• Seafarers can collect money claims from ‘insolvent’ firms

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    Persida Acosta

    Persida Acosta

    Dear PAO,
    I am planning to file a case for non-payment of disability benefits against my manning agency for the injuries I suffered in an accident that happened while I was on board their vessel. But I am having second thoughts as I heard that the manning agency is already bankrupt, and so I fear that it may not have the resources to pay me even if I secure a judgment in my favor. May I know if there are still ways to collect my disability benefits from my manning agency even if it is already bankrupt?
    Tonying

    Dear Tonying,
    It is true that the bankruptcy or insolvency of a company impairs its capacity to discharge its obligations. The word itself connotes inability to pay. Legally, the term used is insolvent, which refers to the financial condition of a debtor that is generally unable to pay its or his liabilities as they fall due in the ordinary course of business or has liabilities that are greater than its or his assets (Sec. 4 (p), Republic Act or RA 10142). Thus, it is completely rational for you to be troubled by the alleged insolvency of your manning agency.

    Nevertheless, your manning agency’s alleged insolvency, even if proven true, does not necessarily mean that you will not be able to fully collect your disability benefits. In a labor case filed by an employee against a recruitment or manning agency, the monetary award in favor of the former may be enforced not only against the pieces of property or assets of the latter, but also against its bond, escrow deposit and compulsory insurance for agency-hired workers.

    The 2011 NLRC (National Labor Relations Commission) Rules of Procedure expressly states that the manner of execution of monetary judgment on cases involving overseas Filipino workers shall be in accordance with RA 10022 (Sec. 8 (f), Rule 11). In turn, the law states that the performance bond to be filed by the recruitment/placement agency, as provided by law, shall be answerable for all money claims or damages that may be awarded to the workers (Sec. 17, RA 8042, as amended). The performance bond refers to the surety bond that a manning agency is required to secure from a bonding company acceptable to the Philippine Overseas Employment Administration (POEA) and accredited with the Insurance Commission that will be answerable for all money claims or damages that may be awarded to a worker (Section 4, Rule II, Part II, POEA Rules and Regulations Governing the Recruitment and Employment of Seafarers). Thus, a worker who wins a labor money claim can secure payment of the award from the performance bond posted by his manning agency.

    In addition, the rule relating to employment of seafarers also requires a manning agency to submit an escrow agreement and confirm escrow deposit with a reputable bank, which is similarly conditioned to answer for all money claims or damages that may be awarded to a worker. (Id.) Thus, in addition to the above-mentioned surety bond, a worker may also go after the manning agency’s escrow deposit, which, by the way, is required to be maintained for the duration of the agency’s license.

    Finally, to satisfy a money claim awarded by the NLRC, a worker may secure payment through his or her compulsory insurance coverage as agency hired worker. Take note that the current law requires all migrant workers deployed by a recruitment/manning agency to be covered by a compulsory insurance policy which covers, among others, payment of money claims arising from employer’s liability which may be awarded or given to the worker in a judgment or settlement of his or her case in the NLRC (Sec. 37-(f), RA 8042, as amended). The insurance coverage is equivalent to at least three (3) months for every year of the migrant worker’s employment contract.

    Based on the foregoing, it is clear that a migrant worker, a seafarer in particular, still has ways and means to collect his labor money claim from his recruitment/manning agency even if the latter is insolvent. There are legally mandated guaranties and insurances purposely instituted to preserve the right of a migrant worker to receive whatever is due him on account of his employment contract.

    We hope we were able to sufficiently answer your concerns. Please bear in mind that our opinion is based on the facts you presented and our appreciation of the same. Our opinion may vary if facts are changed or elaborated.

    Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to dearpao@manilatimes.net

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