Legal Updates Archives

1 Apr

Under the Memorandum from the Executive Secretary entitled Community Quarantine Over the Entire Luzon and Further Guidelines for the Management of the Coronavirus Disease 2019 (Covid-19) Situation dated March 16, 2020 (the “Guidelines”), the Enhanced Community Quarantine or ECQ was implemented in the entirety of Luzon, including the National Capital Region (“NCR”) beginning 12:00 am of March 17, 2020 until 12:00 am of April 13, 2020.[1] ECQ is defined as a measure “where strict home quarantine shall be implemented in all households; transportation shall be suspended; provision for food and essential health services shall be regulated; and heightened presence of uniformed personnel to enforce quarantine procedures will be implemented”.[2]

Under the Guidelines, private establishments providing basic necessities and such activities related to food and medicine production (“exempt establishments”) shall be open.[3] For the list of exempt establishments, kindly refer to the MVGS article titled COVID-19 and the Enhanced Community Quarantine: FAQs on Labor and Employment dated March 31, 2020.

The Guidelines require that in all such open establishments, their respective managements shall ensure the adoption of a strict skeletal workforce to support operations, as well as all strict social distancing measures.
The skeletal workforce of covered enterprises and establishments shall be allowed to enter and exit control points upon presentation of any of the following:[4]

Valid Company Identification Card
Proof of Residence
Certification of Employment

To further facilitate transit of personnel of covered enterprises and establishments, an official Inter-Agency Task Force (“IATF”) identification issued by the Department of Trade and Industry (“DTI”) shall be presented. [5]

Following are social distancing measures required to be implemented by open establishments during the ECQ:

DTI Memorandum Circular No. 20-04 dated March 15, 2020 Prescribing Implementing Guidelines for IATF Resolution No. 12 Issued by the Inter-Agency Task Force for the Management of Emerging Infectious Diseases on Social Distancing and Business Operations (the “Circular”) provides general and specific guidelines that must be observed by open establishments during general community quarantine. In practice, open establishments have continued implementing general community quarantine measures as health and safety measures during the ECQ.

a. General guidelines

Reiterate flexible work arrangements referred to under Department of Labor and Employment (DOLE) Labor Advisory No. 09, series of 2020, including but not limited to, other work arrangements, such as telecommuting, work from home, reduction of workdays/hours, rotation of workers and forced leave
Restrict mass gatherings such as but not limited to general assemblies, large meetings or conferences, outdoor events that attract large crowds and non-essential work-related gatherings

b. Social distancing measures for establishments engaged in retail

The selling area shall have a density of one (1) person per square meter of unimpeded space (“carrying capacity”).
Establishments must educate their employees/staff on the importance of social distancing; observe precautionary measures to prevent the spread of Covid-19 by strictly regulating the entry of people in accordance with the carrying capacity of the establishment.
Establishments must remind the public to observe social distancing through signages and public address system.
Establishments must implement strict sanitary measures including the use of sanitizing solutions in high-touch, high-traffic areas, elevators, shopping carts and baskets.
Establishments must notify the public health authorities of employees and/or staff who show signs or symptoms of Covid-19

c. Social distancing measures for establishments not engaged in retail

Safety and health measures are strictly observed.
Businesses are encouraged to provide temporary housing for its workers outside of the NCR.

d. Safety and health measures

Infectious disease preparedness response plan. Establishments in operation shall prepare plan to protect against the spread of Covid-19.

– Plans should consider and address the level(s) of risk associated with various worksites and tasks that workers perform on those sites.
– Business establishments whose workers have been exposed to Covid-19 must implement contact tracing in coordination with the Department of Health (“DOH”) and the local government unit concerned.

Basic infection prevention measures. Employers should implement good hygiene and infection control practices, including:

–   Promoting frequent and thorough hand washing by providing workers, customers, and worksite visitors with a place to wash their hands, among other measures. If soap and running water are not immediately available, provide alcohol-based hand rubs containing at least 70% alcohol.
–   Encourage workers to stay at home if they are sick.
–   Encourage respiratory etiquette, including covering coughs and sneezes.

Workplace preparations.

