Rent Concessions during the Enhanced Community Quarantine Period

Legal Updates

Author Atty. Erika B. Paulino  

 Atty. Maria Melita Rae J. Fernandez

(Authors’ Note: This article has been updated as of May 5, 2020.)

On April 4, 2020, the Department of Trade and Industry (DTI) issued Memorandum Circular No. 20-12 (the “DTI Circular”) prescribing guidelines on the concessions on residential and commercial rents during the period of the Enhanced Community Quarantine (ECQ).  This implements Section 4 (bb) of the Bayanihan to Heal As One Act (Republic Act No. 11469), empowering the President to adopt temporary emergency measures in order to respond to the crisis brought about by the COVID-19 pandemic. One such power is to:

“(bb) Provide for a minimum of thirty (30)-day grace period on residential rents falling due within the period the enhanced community quarantine, without incurring interests, penalties, fees, and other charges”.

The Philippine Ports Authority (PPA) likewise extended the rental and concession fee payments of PPA lessees and port terminal operators falling due within the ECQ period under Memorandum Circular No. 17, Series of 2020 (the “PPA Circular”), which was published on April 25, 2020.

DTI Circular

The DTI Circular covers only “residential rent”and “commercial rent of MSMEs”. 

§  Residential rent refers to any amount paid for the use or occupancy of a residential unit (i.e., bedspaces, rooms, dormitories, apartments, houses, buildings, and/or land on which another’s dwelling is located used principally for residential or dwelling purposes), regardless of the mode and terms of payment. The DTI Circular does not appear to qualify with respect to eligible categories of lessees of residential units (whether individuals or corporates), unlike in respect of commercial rent.

§  Commercial rent, on the other hand, refers to any amount paid by MSMEs for the use or occupancy of a commercial space (i.e., 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), regardless of the mode and terms of payment.

§  MSMEs (or Micro, Small and Medium Enterprises), as defined under the Magna Carta for Micro, Small and Medium Enterprises (MSMEs) (Republic Act No. 6977, as amended), refer to any business activity or enterprise engaged in industry, agribusiness and/or services, whether single proprietorship, cooperative, partnership or corporation, whose total assets, inclusive of those arising from loans but exclusive of the land on which the particular business entity’s office, plant and equipment are situated, must have value falling under the following categories:

Micro               :           not more than P3,000,000.00

Small                :           P3,000,001.00 – P15,000,000.00

Medium           :           P15,000,001.00 – P100,000,000.00

Following are the guidelines on rent concessions provided under the DTI Circular:
 

What concessions are granted under the DTI Circular on residential rents?
 
A minimum 30-day grace period shall be granted on residential rents falling due within the ECQ period, without incurring interests, penalties, fees and other charges.
 
What concessions are granted under the DTI Circular on commercial rents?
 
A minimum 30-day grace period shall be granted on commercial rents falling due upon MSMEs that have temporarily ceased operations within the ECQ period, without incurring interests, penalties, fees and other charges.
 
In addition, lessors of commercial rents for MSMEs who wish to extend greater generosity may:

  1. a.   Totally or partially waive the commercial rents that fall due during the ECQ period;
  2. b.   Grant reprieve or discounted amount of commercial rents due after the ECQ period;
  3. c.   Open for renegotiation the Lease Term Agreements with the lessees; or
  4. d.   Use other recourse to mitigate the impact of the ECQ to the MSMEs.

Please note, however, that the language of the DTI Circular is couched in permissive terms; hence, the grant of such additional concessions to MSMEs would depend on the goodwill of the lessor.

What are the requirements for MSMEs to be eligible for concessions?

Only MSMEs that have temporarily ceased operations due to the ECQ are covered by the commercial rent concession.  

To be eligible for the concessions, MSMEs must signify to their respective lessors their request for assistance by providing supporting documents, such as, but not limited to, financial statements as proof of enterprise size, and/or lease contract as proof of tenancy.

Do the concessions granted under the DTI Circular apply only to the island of Luzon?

No. The DTI Circular was issued pursuant to the Bayanihan to Heal As One Act, which is a national law, hence, the concessions apply to the entire Philippines.

What is the period of coverage of the ECQ?

The ECQ originally covers the period from March 17, 2020 to April 12, 2020. It was subsequently extended to April 30, 2020, and thereafter until May 15, 2020, unless earlier lifted or extended by the President as circumstances may warrant.

When does the minimum 30-day grace period start?

The mandatory 30-day grace period commences from the due date of the residential or commercial rent falling due within the ECQ period.  For example, if the rent is due on April 10, 2020, then the lessee shall be entitled to a grace period of 30 days from April 10, 2020, making the extended due date May 10, 2020. Following the further extension of the ECQ, the new due date for the April rent is on June 10, 2020.

