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Covid-19

Philippine legal updates on COVID-19 (As of 31 March 2020)

As the COVID 19 pandemic continues to sweep most parts of the world, the responses of governments worldwide have not been limited to the medical or scientific realm but have likewise included legal measures. The Philippine government and its agencies are no exception.

Initial Actions

On 8 March 2020, the President issued Proclamation No. 922, declaring a State of Public Health Emergency throughout the Philippines due to COVID 19. On 12 March 2020, the Vice President urged companies to begin implementing a work-from-home scheme for its employees now that the novel coronavirus outbreak has turned into a pandemic. Later in the evening of March 12, upon advised of the Inter-Agency Task Force on Emerging Infectious Diseases (IATF), the President raised Code Red Sublevel 2 and significantly limited travel in and out of the National Capital Region (NCR) as a form of quarantine for 30 days starting March 15 until April 14. He also ordered the suspension of classes across Metro Manila until April 12, 2020.

With the raising of Code Red to the highest level, the President also announced the following measures, among others:

(i)            banning of planned or spontaneous mass gatherings;

(ii)          suspension of work in the Executive department during the quarantine period without prejudice to the formation of skeletal workforces. On the other hand, the President encouraged Congress and the Judiciary to adopt the same policy. On the other hand, law enforcement agencies, including the Armed Forces of the Philippines and the Philippine National Police, as well as health and emergency frontline services shall continue in full operation;

(iii)         flexible work arrangements are encouraged in the private sector, following guidelines from the Department of Labor and Employment and the Department of Trade and Industry designed to safeguard the welfare of the workers. On the other hand, all manufacturing, retail and service establishments shall remain in operation during the same period, provided that strict social distancing measures are observed;

(iv)         the Department of Transportation should issue guidelines to ensure social distancing in public transportation, which remains operational;

(v)           Land, domestic air, and domestic sea travel to and from Metro Manila shall be suspended until April 14, 2020 

All the above measures shall be subject to daily monitoring and reassessment by the IATF. Finally, entry travel restrictions shall be imposed upon those traveling from countries with localized COVID-19 transmissions, except for Filipino citizens including their foreign spouse and children, if any, holders of permanent resident visa, and holders of diplomatic visas issued by the Philippine Government.[1] 

In a Memorandum dated 13 March 2020 issued by the Executive Secretary, it provided further guidelines on the imposition of Stringent Social Distancing Measures in the NCR starting 15 March 2020 until 14 April 2020. It also provided that community quarantine are two types: (i) general community quarantine, where movement of people are limited to accessing basic necessities and work; and uniformed personnel and quarantine officers shall be present at border points; (ii) enhanced community quarantine, where strict home quarantine are implemented in all households; transportation is suspended; provision for food and essential health services is regulated, and heightened presence of uniformed personnel to enforce quarantine procedures are implemented.

On 16 March 2020, the President made an announcement, placing the entire island of Luzon (where NCR is situated) under an enhanced community quarantine. This meant strict home confinement in all households, suspended transportation lines, regulated provision for food and essential health services, and heightened presence of uniformed personnel to enforce isolation procedures.[2]

On March 17 2020, the President signed Proclamation No. 929 placing the entire Philippines under the state of calamity on account of COVID-19 for a period of six months unless earlier lifted or suspended.

On March 22, 2020 the President asked Congress to declare a national emergency and grant the President emergency powers on account of COVID-19. On March 23, 2020, the House of Representatives approved HB 6616 or "Bayanihan Act" declaring a national emergency due to the coronavirus pandemic and authorizing the President “for a limited period and subject to restrictions, to exercise powers necessary and proper to carry out the declared national policy.”[3] On March 24, 2020 the Senate approved Senate Bill 1481 or "We Heal As One" that will grant President Duterte additional powers to handle COVID-19.

National Legislation

On March 25, 2020 the President signed into law Republic Act 11469, known as Bayanihan to Heal as One Act of 2020,[4] which declared the existence of a national emergency arising from the coronavirus disease 2019 (covid-19). This law among others authorized the President to adopt the following emergency measures, among others, (i) provide public health workers with “COVID-19 Special Risk Allowance” in addition to their hazard pay under existing law; (ii) provide emergency subsidy to 18 million low-income households that have lost their sources of income amid the pandemic in the minimum amount of Php5,000 and maximum amount of P8,000 a month for 2 months; (iii) direct the operation of any privately owned hospitals, medical and health facilities, including passenger vessels, and other establishments to house health workers, serve as quarantine areas, quarantine centers, medical relief and aid distribution locations, or other temporary medical facilities; (iv) undertake the procurement of the necessary goods and services as exemptions from the existing procurement law; (v) engage temporary Human Resources for Health to complement/supplement current health work force; (vi) liberalize the grant of incentives for the manufacture or importation of critical or needed equipment or supplies, and exempting the importation thereof from taxes, duties, and other fees; (vii) regulate and limit the operation of all sectors of transportation; (viii) move statutory deadlines and  timelines for the filing and submission of document, payment of taxes, fees and other charges, and the grant of any benefit; (ix) direct public and private financial institutions to implement a minimum of a 30-day grace period of all loans falling due within the period of enhanced community quarantine without incurring penalties, fees, charges.

