On June 2, 2020, the Philippines’ Department of Trade and Industry (DTI) issued a Memorandum Circular (MC) No. 20-29 series of 2020 entitled “Supplemental Guidelines on the Concessions of Residential and Commercial Rents”.
The latest circular aims to clarify and/or address all valid issues arising from its last MC on April 4, 2020 and to take into account IATF resolutions that have mentioned conditions of a 30-day grace period and lifting of community quarantine classifications.
What rents are covered by these concessions?
- Residential rents and Commercial rents of MSMEs (as defined by RA 6977) that have been affected by the implementation of restrictions during the ECQ, MECQ, and GCQ.
- That fall due on dates between March 17, 2020 and the date of lifting of the community quarantine.
In Summary …
A grant of at least 30-days grace period from the date when the community quarantine was lifted, or when tenant was allowed to resume operations, whichever comes first. No interests, penalties, fees, and other charges shall be imposed.
The lessor can choose to offer more than 30 days grace period. But at minimum, they should give lessees at least 30 days.
This grace period can be availed of by:
- Residential lessees who have lost their income during any of the community quarantines, or whose employers or businesses were not allowed to operate according to the IATF restrictions or LGU ordinances, etc. relevant to the community quarantines.
- Commercial lessees whose business is among those not allowed to operate by the IATF restrictions or LGU ordinances, etc. relevant to the community quarantines.
Cumulative amount of rents falling within any of the covered community quarantines, shall be equally amortized in six (6) months following the end of the 30-day minimum grace period, without interests, penalties, fees, and other charges shall be imposed. This amortized amount shall be added to the monthly rent due.
So compute the rental that has its due date after March 17 until the lifting of GCQ or when the lessor was allowed to operate, whichever comes earlier.
These rents in total shall be amortized, or paid in equal installments over a 6 months period. You will need to provide your lessor with a signed Promissory Note or letter.
We hope and pray that lessors do the following, because according to DTI, nothing is holding them back to do any of this:
- Totally or partially waiving the commercial rents that are falling due during the period of quarantine.
- Grant reprieve or discount to rents due after the quarantines period.
- Open for renegotiation the Lease Term Agreements
- Use other recourse to mitigate the impact of the community quarantines to the MSMEs
Lessors are not obliged to refund residential and commercial rents paid by the lessees before or during the period of community quarantine.
Lessors cannot evict lessees for failure to pay any rental dues between March 17, 2020 until the end of the grace period granted by the lessor.
Both lessors and lessees can be held liable for failure to abide by the relevant laws, regulations/ordinances, or pay obligations and abide by the terms of the promissory note.
Seek DTI assistance
For both lessors and lessees, you can submit to DTI any violation of the terms of this Memorandum Circular, with an email complaint. Ensure the following information are provided:
- Complete name, residence, email address, and contact number of the lessor or lessee.
- Complete address of the leased property.
- Date when the rental payment is due.
- Narration of the relevant and material facts
- Supporting documents (e.g. contracts, receipts, letters, certificate of employments, business permit, etc.)
Best is to talk directly with your property management or your lessor to discuss ways by which you can help each other.
Let us know how you feel about this development. Choose your reaction below 🙂