Can a lessor refuse to extend the 30-day grace period?

No. The 30-day grace period is mandatory for residential units and eligible MSME-lessees of commercial units, and the lessor may not refuse the extension thereof.

How will cumulative rents which fall due within the ECQ be paid?  Is this subject to immediate repayment on the extended due date following the lifting of the ECQ?

The cumulative amount of rents which fall due within the ECQ shall be equally amortized in the six months following the end of the ECQ period, and shall be added to the rents due on those succeeding months, without interest, penalties, fees, and charges. It is, however, unclear how the amortized unpaid rents will be treated for short-term leases (e.g. month-to-month leases, or leases with a term of six months or less).

To illustrate:

The monthly rent due on March 30, 2020 is P

12,000.00. Applying the grace period, the extended due date for the March rent is on April 30, 2020, and in view of the extension of the ECQ, the further extended due date for the March rent is on May 30, 2020.

Now, the rental falling due on April 30, 2020 of P

12,000 shall likewise be subject to a 30-day grace period, so the new due date for the April rent is on May 30, 2020.

Assuming that the ECQ is lifted after May 15, 2020, the amount of rent due on May 30, 2020 shall be:

May RentP12,000.00
March Rent (P12,000 / 6 months)P2,000.00
April Rent (P12,000 / 6 months)P2,000.00
P16,000.00

Can a lessee require the lessor to refund residential and commercial rents already paid during the ECQ period?

Lessors are not obligated to refund covered rents that have already been paid. However, should the lessor choose not to refund such rents, the lessor is required to grant a 30-day grace period for the next rent due without incurring interest, penalties, fees, and charges.

May a lessee be evicted from the rented unit or space if he/she/it fails to pay the rent due after the lifting of the ECQ?

No eviction for failure to pay the residential or commercial rent due may be enforced within a 30-day period after the lifting of the ECQ. For example, if the ECQ period ends on May 15, 2020, the lessee who has failed to pay rent due may not be evicted until after June 15, 2020.  

What are the penalties imposable on lessors for violation of the provisions of  the DTI Circular?

The DTI Circular states that, “as provided under the Bayanihan to Heal As One Act, lessors who shall refuse to provide 30-day grace period to lessees shall be penalized with imprisonment of not less than two months or a fine of not less than ten thousand pesos (P

10,000.00), or both, at the discretion of the court.”

Note, however, that under the DTI Circular and the Bayanihan to Heal As One Act, only the refusal to provide the 30-day grace period is punishable. The DTI Circular is silent as regards the penalties for other violations, such as the imposition of interests, fees, penalties, and charges on covered rents, and the eviction of defaulting lessees within the 30-day period following the lifting of the ECQ.

PPA Circular

Similarly, the PPA extended the rental and concession fee payments of PPA lessees and port terminal operators falling due within the ECQ period under  its Memorandum Circular No. 17, Series of 2020 (the “PPA Circular). Under the PPA Circular, all PPA lessees and port terminal operators who are required to pay rental dues and concession fees under their lease contracts, agreements, guidelines or undertaking, are granted a minimum 30-day grace period on rental dues and concession fees falling within the ECQ period, without incurring interest, penalties, fees and other charges.

Likewise, the 30-day grace period starts from the last due date of the rental and concession fees falling due within the ECQ period. It imperative to note that under the PPA Circular, payment of rental and concession fees are only deferred for 30 days. Upon the expiration of the 30-day grace period, such deferred rental and concession fees must be paid immediately. Otherwise, a 12% interest and a 25% penalty charge per annum will be imposed on late payments.

Despite the issuance of the guidelines, several questions still remain unanswered. Are MSMEs which provide basic necessities but which voluntarily ceased operations during the ECQ also covered? Do the concessions only apply to areas that are declared to be under ECQ?  Can the lessee be made to waive the applicability of the concessions granted? What happens if the lessor grants a 30-day grace period, but imposes interest thereon? How will cumulative unpaid rents be treated, especially in respect of short-term (e.g., month-to-month) leases? Will this result in the automatic extension of the lease term? These are just some of the issues that still need clarification. Further supplemental issuances are needed in order to fully clarify the implementation of the concessions on residential rents and commercial rents of MSMEs.

Tax Filings and Payments during the ECQ

Legal Updates

Author Atty. Mary Elizabeth M. Belmonte, Atty. Harlem P. Ma-at

Authors’ Note: This article was originally published on April 1, 2020 and has been updated in view of subsequent regulatory issuances on the subject.

