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The protection Sulpicio Lines did not get

(Article published in the Jul 23, 2008 issue of Manila Standard Today)  

 It is not without reason that many feel that Sulpicio Lines has been getting a lot of protection these days.  After all, even as Sulpicio blamed God for allowing Typhoon Frank, God’s bishop of Butuan, Juan De Dios Pueblos, interceded at Malacańang upon the request of the owners, the Go Family, “because this is the only livelihood they have.”  The good bishop added, “the cancellation of the company’s business would severely affect the economy in Mindanao.” Another man of the cloth, Cebu Archbishop Ricardo Cardinal Vidal frowned upon calls to revoke the shipping firm's franchise and permanently halt its operations.

Presidentiable Dick Gordon was not to be outdone. Wearing his hat as Chairman and CEO of the Philippine National Red Cross, he reportedly cited the management of Sulpicio Lines for its immediate compliance with his request to use one of its cargo ships to transport urgently needed relief food, water, medical and other humanitarian emergency supplies to Iloilo.  That was before DOTC Usec Elena  Bautista for her part last Friday criticized Sulpicio “for failing to fully cooperate with government in the retrieval efforts.”

Businessmen of Cebu, comprising the membership of the Cebu Chamber of Commerce and Industry (CCCI), Mandaue Chamber of Commerce and Industry, Mactan Island Chamber of Commerce and Industry, Cebu Filipino-Chinese Chamber of Commerce, Lapu-Lapu Fil-Chinese Chamber and Central Eastern Visayas Distributors Association likewise came forward to complain against the grounding of Sulpicio’s vessels.

And, of course, no one forgets how, the first day of the joint House committee hearings on the sinking of Princess of the Stars, chaired Bacolod Rep. Monico Puentevella, ended with Sulpicio Lines not being asked a single question by the attending Congressmen who were dutifully present even if Congress was in recess.
 










     

But the protection Sulpicio got from talk appeared tentative and token; talk is cheap and can be easily met with countertalk, from the talker’s peers, and even from the talkers themselves. Thus, Manila Archbishop Gaudencio Cardinal Rosales was reported to have said Sulpicio Lines should shift its business to another industry because of its disastrous maritime record.  And Pangasinan Archbishop Oscar Cruz, in his usual hard hitting way, specified the new area of business suggested for Sulpicio as the funeral industry.

Dick Gordon, the true politician, immediately diluted his praise by, in the same breath, supporting the official investigation into the sinking of the Princess of the Stars.  So did Cardinal Rosales.  Cebu big business stood firm; but nevertheless asked the investigations, not to be discontinued, but instead, to be fast tracked.  A Cebuano blogger in the meantime wanted Cebuanos to rally against the Gos. And on the second day of the Puentevella hearings, Sulpicio was placed on the hot seat. 

The real protection that Sulpicio badly needed, and did not get, was the “P” in what admiralty lawyers shorthand as “P & I”.  The “&” should be said out loud because muttering it would join the two side initials, making the expression sound like my favorite expletive.  That “P” in “P & I” differs from the protection of talk in that it that requires the talkers to put their money where their mouths are.

“P & I” stands for “Protection and Indemnity,” a type of coverage against third party liability that had its roots in the “hull clubs” of the 18th century.  At that time shipowners found too expensive and inadequate the cost and scope of hull insurance provided by policies written by the Royal Exchange Assurance and the London Assurance, both of whom were granted in 1720 statutory monopoly and by individuals operating in London such as the Lloyd's Coffee House. The monopoly raised the cost; and Lloyd’s  and colleagues, wanting to ensure that coverage does not make the shipowners reckless, limited their liability to only three-fourths of the damage in collisions.  The hull clubs for a short time became unnecessary when the monopoly ceased and competition improved the terms of insurance available.

But they became useful again when in middle of the 1800s, shipowners became increasingly liable, by law and jurisprudence, to crew, passengers, cargo owners, and other third parties.  Finding the coverage of insurance underwriters too limited, they had to band together to form mutual benefit associations to protect the members from certain risks as they occurred.

Initially, the shipowners did not pay “premiums” as we understand the term today.  What they did was to pay “calls” which represented the costs of the clubs’ operations, and most important, the shipowners’ respective shares in the indemnification of those among them who suffered the risks they agreed to cover one another against.  Further developments in the marine industry, however, mandated further fune tuning which required the payment of annual contributions, a part of which went to the cost of pooled reinsurance.

But the central idea of being a mutual benefit club remained.  The ship owners were mutually committed to indemnifying one another whenever anyone in the group suffered from the occurrence of the insured risks.  That is the “I” or Indemnity part of “P &I”.  And since prevention is better than cure, the club exerts intense efforts at informing members of new developments, providing training and education, and legal defense when necessary.  The latter is the “P” or Protection part.

Being a member of a P & I club requires that member to do its own share of care and diligence to make sure that the risk does not befall it and when it does, to take all measures to minimize the loss.  For the loss of one is the loss of all.

Necessarily, a club is within its rights to expel a member who has fallen into the habit of collisions, groundings, engine failures, and sinkings. My fellow writer, Jojo Robles, reports that Sulpicio lost its P&I coverage after its m/v Princess of the World burned off the Zamboanga Peninsula in 2005.

But maintaining one’s membership in a P & I club, through good compliance, has its benefits corresponding to what is covered by a comprehensive auto insurance policy which we land lubbers are familiar with.  It typically covers, among others, loss of life and personal injury, collision risks, cargo risks, harbor damage risks, wreck risks, life and other salvage and general average risks, and crew claims.

Of course, the price for P & I membership, looked at solely as an expense in the income statement, can be costly.  But then, what can be costlier than the 4,000 lives lost when Sulpicio’s Dona Paz collided with M/T Vector at Tablas Strait in 1987, the 300 dead when M/V Marilyn sank of Leyte in 1988, the 150 perished when M/V Princess of the Orient capsized near Fortune Island in Batangas in 1998, and the 700 of the Princess of the Stars last June?

The answer is according to Sulpicio’s public announcement last 30 June published in its website: “Human life is so precious that no value can be attached to it.”

 Obviously, that is not a statement that, as a consequence, Sulpicio attaches no value to human life. Or, is it? Tell me.

 

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