Oriental Mindoro oil spill

It was a San Miguel Shipping subsidiary that chartered MT Princess Empress

Isagani de Castro Jr.

This is AI generated summarization, which may have errors. For context, always refer to the full article.

It was a San Miguel Shipping subsidiary that chartered MT Princess Empress

HIDDEN IN CREVICES. A volunteer collects a bucketful of oil sludge from a deep crevice between two large boulders in Buhay na Tubig.

Lorenz Pasion

Under the Oil Compensation Act of 2007, a charterer can’t be made to pay for pollution damage. Environmental groups, however, say the cargo owner should also be made to pay based on the 'polluter pays principle.'

MANILA, Philippines – A subsidiary of San Miguel Shipping and Lighterage Corporation – SL Harbor Bulk Terminal Corporation – chartered RDC Reield Marine Services (RDC) to ship the 800,000 liters of industrial fuel oil from Limay, Bataan to Iloilo last February 28, Rappler learned from government officials. 

The officials made the claim based on documents they have seen. MT Princess Empress sank off Naujan, Oriental Mindoro reportedly after encountering big waves and strong winds that day.

In the shipping business, a charterer enters into an agreement with the ship owner to deliver cargo. The charterer pays the ship owner for the use of the vessel. Although San Miguel Shipping and Lighterage has its own tankers, it also charters other shipping companies for deliveries.

Asked in an email whether SL Harbor Bulk Terminal Corp. was indeed the charterer, Maritime Industry Authority (MARINA) spokesperson Sharon Aledo said, “We only received direct information from the shipowner’s representatives that SL Harbour Terminal Corp. was the loading port.” Aledo did not respond to a follow-up email on whether she can say that SL Harbor Bulk Terminal Corp. may not have been the charterer and cargo owner since RDC only told them that this was the “loading port.”

RDC declined to say on Monday, March 13, whether SL Harbor Bulk Terminal Corp. was the charterer of MT Princess Empress, invoking its non-disclosure agreement.

Rappler sent an email on Monday to the Department of Environment and Natural Resources (DENR) asking for confirmation on the charterer, but was told the question should be directed to other offices. DENR is the agency coordinating the oil spill cleanup work.

SL Harbor Bulk Terminal Corporation, a registered importer of petroleum products, is a subsidiary of San Miguel Shipping and Lighterage. It owns fuel storage facilities in Limay, Bataan, as well as an oil terminal in Tagaloan, Cagayan de Oro.

San Miguel Shipping and Lighterage Corp. is under publicly listed San Miguel Corporation, a diversified conglomerate led by its president, Ramon S. Ang. It handles the shipping requirements of the conglomerate. The conglomerate’s shipping business is separate from its oil (Petron Corp.) and energy (SMC Global Power Holdings Corp.) business.

It was a San Miguel Shipping subsidiary that chartered MT Princess Empress
Why does this matter?

In a statement on March 5, San Miguel’s fuel and oil firm, Petron Corporation, clarified that MT Princess Empress “was not carrying products from the Petron Bataan Refinery nor does Petron own the fuel oil cargo the tanker was carrying at the time of the incident.”

Petron is the Philippines’ largest oil company, capable of supplying around 40% of the country’s fuel requirements. It has an oil refinery in Limay, Bataan, which processes crude oil into various petroleum products. For its industrial fuel oil requirements, Petron now sources it from abroad through importation.

“With major investments for the enhancement of our refinery, Petron has stopped producing fuel oil since 2016,” it said, adding, however, that it was still assisting in the cleanup after the oil spill. 

The conglomerate, however, has so far been silent on SL Harbor’s involvement as a charterer.

Rappler reached out to San Miguel for comment on March 9, March 10, and March 13. As of posting, it has not responded to our emailed questions, saying in a text message that they were “still getting in touch with SL Harbor for details.” We will update this story in case the San Miguel camp responds.