–   Provide customers and the public with tissue, alcohol and trash receptacles.
–   Discourage workers from using other workers’ phones, desks, offices, or other work tools and equipment when possible.
–   Maintain regular housekeeping practices, including routine cleaning and disinfecting of surfaces, equipment, and other elements of the work environment, using Food and Drug Administration approved cleaning materials.

Strictly monitor and conform to safety and precautionary guidelines issued by the DOH.

1 Apr

COVID-19 and the Enhanced Community Quarantine: FAQs on Labor and Employment

Atty. Reynaldo T. Dizon, Atty. Enrico Errol D. Angeles, Mary Katherine B. Alampay

Legal Updates

Author Atty. Reynaldo T. Dizon, Atty. Enrico Errol D. Angeles, Mary Katherine B. Alampay

[Authors’ Notes: This article has been updated as of May 8, 2020.]Introduction:

On March 16, 2020, the Office of the President, through Presidential Proclamation No. 929, declared a State of Calamity throughout the Philippines due to the coronavirus disease (“COVID-19”), and imposed Enhanced Community Quarantine throughout Luzon until April 12, 2020. Below is a Q&A on the general legal implications of the imposition of the Enhanced Community Quarantine as well as the other issuances from the relevant governmental agencies pertaining to the employment matters.

Frequently Asked Questions:

1. What is the legal implication of the Enhanced Community Quarantine to the employers?

Only those private establishments providing basic necessities and such activities related to food and medicine production, banks, money transfer services, power, energy, water, and telecommunications supplies and facilities shall be open.

Business Process Outsourcing establishments and export-oriented industries shall also remain operational.

2. Does this mean that businesses which do not fall under the lines of business enumerated above should not operate?

Based on the Memorandum issued by the Executive Secretary on 16 March 2020, only the above-mentioned businesses are allowed to operate. However, the Department of Labor and Employment (“DOLE”) issued Department Order No. 209 on 17 March 2020 to implement the COVID-19 Adjustment Measures Program (“CAMP”) for the benefit of the workers affected by COVID-19 and to cater to the extraordinary circumstances arising due to the said virus. It serves as guidelines on the implementation of flexible work arrangements (“FWAs”) and remedial measures due to the ongoing outbreak of COVID-19. It is considered a better alternative than outright termination of employments or the total closure of the establishments.

3. What is the period of coverage of the CAMP?

CAMP covers the period from January 2020 until the lifting of the Stringent Social Distancing Measures in the National Capital Region (“NCR”) on 14 April 2020, unless extended by the Inter-Agency Task Force for the Management of Emerging Infectious Diseases. It has retroactive application.

4. Which establishments are affected by the CAMP?

Private establishments that have implemented (i) FWAs as defined under DOLE Labor Advisory No. 09, Series of 2020; or (ii) temporary closure as mitigating measures due to the COVID-19 pandemic. Government employees are excluded from the program.

5. What is the legal implication of the Enhanced Community Quarantine period to the employment status of the employees?

The affected workers remain employees of the employer, unless the employer permanently closes its business or the employee resigns.

Employees who fail or refuse to work by reason of imminent danger resulting from natural calamities shall not be exposed to or subject to any administrative sanction.[1]

6. What is the general rule for compensation of employees during the Enhanced Community Quarantine period?

During the Enhanced Community Quarantine period, the general rule to be applied is the principle of, “No work, no pay.”[2] Employees who do not report to work are not entitled to receive their salaries/wages.

7. Are there any exceptions?

Yes. With the consent of the employees, absences incurred during the Enhanced Community Quarantine period due to the request by the employer to stay at home or who are served quarantine orders for reasons related to COVID-19 will be charged against the remaining leaves of the employees, if any.[3]

8. What happens if the employees have already consumed all their available leaves and/or they refuse that the days they are
not required to work be charged to their remaining leaves?

The “No work, no pay” principle will apply and the employees will be on unpaid leave.[4] The employers are not legally mandated to pay their respective salaries during the time that these employees are on unpaid leave.

9. Is there any requirement under the law for employers to provide financial assistance to employees during the
Enhanced Community Quarantine Period?

No, this will be at the employer’s discretion.

