Crew Claims in the Philippines
Steamship Mutual
Published: November 09, 2017
September 2006
There have been a number of recent developments in the Philippines jurisprudence which are adverse to ship owners (and their Clubs) who employ Filipino crew. The extent and impact of these changes are far reaching and need to be fully considered when dealing with Filipino crewmember claims.
Garnishment
The first area of concern is the practice of garnishment; The Philippines National Labour Relations Court (NLRC) has recently been allowing claimants to draw down on a bond despite the fact that an appeal is pending before the Supreme Court. The bond is a prerequisite of an appeal. It is security which must be provided by an owner wishing to appeal a first instance decision. The bond is posted by a local bonding agent on the back of a Club letter of undertaking. Crewmembers are frequently given leave by the Court to cash in the first instance judgment against the bond with the caveat that if the owner's appeal is successful the monies will be returned. Needless to say it is virtually impossible to recover the funds even if the first instance decision is overturned.
Clearly, this is a highly unsatisfactory situation and while consideration has been given to solutions including the possibility of the establishment of an Escrow account system to which cash would be deposited until such a time as the Supreme Court renders a final decision the problem remains at this time.
Local influential manning agencies and shipping groups are making representations to the POEA (Philippine Overseas Employment Administration), the NLRC and it's commissioners in the hope that this process can be stopped. Discussions are also being held with the Supreme Court in the hope that it will put pressure on the Labour Arbiters at the NLRC level to wait for its final ruling before executing decisions.
So far as claims handling is concerned there are some steps which can be taken in mitigation. Counsel can be instructed to seek relief to obtain a Temporary Restraining Order (TRO) on execution while the appeal is pending in all cases. Execution may also be delayed by appealing the garnishment order.
The "120 day" rule: Deo Natividad v Crystal Shipping (October 2005)
In Crystal Shipping, crewmember Nativdad was adjudged to be permanently disabled and hence entitled to a contractual disability payment of US$ 60,000 when he had been unable to work for 120 days. The crewmember had, in fact, been assessed as having a lesser disability by his treating physician and was expected to be able to return to work shortly after the 120 day period had been reached. Nativdad was suffering from swollen lymphatic glands.
The Supreme Court had ruled that permanent disability is the inability of a worker to perform his job for more than 120 days and in doing so they cited Article 192 of the Labour Code. While the State Insurance Fund clause in the Labour Code of the Philippines does state that a disability should be rendered permanent when lasting for more than 120 days, the Supreme Court erred in that the Labour Code only applies to disability benefit claims under the Social Security System. P&I crew claims are filed under the POEA contract which governs the employer/employee relationship - such claims are not filed pursuant to or governed the Labour Code. There is no equivalent provision under the POEA standard terms and conditions that temporary total disability even if more than 120 days shall be deemed total and permanent.
Subsequent rulings have followed the Crystal Shipping case. This clearly erroneous decision carries with it serious repercussions in that numerous permanent disability adjudications are being rendered in the favour of seaman with less serious conditions than the permanent disability ruling would suggest.
Local legal experts are confident that given the clear error on the part of the Supreme Court the Crystal Shipping decision will ultimately be overturned. Again, local manning agencies and various shipping organisations are petitioning the NLRC and the Supreme Court in an attempt to show how damaging this decision could be to the Philippino seafaring community given that employers, faced with such potential exposure, may turn to other countries for their personnel.
In the meantime, when dealing with crew cases which have the potential for a disability period of more than 120 days the Crystal Shipping decision should be borne in mind. Defence counsel must be instructed to closely monitor such cases in the court system. Treatment should be monitored closely to ensure that the best care possible is being given and company Doctors should be instructed to issue reports immediately. Further, recommended treatment should be administered without delay and it is essential that the court is made aware of attempts by a crewmember to delay treatment.
If a crewmember reaches 90 days of disability with no plateau of recovery in sight it may be worthwhile having him formally adjudged with a disability rating before the 120 day period elapses. A 50 % disability rating (for example) may be rendered and with the spectre of a full disability payment looming settlement between the adjudged 50% finding and the full disability sum may be worth considering in an attempt to mitigate loss.
Cases which followed Crystal Shipping are presently being appealed to the Supreme Court. It is anticipated that the decision will be overturned. Indeed, in an appeal pursued by a Steamship Mutual member the Supreme Court has asked the claimant to file a response to the appeal; a development that should be taken as a promising sign.