Lack of transparency

Under Republic Act 9483 or the Oil Pollution Compensation Act of 2007, no claim for pollution damage compensation may be made against “any charterer.” This law provides that liability on pollution damage lies on the “owner of the ship at the time of an incident.” 

RDC officials did not respond to reporters who sought to interview them in Pola, Oriental Mindoro on March 4 and March 6. 

However, in a meeting with local officials, Fritzie Tee, vice president for administration and external affairs of RDC, expressed “the company’s commitment to address the cleanup and containment of the oil spill,” according to a company press release on March 6.  

In a statement on Monday, March 13, Tee said: “We are truly sorry that this incident has affected the livelihoods of those living in the impacted areas and the spill’s effect on the environment. We are committed to doing everything possible to minimise the ongoing impact on the environment and people’s lives and clean up the spill.”

She said the company’s “primary focus at this stage remains on the oil spill response and we are adopting a phased approach as advised by experts.”

IN PHOTOS: Oil spill cleanup in Buhay na Tubig, Oriental Mindoro

IN PHOTOS: Oil spill cleanup in Buhay na Tubig, Oriental Mindoro

On Friday, March 10, Liza Osorio, Oceana Legal and Policy Director, lamented the lack of transparency in this latest oil spill.

Sana lumitaw na sya. Bakit tahimik? (The cargo owner should emerge. Why the silence?),” she told Rappler.

Who’s liable

In an interview with radio DZBB on March 9, Aledo, also the legal chief of MARINA, said that based on interviews with the crew of MT Princess Empress, the 500-ton tanker encountered “breaking waves” reaching 3 to 4.5 meters and wind speed of 20 to 22 knots” which led to the sinking. 

Yun yung isa sa mga (This is one of the) incidents that led to the sinking, but the probable root causes have not yet been determined,” she said. 

She said the “direct cause” of the sinking has yet to be determined since the MT Princess Empress was still deep in the sea, making a physical inventory of its equipment and inspection impossible. 

Aledo agreed that industrial fuel oil is also called “black oil,” which she said is “more toxic” than other fuels like diesel. 

She said RDC officials told regulators the ship was insured for $1 billion or around P55 billion under a Protection and Indemnity (P&I) coverage. 

MT Princess Empress insured for $1 billion, says MARINA official

MT Princess Empress insured for $1 billion, says MARINA official

She said, however, that the ship’s insurance is “subject to provisions on limitations of liability under RA [Republic Act] 9483” or the Oil Pollution Compensation Act of 2007. 

Asked if the company will be able to claim insurance for this oil spill, she said a P&I answers compensation due to any damage and/or injury, but this has to go through a process.

Aledo said it was “incumbent” on the ship owner to file an insurance claim. 

According to the International Risk Management Institute (IRMI), a P&I is a “liability insurance for practically all maritime liability risks associated with the operation of a vessel.” IRMI’s mission is to provide risk management and insurance information and training.

Last Thursday, the Philippine Coast Guard said the municipality of Pola has created “TASK FORCE POLA to pursue appropriate legal actions against the owner, operator, or insurer of MT PRINCESS EMPRESS in proper courts or administrative agencies for the damages they incurred.”

In an interview with ABS-CBN News, Mayor Jennifer Cruz of Pola, Oriental Mindoro said the task force would first meet on Monday, March 13 to assess the extent of damages on the environment as well as loss of livelihood and tourism prior to suing the parties involved.

Polluters should pay

Three environmental groups are also demanding that the government “ensure that the companies responsible for the disaster are held accountable.” 

In a joint statement on March 9, Greenpeace Philippines, Oceana, and Center for Energy Ecology and Development (CEED), said the Marcos administration should also “show its concrete plans to protect the affected communities and ecosystems.”

“There are accountability measures in place already in our laws…and in these laws, there is a ‘polluter pays’ principle. Under this is RA 9483, which spells out the liability for those responsible for the oil spill,” said Osorio.

She added that this “covers cleanup operations at sea, preventive measures, consequential laws or loss of earnings, pure economic loss, and even damage to human health or loss of life, among others.” 