         The months of March and April of each year are generally regarded as the busiest and most chaotic period for taxpayers and accountants. This year started no different. However, with the declaration by World Health Organization of COVID-19 as a pandemic and the declaration by our own President of the Enhanced Community Quarantine (ECQ) over the entire Luzon beginning 17 March 2020 until 12 April 2020, this year’s tax filing season has become even more challenging.

         In response to the current circumstances, the Bureau of Internal Revenue (BIR) as well as certain local government units (LGUs) have released various issuances extending the deadlines for the filing of tax returns and payment of taxes, including income tax for the year 2019, and the filing of other matters, including the availment of the amnesty for tax delinquencies and claims for value-added tax refund.

         Less than a week before the end of the ECQ, President Duterte extended the ECQ until 11:59 p.m. of 30 April 2020 to curb the spread of COVID-19. Hence, the BIR released another batch of issuances further extending the “extended due dates” for a period of fifteen (15) calendar days, except certain matters where the BIR provided a specific deadline or where the extended due dates granted are reckoned from the lifting of the ECQ.

         The Summary of Tax Filings and Payments and the List of Issuances by the BIR and LGUs may be accessed through the links below.

         The BIR also adopted a file and pay anywhere system providing taxpayers the following payment options:

  a.    Payment to any Authorized Agent Bank (AAB) nearest to the location of the taxpayer;
  b.    Payment to any Revenue Collection Officer under the Revenue District Office; and
  c.    Electronic/Online Payment:
           i.       LandBank of the Philippines (LBP) Link.biz Portal (for taxpayers who have ATM account with LBP and/or 
                    holders of BancNet ATM/Debit/Prepaid Card and taxpayer utilizing PesoNet facility for depositor of RCBC  
                    and Robinsons Bank);
           ii.      Development Bank of the Philippines’ (DBP) Pay Tax Online (for holders of Visa/Mastercard Credit Card
                    and/or BancNet ATM/Debit Card);
           iii.    Union Bank Online Web and Mobile Payment Facility (for taxpayer who has an account with Union Bank of
                    the Philippines); and
           iv.    Mobile Payment (GCash/PayMaya) [Revenue Memorandum Circular Nos. 26-2020 and 28-2020].

         Now that the extension of tax deadlines has given relief to taxpayers, we can all focus on maintaining social distance, staying at home and extending all help that we can as we await the end of the ECQ and, hopefully, of COVID-19.

       
         Links:    ECQ – List of BIR and LGU Issuances
                        ECQ – Summary of National and Local Tax Filings and Payments

ECQ and the Bayanihan Act: Dealing with Debts

Legal Updates

Author Atty. Rosalia S. Bartolome-Alejo, Atty. Erika B. Paulino, Atty. Mary Elizabeth M. Belmonte

Authors’ Note: This article was originally published on April 6, 2020 and has been updated in view of subsequent regulatory issuances on the subject.

The “Bayanihan to Heal As One Act” (Republic Act No. 11469) came into immediate effect upon its publication on March 25, 2020. One of the provisions of the law that became the subject of much interest is Section 4(aa).  It essentially provides that the President is authorized to exercise temporary powers necessary and proper to carry out the declared national policy and to respond to the crisis brought by the Covid-19 pandemic, including to:

“(aa) Direct all banks, quasi-banks, financing companies, lending companies, and other financial institutions, public and private, including the Government Service Insurance System, Social Security System and Pag-IBIG Fund to implement a grace period of at least thirty (30) days for the payment of all loans, including, but not limited to salary, personal, housing and motor vehicle loans, as well as credit card payments, falling due within the period of the enhanced community quarantine, without incurring interests, penalties and fees, or other charges. Persons with multiple loans shall likewise be given the grace period of at least thirty (30) days for every loan”.


Confusion immediately arose as to the extent or scope of the loans covered by the grace period and the implementation thereof until the Department of Finance (DOF) issued the “Implementing Rules and Regulations on Section 4(aa) of Republic Act No. 11469, Otherwise Known as the ‘Bayanihan to Heal as One Act’” last April 1, 2020.
 
The DOF-IRR
 
Below are frequently asked questions regarding Section 4(aa) and the DOF-IRR:

       Which loans are covered by the 30-day grace period?
 
       All loans extended by Covered Institutions are covered by the grace period under the Bayanihan to Heal as One Act.
 
       What do you mean by “all loans” and “Covered Institutions”?

Loans refer to all loans extended by Covered Institutions to individuals, households, micro, small and medium enterprises (MSMEs), corporate borrowers and other counterparties. Based on this definition, loans include consumer loans, personal loans, salary loans, home mortgage loans,  motor vehicle loans, credit card loans and credit card payments, corporate loans, and various type of bank credit facilities.
 