However, large establishments are encouraged to cover the full wages of employees within the one (1) month Enhanced Community Quarantine period.[5]

10. Is there any financial assistance from the government available to employees who have used up their leaves?

Employees who have used up their leaves may be entitled to one-time financial assistance from the DOLE under CAMP. It is a safety net program meant to offer financial support affected employees in private establishments that have adopted FWAs or temporary closure during the COVID-19 pandemic.[6] Under CAMP, such affected employees may avail of lump-sum, non-conditional financial assistance equivalent to Php5,000.00, regardless of employment status[7] (i.e. permanent, probationary, or contractual[8]).

11. Which employers are eligible for the financial assistance under CAMP?

Employers who have implemented an FWA or temporary closure due to the COVID-19 pandemic.[9] Employees working in micro, small, and medium enterprises are given priority.

12. What is the legal implication of the Enhanced Community Quarantine to the employers?

Business Process Outsourcing establishments and export-oriented industries shall also remain operational. 13. Does this mean that businesses which do not fall under the lines of business enumerated above should not operate?

14. What is the period of coverage of the CAMP?

15. Which establishments are affected by the CAMP?

16. What is the legal implication of the Enhanced Community Quarantine period to the employment status of the employees?

17. What is the legal implication of the Enhanced Community Quarantine period to the employment status of probationary employees?

The DOLE issued Labor Advisory No. 14 stating that for purposes of determining the six-month probationary period, the one month Enhanced Community Quarantine period is not included thereof.

18. Since the Enhanced Community Quarantine period was extended to April 30, 2020 and then to May 15, 2020, are the said periods still not included in determining the six-month probationary period?

It is worthy to note that when the said Labor Advisory was issued, the Enhanced Community Quarantine period would supposedly last only until April 15, 2020. This is why it specifically referred to the “one month Enhanced Community Quarantine period”. Thus, erring on the side caution, the succeeding extensions of the Enhanced Community Quarantine period should not excluded in determining the six-month probationary period.

19. What is the legal implication of the Enhanced Community Quarantine period to legitimate contractors whose Certificate of Registration expired or expires within the said period?

The DOLE issued Department Order No. 213 which suspended new and renewal applications for Certificate of Registration during the community quarantine period. For those whose registration expired or expires within the community quarantine period, extension of filing of the Certificate of Registration is deemed granted after the lifting of the community quarantine period for a period of thirty (30) days (note that the said Order contemplates both Enhanced Community Quarantine and General Community Quarantine periods).

20. What is the general rule for compensation of employees during the Enhanced Community Quarantine period?

During the Enhanced Community Quarantine period, the general rule to be applied is the principle of, “No work, no pay.”[11] Employees who do not report to work are not entitled to receive their salaries/wages.

21. Are there any exceptions?

22. What happens if the employees have already consumed all their available leaves and/or they refuse that the days they are not required to work be charged to their remaining leaves?

The “No work, no pay” principle will apply and the employees will be on unpaid leave.[13] The employers are not legally mandated to pay their respective salaries during the time that these employees are on unpaid leave.

23. Is there any requirement under the law for employers to provide financial assistance to employees during the Enhanced Community Quarantine Period?
No, this will be at the employer’s discretion.

However, large establishments are encouraged to cover the full wages of employees within the one (1) month Enhanced Community Quarantine period.[14]

24. Is there any financial assistance from the government available to employees who have used up their leaves?
Employees who have used up their leaves may be entitled to one-time financial assistance from the DOLE under CAMP. It is a safety net program meant to offer financial support affected employees in private establishments that have adopted FWAs or temporary closure during the COVID-19 pandemic.[15] Under CAMP, such affected employees may avail of lump-sum, non-conditional financial assistance equivalent to Php5,000.00, regardless of employment status[16] (i.e. permanent, probationary, or contractual[17]).

25. Which employers are eligible for the financial assistance under CAMP?
Employers who have implemented an FWA or temporary closure due to the COVID-19 pandemic.[18] Employees working in micro, small, and medium enterprises are given priority.

[1] DOLE Labor Advisory No. 01 Series of 2020.

[2] DOLE Labor Advisory No. 01 Series of 2020.

