern Insurance, Phil. First Insurance Co. Inc., and Charter Ping An Insurance.
Senate Bill 1380, An Act Amending Chapter V, Section 14 of RA 9295, was filed by Sen. Bam Aquino seeking to provide for a “no risk, no fault” insurance coverage of all passengers whether manifested or not.
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Dennis B. Funa is currently the deputy insurance commissioner for Legal Services of the Insurance Commission. E-mail: dennisfuna@yahoo.com.