The law also penalized certain acts including the act of “creating, perpetrating or spreading false information regarding the COVID-19 crisis on social media and other platforms”  when the information has no “beneficial effect on the population” and are “clearly geared to promote chaos, panic, anarchy, fear or confusion.” It also punishes those “participating in cyber incidents that make use or take advantage of the current crisis situation to prey on the public through scams, phishing, fraudulent emails, or other similar acts.”    

Tax issuances

A day before or on 23 March 2020, the country’s tax agency, the Bureau of Internal Revenue (BIR), also clarified the extension of the deadline of the filing of the annual Income Tax Return (ITR) from 15 April 2020 to 15 May 2020[5] The deadline to avail of the tax amnesty on delinquency was also extended from 23 April 2020 to 23 May 2020.[6] Other tax related deadlines were also extended.[7] The BIR also clarified that the running of the Statute of Limitations in the assessment and collection of taxes is also suspended.[8]

Judiciary and the Prosecution Service

Meanwhile, the country’s justice department authorized the conduct of an “alternative” and “optional” “e-inquest” proceeding. Inquest is an informal and summary investigation conducted by a public prosecutor in criminal cases involving persons arrested and detained without the benefit of a warrant of arrest issued by the court for the purpose of determining whether said persons should remain under custody and correspondingly be charged in court.[9]

On the other hand, on March 16, 2020 the Philippine Supreme Court issued Administrative Circular 32-2020 which, among others, suspended all hearings nationwide except “urgent matters.” A few days later, citing “the unabated rise of COVID 19” the Supreme Court issued Administrative Circular 32-2020 directing the physical closure of all courts nationwide.

On 31 March 2020, the Philippine Supreme Court allowed the electronic filing of criminal complaint or information. Other pleadings or motions in relation to the criminal case may likewise be filed electronically.[10] It also authorizes the electronic transmission of the court’s order granting bail and the corresponding release order to the appropriate law enforcement authorities. This procedure is made effective only during the period of the public health emergency.[11]

Trade

The country’s trade and industry department meanwhile issued a Memorandum Circular 20-04 dated 15 March 2020, applicable to business establishments in Metro Manila. It provides that all manufacturing, retail and service establishments shall remain in operation subject to social distancing measures among other safety and health measures; mass gatherings are restricted in all business establishments; limited the operations of mall to establishments offering basic necessities. The rentals and other charges of stores closed during the quarantine period are also waived. On the other hand, businesses offering leisure and entertainment, gathering crowds are prohibited from operating during the quarantine period.

Retail establishments may operate provided that the number of people at any given time should be limited to one person per one square meter of vacant space in the establishment.  They are also directed to (i) educate their employees on social distancing, (ii) observe precautionary measures to prevent spread of COVID19 by regulating entry of people; (iii) remind buying public to observe social distancing, (iv) implement sanitary measures; (v) inform public health authorities of staff/employees who show symptoms of COVID 19. They are also directed to strengthen online commerce.

Non-retail businesses in agriculture, manufacturing, and service may continue to operate provided that they observe social distancing and other safety and health measures.

Since the terms of Memorandum Circular 20-04 is broad, a few establishments implemented a “no-mask no entry” policy. The government (IATF) has taken the position that this is not a valid policy.[12] 

The trade and industry department also issued Memorandum Circular 20-07 which provides for measures to prevent unreasonable increase in the prices of all basic necessities and to ensure availability of vital and essential commodities especially during the duration of Public Health Emergency.[13] 

Meanwhile, some local governments have responded creatively to implement social distancing by employing technology. At least two local governments have employed drones equipped with cameras that are deployed in public places to track people’s compliance with social distancing.

The trade and industry department also announced that the SB Corporation, an agency under it, is setting up a P1 billion Enterprise Rehabilitation Financing facility which will be implemented once the community quarantine declaration is lifted. Micro enterprises with asset size of not more than P3 million may borrow P10,000 up to P200,000 and small enterprises with asset size of not more than P10 million may borrow a higher loan amount but will not exceed P500,000. The loan shall be used to help the enterprise stabilize or recover from its losses due to COVID19.[14] 

Securities body

The country’s securities body, the Securities and Exchange Commission (SEC), also  issued Guidelines on the Attendance and Participation of Directors, Trustees, Stockholders, Members, and Other Persons of Corporations in Regular and Special Meetings Through Teleconferencing, Video Conferencing and Other Remote or Electronic Means of Communication.[15] Under the Guidelines, directors or trustees who cannot physically attend or vote at board meetings can participate and vote through remote communication such as videoconferencing, teleconferencing, or other alternative modes of communication that

allow them reasonable opportunities to participate. In this regard, the Corporate Secretary is tasked to among others “ensure that the visual and audio recordings of the meeting are secured” and “to safe-keep and perpetuate” the same “in updated data storage equipment or facility.