[3] DOLE Labor Advisory No. 04-20 Series of 2020 and DOLE Labor Advisory No. 11-20 Series of 2020.
[4] DOLE Labor Advisory No. 04-20 Series of 2020
[5] DOLE Department Order No. 209 dated March 17, 2020

[6] DOLE Department Order No. 209 dated March 17, 2020

[7] DOLE Department Order No. 209 dated March 17, 2020

[8] DOLE Labor Advisory No. 12-20 Series of 2020
[9] DOLE Department Order No. 209 dated March 17, 2020
[10] DOLE Labor Advisory No. 01 Series of 2020.
[11] DOLE Labor Advisory No. 01 Series of 2020.
[12] DOLE Labor Advisory No. 04-20 Series of 2020 and DOLE Labor Advisory No. 11-20 Series of 2020
[13] DOLE Labor Advisory No. 04-20 Series of 2020
[14] DOLE Department Order No. 209 dated March 17, 2020

[15] DOLE Department Order No. 209 dated March 17, 2020

[16] DOLE Department Order No. 209 dated March 17, 2020

[17] DOLE Labor Advisory No. 12-20 Series of 2020

[18] DOLE Department Order No. 209 dated March 17, 2020

2 Mar

Establishment of a Corporation with less than 5 Incorporators

Atty. Phil Ivan A. Chan

Legal Updates

Author Atty. Phil Ivan A. Chan

The Revised Corporation Code of the Philippines (the “RCC”), which took effect on 23 February 2019, introduced several changes in corporate law, one of which is in relation to establishing a corporation. The RCC now allows any person, partnership or corporation, whether singly or jointly with others, to form a corporation. In addition, the old requirement of having at least 5 incorporators have been removed paving the way for the introduction of a One Person Corporation (OPC).

The Securities and Exchange Commission (SEC) currently allows establishment of a corporation with less than 5 incorporators through manual registration. A few years ago, the SEC launched the Company Registration System (CRS) which provides an online pre-processing of registrations and other corporate applications. However, the changes introduced by the RCC has not yet been integrated into the CRS so for those who intend to establish a corporation with less than 5 incorporators, the application must be filed physically at the SEC.

Below are the steps for establishing a corporation with less than 5 incorporators (other than a OPC):

1. Prepare 5 sets of the Articles of Incorporation and By-Laws (the “Incorporation Documents”) signed by the incorporators and the treasurer-in-trust, and acknowledged or authenticated in such form and manner as allowed by the SEC. Each incorporator must own or subscribe to at least 1 share of the capital stock or in case of a non-stock corporation, each must be a member thereof. In case of incorporators who are natural persons, each must be of legal age. In case of an incorporator which is a juridical entity, it must be in good standing and the investment must be approved by majority of the board of directors or trustees and ratified by shareholders owning at least 2/3 of the outstanding capital stock or by at least 2/3 of the members in case of a non-stock corporation or by all partners in case of a partnership. In case of foreign corporations, the document evidencing board approval must be authenticated or with an apostille affixed thereto. In any case, the written approval must also contain the name of the designated signatory for the juridical entity. These written approvals must be submitted together with the Incorporation Documents.

2. Reserve the proposed corporate name through the manual name reservation procedure with the Corporate and Partnership Registration Division (CPRD) of the SEC for a fee of Php100.00. This process takes 1 to 3 business days. Confirmed name reservations are valid for 30 days.

3. Submit the duly accomplished Incorporation Documents to the CPRD for checking. SEC review takes 1 to 2 business days.

4. Upon securing clearance, the SEC will issue a Payment Assessment Form (PAF) for the registration fees. Upon issuance of the PAF, proceed to the Cashier’s Office to pay the registration fees. This will take 1 business day.

5. After payment of the registration fees, submit Incorporation Documents for processing and issuance of the Certificate of Incorporation. This process takes 2 to 5 business days.

A downside of the manual registration is that the SEC will not be able to generate the Taxpayer Identification Number (“TIN”), or Employer Registration Numbers (“ERNs”) of the corporation with Pag-IBIG, Philhealth, and SSS. As such, corporations that underwent the manual process of registration must therefore separately apply for the TIN with the BIR and the ERNs with the proper government agencies.