LANDLORDS and lessors are not allowed to evict their tenants, particularly small businesses, who are unable to pay either residential or commercial rent within a 30-day grace period after the lifting of the enhanced community quarantine (ECQ), the Trade department said.
The Department of Trade and Industry issued Memorandum Circular 20-12 dated April 4, which sets the guidelines for the concessions for residential rent, and commercial rent for micro, small, and medium-sized enterprises (MSMEs) that have temporarily ceased operations during the ECQ.
The grace period covers 30 calendar days from the rent due date within the ECQ. As of Monday, the government is considering an extension of the ECQ, which is scheduled to end on April 12.
The cumulative rent due within the ECQ will be amortized in the six months after the lifting of the lockdown, and will be added to rent charges in the following months without interest or penalties.
“No eviction for failure to pay the residential or commercial rent due may be enforced within the thirty (30)-day period after the lifting of the ECQ,” the memorandum said.
Trade Secretary Ramon M. Lopez in a statement on Monday said no Filipinos should lose their residence during the ECQ period.
“Moreover, the importance of MSMEs in jumpstarting our economy once the ECQ has been lifted cannot be understated,” he said. “Through these measures, we ensure that our fellow Filipinos have a future after the ECQ with homes that they can live in and through jobs and employment provided by our MSMEs.”
Several business groups last week said MSMEs must be given assistance including financial support and tax breaks, especially after the lifting of the ECQ.
DTI said that lessors do not have to refund residential and commercial rent already paid during the ECQ, but must grant at least a 30-day grace period from the next rent due date without interest or penalties.
The department also encouraged commercial rent lessors “with greater generosity” to totally or partially waive MSMEs’ rent due within the ECQ, grant a reprieve or provide discounts, or renegotiate lease term agreements.
Lessors can consider MSMEs’ liquidity and capability to pay rent in negotiating possible assistance. MSMEs in turn can present as evidence financial statements, cash flow projections, among others.
“MSMEs shall 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 contracts as proof of tenancy.”
Micro enterprises include those that have a total asset value of P3 million, while small enterprises’ asset value can reach up to P15 million. Medium enterprises’ asset value can hit up to P100 million.
Existing rental payment waivers recognizing the closure of businesses during the ECQ will continue to be honored.
Lessors who do not enforce the 30-day grace period will be penalized with imprisonment of at least two months and/or fined at least P10,000.
Violators may be reported to the DTI, which can issue a notice of violation. The lessor must submit a written reply within five days after receiving a notice.
DTI in mid-March asked mall operators and commercial landlords to waive rent during the ECQ.
The country’s biggest mall operators, SM Group, Ayala Malls, Megaworld Corp., Robinsons Land Corp. and Ortigas & Co., earlier announced they will waive rent for all tenants in its shopping malls that are not able to operate until April 14.
“The total package will be worth around P1.4 billion in rent condonation to provide the merchants of these malls financial relief so they can in turn provide the much-needed financial support for their employees during this period,” Ayala Corp. Chairman and CEO Jaime Augusto Zobel de Ayala earlier said.
“We share our tenants partners’ concerns at the unfortunate situation and will waive rental charges for those affected and unable to operate during this period,” SM Supermalls President Steven Tan also said in an earlier statement. — Jenina P. Ibañez