Seafarers' claims to be delayed by placing awards in Escrow

 Manning agencies are pushing for the inclusion of  an escrow provision in the proposed Magna Carta which  is a mere dilatory tactic in the execution of the seafarers’  monetary awards.

 The provision  in essence aimed to amend the labor code that will have significant impact on labor claims governing the immediately “final and executory” nature of decisions issued by National Labor Relations Commission (NLRC) and the National Conciliation and Mediation Board (NCMB).  

The manning agencies resurrected what ANGKLA Partylist  earlier  filed  as House Bill  No. 5430 on February 2015 during the 16^th Congress   wherein the proceeds of execution shall be deposited in an escrow account with an escrow agent designated by the NLRC  or the NCMB.    

The seafarer  will wait for longer years before they receive the NLRC/NCMB  award , mostly  for cases involving monetary claims for  disability and death benefits, illegal dismissal as well as unpaid or underpayment of salaries and wages. 

The manning agencies echoed ANGKLA’s rationale for the earlier Bill to ensure the restitution of monetary awards in case the appropriate appellate court annuls or partially or totally reverses the monetary judgment award.

The proceeds shall remain in escrow until such time the finality of the decision issued by the appropriate appellate court is obtained..

The proceeds shall only be released after issuance of an entry of judgment by the appropriate appellate court and upon issuance by the NLRC or the NCMB, after motion of the proper party, of an order authorizing the release of proceeds of execution.

ANGKLA pointed out that the amendment is proper as the problem of the immediately “final and executory” nature of decisions gains greater relevance considering the following factors: (a) the complainant will insist on the execution of the NLRC or NCMB decision despite the appeal; (b) even if the appellate courts overturn or modify the NLRC or NCMB decision, there is little hope of recovering anything through restitution; (c) more legal costs and expenses will be incurred in pursuing the case through the appellate courts and in applying for restitution of the judgment award. 

Every labor dispute is a David and Goliath situation  as it  involves two opposing parties:  the worker on one side and the management on the other.  

Constantly exposed to fluctuating temperatures caused by variant harsh weather conditions, the risks of his getting killed, injured or ill are high. 

When he sustains injury, illness or lose his life, seldom does he receive full compensation provided under the law because his employer does not hesitate to harness its immense resources to limit its liability. 

Labor litigation takes years before it reaches the Supreme Court.

 In cases of seafarers with medical conditions, some incur huge debts to sustain their medication while others die before the decision by the Supreme Court is released. 

Due to the longer years that they have to wait, without any leverage in prosecuting his monetary claims, chances are, the seafarer bows to the demand of his employer to either drop his claim or accept a small settlement. 

The scenario under said provision  will be analogous to situations described by the  Supreme Court where "the judgment becomes illusory. (Corona v. CA, ,343 SCRA 512) 

The Supreme Court lamented that   the claimant "has grown old with the case. He fears he may no longer be in this world when the case is finally decided." (Borja vs.  CA, 196 SCRA 847)  The prevailing party might  be unable to enjoy  the judgment award  after the lapse of time, considering the tactics of the adverse party who may have no recourse but to delay. (Intramuros Tennis Club, Inc. v. PTA,341 SCRA 90)

In cases of execution pending appeal, the Supreme Court underscored that " the law itself has laid down a compassionate policy which, once more, vivifies and enhances the provisions of the 1987 Constitution on labor and the working man.  These duties and responsibilities of the State are imposed not so much to express sympathy for the workingman as to forcefully and meaningfully underscore labor as a primary social and economic force, which the Constitution also expressly affirms with equal intensity. Labor is an indispensable partner for the nation's progress and stability" ( Aris Inc. vs. NLRC, 200 SCRA 246) 

If the provision  that aims to delay in execution will be included, the proposed  Magna Carta   becomes a tool of oppression and inequity to the prejudice of  the seafarer.

In the end, such legislative act runs in contradiction to the constitutional provision  that says "the State affirms labor as a primary social economic force. It shall protect the rights of workers and promote their welfare." (Art. II, Sec. 18, Constitution, 1987.). 

 (Atty. Gorecho heads the seafarers’ division of the  Sapalo Velez Bundang Bulilan  law offices. For comments, email info@sapalovelez.com, or call 09175025808 or 09088665786)

Unconstitutionality of escrow provision in the Magna Carta

The escrow provision in the proposed Magna Carta for Filipino seafarers violates the constitutional guarantee on equal protection.

The Joint  Manning Group  is pushing for the inclusion of an escrow provision  which is a mere dilatory tactic in the execution of the seafarers’ monetary awards.

