Escrow Deposit Provision in Magna Carta of Filipino Seafarers to put an end to shenanigans of ambulance chasers

After decades of languishing in the legislative arena, the bill instituting the Magna Carta of Filipino Seafarers has passed the third and final reading in the House of Representatives in the last week of February 2023.

House Bill No. 7325 was passed with hardly any opposition by the House of Representatives Committee on Overseas Workers chaired by Congressman Ron Salo of Kabayan Party-list with Congressman Sandro Gonzalez of Marino Party-list as well as Congresswoman Marissa “Del Mar” Magsino of OFW Party-list, Congressman Elizaldy S. Co of AKO Bicol Party-list, and Congresswoman Ma. Rachel J. Arenas of the 3rd district of Pangasinan as members.

More importantly, the House committee was able to successfully include in the bill an escrow deposit provision in the execution of final and executory decisions of both the National Labor Relations Council (NLRC) and the National Conciliation and Mediation Board (NCMB), the absence of which have been taken advantage of by ambulance chasers since practically time immemorial.

Ambulance chasers or lawyers’ agents lurk around medical clinics and hospitals frequented by Filipino seafarers who undergo treatment for sickness or injuries whether such was incurred onboard or not. They sweet-talk the seafarers into filing claims against their most recent shipowner by usually citing legal spiel on seafarer’s rights and employer’s financial obligations. Once they get the interest of the seafarer by dangling promises of financial windfall, ambulance chasers chew on the unwitting individual into signing an agreement authorizing a lawyer or law office to file claim on his behalf against his most recent shipowner with either NLRC or NCMB.

To further whet the appetite of the forced-to-file-a-claim seafarer, these ambulance chasers also offer cash loans, even guaranteeing of victory in labor tribunal cases. But they also intentionally withhold an important information that NLRC or NCMB decision can be possibly reversed by the Court of Appeals or the Supreme Court should the shipowner decide to appeal the decision of NLRC or NCMB.

Since the NLRC and NCMB labor decisions are final and executory, the seafarer and the ambulance chasers can immediately get the claimed amount, usually in millions of pesos. More than 50% of the money usually goes to the ambulance chasers and the balance goes to the seafarer who shall still be happy since he got something that he was not expecting in the first place.

The problem occurs when the shipowner files an appeal and the Court of Appeals overturns or reverses the decision of NLRC or NCMB. The reversal would mean that the seafarer would be forced to return the entire amount of the claim even if he just got less than 50% of it so he will be forced to sell his car, house, land, or other possessions to repay the millions worth of claims he owes the shipowner. The ambulance chaser on the other hand pockets the bounty and is back scavenging near hospitals and medical clinics looking for his next seafarer victim.

With the escrow deposit provision in the Magna Carta of Filipino Seafarers, it protects the Filipino seafarers from the modus operandi of ambulance chasers. By allowing escrow deposit as form of payment or satisfaction of judgment, the shipowner still pays the judgment award issued either by the NLRC or NCMB. However, the money is preserved in an escrow deposit by the NLRC or NCMB until the appeal is decided with finality by the Court of Appeals or the Supreme Court.

In this way, the money along with the interest earned is preserved for the prevailing party be it the seafarer or the shipowner and is protected from the predations of ambulance chasers who have been receiving more than half of the judgment awards, thus, leaving the seafarers unable to restitute the shipowner for money award that is ordered returned upon appeal.

However, any earned salaries, statutory benefits, or claims originally determined by the employer or the manning agency to be legally due to the seafarer should be paid immediately to the seafarer and are not to be placed on escrow. But the seafarer can still execute the monetary award pending appeal provided he posts a bond.

Reports have it that the past and current handiworks of ambulance chasers have turned off a lot of foreign shipowners from recruiting Filipino seafarers because of the often ridiculous disability and compensation claims which these unscrupulous individuals upgrade to 10 to 20 times the real amount. The legal loophole in Article 229 and Article 230 of the Labor Code of the Philippines which allows the decisions of NLRC and NCMB to be final and executory and payment of judgment award immediate even if there is an appeal, has cost foreign shipowners a lot of unclaimed reimbursements.

Records show that 28% of the decisions of NLRC and NCMB are reversed by the Court of Appeals and 30% by the Supreme Court, thus necessitating a reimbursement of the claim. Based on the data of the Department of Migrant Workers (DMW) from 2018 to 2022 alone, foreign shipowners were owed P2.57 billion by Filipino seafarers who lost their claim upon reversal because of grave abuse of authority or lack of jurisdiction by arbitrators of NLRC or mediators of NCMB.

With the escrow provision in the Magna Carta of Filipino Seafarers safely tucked, the law now has a teeth to contribute in ending the shenanigans of ambulance chasers in the Philippines.