Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

Eighteenth Congress
First Regular Session

HoUsE BILL No. £821

Introduced by Rep. Bernadette Herrera-Dy

AN ACT MANDATING A MORATORIUM OF FINANCIAL OBLIGATIONS
UNDER STATE OF CALAMITY

Explanatory Note

On 11 March 2020, the World Health Organization declared a global pandemic over a
new strain of coronavirus, or COVID-19 as it continues to spread to numerous countries and
territories at an alarming rate, including the Philippines. Since then, the State has responded to
the growing public health threat in several ways. On 16 March 2020, Proclamation No. 929
‘was signed, declaring a ‘State of Calamity’ throughout the country for a period of six months.
An ‘Enhanced Community Quarantine’ in the entirety of Luzon was also imposed from 17
March 2020 until 13 April 2020 to slow the spread of the virus by requiring the population to
practice social distancing. The ECQ implemented strict quarantine measures in barangays and
households, the suspension of mass public transportation, the temporary closure of “Non-
Essential” businesses, the exception of a skeletal work force, and the establishment of
alternative working arrangements. Meanwhile, essential businesses such as hospitals,
pharmacies, groceries, food manufacturers and services, select transportation, banks, utilities,
telecommunications, and media are permitted to continue operations. The said impositions of
ECQ may be lifted or extended as circumstances may warrant. As of 7 April 2020, ECQ was
extended until 30 April 2020 to further contain the transmission of the virus.

On 23 March 2020, Congress passed Republic Act No. 11469, otherwise known as the
Bayanihan to Heal as One Act. This law provides additional powers to the President, allowing
budgetary adjustments and reallocations to support operations and response measures to fight
COVID-19 and provide social amelioration for those deeply affected by ECQ. Section 4 (z)
mandates moving “statutory deadlines and timelines for the filing and submission of any
document, the payment of taxes, fees, and other charges required by law, and the grant of any
benefit, in order to ease the burden on individuals under community quarantine”. Section 4 (aa)
and Section 4 (bb) specifically directs all lenders, both public and private, along with residential
landlords respectively, to grant a thirty (30)-day grace period for the payment of all loans and
fees falling due within the period of ECQ, without incurring penalties.

While the country’s largest and most populous island is placed under lockdown, 57
million people are significantly affected and expected to put their lives on hold for an


underdetermined period of time'. On a day-to-day basis, movements outside of one’s home is
restricted to purchasing food, medicine, and other essential items necessary for survival.

As more territories around the world undergo quarantine, the IMF described this “Great
Lockdown” as the worst economic turndown since the Great Depression. While public health
measures intend to prevent the spread of the virus, financial fear has inevitably become more
pronounced. The Asian Development Bank reported that the outbreak could result in the
Philippine economy losing between 87,000 to 252,000 jobs, in addition to losing up to $1.9
billion in gross domestic products (GDP)*.

Given these circumstances, Non-Essential businesses have continued to pay for the
salaries of their employees during ECQ, despite having little to no revenues. According to the
LFS, businesses with payroll costs and litte sales employ about 17.48 million workers. Of this
data, 5.12 million, or almost 30 percent, are workers with paid salaries. Furthermore, the total
payroll costs for these salaried workers amount to approximately 3 billion pesos per day, or
63.038 billion pesos for an average 21-day work month. Overall, firms considered as a non-
essential business, comprise 60 percent of all payroll costs shouldered during the ECQ. Based
on the Annual Survey of Philippine Business and Industry, many of these businesses are highly
leverage, and the total annual interest payments of these businesses are estimated to amount to
90 billion pesos.

Other businesses that are heavily impacted by the lockdown are the 998,342 micro,
small, and medium enterprises (MSMEs) in the Philippines. These establishments make up
99.52% of all businesses in the country as of 2018, according to the latest List of
Establishments from the Philippine Statistics Authority. MSMEs employ 63.3% of the total
labor force and contribute about 35.7% to the GDP. Moreover, they comprise 60% of all
exporters, These data essentially depict that MSMEs are critical in helping the Philippine
economy keep afloat and flourishing. For many of these enterprises, the most profitable period
are the summer months from March to May. Due to the recent developments of the pandemic
and ECQ impositions, many MSMEs now struggle to manage their operations with no income,
causing businesses to lay off their employees or officially close down altogether. On the other
hand, the seemingly fortunate few MSME owners resort to tapping into their emergency funds
to cover payroll costs, rent, utility, and supplies. However, these funds do not offer the long-
term sustainability needed should the pandemic persist and the lockdown further extend.

