Philippines: Significant Changes in the Amended POEA Contract

December 2001 (Updated July 2002)

(Sea Venture Volume 20)

The amended Philippines Overseas Employment Administration (POEA) contract came into effect on 26th June 2000. Two petitions were filed with the Philippine Supreme Court questioning the validity of the contract. The first petition was dismissed. The second petition (filed by non-government organisations) resulted in the issuance of a Temporary Restraining Order on the implementation of Section 20 of the contract which deals with compensation and benefits. The POEA implemented the contract substituting Section 20 of the old contract in place of Section 20 of the amended contract.

It is expected that the second petition will soon be dismissed*. This article discusses the significant changes which are expected to be in force soon when the new Section 20 comes into force. Other relevant changes are also discussed.

Work-Related Death, Injury and Illness (Section 20)

Work-related illness, injury or death are addressed in the amended contract.

Two conditions must be satisfied for compensation to be payable for work-related death: The death must result from a work-related injury or illness and it must have occurred during the term of employment¹. However, if the seafarer dies after his term of employment but his death was a result of work-related injury or illness suffered during the term of employment, compensation is still payable in respect of the resulting death under Section 20.²

Work-related injury is defined as "injury(ies) resulting in disability or death arising out of and in the course of employment".³ The basic requirements for compensation are that the injury arose "out of and in the course of employment" and that it occurred during the term of the contract.⁴ The Philippine Supreme Court has ruled that an injury is work-related if it occurs in the workplace and the employee was performing his official duties. However, exceptions to the "injury at the workplace" doctrine is the "coming-going" rule which states that an employee proceeding to and from his place of employment and an employee charged with some duty or special errand outside the workplace will still be compensated if injured.

Work-related illness is "any sickness resulting in disability or death as a result of an occupational disease listed under Section 32-A of this contract with the conditions set therein satisfied".⁵

For compensation to be payable, not only must an illness be listed under Section 32-A, but it must also occur during the term of the contract.⁶

Section 32-A states that for compensation to be payable for an occupational disease and resulting death or disability, all of the following conditions must be satisfied:

1. The seafarer's work must involve the risks described therein;

2. The disease was contracted as a result of the seafarer's exposure to the described risks;

3. The disease was contracted within a period of exposure and under such factors necessary to contract it;

4. There was no notorious negligence on the part of the seafarer."

Further, each of the 21 illnesses listed under Section 32-A enumerate certain conditions for the illnesses to be work-related. It is important to review these conditions, as they are material to the determination of whether the illness is work-related.

Those illnesses not listed under Section 32-A are "disputably presumed work-related".⁷ This means that it is presumed that compensation will be payable for illnesses suffered by a seafarer during the term of his contract unless "substantial evidence" is presented by the employer to prove that the illness is not work-related.

Third Doctor (Section 20)

The seafarer may now dispute the disability grading of the company-designated physician. The seafarer may appoint his own doctor and, if there is a disagreement as to the disability assessment, the parties may appoint a third doctor whose decision is final and binding.⁸ There is no provision as to the manner of appointment of a third doctor. However, based on past experience, the parties are usually able to agree on a third doctor.

Concealment of Past Medical Condition (Section 20)

"A seafarer who knowingly conceals and does not disclose a past medical condition, disability and history in the pre-employment medical examination constitutes fraudulent misrepresentation and shall disqualify him from any compensation and benefits".⁹ There must be intentional concealment, which means that the seafarer knows of his illness/injury and still conceals such illness/injury in his pre-employment medical examination.

Coverage of Payment of Benefits (includes Tort) (Section 20)

"The seafarer or his successor in interest acknowledges that payment for injury, illness, incapacity, disability, or death of the seafarer under this contract shall cover all claims arising from or in relation to or in the course of the seafarer's employment, including but not limited to damages arising from the contract, tort, fault or negligence under the laws of the Philippines or any other country".¹⁰ This strengthens the employer's defence that payment of benefits under the contract releases the employer from any and all claims whether arising from "contract, tort, fault or negligence under the laws of the Philippines or any other country".

