Lawyers say escrow provision in proposed Magna Carta of Filipino Seafarers is unconstitutional

A group of human rights lawyers in the Philippines has declared its opposition against the inclusion of the escrow provision in the proposed House Bill “An Act Instituting the Magna Carta of Filipino Seafarers” for being “constitutionally infirm, for discriminating against seafarers and for being adverse to the rights of labor.”

Watch the video here.

The proposed Magna Carta of Filipino Seafarers is designed to provide seafarers with comprehensive protection before, during and after employment, especially in the event of maritime accidents, epidemics or pandemics, or other natural or man-made crises. It codifies the rights of seafarers into a single reference law, seeks to secure their rights to decent, just and humane conditions of employment, and set a guide for their training and education, overseas employment and ultimately retirement.

To the international community, the Magna Carta for Seafarers is an affirmation of the Philippines’ commitment to the maritime industry and adherence to the Maritime Labor Convention of 2006, where the Philippines stands as the 30th ILO Member state to ratify.

This proposed bill is among the priority measures of the administration of President Ferdinand Marcos Jr. through the Legislative-Executive Development Advisory Council.

However, according to the National Union of Progressive Lawyers (NUPL), while the passage of the Magna Carta is long overdue, the inclusion of Section 51 Escrow as a Manner of Execution runs counter to the objective of the law which is to protect labor.

Atty. Ephraim B. Cortez, NUPL President, explained that under the said provision, any monetary award by the arbitrator to the seafarer, or his successors-in-interest, made whether in voluntary or mandatory arbitration or by the National Labor Relations Commission (NLRC), will be placed in escrow if the employer or manning agency has raised or intends to raise the decision for judicial review following the rules of Court.

The amount in escrow will not include claims for salaries, statutory monetary benefits, or those originally determined by the employer or manning agency to be legally due to the seafarer.

He said: “The amount shall remain in escrow until the issuance of an entry of judgment by the appropriate reviewing court or when the employer or manning agency fails to perfect his appeal or his petition for review.

“This escrow provision will amend the Labor Code of the Philippines which allows the immediate payment of the money award to all employees including laborers, overseas Filipino workers (OFWs), fisherfolk, and seafarers who have won a case with finality at the NLRC or NCMB even if the company files a certiorari at the Court of Appeals later on and even a Petition for Review at the Supreme Court.”

At the core of the NUPL’s protest is the fact that instead of releasing the award to the winning seafarer or their heirs should they die while the case is pending, the award will be deposited in escrow in a bank and will be released only when the Court of Appeals has affirmed the NLRC decision and the Supreme Court has affirmed the decision of the Court of Appeals later on.

“What use is the grass if the horse is already dead?” Cortez said.

Protestors said the escrow provision is detriment to the welfare of seafarers.

Biased against seafarers and fisherfolk

Cortez argued that the legal process is already tedious and long winding.  He explained that there is the SENA or Single-Entry Approach where the seafarer and the company will negotiate, then the filing of the case with a Labor Arbiter, then if the seafarer wins, the company can still appeal to the NLRC Commission consisting of three Commissioners. If the Commission affirms the Labor Arbiter’s decision, the company can still file a Motion for Reconsideration. 

“Once a judgment has become final, the prevailing party can have the judgment executed as a matter of right.   The seafarer can, at last, get his winning award even if the company files a petition for certiorari at the Court of Appeals, and later on, a Petition for Review with the Supreme Court (SC) which will take additional years to resolve,” he said.

With the escrow provision (Sec. 51), the money will be deposited in escrow with a bank and the seafarer can only get the money after the SC has decided the case with finality.

“How can this nefariously anti-labor insertion be included in a Magna Carta for Seafarers which is supposed to protect the rights of seafarers? This is violative of the constitutional provision 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,” Cortez said.

“The 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. Seafarers are also laborers who are entitled to the equal protection of the labor laws of the country.”

The NUPL’s secretary-general Atty. Josalee Deinla also took issue against the escrow provision’s singling out of seafarers.

“The provision excludes them from the class of employees who can get the immediate payment of their awards after winning the case at the NLRC with finality. If the seafarer wants the immediate payment of their award at the NLRC, they should pay a Bond.  This is an absurd imposition on labor since under the Labor Code, no employee is required to pay a bond for execution. Why impose this only on the seafarers who are jobless, sick, disabled, and infirm when they file cases at the NLRC?” she argued.

Deinla said if passed into law, the provision on escrow would be tantamount to Class Legislation (discriminating against some and favoring others).  The classification by the legislative body must, as an indispensable requisite, not be arbitrary.  