Covered Institutions refer to all lenders, including but not limited to, banks, quasi-banks, non-stock savings and loan associations, credit card issuers, trust departments/corporations, pawnshops, and other credit-granting financial institutions (whether public or private) under the supervision of the Bangko Sentral ng Pilipinas (BSP), the Securities and Exchange Commission (SEC), and the Cooperative Development Authority (CDA), including the Government Service Insurance System, the Social Security System  and the Pag-IBIG Fund. This would, thus, include financing companies, lending companies, and lending cooperatives.

Does the law apply only to the Luzon region placed under Enhanced Community Quarantine (ECQ) pursuant to Presidential Proclamation No. 929, s. 2020?

No. The Bayanihan to Heal as One Act is a national law and applies uniformly to all Covered Institutions within the Philippines.

When does the 30-day grace period start?

The mandatory 30-day grace period commences from the due date of a principal or interest payment falling due within the Enhanced Community Quarantine (ECQ) period (March 17, 2020 to April 12, 2020).  For example, if an interest payment is due on April 6, 2020, then the borrower shall be entitled to a grace period of 30 days from April 6, 2020.

Is there a possibility that the 30-day grace period be extended?
 
The initial 30-day grace period may be extended if the ECQ is extended beyond April 12, 2020. As of the date of this article, the ECQ period has been extended until April 30, 2020. It is, however, unclear from the DOF-IRR how this extension is to be interpreted.

Granted that a loan repayment is extended, can there be additional interest or penalty imposed?

No. A Covered Institution is prohibited from imposingany interest on interest, fees and charges during the 30-day grace period.

Can a Covered Institution refuse to extend the 30-day grace period? Can a Covered Institution ask for a waiver?


The 30-day grace period is mandatory and no Covered Institution may refuse the extension thereof. Covered Institutions are prohibited from requiring their clients to waive the application of the provisions of the Bayanihan to Heal as One Act, and any previously issued waiver is deemed invalid.

If a borrower (individual or corporate) has multiple loans, does the grace period apply only to one loan?


No. The grace period applies to multiple loans of any individual or corporate borrower whose payment of interest or principal will fall due during the ECQ period.

How will interest accrued during the 30-day grace period be treated? Is this subject to immediate repayment on the extended due date following the lifting of the ECQ?
 
The accrued interest for the 30-day grace period may be paid by the borrower on staggered basis over the remaining life of the loan. In respect of BSP supervised Covered Institutions, please refer to the discussion below.

If a loan matures and falls due during the ECQ period, and a Covered Institution requires the loan to be renewed or restructured, is the borrower liable to pay Documentary stamp tax (DST)?

No. DST under Sections 179, 195, and 198 of the Tax Code shall not be imposed on any credit extension, renewal or restructuring during the ECQ period.

What are the penalties imposable on Covered Institutions for a violation of Section 4(aa), or any provision of the DOF-IRR?


The DOF-IRR refers to the appropriate penalties set forth in the Bayanihan to Heal as One Act as imposable penalties for any violation of the provisions of the DOF-IRR. Note, however, that only the refusal to provide the 30-day grace period is punishable under the Bayanihan to Heal as One Act with imprisonment of two months or a fine ranging from Php10,000 to Php1 million, or both.


Tax Treatment of Credit Extensions, Renewals or Restructurings during the ECQ Period

The DOF-IRR provided for the DST exemption of any credit extension, renewal or restructuring during the ECQ Period. Implementing the DST exemption, the Bureau of Internal Revenue (BIR) issued Revenue Regulation No. 8-2020 and Revenue Memorandum Circular No. 36-2020.

Further BIR guidance on the DST exemption follows:

       What credit extensions are exempt from DST?

       Credit extensions of pre-existing loans falling due during the ECQ Period where interest is paid but the principal is    
       converted into a new loan with a new maturity date are covered by the exemption. Thus, the new loan principal and 
       the renewal or extension of the loan’s mortgage, pledge or deed of trust (collateral documentation) shall be exempt
       from DST.

       However, credit extensions of pre-existing loans where interest is paid but the principal is rolled-over or renewed as 
       a new loan principal in accordance with a pre-agreed roll-over arrangement and collateral documentation thereof    
       prior to the COVID-19 situation shall remain subject to DST.

       What credit restructurings are exempt from DST?

       The following credit restructurings are exempt from DST:

          a.    Those pertaining to pre-existing loans where both the principal and interests are not paid but are consolidated 
                 and converted into a new loan principal with a new maturity date and the renewal or extension of the loan’s 
                 mortgage, pledge or deed of trust (collateral documentation); and

          b.    Those pertaining to pre-existing loans where there is payment of interest and partial payment of principal on 
                 maturity while the remaining unpaid principal is converted into a new loan principal with a new maturity date 
                 and the renewal or extension of the loan’s mortgage, pledge or deed of trust (collateral documentation).
 
