Five Hundred Twenty-Five Thousand Six Hundred Minutes.
How do we measure the period under Enhanced Community Quarantine (“ECQ”)? In daylights? In sunsets? In number of Tiktok videos? In cups of dalgona coffee?
More importantly, how do we measure the adverse effects and the relief needed in response to it? We have been under quarantine and lockdown for approximately 1 month and 2 weeks now; but it feels like forever. The COVID-19 pandemic affected and continues to affect all aspects of our lives, including businesses and inevitably, our economy.
At present, a lot of businesses are contemplating the option of closing down or have already resorted to indefinite cessation of their operations, as they foresee the inability to cover their expenses during the ECQ, and even as the latter is lifted but under an uncertain future of the “new normal.”
To provide Filipinos and businesses, particularly Micro, Small and Medium Enterprises (“MSMEs”), economic relief during the COVID-19 public health emergency, the government enacted the Bayanihan to Heal as One Act and pursuant to this, Department of Trade and Industry issued its Memorandum Circular No. 12, Series of 2020.
Specifically, the DTI Memorandum Circular grants MSMEs a 30-day minimum grace period, without incurring interests, penalties, fees and other charges, for the payment of rent for commercial spaces during the ECQ. Unfortunately, not all MSMEs or businesses were covered, nor will benefit from the economic relief provided by the government, due to the limiting qualification that the MSMEs to be entitled to coverage must have ceased operation.
The truth of the matter is that even those businesses expressly excluded by DTI Memorandum Circular No. 12-2020 are not exempted from the economic effect of the COVID-19 pandemic. While these enterprises attempt their best to continue to operate, the current economic environment and surrounding circumstances prevent them from generating income commensurate to the losses or expenses they are incurring or will continue to incur as the ECQ extends and the aftermath of the pandemic looms even after any relaxation of the current quarantine. The public’s buying power, or even interest, due to work restrictions, has substantially diminished, and their priorities severely changed.
Furthermore, the physical restrictions brought about by the ECQ still prevents the procurement of goods and services from various enterprises. In turn, these businesses have suffered and will continue to suffer major losses. Despite these losses, these enterprises are still faced with the duties to provide the mandatory obligations and benefits to its employees, among its other expenses, such as that of commercial rent.
So, if you have been excluded DTI Memorandum Circular No. 12-2020, how do you avail of a rent concession from your lessor? What do you do now? We offer some suggestions.
Reach out to government to fill in this gap
It is understandable that not all situations can be contemplated by the government in issuing circulars to address the pandemic. After all, we, and our current government, have no prior experience on this. We all only learn through actual experience.
While the government has already issued DTI Memorandum Circular No. 12-2020, nothing stops the government from expanding the coverage or providing further guidelines, to address other enterprises not covered by such issuance or any gap not covered by existing regulations. The government, especially the Inter-Agency Task Force for the Management of emerging Infectious Diseases, has issued supplemental and clarificatory issuances as new information is learned and as the situation develops.
Admittedly, our government, has, of late, been responsive to public opinion. They have shown that they do listen. We recommend writing, together with other businesses owners similarly situated, directly to the government agencies concerned, to provide them with the data, information, and more importantly, the actual sentiments of those actually affected. Any assistance provided to other enterprises would consequently also assist the people, and the economy as a whole.
Ask the concession directly from your lessor
In unprecedented moments like this, we count on each and everyone’s humanity and empathy to come out and pull us together towards a common end. Concurrent with our advice to ask government for such concession, is also the advice for you to pull the necessary courage to ask your landlord directly for such concession that is fair and mutually beneficial to the both of you.
A deferment of the rent during the affected period or even the first few months after the relaxation of the ECQ is one of the concessions you can negotiate for; but best to couple that request for concession with a concrete and fair plan on how you intend to pay the deferred period. Do not hesitate to disclose that you are requesting for the concession as a matter of cash flow management in accordance with your bounce back plan. A request to convert a fixed monthly rent scheme to one of a sales percentage-based arrangement is also one option you can consider and discuss. You can explain that this is being asked for to coincide with the gradual return of the public’s confidence in patronizing retail and similar establishments. We have had inquiries on whether or not it is wise to ask for a waiver. Asking for this one is a huge gamble that is dependent on many variables, a big part of which is your relationship with your landlord. We advise to tread carefully on this particular concession.
At the end of the day, even without the government issuing further guidelines on the matter, isn’t it still incumbent upon us to lend a helping hand to each other, during this difficult time? “Sovereignty resides in the people” is not just an adage. It also means that we have the power and obligation to do what we can to help each other, act with justice, give everyone his due, observe honesty and good faith, towards one goal – overcoming this pandemic. Now, more than ever, is the time for us to be united, and to move past our differences.
Invoke Force Majeure
When all else fails, invoke force majeure or fortuitous event. Even without the DTI Memorandum Circular, all other enterprises may be entitled to rent concessions by invoking force majeure or fortuitous events under the general provisions of the Civil Code, subject to some generally known exemptions.
The COVID-19 pandemic may be considered a force majeure as it is an unforeseeable event, independent of the will of the various business enterprises. Any delay in performance of obligation may be excused, without imposition of further liability. Even without any Memorandum Circular on this matter, nothing prevents the lessors from applying such general laws and providing concessions to these other enterprises.
Be reminded, however, that the defense of force majeure is not absolute. It will not apply in cases expressly specified by law, when it is agreed in the contract that there will still be liability despite occurrence of a fortuitous event, when the nature of the obligation requires the assumption of risk, or when the party liable has performed acts that contribute to the breach of the contract, among others.
