Philippines: Progress Towards Claims Under Appeal in POEA System

September 2019

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Philippines claims web

The International Group (IG) of P&I Clubs has many roles, not least of which is to provide a collective industry voice to engage with governments and regulatory bodies, to assist in fostering fair and balanced policies for the protection of both ship-owner and seafarer alike.

Against this backdrop our Members might be interested to hear that the IG has been working hard over the years to try to encourage changes in the Filipino legal system and the way in which Philippine Overseas Employment Administration (POEA) claims are dealt with.

Previously such efforts have resulted in improvements to the system which have been to the benefit of IG Members and their crew. By way of example, the Seafarers Protection Act was created to address the problem of the legal  representatives of crew imposing excessive legal fees in cases they handle for their clients, thereby eroding the compensation the seafarers were due to receive.

In addition to this there was an amendment made to the 2016 POEA Rules and Regulations to prevent permanently disabled seafarers from appearing on the National Seafarer Registry and their Seafarer’s Record Book and Seafarer’s Identity Document are now no longer being issued.

However, efforts continue to try to improve the system, with the IG heavily involved in attempting to progress matters via their Philippines Working Group. Particular focus has been upon finding a solution to the problems caused by  garnishment and restitution; garnishment meaning the collection of a judgment on behalf of the claimant from the defendant and restitution being recompense for the injury or loss sustained.

As things stand, once a ruling has been made by the National Labor Relations Commissions (NLRC) or the National Conciliation and Mediation Board (NCMB), if the defendant wishes to appeal they can do so but must first pay the sum of the judgment. The only way to avoid this is to obtain a temporary restraining order, which in practice is very difficult to do. Consequently this can result in the defendant having to satisfy the judgment even where the case remains pending before the Court of Appeals.

Subsequently, if the decision is reversed, then due to the current procedures in relation to garnishment it is unlikely that the defendant will see a return of the monies previously paid. It is believed that the cost to shipowners as a result of garnishment being allowed prior to the appeal process being exhausted has cost the industry millions of dollars of unrecovered payments. Not to mention the fact that in many cases the defendant forgoes their right to appeal, fearing such an action to be futile, and so agrees to a settlement under duress.

With this problem in mind the IG working group has submitted proposals to the Department of Labour and Employment, along with various other interested parties, to offer a solution which would be equitable to all parties; this suggestion being the creation of an escrow account. The basic idea being that where a case is elevated from either the NLRC or NCMB to the Court of Appeals, the award which has been made shall be deposited into an escrow account, where it will be administered by a mutually agreeable custodian until such time as final judgment is entered.

It is clear that acceptance of the escrow proposal will bring benefits to both ship-owner and seafarer alike. POEA deployment records suggest that the current situation is having an adverse effect on the local maritime manning industry and the employment of Filipino crew abroad.

This should be a concern for all parties because Filipino seafarers undoubtedly play an extremely valuable role in commercial shipping the world over. However, the current system often results in shipowners having to pay compensation when ultimately it is held that none was due, or at least not to the extent of the award from the lower court. This has a huge impact on a shipowners insurance premium and the effect this has on their bottom line can be felt by employer and employee alike.

Article by Paul Brewer

Syndicate Manager

Americas Syndicate