Civil, Property, Family Laws

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 providing for the “Guidelines on the Concessions on Residential Rents and Commercial Rents of Micro, Small, and Medium Enterprises (MSMEs)”.

A grace period of at least thirty (30) days applies to rent falling due within the Enhanced Community Quarantine (ECQ) period, specifically for:[1]

  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 last due date of the rent. For example, if the rent falls due on 20 March 2020, the lessor can demand payment, at the earliest, 30 days thereafter or on 19 April 2020.

If there are cumulative amounts of rent that need to be paid within the ECQ period, these shall be amortized within the six (6) months following the end of the ECQ, without interest, penalties, fees and charges, in addition to the rents due on those succeeding months.


Effects of Grace Period

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

Lessors are not obligated to refund paid residential and/or commercial rents as the grace period shall apply to the next due date.

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

No eviction for failure to pay shall likewise be enforced within thirty (30) days after the lifting of the ECQ.

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 period;
  2. Granting reprieve or discounted commercial rents after the ECQ period;
  3. Renegotiating the Lease Term Agreements with the lessees; and
  4. Using other recourse to mitigate the impact of the ECQ 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; and (e) documentary evidence, if any, such as the lease agreement and/or demand letter.


Click here to read the entire text of DTI MC No. 20 – 12, Series of 2020.

Click to read the following related articles:


[1] Presidential Proclamation No. 929, Series of 2020 provides that ECQ is from 17 March 2020 to 12 April 2020 unless earlier lifted or extended. On 07 April 2020, IATF Spokesperson Cabinet Secretary Karlo Nograles confirmed extension until 30 April 2020 11:59 pm.

[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.


Disclaimer: The information in this website is provided for general informational purposes only. No information contained in this post should be construed as legal advice from Platon Martinez or the individual author, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting on the basis of any information included in, or accessible through this post without seeking the appropriate legal or other professional advice on the particular facts and circumstances.