To help address the national crisis brought about by the Coronavirus Disease 2019 (COVID-19), Congress granted temporary emergency powers to the President, through the “Bayanihan to Heal As One Act” (Republic Act No. 11469). This law already took effect but not self-executory, which is why on 28 March 2020, the President, through the Executive Secretary, issued a directive to implement the emergency powers. Among the matters covered by the temporary emergency powers is the suspension of rent and loan payments.
At the outset, it is important to note that the emergency powers is valid throughout the country and effective for a period of three (3) months, unless extended by Congress, or withdraw sooner either by Congress or the President.
RENTS. The President has directed the Secretary of of Trade and Industry (DTI) to enforce the suspension of rental payments for all residential units falling due within the period of the enhanced community quarantine.The minimum grace period is thirty (30) days, which means the DTI has the authority to extend the grace period for the entire duration of the emergency powers, which is 3 months.
The grace period is only for residential units. The Presidential directive does not include rentals for offices or business units. It is interesting to note, however, that R.A. 11332 also authorizes the President, in the same provision granting a grace period for residential rents, to “undertake such other measures as may be reasonable and necessary to enable the President to carry out the declared national policy subject to the Bill of Rights and other constitutional guarantees.” We need to wait if the government will also provide a grace period for office or other business space rentals. [Update: The DTI Memorandum Circular covers rental payments for both residential and commercial units.]
The grant is for a grace period. It does not mean that the tenant will no longer pay the rent for that particular month. It is not condonation. The grace period simply means that the payment deadline is extended, without incurring interests, penalties, fees, and other charges.
LOANS. The Secretary of the Department of Finance (DOF), in partnership with the Bangko Sentral ng Pilipinas (BSP), is mandated to direct the grant of a minimum of a 30-day grace period for the payment of ALL loans falling due within the period of the enhanced community quarantine, without incurring interests, penalties, fees, or other charges. The covered loans include, but not limited to:
- motor vehicle loans
- credit card payments
The grace period covers the Government Service Insurance System, Social Security System, Pag-ibig Fund, and all the following, public or private:
- financing companies
- lending companies
- other financial institutions
Persons with multiple loans are given the minimum 30-day grace period for EVERY loan.
Incidentally, the standard practice for rents and loans is the issuance of post-dated checks. The grace period constitutes a valid defense in a Bouncing Check (BP 22) case, should the landlord or lender decide to deposit the check corresponding to the rent for the period covered by the community quarantine (and the check bounces for insufficiency of funds).
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