Enhanced Community Quarantine: What it Spells Out for Lessees and Property Owners.

 

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What is Enhanced Community Quarantine?

Effective March 17, 2020, the entire island of Luzon was placed under Enhanced Community Quarantine (ECQ). This Executive Issuance was a sequel to a previous Memorandum dated March 14, 2020, directing government agencies to implement strict social distancing measures as part of a General Community Quarantine to arrest the spread of the COVID19 virus.

The first issuance created a lot of confusion and led people to practice the opposite of social distancing. Such confusion led to the creation of a more aggressive executive order.

In layman’s terms, ECQ directs all business to the exception of several vital industries, to shut down its physical operations in order to implement social distancing.

How do all these issuances affect business owners, and lessees in particular?

The March 14 Memorandum gave rise to several Department issuances, one of which was DTI Memorandum 20-04. Most germane to this topic is the provision of rent relief for certain businesses. In item C(2.2), it provides that:

“Lessors and owners of these business spaces shall share the responsibility by waiving the corresponding rental fees and charges of stores that were closed during the one month period of General Community Quarantine, as a result of this Memorandum Circular.”

While Memorandum 20-04 only mentioned the total shut down of businesses in the entertainment and restaurant industries, an extrapolation of this rule should extend to all affected businesses due to the implementation of the ECQ. As of this posting, DTI has not yet issued an “enhanced” version of Memorandum 20-04.

Is the imposition of rent relief legal?

In discussing the government’s attempt to impose rent relief on property owners, three important laws mainly come into play: (1) Section 17, Article XII of the Constitution on temporary direction of businesses affected with public interest, (2) Republic Act 1132 also known as Public Health Concern Act of 2018, and the notorious (3) Residual Powers of the President under the Revised Administrative Code of 1987.

The Public Health Concern Act gives the President the power to declare a State of Public Health Emergency. In declaring such, he can mobilize both government and nongovernmental agencies to respond to threats, including directing businesses affected with public interest. For good measure, the President’s “residual powers” ensure that as long as there is no law prohibiting a particular presidential act, it shall be considered legal and valid.

Armed with these legal arsenal, the President may validly impose rent relief on affected businesses and industries.

Is the leasing industry vested with public interest?

The Constitution mentions the term “public interest” in relation to which businesses can the President legally tinker with. Public interest is described by the Supreme Court as something that directly affects the daily lives of the public. Rented property, particularly commercial spaces where the daily livelihood of millions of Filipinos depend on, is vested with public interest especially in a public health emergency.

In our current situation, imposing rent relief in favor of ailing businesses may spell out the future of countless livelihoods.

Stay safe and trust the system.

 

Karl S. Borja is a Partner at Borja Salem Panis Baldonado and Associates. His practice includes real estate transactions, property law, and government regulatory compliance.

You may reach him at:

ksborja@bspba.law

6B Vernida I Condominium, 120 Amorsolo St., Legazpi Village, Makati City. Tel No. 02-847888395.

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