30-day Grace Period for Residential and Commercial Rents Falling Due During the ECQ Period

On 04 April 2020, the Department of Trade and Industry (DTI) issued Memorandum Circular No. 20-12, series of 2020, the Guidelines on the Concessions on Residential Rents and Commercial Rents of Micro, Small, and Medium Enterprises (MSMEs). This was amended by DTI Memorandum Circular No. 20-29 issued on 2 June 2020 and DTI Memorandum Circular No. 20-31 issued on 04 June 2020 (Amendment to the Supplemental Guidelines on the Concession on Residential Rents and Commercial Rents).

Under the guidelines, as amended, a minimum of thirty (30) days grace period applies to rent falling due within the declared community quarantine, whether Enhanced Community Quarantine (ECQ), Modified Enhanced Community Quarantine (MECQ), or General Community Quarantine (CGQ). [1] The following are covered by the guidelines:

1. Residential Rents defined as any amount paid for the use or occupancy of a residential unit,[2]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,[3]regardless of mode and terms of payment for MSMEs that have ceased operations.

The grace period is counted from the lifting of the ECQ/MECQ/GCQ period without incurring interests, penalties, fees, and other charges.[4]For example, if the rent in a Metro Manila residential unit was due on 20 April 2020, the lessor can demand payment at the earliest 30 days after the lifting of the GCQ (which, based on the latest declaration by the President, is until 30 June 2020) or on 30 July 2020.

The cumulative amounts of rent that fall due within the ECQ/MECQ/GCQ period shall be equally amortized in six (6) months following the end of the 30-day minimum grace period, without interest, penalties, fees and charges, which amount shall be added to the current monthly rent due.

Effects of Grace Period

Payments benefiting from the grace period shall be without interest, penalties, fees and other charges.

Lessors are not obligated to refund residential and/or commercial rents paid before or during the period of the community quarantine.

Lessors shall continue to honor existing waivers on rental payments due previously granted.

No eviction for failure to pay shall likewise be enforced from 17 March 2020 when the ECQ took effect until the end of the grace period granted by the lessor .

The DTI also encourages lessors of commercial units to extend their generosity to eligible MSMEs by:

1. Totally or partially waiving the commercial rents which falling due within the ECQ/MECQ/GCQ period;
2. Granting reprieve or discounted commercial rents after the ECQ/MECQ/GCQ period;
3. Renegotiating the Lease Term Agreements with the lessees; and
4. Using other recourse to mitigate the impact of the ECQ/MECQ/GCQ to the MSMEs.

Penalty

Refusal to provide the thirty (30)-day grace period to lessees shall be penalized with imprisonment of at least two (2) months or a fine of at least P10,000.00, or both, at the discretion of the court, pursuant to Republic Act No. 11469.

Violations of the Memorandum Circular must be reported to the DTI either in person or via e-mail to the Fair Trade and Enforcement Bureau (FTEB) through FTEB@dti.gov.ph or with the regional offices, by submitting a Complaint with the following information: (a) Complete name, residence, contract number of both the lessor and lessee; (b) Complete address of the residential or commercial unit concerned; (c) Date when rent was due; (d) Material and relevant facts; (e) Documentary evidence, if any, such as the lease agreement and/or demand letter.

Click on the following links for the issuances:

• DTI MC No. 20 – 12, Series of 2020, Guidelines on the Concessions on Residential Rents; Commercial Rents of MSMEs (04 April 2020);
• DTI MC No. 20-29, Series of 2020, Supplemental Guidelines on the Concessions on Residential Rents and Commercial Rents (02 June 2020);
• DTI MC No. 20-31, Series of 2020, Amendment to the Supplemental Guidelines on the Concession on Residential Rents and Commercial Rents (04 June 2020).

Click to read the following related articles:

• President Rodrigo Duterte Signs R.A. No. 11469 or the “Bayanihan To Heal As One Act” to Respond to COVID-19 Pandemic
• What are the Acts Penalized under R.A. No. 11469 or the “Bayanihan To Heal As One Act” or “Bayanihan Law”?

[1] IATF Resolution No. 46-A, Series of 2020 issued last 15 June 2020 provides that GCQ in NCR is extended until 30 June 2020.

[2] “Residential unit” refers to bedspaces, rooms, dormitories, apartments, houses, buildings, and/or land on which another’s dwelling is located and is used principally for residential or dwelling purposes.

[3] “Commercial space” refers to land, offices, buildings, centers, shops, facilities and any other property used principally for commercial purposes, which denote any activity for which profit is the main aim or revenue is received.

[4] Note that although SEC. 3.3 of the latest Circular states that the grace period shall commence “from the last due date or from the lifting of the ECQ, MECQ, and GCQ, whichever is longer,” Sec. 3.1 thereof states that “the due date of rent subject to the thirty (30)-day grace period falls within the declared community quarantine, whether ECQ, MECQ, and GCQ.” The date of lifting of the ECQ, MECQ and GCQ shall thus always be longer, hence the grace period shall commence on this date.