The Department of Trade and Industry (DTI) issued the Supplemental Guidelines on the Concessions on Residential Rents and Commercial Rents (Memorandum Circular No. 20-29) and the Amendment to Supplemental Guidelines on the Concessions on Residential Rents and Commercial Rents (Memorandum Circular No. 20-31). Here is a summary/discussion of the amended supplemental guidelines:
AREAS COVERED; COMMUNITY QUARANTINE CLASSIFICATION
The supplemental guidelines on the 30-day grace period for rents cover areas under Enhanced Community Quarantine (ECQ), Modified Enhanced Community Quarantine (MECQ), and General Community Quarantine (GCQ). Areas under Modified General Community Quarantine (MGCQ) are not covered.
The 30-day grace period covers rents falling due within the ECQ, MECQ and GCQ periods. [Incidentally, the 30-day grace period for loans was not extended by the appropriate government agency.]
WHEN THE 30-DAY GRACE PERIOD STARTS TO RUN; BENEFICIARIES
The 30-day grace period applies to: (a) residential lessees; and (b) micro, small and medium enterprises or MSMEs; and (c) other business sectors whose operation is not permitted during the period of community quarantine. The supplemental guidelines explicitly provide that the grant of a minimum 30-day grace period shall start to run from any of the following events, whichever comes later:
- (1) from the last due date; or
- (2) from the lifting of the ECQ, MECQ and GCQ.
This irons out the provisions in MC 20-29, which created quite a confusion. MC 20-31 removed the provision in MC 20-29 that the “grace period may be availed of by residential lessees who have lost their income during any of the community quarantine, or whose employer/s or business/es were not allowed to operate by laws/ regulations/ ordinances relevant to any covered community quarantine.” This provision gives the impression that residential lessees who still receive salaries are excluded from the benefit of the 30-day grace period. MC 20-31 also removed the provision to the effect that the 30-day grace period shall be counted from the date that such employment or business was allowed to resume, regardless of whether or not the lessee opts to go back to work or resume operation.
The next possible source of confusion is Section 3.3 of the Amended Supplemental Guidelines, which reads: “For commercial rents falling due upon MSMEs and sectors not permitted to operate during the ECQ, MECQ, and GCQ, the minimum thirty (30)-day grace period shall be from the last due date or from the lifting of the ECQ, MECQ, and GCQ, whichever is longer, without incurring interests, penalties, fees and other charges;” [Emphasis supplied] This might be interpreted to mean that MSMEs and other sectors which are allowed to operate during the ECQ, MECQ and GCQ period are NOT entitled to the 30-day grace period. The Amended Supplemental Guidelines should have clarified that the phrase “not permitted to operate” refers to other “sectors”. MSMEs, even if allowed to operate, are entitled to the 30-day grace period.
PAYMENT OF RENT AFTER 30-DAY GRACE PERIOD
Cumulative amount of rents falling due within any of the covered community quarantine, shall be equally amortized in the 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 monthly rent.
REQUIREMENT TO AVAIL OF 6-MONTH CONCESSION
MC 20-31 removed the requirement that in order to avail of the 6-month concession, the lessee shall provide the lessor a signed Promissory Note or letter, undertaking to pay the deferred rent/s in accordance herewith, and failure thereof shall make such deferred rents due and demandable immediately following the end of the minimum grace period of thirty (30) days.