Are the extensions of payment and/or maturity periods of salary, personal, housing, and motor vehicle loans also exempt from DST?

Yes. All extensions of payment and/or maturity periods of salary, personal, housing, and motor vehicle loans and all other pre-existing loans falling due within the ECQ period, including the extension of maturity periods that may result from the grant of grace periods for these payments, whether or not such maturity periods originally fall due within the ECQ period are exempt from DST.

Are fresh loan availments, top-up to existing loans, and new loan drawdowns during the ECQ period and its collateral documentation also exempt from DST?

No. Fresh loan availments, top-up to existing loans, and new loan drawdowns during the ECQ period and its collateral documentation remain subject to DST, as applicable.

Do Covered Institutions have additional reportorial requirements to the BIR due to the exemption of credit extension, renewal or restructuring during the ECQ period from DST?

Yes. Covered Institutions shall submit a summary listing of all pre-existing loans, pledges, and other instruments as of March 17, 2020 which were granted extension of payment and/or maturity periods to the BIR office where they are registered within 60 days from lifting of the ECQ. Otherwise, the Covered Institutions shall be liable for the additional DST that should have been imposed on the instrument during the ECQ period, plus administrative penalties.

BSP Implementation of Section 4(aa) and the DOF-IRR

On April 6, 2020, the BSP issued Memorandum No. M-2020-018 (the “BSP Memorandum”) to provide additional guidance and clarification on the BSP’s implementation of the DOF-IRR. Note, however, that the BSP Memorandum covers only BSP-supervised financial institutions (BSFIs) with lending operations. These include banks, quasi-banks, non-stock savings and loan associations, credit card issuers, trust departments/corporations, pawnshops, and other credit granting entities under the supervision of the BSP.
 
The BSP Memorandum addressed the following:

       Are past-due loans entitled to the 30-day grace period?

       Yes. The DOF-IRR covers all accounts regardless of whether these are current or past due.

       Are loan accounts covered by automatic payment arrangements (such as auto-debit) or by post-dated checks (PDCs) 
       covered by the 30-day grace period?

       Yes. Unless the borrower agrees to proceed with the automatic payment arrangement, upon coordination by the 
       BSFI, the latter may not proceed with the automatic payment. The BSFIs shall also coordinate with their clients if
       they wish to reverse checks cleared or payments debited/deducted prior to the enactment of the Bayanihan to Heal 
       as One Act. The reversal shall be done without corresponding fees and charges.

       Are loans that are not amortized monthly (i.e., quarterly or semesterly) entitled to the 30-day grace period?

       Yes. The grace period will apply to all loans regardless of its amortization schedule, as long as the due date falls
       within the ECQ period. BSFIs will add 30 days to the due date falling within the ECQ period to determine the new
       due date.


       Are fees/charges related to loans extended or credit lines granted (e.g. credit card renewal fees) scheduled to be paid 
       during the ECQ period covered by the 30-day grace period?
 

Yes.
Will the principal amount payable during the grace period be added to the principal amount due in the next payment due date or will the final due date of the entire loan move by 30 days?

The last payment due date will move by 30 days.

How will interest accrued during the 30-day grace period be treated? Is this subject to immediate repayment on the extended due date following the lifting of the ECQ?

Interest accrued during the 30-day grace period may be paid in lump sum on the new date or on a staggered basis over the remaining term of the loan.

Illustration: A 5-year loan with remaining maturity life of 4 years. If the monthly amortization of the loan due on April 2, 2020 is P10,500.00 (P10,000.00 applied to the principal and P500.00 applied to the monthly interest.

–  Applying the 30-day grace period, the new due date will be May 2, 2020.
–  On May 2, 2020, the borrower will either pay:

       1. Principal for 1 month, plus interest for 2 months, computed as follows: 
                                           P10,000.00 + P500.00 + P500.00 =  P11,000.00
       2. Principal for 1 month, plus interest for 1 month, plus a portion of the 1-month interest, computed as follows:
                                           P10,000.00 + P500.00 + [P500.00 / (4 years x 12 months)]  = Php10,510.42


Will amortizations be rescheduled in line with the 30-day grace period (i.e., plus one period for monthly amortizations)? Do BSFIs need to issue new Promissory Notes/Disclosure statements for the new amortization schedule?

Yes, the amortizations will be effectively rescheduled. However, there is no need to issue new Promissory Notes/Disclosure statements.

For credit card revolvers or borrowers who do not pay in full every payment period, will interest on their outstanding balances continue to accrue during the 30-day grace period?

