DTI | grace period | concession | residential rent | commercial rent 

MSMEs

MC 20-29

MC 20-31

MC 20-12

Community quarantine

ECQ

MECQ

GCQ

MGCQ

DTI supplements guidelines on concession of residential and commercial rents

DTI issues MC 20-29 and MC 20-31 supplementing the guidelines on the 30-day grace period to pay residential and commercial rents of MSMEs

Client Alert – 19 June 2020

Department of Trade and Industry ("DTI") issued last June 2, 2020 its Memorandum Circular No. 20-29 (“MC 20-29”) as amended by Memorandum Circular No. 20-31.

MC 20-29 supplements the guidelines on the concession of residential and commercial rents earlier provided in Memorandum Circular No. 20-12.

MC 20-29 covers all residential and commercial rents of micro, small and medium enterprises (“MSMEs”) that have been affected by the community quarantine (which can be ECQ, MECQ and GCQ).

A. Concession on residential and commercial rents

MC 20-29 provides the following rules for applying the minimum 30-day grace period for paying rent:

  1. Residential rent and commercial rent of MSMEs and sectors not allowed to operate during the community quarantine are granted a 30-day grace period. The 30-day grace period applies to rent that falls within the ECQ, MECQ and GCQ;
  2. The grace period starts from the last due date to pay rent, or from the lifting of the ECQ, MECQ and GCQ, whichever is longer, without incurring interests, penalties, fees and other charges; and
  3. The cumulative amount of residential and commercial rents stated above that fall due within ECQ, MECQ, and GCQ will be amortized in 6 months following the end of the 30-day grace period, without incurring interests, penalties, fees and other charges, which amount shall be added to the current monthly rent due.

B. No evictions

MC 20-29 prohibits any eviction from March 17, 2020 until the end of the grace period granted to a lessee for failure to pay the residential and commercial rent due.

Any violation of MC 20-29 may be filed with the DTI for investigation and may result in an administrative and criminal complaint against the offender.

C. How this affects you

Lessors who are affected by the MC 20-29 should grant the mandatory grace period to their lessees in order to avoid the penalties for non-compliance, which include possible imprisonment.

Lessors should note however that the grace period applies only to rent during the community quarantine and for a limited time after. Further, the grace period does not apply during MGCQ.

On the other hand, lessees can invoke the mandatory grace period to give themselves economic respite from the community quarantine.

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Regards,

The Legal Tree team