Disciplinary Procedures (Section 17)

Grounds for disciplinary procedures not only include those listed under Section 33 but also any "analogous act constituting the same".¹¹ However, the procedures of investigation and hearing (and not only an entry of the investigation) must be entered into the ship's logbook.¹²

Dismissal for just cause may be effected by the Master without a notice of dismissal if there is "clear and existing danger" to the safety of the crew or the vessel.¹³ The old contract allowed for no notice of dismissal if "doing so will prejudice the safety of the crew or the vessel". Now, the danger must be "clear and existing".

Termination of Employment (Section 18)

Unlike the old contract, the amended contract requires that any voluntary resignation must be in writing.¹⁴ The Philippine Supreme Court has ruled that a letter of resignation prepared by the employer and merely signed by the employee is not a voluntarily resignation.

Under the amended contract, if a vessel is laid up, sold or discontinues its voyage, the seafarer is entitled to earned wages, termination pay equivalent to one month basic wages, and repatriation costs unless the seafarer is rehired by the same principal to complete his contract.¹⁵

A seafarer who is dismissed and repatriated due to port state control procedures/actions is deemed to have been validly dismissed. However, he is entitled to repatriation, earned wages, and other benefits.¹⁶ The amended contract does not specify the "other benefits" to be received by the seafarer.

Dispute Settlement Procedures (Section 29)

According to Section 29 the parties with a collective bargaining agreement (CBA) (in addition to the amended POEA Standard Contract) shall submit to the jurisdiction of a voluntary arbitrator or panel of voluntary arbitrators. If no arbitrators are listed in the CBA, the parties shall choose from the list of voluntary arbitrators of the National Conciliation and Mediation Board (NCMB) of the Department of Labor and Employment. The decision of the voluntary arbitrator(s) is considered final and binding, although in practice it may be appealed to the Court of Appeals and the Supreme Court. For seafarers without a CBA and only covered by the POEA contract there is an option to choose between voluntary arbitration and compulsory arbitration before the Labor Arbiters of the National Labor Relations Commission (NLRC).

The NCMB has accredited the first batch of maritime voluntary arbitrators who will arbitrate claims and disputes arising from the POEA contract and the CBA.

Limitation (Section 30)

The limitation period under the old contract is one year from the date of the seafarer's return to the point of hire. Under the amended contract, limitation is three years from the date the cause of action arises.¹⁷ This harmonizes the contract with the Philippine Labor Code, which allows for a three-year limitation period.

There is an exception to the three-year limitation period for asbestosis for which the limitation period is three years from discovery of the disease.¹⁸

Conclusion

It has taken the POEA more than five years to amend the contract. Several conferences were held between government, employers and unions in order to draft the amendments. It is unfortunate that petitions where filed before the Supreme Court questioning the validity of the contract. It is, however, expected that the remaining petition will soon be dismissed. On the whole, the work-related provisions and the release from "tort" upon payment of benefits are important concessions to the employer. However, the extent of benefits will be largely determined by future interpretation of the changes by the courts.

 

With thanks to Ruben Del Rosario of Del Rosario & Del Rosario, Manila for preparing this article.

Update - "Sea Venture", Vol.21 

*Update, July 2002: The petition has been dismissed and the amended POEA contract is now in force.

¹ Section 20A1. 
² Section 20A4. 
³ Definition of Terms. 
⁴ Sec. 20B. 
⁵ Definition of Terms. 
⁶ Section 20E. 
⁷ Section 20B4. 
⁸ Section 20B3. 
⁹ Section 20E. 
¹⁰ Section 20G. 
¹¹ Section 17A1. 
¹² Section 17B. 
¹³ Section 17D. 
¹⁴ Section 18B3. 
¹⁵ Section 23. 
¹⁶ Section 25. 
¹⁷ Section 30. 
¹⁸ Section 32A21b.