Unfortunately, for some workers, alternative work arrangements are not feasible. For
many, no work translates into no income for the foreseeable future. Along with these
circumstances, workers especially those reliant on day jobs and wages, struggle to settle rent,
Joan payments, utility bills, social agency contributions, and other financial obligations on time,
while trying to make ends meet for their families. Consequently, this plunges low-income
families even deeper into poverty. As of 11 April 2020, data from the DOLE showed that
1,049,649 workers across the country are affected, and the highest displacement recorded is in
Metro Manila with 246,810 people. Thus, the next course of action to take is to address
concerns that limit sectors from achieving their full potential and keep businesses and workers
afloat during trying times.

* http://www sappler.com/newsbreak/in-depth/257179-heavy-impact-coronavirus-lockdown-micro-small-medium-
enterprises

* huaps://business inquirer.neV/291954/adb-on-coronavirus-likely-cost-to-ph-up-to-225000 jobs-lost-1-9b-in-gdp-dectine


In addition to the social amelioration program under the Bayanihan to Heal as One Act
and the monetary aid for MSMEs to be provided by the Department of Finance, a moratorium
on all financial obligations is needed to help lessen the impact of the pandemic to millions of
livelihoods. Although health and safety have been the forefront of our concern, it is greatly
intertwined, if not, dependent on the growth of the economy and security of the population and
its industries. Just as the State is prepared to implement public health measures, it too must take
into account the socio-economic impact of the COVID-19 outbreak.

If there is anything we learned by the calamity and crisis situation gripping the country
as a result of the COVID-19 outbreak, it is that there is a need to protect the MSMEs. Far
too often, the Philippines suffers situations of rebellion, conflict, floods, earthquakes, and
eruptions, among others. It is high time to establish policy measures to protect our economy
in the event of such calamities.

Therefore, this Bill seeks to mandate a moratorium on all financial obligations declared
by the President as suffering under a state of calamity, martial law, insurgency, or other
emergency situation, in order to help alleviate the burden of our affected industries and fellow
countrymen and women. Deferring payments would help avoid heavy economic losses and
business closures, reestablish business confidence, and protect sustained operations during and
post-ECQ period. This measure also provides relief to poverty-stricken communities and
vulnerable families most affected by ECQ by keeping their roofs over their heads without
eviction, and enabling them to prioritize their funds for basic necessities.

It is the responsibility of the State to protect its citizens, and most especially in
challenging times, their welfare as well. Unprecedented times call for unprecedented solutions.
With millions of livelihoods at stake, our solutions must be calibrated at hand.

In view of the foregoing, the approval of this bill is earnestly sought.

(ADETTE HERE! -DY


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

Eighteenth Congress
First Regular Session

HOUSE BILL NO. 6621

Introduced by Rep. Bernadette Herrera-Dy

AN ACT MANDATING A MORATORIUM OF FINANCIAL OBLIGATIONS,
UNDER STATE OF CALAMITY

SECTION 1. Short Title. This Act shall be known as the “MSME Calamity Protection Act of
2020”.

SECTION 2. Declaration of Policy.

Section 5, Article IT of the 1987 Constitution provides that “The maintenance of peace and
order, the protection of life, liberty, and property, and the promotion of general welfare are
essential for the enjoyment by all people of the blessings of democracy.”

Section 17, Article II of the same Constitution further provides that “The State affirms labor as,
a primary social economic force. It shall protect the rights of workers and promote their general
welfare.”

Furthermore, Section 1, Article XIII of the same Constitution mandates Congress to “...give
highest priority to the enactment of measures that protect and enhance the right of all people to
human dignity, reduce social, economic, and political inequalities by diffusing wealth and
political power for the common good.”

