Interest rate in reimbursing placement fees, other awards

In cases of illegal dismissal employees may be adjudged entitled to the payment of interest over their monetary claims. What interest rate should apply to the resulting monetary awards, if any?In the matter of the applicable interest rates over the monetary claims awarded to respondent employees, Section 10 of R.A. No. 8042 provides that "[i]n case of termination of overseas employment without just, valid or authorized cause as defined by law or contract, the workers shall be entitled to the full reimbursement of his placement fee with interest of twelve percent (12%) per annum." However, this provision does not provide a specific interest rate for the award of salary for the unexpired portion of the employment contract nor for the other money claims the respondent employees are entitled to.

In Sameer, it was held that Bangko Sentral ng Pilipinas Circular No. 799 issued on June 21, 2013,[1] which revised the interest rate for loan or forbearance of money from twelve percent (12%) to six percent (6%) in the absence of stipulation, is not applicable when there is a law that states otherwise. Thus, Circular No. 799 does not have the effect of changing the interest on awards for reimbursement of placement fees from twelve percent (12%), as provided in Section 10 of R.A. No. 8042, to six percent (6%). However, Circular No. 799 applies to the award of salary for the unexpired portion of the employment contract and the other money claims of the employees since the law does not provide a specific interest rate for these awards.[2]

Accordingly, the placement fees to be reimbursed to the employees shall earn interest at a rate of twelve percent (12%) per annum from finality of this decision until full payment thereof. On the other hand, the other monetary awards, specifically employees' salaries for the unexpired term of their employment contract, the illegal deductions which are to be refunded to them, and the award of attorney's fees in their favor, shall earn interest at the rate of six percent (6%) per annum from finality of this decision until full payment thereof.[3][4]

[1] Re: Rate of Interest in the Absence of Stipulation. Circular No. 799 took effect on July 1, 2013.

[2] G.R. No. 170139, August 5, 2014, 732 SCRA 22, at 64-68.

[3] See Nacar v. Gallery Frames, G.R. No. 189871, August 13, 2013, 703 SCRA 439, 458.