The provision in essence aimed to amend the labor code that will have significant impact on labor claims governing the immediately “final and executory” nature of decisions issued by National Labor Relations Commission (NLRC) and the National Conciliation and Mediation Board (NCMB).  

The manning agencies echoed ANGKLA’s rationale for an earlier Bill to ensure the restitution of monetary awards in case the appropriate appellate court annuls or partially or totally reverses the monetary judgment award.

 There is an invalid classification that runs counter to  the Constitutional provision  which  provides that “no person shall be deprived of life, liberty, or property without due process of law, nor shall any person be denied the equal protection of the laws.” ( Article II, Section 1)

 The guarantee of this constitutional right of equal protection shall mean that all persons or things similarly situated should be treated alike, both as to rights conferred and responsibilities imposed

Class legislation is such legislation which denies rights to one which are accorded to others, or inflicts upon one individual a more severe penalty than is imposed upon another in like case offending. (Executive Secretary v. Court of Appeals, G.R. No. 131719, May 25, 2004)

The Supreme Court elucidated upon the concept of equal protection of the laws in the caseof Nuñez v. Sandiganbayan, (197 Phil. 407 [1982]):

"xxx that the laws operate equally and uniformly on all persons under similar circumstances or that all persons must be treated in the same manner, the conditions not being different, both in the privileges conferred and the liabilities imposed. Favoritism and undue preference cannot be allowed. For the principle is that equal protection and security shall be given to every person under circumstances which, if not identical, are analogous. If law be looked upon in terms of burden or charges, those that fall within a class should be treated in the same fashion, whatever restrictions cast on some in the group equally binding on the rest.”

Legislative bodies are allowed to classify the subjects of legislation. If the classification is reasonable, the law may operate only on some and not all of the people without violating the equal protection clause. The classification must, as an indispensable requisite, not be arbitrary.

To be valid, it must conform to the following requirements :  (1) It must be based on substantial distinctions; (2) It must be germane to the purposes of the law; (3) It must not be limited to existing conditions only and (4) It must apply equally to all members of the class.(People v. Cayat, G.R. No. L-45987, May 5, 1939),

If passed into law with said provision, the Magna Carta will partake of the nature of class legislation because it  singles out seafarer claims from other labor claims, both local and overseas.

The requirement that classification must be based on substantial distinctions has not been complied with.  There lies no substantial distinction between the claims a seafarer and any other laborers.

The provision makes a rash generalization that cases filed by lawyers in the seafaring practice are merely after financial gain, and not to protect the seafarer’s rights, all based on an unsubstantiated and likewise unfair generalization to the effect that all lawyers in the seafaring practice are ambulance chasers.

In the same vein, the provision should highlight the fact that the act of ambulance chasing transcends other fields of practice, and is not solely found in the seafaring practice.

          The provision is unduly oppressive, unreasonable, and is repugnant to the Constitution. It undermines the mandate of the Constitution to protect the rights of overseas workers and to promote their welfare when it deprive such seafarers an avenue to receive the fruits of his legal battle. 

The proposed legislation is the reverse of the constitutional mandate and the declared policies of RA No. 8042, as amended by R.A. 100022 as  it unreasonably downplays the seafarers' rights guaranteed by the constitution instead of protecting the rights and promoting their  welfare. 

In what appears to be a virtuous objective of protecting Filipino seafarers, the inclusion of said escrow provision will go beyond such benevolent objective at the expense of curtailing their rights. 

(Atty. Gorecho heads the seafarers’ division of the  Sapalo Velez Bundang Bulilan  law offices. For comments, email info@sapalovelez.com, or call 09175025808 or 09088665786)

Definitive assessment of a seafarer's disability

A seafarer is considered as  suffering permanent total disability if the medical statement of the company doctor  is  devoid of any definitive declaration as to the seafarer's  capacity  to return to work or at least a categorical and final degree of disability.

For the courts and labor tribunals, determining whether a seafarer's fitness to work despite suffering an alleged partial injury generally requires resort to the assessment and certification issued within the 120/240-day period by the company-designated physician. Through such certification, a seafarer's fitness to resume work or the degree of disability can be known, unless challenged by the seafarer through a second opinion secured by virtue of his right under the POEA-Standard Employment Contract. Such certification must be a definite assessment of the seafarer's fitness to work or permanent disability.  