“I believe that the government already has the necessary tools, but what is more important is that these accountability mechanisms should be enforced,” she said.

Osorio, in the Rappler interview, said it is “unfortunate” that the Oil Compensation Act of 2007 excludes the cargo owner of a sunken vessel from liability. However, she said “the general rule under transportation law makes the charterer liable depending on the type of charter.”

“If the charterer is negligent in packaging the goods, such as not ensuring the ship is following international regulations, then the charterer is liable,” Osorio said.

“However, we have a rule on statutory construction that a special law like RA 9483 (Oil Pollution Compensation Act) will prevail over general law. In essence, RA 9483 will be the controlling law,” she said.

Osorio said environmental groups are looking into other laws, such as the Amended Fisheries Code or Republic Act 10654, the Clean Water Act, as they contemplate their legal actions in response to the oil spill.

“We’re looking at all angles right now,” she said, noting that there are decided cases wherein the polluter has been made to pay by the DENR’s Pollution Adjudication Board.

Osorio said the Philippines is also a signatory to the International Convention for the Prevention of Pollution from Ships (MARPOL) which prescribes other measures on prevention pollution by ships due to “operational or accidental causes.” Among others, it mandates that new oil tankers have double hulls. This convention was adopted in 1973 and entered into force in 1983. A protocol amending it took effect in 2005. 

In an interview with radio DZBB on Monday, March 13, Philippine Coast Guard spokesman Rear Admiral Armand Balilo said MT Princess Empress had double hulls. He said MARINA requires that all oil tankers should have double hulls for added protection. In this incident, he said the crew lost control of the vessel.

When asked whether the oil tanker was taking the correct route, he said the MARINA had approved the route MT Princess Empress took.

Greenpeace Philippines, Oceana, and CEED asserted that such a disaster is likely to happen again if the country continues to rely on fossil fuel energy. 

“This incident is one of many that the fossil fuel industry has seemingly moved on from, while continuing to pass the burden onto affected communities. The least our government and whoever is responsible for the spill can do is to be completely transparent about the actual impacts, how much worse it can get, and what they are doing to mitigate this disaster,” said Greenpeace campaigner Jeff Chua. 

“More importantly, there must be accountability from the companies involved, especially the owner of the cargo. They must pay for the immediate and long-term damages their business operations have caused, especially in the disruption of livelihoods and access to ecosystem services,” he said. 

Gov’t responses

On March 8, President Ferdinand Marcos Jr. ordered the DENR to speed up the cleanup in the affected areas affected by the oil spill. 

In a Palace statement, Environment Secretary Antonia Yulo-Loyzaga said “the rate of discharge of oil from the sunken vessel is estimated between 35,000 to 50,000 liters a day.”

She added that the oil spill in Antique and Semirara Island was continuing to spread. 

Models of the National Oceanic and Atmospheric Administration show that Naujan and Pola in Oriental Mindoro would be the hardest hit, the Presidential Communications Office (PCO) said.

Loyzaga said “the vessel owner’s insurance provider has offered to bring in a ship from China to plug the leak of the vessel.”

She said that around P60 million has been set aside for the cash-for-work program of the Department of Labor and Employment for families affected by the oil spill. 

The Palace said the DENR is also coordinating with local government units, the vessel owner, and the Department of Social Welfare and Development on “potential additional source of funds for the cash-for-work program as assistance to the affected residents.”

Social Welfare Secretary Rex Gatchalian said the areas to be given the temporary means of livelihood include the towns of Bansud, Bongabong, Bulalacao, Gloria, Naujan, Pinamalayan, Pola and Roxas in Oriental Mindoro; Caluya in Antique; and Agutaya in Palawan.

The Japanese government has sent a Disaster Relief Expert Team on oil removal and control, including 5 from Japan’s Coast Guard, to support the Philippine government’s efforts. It is sending oil blotters, oil snares, and oil-proof working gloves for the cleanup.