“The exclusion of seafarers from other OFWs and employees is arbitrary. It is not based on substantial distinctions as seafarers are not different from any OFW or any land-based worker. It is also not germane to the purpose of the law since it protects the rights of the employer and not the employee,” she said.

There are also advocacy groups protesting against the provision and the proposed Magna Carta for Seafarers itself, saying that they disregard the rights of fisherfolk who, under the law are also considered seafarers.

The group Migrante said the bill excludes fisherfolk from the protections accorded to seafarers when the former are entitled to the same rights as the latter under Philippine Overseas Employment Administration guidelines.

The group said fisherfolk are among those who suffered greatly during the COVID-19 pandemic and are also among the exploited and abused sectors.

“Their exclusion from the proposed Magna Carta is an attack against their rights,” Migrante secretary general Arman Hernando said.

Observers said the final version passed by the House of Representatives excluded the two main demands that were woven into the original version of the bill Gabriela Women’s Party Rep. Arlene Brosas filed: the inclusion of fishing vessels and the provision of security of tenure for seafarers with one year experience.

Rep. Brosas said the final version that has been submitted to the senate includes qualified inclusion of domestic merchant ships, excluding the application of provisions regarding standard employment contracts, and payment of wages, among others on domestic seafarers.

Protestors against the inclusion of escrow provision.

Remove escrow provision

Another NUPL member Atty. Dennis Gorecho was also vehement in his stand, saying that a provision that will “adversely affect a seafarer’s cause in whatever manner or nature has no place in a legal document that should be for their protection in the first place.”

“This escrow provision is repugnant to the Constitution; it undermines the mandate to protect the rights of overseas workers like seafarers and to promote their welfare when it prejudices them the speedy avenue to receive the fruits of their legal battles,” he said.

Based on the explanations of the group, all delays in the release of the monetary awards to seafarers for many years protect the already rich manning agencies and foreign principals and their Protection and Indemnity Clubs (P&I clubs) or ship insurers. 

The NUPL in its position paper said escrow power is also unilaterally given to the employers who can decide how much would be released and how much would be put in escrow. The seafarers, the group pointed out, have no say in this, and neither do the Labor Arbiter and the NLRC Commission.

“The legislature would be surrendering the quasi-judicial power to determine the amount of Escrow to the litigant employer. This is one-sided against labor,” said Cortez.

The NUPL’s stand against the ESCROW provision came at the heels of the nationally-coordinated mobilizations marking International Labor Day last May 1.  The lawyers said that to allow the diminution of the rights of seafarers and their arbitrary exclusion from the protective ambit of the Labor Code of the Philippines and beneficent labor laws is an attack on labor. The NUPL also supported the call of Rep. Brosas and the Makabayan (Patriotic) Bloc to expunge the Escrow provision from the Magna Carta bill.

“If they can single out seafarers today, what can prevent them from applying the Escrow on all OFWs later on?  Even the Filipino industrial workers here are all at risk if this anti-labor virus is allowed to be inserted into our labor laws,” Atty. Deinla said.

Labor groups: Escrow is unnecessary

Labor groups have also chimed in on the issue and called on lawmakers to scrap the escrow provision. The Association of Marine Officers and Ratings (AMOR) and the Federation of Free Workers (FFW) said that the escrow clause violates the equal protection clause of the Constitution.

The president of the FFW Atty. Sonny Matula said the provision is discriminatory since no such provision applies to the claims of local workers or land-based OFWs.   He said that if the Magna Carta is passed into law with the provision retained, the High Court should declare it unconstitutional.

“This escrow provision condemns our seafarers to years of legal battles with their manning agencies or employers before they can take hold of their claims. It makes those who already have less in life, even have less protection under the law,” he said.

Sonny Matula, president of Federation of Free Workers.

The spokesperson of the ratings and officers group Jack Rivera for his part pointed out the practice of ambulance chasing which is what proponents of the escrow provision are using to justify it is not at all widespread. He said that the NLRC decisions on seafarer claims are affirmed by the higher courts.

Rivera cited data from the NLRC stating the affirmation rate from the Court of Appeals in favor of labor is at 92 percent. He also said based on conciliation and mediation results, from 2016 to 2022, of the 2,035 cases that were filed in the office of the mediation board of the labor department, 81 percent were in favor of management.

Both Matula and Rivera said that backers of the escrow provision were mistaken in their support. They said that the higher courts usually find no issue with the decisions of the NLRC, and this makes the escrow provision unnecessary.

“We will continue to demand the removal of this provision all the way to the Senate and even to the Supreme Court if necessary,” the labor leaders said.

Watch the video here.

All photos credit: MayDay Multimedia

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