A final and definite disability assessment is necessary in order to truly reflect the true extent of the sickness or injuries of the seafarer and his or her capacity to resume work as such. Otherwise, the corresponding disability benefits awarded might not be commensurate with the prolonged effects of the injuries suffered. (REYNALDO SUNIT,  vs. OSM MARITIME SERVICES, INC.  February 27, 2017G.R. No. 223035

Jurisprudence is replete with cases bearing similar pronouncements.

In Fil-Star Maritime Corporation v. Rosete (G.R. No. 192686, November 23, 2011), the Court concluded that the company-designated doctor's certification issued within the prescribed periods must be a definite assessment of the seafarer's fitness to work or disability:

As stated in Oriental Shipmanagement Co., Inc. v. Bastol, (G.R. No. 186289 June 29, 2010)

the company-designated doctor must declare the seafarer  fit to work or assess the degree of his permanent disability. Without which, the characterization of a seafarer's condition as permanent and total will ensue because the ability to return to one's accustomed work before the applicable periods elapse cannot be shown.

In Kestrel Shipping Co., Inc. v. Munar,  (G.R. No. 198501, January 30, 2013, 689 SCRA 795), the Supreme Court  underscored  that the assessment of the company-designated physician of the seafarer's fitness to work or permanent disability within the period of 120 or 240 days must be definite, viz: "Moreover, the company-designated physician is expected to arrive at a definite assessment of the seafarer's fitness to work or permanent disability within the period of 120 or 240 days. That should he fail to do so and the seafarer's medical condition remains unresolved, the seafarer shall be deemed totally and permanently disabled. (emphasis supplied)"

There is no "definitive assessment" where the company-designated physician noted that seafarer's wound was still open and that he was to continue his medications  (Carcedo v. Maine Marine Philippines, Inc G.R. No. 203804, April 15, 2015) If he fails to do so and the seafarer’s medical condition remains unresolved, the latter shall be deemed totally and permanently disabled.(Fil-Pride Shipping Company, Inc. v. Balasta,  G.R. No. 193047, March 3, 2014, 717 SCRA 624, 626) 

Such principle is more apparent in  event that  the seafarer  has remained unemployed as a seafarer for more than 240 days from the time of his repatriation  or he was unable to perform the same physical activities he used to perform prior to his injury.  ( Belchem Phils./UPL  vs. Eduardo  Zafra G.R. No. 204845               June 15, 2015) 

Assumption of liability not a defense

The  original manning agency cannot  claim that it will  be exempted from liability because it is no longer the manning agency responsible to the dismissed seafarers since  the new manning agencies  had executed Affidavits of Assumption of Responsibility.

In Section 1 of Rule II of the POEA Rules and Regulations, it states that:

Section 1. Requirements for Issuance of License. Every applicant for license to operate a private employment agency or manning agency shall submit a written application together with the following requirements:

x x x

             f. A verified undertaking stating that the applicant:

x x x

(3) Shall assume joint and solidary liability with the employer for all claims and liabilities which may arise in connection with the implementation of the contract; including but not limited to payment of wages, death and disability compensation and repatriation.

Accordingly, despite the execution of the Affidavits of Assumption of Responsibility by other manning agencies, the original manning agency  cannot exempt itself from all the claims and liabilities arising from the implementation of the contract executed between the said original manning agency  and the seafarers. It is very clear from the above-cited provisions of the Rules and Regulations of the POEA that the manning agency shall assume joint and solidary liability with the employer.Joint and solidary liability is meant to assure aggrieved workers of immediate and sufficient payment of what is due them. The reason for this ruling was given by this Court in the 1988 case of Catan v. National Labor Relations Commission ( 160 SCRA 691, 695)  which is reproduced in part below:

This must be so, because the obligations covenanted in the recruitment [manning] agreement entered into by and between the local agent and its foreign principal are not coterminus with the term of such agreement so that if either or both of the parties decide to end the agreement, the responsibilities of such parties towards the contracted employees under the agreement do not at all end, but the same extends up to and until the expiration of the employment contracts of the employees recruited and employed pursuant to the said recruitment agreement. Otherwise, this will render nugatory the very purpose for which the law governing the employment of workers for foreign jobs abroad was enacted.

Also, according to Section 10, paragraph 2 of Republic Act No. 8042, the agency which deployed the employees whose employment contract were adjudged illegally terminated, shall be jointly and solidarily liable with the principal for the money claims awarded to the aforesaid employees. 