Yes, interest will continue to accrue and will be payable on the next due date, either in lump sum or on staggered basis.

For credit card transactors, will interest accrue on the outstanding balance during the 30-day grace period?

No interest will accrue if the credit card transactors pay the total outstanding balance on or before the new due date.
 

Compliance by Covered Institutions
 

Following the publication of the DOF-IRR and the BSP Memorandum, banks have released public advisories on the terms and conditions of the grace period, which cover, among others: the application of the grace period (some banks limiting application only to loans of borrowers residing or working in areas declared under ECQ), the extent of the grace period granted (some banks granting as long as 60 days grace period), the application of finance charges (waiver applicable only on a case-to-case basis), and the treatment of accrued interest (some requiring payment to be made on the next payment due date on top of the then current amortization due, while some banks implementing an automatic extension of the term of the loan).

The government’s credit-granting institutions have likewise implemented the moratorium under Section 4(aa).
 

  •    –   The Pag-IBIG Fund has offered a three-month moratorium to all its member Pag-IBIG Fund Housing Loan, Multi-Purpose Loan, and Calamity Loan borrowers with payments due on March 16, 2020 until June 15, 2020. Presently, only those residing in Luzon and in the National Capital Region can avail of the offer.
  •    –   The Social Security System approved a program for the moratorium of loan payments of members in the entire Philippines. The moratorium will be for the applicable months of February to April 2020, resulting in the extension of the loan payment term by a maximum of three months. To be eligible for the moratorium, the members’ salary, calamity, or emergency loan must have been granted within the period from January 1, 2018 to March 16, 2020; while the members’ loan under a restructuring program or educational assistance loan must be currently amortizing.
  •     –  Under Resolution No. 42-2020, the Government Service Insurance System (GSIS) approved the moratorium on all loan payments of GSIS members and pensioners, including housing loan amortizations. Collection of loan payments due for the months of March, April and May 2020 shall be deferred, and shall resume on June 1, 2020 without penalty or additional interest. All loan terms shall be effectively extended by three months.

No single standard implementation approach will be observed, in particular, with respect to Covered Institutions that are not BSFIs. While the BSP Memorandum provided clarity on a number of matters which were unclear under the DOF-IRR, the BSP issuance does not cover financing companies, lending companies, and credit cooperatives under the supervision of the SEC and the CDA. No supplemental issuances have been issued by the DOF, SEC, or the CDA as of the date of this writing.

In the absence of such clarificatory issuances, however, Section 1.03 (Interpretation Clause) of the DOF-IRR may not be disregarded. In the event of doubt in the interpretation of its provisions, the rules shall be liberally construed to ensure the fulfillment of the policy objectives of Section 4(aa) – to “undertake a program for recovery and rehabilitation, including a social amelioration program and provision of safety nets to all affected sectors”, “partner with the private sector and other stakeholders to deliver these measures and programs quickly and efficiently”, and “promote and protect the collective interests of all Filipinos in these challenging times”.

SEC and PSE Compliance During ECQja

Legal Updates

Author Atty. Janice L. Co  

With the entire Luzon placed under Enhanced Community Quarantine (ECQ), it becomes worrisome for some private establishments on how to comply with the regulatory deadlines of the Securities and Exchange Commission (SEC) and The Philippine Stock Exchange, Inc. (PSE) that will fall due on the ECQ period.  The preparation or completion of their financial statements, for example, cannot be completed on time for filing this April.  Companies may not be able to submit the documents required to be under oath in view of the difficulty of securing the services of a Notary Public at this time.  There is also the question on how will companies submit  their reports while the ECQ is being implemented.

In response, the SEC and PSE advised the public through circulars, notices and advisories of their temporary arrangements until the ECQ is lifted.  The SEC adopted work from home arrangements to minimize the disruption brought about by COVID-19 in the delivery of public service.  During the ECQ period, it will allow filing of reportorial requirements by electronic mail provided that its guidelines are observed.  The PSE, on the other hand, was earlier required to cease operating but was eventually allowed
to resume operations by the Inter-Agency Task Force for the Management of Emerging Infectious Disease or IATF.  All trading activities will have to be conducted remotely and it will be implementing shorter trading hours (i.e. from 9:00 AM to 1:00PM). 

The summary of issuances by the SEC and PSE as of April 2, 2020 in relation to ECQ may be accessed through the links below.  These are categorized into –

  • – SEC Memorandum Circulars;
  • – SEC and PSE Notices for Publicly Listed Companies;
  • – SEC Notices for Corporations with Secondary License (other than PLCs); and
  • – SEC Notices for Corporations without Secondary License.

