Published — June 1, 2022
The following post does not create a lawyer-client relationship between Alburo Alburo and Associates Law Offices (or any of its lawyers) and the reader. It is still best for you to engage the services of your own lawyer to address your legal concerns, if any.
Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.
In view of the passage of RA 11469 or otherwise known as “Bayanihan to Heal as One Act” which mandates for a minimum of thirty (30)-day grace period on residential rents falling due within the period of the Enhanced Community Quarantine, without incurring interests, penalties, fees and other charges, the Department of Trade and Industry (DTI), on 04 April 2020, issued Memorandum Circular No. 20-12, series of 2020 providing for the “Guidelines on the Concessions on Residential Rents and Commercial Rents of Micro, Small, and Medium Enterprises (MSMEs). ” The Memorandum Circular aims to provide Filipinos and businesses particularly MSMEs, economic relief during the COVID-19 public health emergency.
RA 6977, as amended, otherwise known as “Magna Carta for Micro, Small and Medium Enterprises (MSMEs) defines MSMEs as any business activity or enterprise engaged in industry, agribusiness and/or services, whether single proprietorship, cooperative, partnership or corporation whose total assets, inclusive of those arising from loans but exclusive of the land on which the particular business entity’s office, plant and equipment are situated, must have value falling under the following categories:
micro: not more than P3,000,000
small: P3,000,001 – P15,000,000
medium: P15,000,001 – P100,000,000
DTI’s Memorandum Circular, provides a grace period of at least thirty (30) days for rents falling due within the Enhanced Community Quarantine (ECQ) period, specifically for:
1. Residential Rents defined as any amount paid for the use or occupancy of a residential unit, regardless of mode and terms of payment; and
2. Commercial Rents defined as any amount paid for the use or occupancy of a commercial space, regardless of mode and terms of payment for MSMEs that have ceased operations.
The grace period is counted from the last due date of the rent. For example, if the rent falls due on 25 March 2020, the lessor can demand payment, at the earliest, 30 days thereafter or on 24 April 2020.
If there are cumulative amount of rents that needs to be paid within the ECQ period, it will be amortized equally in six (6) months following the end of the ECQ and shall be added to the rents due on those succeeding months, without interest, penalties, fees and charges. Also, the lessors may not evict the lessee for failure to pay the residential or commercial rent due within the thirty (30)-day period after lifting the Enhanced Community Quarantine. The lessors, however, are not obligated to refund residential and commercial rents paid by the lessees during the period of the quarantine.
If the lessors of commercial rents for MSMEs wish to extend greater generosity they may:
- Totally or partially waive the commercial rents that are falling due during the ECQ
- Grant reprieve or discounted amount of commercial rents due after the ECQ
- Open for renegotiation the Lease Term Agreements with the lessees
- Use other recourse to mitigate the impact of the ECQ to the MSMEs
Any existing waivers on rental payments due provided by lessors, such as those in recognition of the closure of their lessees’ business during the ECQ, shall continue to be honored.
Complaints
Any violation of the Memorandum Circular may be brought before the DTI either in person or electronically.
The complaint shall contain the following information:
- Complete name, residence address and contact number of the lessor and the lessee;
- Complete address of the residential or commercial unit concerned;
- Date when the rental payment became due;
- Narration of the relevant and material facts; and
- Submission of documentary evidence, if any.
Penalty
Lessors who refuse to provide 30-day grace period to lessees shall be penalized with imprisonment of not less than 2 months or a fine of not less than ten thousand pesos, or both, such imprisonment and fine at the discretion of the court.
Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.
All rights reserved.
SUBSCRIBE NOW FOR MORE LEGAL UPDATES!
[email-subscribers-form id=”4″]