The Affidavits of Assumption of Responsibility, though valid as between  the original manning agency and the other two manning agencies, are not enforceable as against the respondents because the latter were not parties to those agreements. The provisions of the POEA Rules and Regulations are clear enough that the manning agreement extends up to and until the expiration of the employment contracts of the employees recruited and employed pursuant to the said recruitment agreement. Hence, despite the execution of the aforementioned affidavits,  the original manning agency  cannot exempt itself from the liabilities and responsibilities towards the seafarers.

( SKIPPERS UNITED PACIFIC, INC., and J.P. SAMARTZSISMARITIME ENTERPRISES CO., S.A., vs. JERRY MAGUAD and PORFERIO CEUDADANO,  G.R. No. 166363,  August 15, 2006) 

Third doctor opinion rule in seafarer's compensation claims

In the event of disagreement on the services of the third doctor, the seafarer has the right to institute a complaint  for disability benefits directly before the National Labor Relations Commission (NLRC)  or the National Conciliation and Mediation Board (NCMB)

This is the ruling of the Supreme Court in  the recent case of Reynaldo Sunit vs. OSM (G.R. No. 2230, February 27, 2017) . The language of the POEA-Standard Employment Contract (SEC)  is clear in that both the seafarer and the employer must mutually agree to seek the opinion of a third doctor. In many instances, the  NLRC/ NCMB and appeal courts dismiss the compensation claims of seafarers for alleged “non-compliance” with the third doctor opinion rule.

During his employment, the seafarer  fell from the vessel's tank approximately 4.5 meters high and suffered a broken right femur. He was diagnosed to have suffered "Fractured, Right Femur; SIP Intramedullary Nailing, Right Femur." The seafarer was repatriated on October 6, 2012. After undergoing medical treatment, the company-designated doctor issued an interim Grade 10 disability on January 13, 2013. The seafarer  was then issued with a final Grade 10 disability by the company-designated doctor on February 15, 2013. Prior to the February 15, 2013 assessment, the seafarer  consulted the opinion of a second doctor, Dr. Garduce, who recommended a Grade 3 disability.

Both parties then consulted a third doctor to assess the seafarer's degree of disability, who assessed seafarer with a Grade 9 partial disability on February 17, 2014, 499 days from his repatriation. In addition to the partial disability grading, Dr. Bathan likewise assessed the seafarer  as unfit to work and recommended him to undergo further rehabilitation.

The parties do not dispute that seafarer's injury was work-related and that he is entitled to disability compensation. The disagreement, however, lies on the degree of disability and amount of benefits that petitioner is entitled.

A final and definite disability assessment is necessary in order to truly reflect the true extent of the sickness or injuries of the seafarer and his or her capacity to resume work as such. Otherwise, the corresponding disability benefits awarded might not be commensurate with the prolonged effects of the injuries suffered.

The Supreme Court recapitulated the procedural requisites under the rules and established jurisprudence where the parties opt to resort to the opinion of a third doctor:

First, according to the POEA-SEC  and as established by Vergara,26 when a seafarer sustains a work-related illness or injury while on board the vessel, his fitness or unfitness for work shall be determined by the company­ designated physician.

Second, if the seafarer disagrees with the findings of the company doctor, then he has the right to engage the services of a doctor of his choice. If the second doctor appointed by the seafarer disagrees with the findings of the company doctor, and the company likewise disagrees with the findings of the second doctor, then a third doctor may be agreed jointly between the employer and the seafarer, whose decision shall be final and binding on both of them.

It must be emphasized that the language of the POEA-SEC is clear in that both the seafarer and the employer must mutually agree to seek the opinion of a third doctor. In the event of disagreement on the services of the third doctor, the seafarer has the right to institute a complaint with the LA or NLRC.

Third, despite the binding effect of the third doctor's assessment, a dissatisfied party may institute a complaint with the LA to contest the same on the ground of evident partiality, corruption of the  third  doctor,  fraud, other undue means,lack of basis to support the assessment, or being contrary to law or settled jurisprudence.

Permanent disability is defined as the inability of a worker to perform his job for more than 120 days (or 240 days, as the case may be), regardless of whether or not he loses the use of any part of his body. Total disability, meanwhile, means the disablement of an employee to earn wages in the same kind of work of similar nature that he was trained for, or accustomed to perform, or any kind of work which a person of his mentality and attainments could do.

As the seafarer  was actually unable to work even after the expiration of the 240-day period and there was no final and conclusive disability assessment made by the third doctor on his medical condition, it would be inconsistent to declare him as merely permanently and partially disabled. It should be stressed that a total disability does not require that the employee be completely disabled, or totally paralyzed.  In disability compensation, it is not the injury which is compensated, but rather it is the incapacity to work resulting in the impairment of one's earning capacity