The Philippine government is also looking into whether this year’s Balikatan exercises between the Philippines and the US can be tapped for cleanup drives in areas affected by the oil spill.  

Projected damage

Meantime, the UP Marine Science Institute (UP MSI) has estimated that the oil spill would impact 20,000 hectares of coral reef, 9,900 ha. of mangroves and 6,000 ha. of seagrass in Oriental Mindoro, Palawan, and Antique in the Visayas, with around half of the “potentially affected reefs (11,000 ha.) in the Cuyo group of islands, Palawan. 

Based on the institute’s modeling as of March 5, the projected spill would continue to the Cuyo group of islands and “will get closer to northern Palawan mainland in about a week’s time.” World-renowned Amanpulo Resort is located in the Cuyo group of islands, Palawan.

UP MSI said Karagatan Patrol, an online platform for illegal fishing activities, mapped the areas affected by the oil spill based on verified reports of oil slick sightings and onshore deposits. 

“Patterns of oil sighting strongly coincide with the oil spill trajectory model of the UP MSI,” it said. 

The UP MSI added, however, that “the model results are model forecasts and accuracy is difficult to determine,” and “does not account for dispersion, evaporation, emulsification, and degradation of the oil and assumes that the oil behaves like persistent buoyant particles.” 

On March 12, UP MSI said that based on its simulation focusing on the tanker’s location from March 10 to 16, “with continuous release of oil from the alleged seepage location, most of the oil will end up along Naujan coast and Pola Bay.”

It also warned: “However, due to the weakening Amihan, some of the oil may flow northwards towards the Verde Island Passage by March 16, affecting coastal areas of Calapan, Verde Island, and some parts of Batangas. The oil spill threatens the global center of marine biodiversity located in the Verde Island Passage (VIP).”

It was a San Miguel Shipping subsidiary that chartered MT Princess Empress

In a disclaimer, UP MSI said the model was based on “weathering characteristics of the bunker oil and a seepage rate of 1,000 barrels per day,” adding that “these assumptions…are based on best available information.”

In a forum on March 9, Ram Joseph Temeña of the Provincial Disaster Risk Reduction Management Office in Oriental Mindoro, said 111 barangays with fisherfolk and 19,556 affected families from Nauhan to Bulalacao, Oriental Mindoro are affected by the oil spill. 

Mayor Mary Jean Te of Libertad, Antique, in the same forum, said, “We’re worried na mag-shift ang hangin at mapunta dito sa amin ang (that the wind would change direction towards us) oil spill. It’s tuna season here in our area and tons of fish are being caught through sustainable fishing. We have the biggest number of mangroves and well-managed coastal resources here in northern Antique.” 

In a separate statement, Father Edwin Gariguez, a Catholic priest who has been active in environmental causes in Oriental Mindoro, said that at least 18,000 fisherfolk in Oriental Mindoro “have been robbed of their livelihood” with fishing activities put on hold.

He also warned of food insecurity in the coming years for the affected communities. 

“We call on the Philippine government for most urgent action to contain the spill, assess the severity of damage, and prioritize the welfare of impacted communities who must receive livelihood support and protection from health impacts,” he said.

“We also demand accountability from the owner of MT Princess Empress, RDC Reield Marines Services, and the fuel supply it contains.”

The Senate committee on environment, natural resources, and climate change, chaired by Senator Cynthia Villar, is set to hold a hearing on Tuesday, March 14 on the Mindoro oil spill. – with reports from Ralf Rivas and Dwight de Leon/Rappler.com

LIST: Major oil spills in the Philippines

LIST: Major oil spills in the Philippines

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Isagani de Castro Jr.

Before he joined Rappler as senior desk editor, Isagani de Castro Jr. was longest-serving editor in chief of ABS-CBN News online. He had reported for the investigative magazine Newsbreak, Asahi Shimbun Manila, and Business Day. He has written chapters for books on politics, international relations, and civil society.