Since many private establishments have also adopted the work from home arrangement and is business as usual, we expect that SEC and PSE will be posting more information and further announcements on their websites to address the various concerns of the public.

 Links:  Summary of SEC Memorandum Circulars (as of April 2, 2020)
 Summary of SEC and PSE Notices for Publicly Listed Companies (as of April 2, 2020)
 Summary of SEC Notices for Corporations with Secondary License (other than PLCs) (as of April 2, 2020)
 Summary of SEC Notices for Corporations without Secondary License (as of April 2, 2020)

Management of Human Remains in the Time of COVID-19

Legal Updates

Author Atty. Stephanie Anne V. Oracion  

The coronavirus disease 2019, most commonly known as COVID-19, is a respiratory illness caused by the SARS-CoV-2 (severe acute respiratory syndrome coronavirus 2) and has infected about 940,000 people worldwide as of April 2, 2020.

In the Philippines, there are 2,633 confirmed cases of COVID-19 infections, with the number of deceased individuals totaling 107.[1] In response to the rising number of COVID-19 positive individuals and subsequent deaths, the Department of Health issued on 7 February 2020 Department Memorandum No. 2020-0067 detailing the guidelines in the proper disposal of the remains of confirmed cases of COVID-19. On 27 March 2020, the Department of the Interior and Local Government (“DILG”) followed suit and introduced its own guidelines on the management of human remains of confirmed COVID-19 patients and including therein patients under investigation (“PUI”) in coordination with the Local Government Units (“LGU”).[2]

This article discusses posthumous rights, the new reality brought about by COVID-19, with stories we hear of dead loved ones separated and cremated with just one or no family members at all present, and the DILG Guidelines that laid out the precautions to be taken in the proper handling of the remains of COVID-19 patients and PUIs.   

Posthumous Rights

While an individual’s wishes should be given the highest respect, the variables may differ, depending on the stakeholders, i.e., the government and the community. The problem lies in striking a balance between the private interest and the interests of the State.

International law dictates that the dead must be treated and buried in a dignified manner. The United Nations Commission on Human Rights adopted a resolution in 2005 underlining the importance of handling human remains in a dignified manner and respecting the needs of the families.[3] In the Philippines, these international law principles have long been recognized, with the law recognizing the family’s duty and right to make arrangements for the funeral of a relative,[4] and directing that the funeral be in keeping with the social position of the deceased,[5] as well as in accordance with his expressed wishes, and, in the absence of such, in accordance to his religious beliefs or affiliation.[6]

Due to the rifeness of this disease, however, many will lose the chance to show their last respects to the dead, who, more often than not, will die alone without the comforting presence of even the healthcare workers.

New Reality Brought About by COVID-19

There is abundant information about how to handle infected cadavers, how to disinfect surfaces, how to transport dead bodies and how to bury them. Not much is being done, however, to address the concerns of those who are left behind. In Italy, where an unparalleled number of deaths occurred due to COVID-19, the finest clothes of the dead are simply laid on top of the bodies to give a semblance of dignity and
to cover the disease-ridden hospital gowns in which they died.[7]

In the Philippines, little is known about whether posthumous rights are being respected. Indeed, it has only been 2 weeks since the start of the quarantine period and it is more than likely that the government has not had time to consider these issues against the pressing need to “flatten the curve.” The situation dictates that State interests overshadow posthumous rights.

The Government’s Response

On March 8, 2020, the President declared a State of Public Health Emergency throughout the Philippines due to COVID-19, urging citizens to “act within the bounds of the law and comply with the lawful directives of the appropriate government agencies.” On March 24, 2020, the President signed into law the Bayanihan Act of 2020 which granted him limited emergency powers to address the alarming spread of the disease, giving imprimatur to the various LGUs to make sure that the spirit of the law is followed through the exercise of police power.

The concept of police power, which has no exact definition, is the plenary power of the State to address emergent situations such as health emergencies, and has been described as the most “essential, insistent and the least limitable of powers, extending as it does to all the great public needs.”[8] This is otherwise known as the general welfare under the Local Government Code, which is the delegated power by the state “necessary, appropriate, or incidental for the efficient and effective governance.” In the context of the current pandemic, police power is used ideally to promote public health, morals or safety and the general well-being of the citizenry.

The case of White Light Corporation v. City of Manila,[9] et. al. is instructive as to the extent of police power vis-à-vis individual rights. The eminent Justice Tinga concluded that,

“We reiterate that individual rights may be adversely affected only to the extent that may fairly be required by the legitimate demands of public interest or public welfare. The State is a leviathan that must be restrained from needlessly intruding into the lives of its citizens.”