Apart from this, the SEC also issued Guidelines[16] for the Filing of General Information Sheet (GIS) during the COVID-19 Outbreak and Enhanced Community Quarantine. Under the Guidelines, if the election of directors, trustees or officers is conducted, the GIS may be submitted by email to the SEC but within 30 days of the election. If the annual meetings or elections, due to be held between 1 March 2020 and 31 May 2020, are not held due to COVID-19 and there are no facilities for remote communication, the corporation should report the matter to the SEC within 30 days from the scheduled meeting and this can be done by email as well. However, the report should contain a proposed new date which must be within 60 days of the original date.

Labor

Lastly, as early as 4 March 2020, the labor department issued an Advisory[17] encouraging the adoption of flexible work arrangements as “better alternatives” to outright termination of services of employees or closure of the establishment. The labor department also later issued Guidelines on the Adjustment Measures Program for the Affected Workers due to Coronavirus Disease 2019,[18] which apply to employees whose employers have implemented flexible work arrangements or temporary closure due to COVID 19 and have duly complied with the documentary requirements of the labor department. Under the Guidelines, these employees, regardless of employment status, would receive from the government, through bank transfer, a “non-conditional” one-time financial assistance of Php5,000.00.

COVID 19 as Force majeure or Fortuitous event

Acts of God or force majeure, by definition, are extraordinary events that could not be foreseen, or which, though foreseen, are inevitable.[19] To exempt the obligor from liability for a breach of an obligation by reason of force majeure or fortuitous event, the following requisites must concur: (a) the cause of the breach of the obligation must be independent of the will of the debtor; (b) the event must be either unforeseeable or even if foreseeable is unavoidable; (c) the event must be such as to render it impossible for the debtor to fulfill his obligation in a normal manner; and (d) the debtor must be free from any participation in, or aggravation of the injury to the creditor.

The exempting effect of force majeure or fortuitous event however is subject to exceptions. Under the law, these exceptions are: (1) when the law expressly so specifies; (2) when it is otherwise declared by the parties; and (3) when the nature of the obligation requires the assumption of risks.

Considering that the requisites for applicability of force majeure or fortuitous event, and the exceptions to it are heavily factual in nature, whether force majeure or fortuitous event may or may not be applied must be resolved on a case-to-case basis.

Impossibility and Doctrine of Unforeseen Events

Apart from force majeure or fortuitous event, Philippine law also recognizes legal or physical impossibility as a ground to release a debtor from obligation: “The debtor in obligations to do shall be released when the prestation becomes legally or physically impossible without the fault of the obligor.” Thus, it is required that (i) the obligation is an obligation to do; (ii) the obligation becomes legally or physically impossible; and (iii) the physical or legal impossibility arose without fault of the debtor.

Legal or physical impossibility is an exception to the principle of obligatory force of contracts[20], such that, when it is clearly shown that legal or physical impossibility exists in complying with one’s contractual obligations, for equity considerations, the law itself relieves the debtor from responsibility. Similar with fortuitous event and force majeure, the factual circumstances of each case should be carefully evaluated to determine the existence of the requirements of legal or physical impossibility.

Another legal construct that could exempt the debtor from liability is the doctrine of unforeseen events. Under Philippine law, “when the service has become so difficult as to be manifestly beyond the contemplation of the parties, the obligor may also be released therefrom, in whole or in part.” The doctrine is based on the discredited theory of rebus sic stantibus in public international law; under this theory, when the parties stipulate in the light of certain prevailing conditions, the cessation of these conditions would cause the cessation of the contract entered into between the parties. Unlike cases on fortuitous events or, to a certain extent, on legal or physical impossibility, cases applying the doctrine of unforeseen events are far fewer and rarer because parties are assumed to know all the circumstances and assumed all business risks concomitant to a specific contractual undertaking.

 



[2] Memorandum from Executive Secretary dated 16 March 2020. The Enhanced Community Quarantine and Stringent Social Distancing Measures is set from 17 March 2020 to 13 April 2020 while classes are suspended until 14 April 2020; https://news.abs-cbn.com/news/03/16/20/duterte-places-luzon-under-enhanced-community-quarantine-to-fight-covid-19

[5] Revenue MC. 30-2020 (23 March 2020)

[6] Revenue MC. 33-2020 (24 March 2020)

[7] E.g. Memorandum Circular 27-2020 (17 March 2020); Memorandum Circular 32-2020 (20 March 2020); Memorandum Circular 31-2020 (23 March 2020); Revenue Regulation 7-2020 (27 March 2020).

[8] Memorandum Circular 34-2020 (27 March 2020).

[9] Office Order dated March 27, 2020.

[10] Administrative Circular 33-2020.

[11] Administrative Circular 33-2020 (Online Filing of Complaint or Information and Posting of Bail Due to the Rising Cases of COVID-19 Infection

[15] Memorandum Circular No. 6.

[16] Memorandum Circular No. 9.

[17] Labor Advisory No. 9, Series of 2020

[18] Department Order No. 209, Series of 2020 (March 17, 2020).

[19] National Power Corporation v Court of Appeals, G.R. No. 96410 July 3, 1992.

[20] G.R. No. 116896, 05 May 1997.