Where the balance lies between the exercise of police power in these trying times and the need to uphold the inherent rights of those living and dead is a moral issue that government needs to deal with. After all, no human wants to die in isolation and be treated as an infectious disease carrier even as he is buried six feet underground. And yet, the pervasiveness of the disease dictates that, for the welfare of the people, tradition and culture be subservient to the powers of the State.

The DILG Guidelines

Consistent with the President’s declaration of a State of Public Health Emergency throughout the Philippines due to COVID-19, and as part of the government’s response, the DILG issued the Guidelines on the proper handling of the remains of COVID-19 patients and PUIs.  The DILG Guidelines includes biosafety and infection control practices which shall be implemented by all local chief executives, DILG regional directors, the Philippine National Police, Bureau of Fire Protection and other local officials.

The Guidelines principally recommend the utilization of standard and transmission-based precautions such as frequent hand washing and donning of personal protective equipment (“PPE”), as well as certain prohibitions unique to the current pandemic have been provided. One salient provision is the commissioning of “reputable funeral parlors and crematoriums” to handle the remains of COVID-19 positive individuals and PUIs. Aside from the burial or cremation of the deceased,  these funeral parlors and crematoriums will also handle the transportation of the human remains in case the individuals die outside medical facilities.

The specific provisions of the Guidelines are discussed below.

i)          Standard Precautions

All health workers and all personnel coming into contact with the deceased are encouraged to have complete vaccination. i.e. Pneumococcal, Influenza, Hepatitis-B and Tetanus Toxoid prior to contact with the remains. In handling dead bodies, all persons are directed to avoid contact with any body fluids, and are expected to use PPEs, such as, but not limited to double gloves, water resistant gowns, surgical masks and face shields. The Guidelines likewise provides the formula for the standard decontamination solution.

ii)         Disposal

In case the body is transported from another facility or from the home of the deceased, it must be initially wrapped in leak-proof plastic and placed in a leak-proof cadaver bag. It is required that the outside portion of the cadaver bag be disinfected with hypochlorite solution and air dried with the attached biohazard tag (indicating the words “SUSPECTED” or “POSITIVE” Covid-19, HANDLE WITH CARE) before it is handed over to transport personnel. If the remains will be transported from the home, the next of kin or the LGU shall be responsible for the transportation, taking care to disinfect the vehicle after the remains are removed. Hygienic preparation and embalming of the body is strictly prohibited and only adult members of the family are allowed to attend the burial. The body shall be placed in a closed casket and public assembly or viewing of the remains is strictly prohibited.

iii)        Burial/Cremation

The burial or cremation of the human remains is mandated to be done within 12 hours after death with due consideration to the deceased person’s preferences, if any. In relation thereto, healthcare facilities are directed to release the remains of the deceased, regardless of any unpaid hospital bills.

The death certificate shall be issued by the attending physician if the deceased died in-hospital, or, by the Local Health Officer if the death occurred in the home. The death must be reported to the City or Municipal Health Officer within 12 hours after death and forwarded to the Local Civil Registrar within 30 days for registration. It is noted that a burial or cremation is not allowed if no valid death certificate is presented. The burial site, which shall be designated by the LGU,  must be 25 meters away from any residential area, at least 1.5 meters deep, and shall not be buried where the water table is less than 2 meters deep from the natural ground surface.

If the deceased was a Muslim foreign national, the remains will be buried in the Philippines following Islamic burial rites, while still observing standard precautions as necessary.

iv)        Shipment from outside the Philippines.

If the human remains should come from outside the Philippines, a Transfer Permit is required which shall be obtained by the Department of Foreign Affairs and Bureau of International Health Cooperation and will be issued by the Bureau of Quarantine.

v)         General Prohibitions

The identity of the deceased shall be kept strictly confidential unless it is with written consent of the deceased while he/she was alive, to facilitate contact tracing, or if the deceased was a social or political figure which required him to disclose the status of his health to the public. It is considered unlawful for any photo or video of the deceased to be uploaded or shared in any media platform, or any act that will blacken the image of the deceased. The Guidelines likewise prohibit the use of the remains for medical or scientific studies.

The Challenge to GovernmentThe DILG Guidelines, without question, is necessary for a whole picture response to the COVID-19 situation.  The challenge now, however, is finding the middle ground—can a dignified death be respected and upheld while making sure that the community is safe from the harms of a highly contagious disease? One might immediately think that it is better to sacrifice one for the good of the whole. The question though remains, is there a way to protect public health and welfare but at the same time respect posthumous rights?.

A fully informed, yet cautious compromise, is morally valuable because it shows respect for and recognition of other human beings’ needs, and humanity. The challenge, therefore, may be something worth exploring.

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