Relief of those suffering the ravages of calamities constitutes a prime concern of the
Government. In order to sustain and spur economic growth, opportunities shall be afforded to
Non-Essential Businesses, MSMEs, and other debtors to alleviate themselves and enable them
to pay their financial obligations under circumstances beneficial to them. It is hereby declared
as the policy of the State to mandate a moratorium on all financial obligations under state of
calamity.

SECTION 3. Definition of Terms. — For purposes of this Act, the following terms are hereby
defined:

“Debtors” — refers to individuals, firms, organizations, or other entities that owe money or
unable to make a payment to a bank, lender, creditor, landlord, mortgagee, or other financial
institution or entity at a particular time.

“Enhanced Community Quarantine (ECQ)” ~ refers to the implementation of strict home
quarantine in all households, suspension of transpiration, provision for food and regulated
essential health services, and heightened presence of uniformed personnel to enforce


quarantine procedures in order to prevent the spread of COVID-19, as imposed on all of
Luzon under Presidential Proclamation No. 929 dated 17 March 2020.

“Financial Institution” — refers to all lenders, whether public or private, including: (1)
banks, quasi-banks, non-stock savings and loan associations, credit card issuers, pawnshops
and other credit granting institutions under the supervision of Bangko Sentral ng Pilipinas,
Securities and Exchange Commission, and Cooperative Development Authority; (2)
Government Service Insurance System; (3) Social Security System; and (4) Home Mutual
Fund or Pag-Ibig Fund.

“Financial Obligation” ~ refers to the responsibility to meet scheduled payments owed to
an individual (i.e. landlord), corporation, or financial institution at a particular time.

“Moratorium” — refers to the authorized temporary suspension of activities or payment due
in a particular time in order to respond to financial hardship during emergencies that disrupt
normal activities until the related issues are resolved or future events warrant the lifting of
the suspension.

“Micro, small, and medium-scale enterprise (MSME)” — refers to any business activity or
enterprise engaged in industry, agribusiness and/or services, regardless of the type of
ownership - sole proprietorship, cooperative, partnership or corporation, and whose total
assets, have a value falling under the following categories:

Atleast Not more than Employees
Micro - P 3,000,000 1-9 employees
Small P 3,000,001 P15,000,000 10-99 employees
Medium P 15,000,001 P 100,000,000 100-199 employees

“Non-Essential Businesses” — refers to private establishments not in the business of
providing basic necessities and not engaged in rendering activities related to food and
medicine production, such as public markets, supermarkets, groceries, convenience stores,
hospitals, medical clinics, pharmacies, and drug stores, food preparation and delivery
services, water-refilling stations, manufacturing and processing plants of basic food
products and medicines, banks, money transfer services, power, energy, water and
telecommunications supplies and facilities, compliant with the Memorandum of the
Executive Secretary dated 13 March 2020.

“Social Agency Contributions” — refers to compulsory payments made to Government-
Owned and Controlled Corporations that provide entitlement to receive a future social
benefit such as SSS, GSIS, HDMF, and the Philippine Health Insurance Corporation
(PhilHealth).

“State of Calamity” — refers to the condition involving environmental catastrophe, threats
to public health and/or safety, mass casualty, and/or major damages to property, and other
analogous situations resulting with the disruption of means of livelihoods, roads, and
normal way of life of people in the affected areas as a result of the occurrence of natural or


human-induced hazard, as declared by the President of the Philippines to take effect in a
locality or for the entirety of the country for a set period of time.

SECTION 4, Moratorium of Financial Obligations under State of Calamity. Enforcement
of payment of all debts or other financial obligations payable within the Philippines for the
duration of the State of Calamity as declared by the President, to apply in a particular locality
or throughout the entire country, as the case may be.

‘A moratorium on the payment of all financial obligations shall be mandated for the purpose of
easing the burden of Non-Essential Businesses, MSMEs, and other debtors affected and
disrupted by the calamity.

SECTION 5. Scope of Moratorium. This Act mandates all financial institutions whether
public or private, to defer payments of financial obligations owed to them.

The beneficiaries of this Act are applicable to all of Non-Essential Businesses, MSMEs, and
other debtors that have financial obligations with financial institutions, landlords, or other
entities due within the ECQ period.

The financial obligations to be temporarily suspended under the scope of moratorium include:

(i) payroll costs,

(ii) social agency contributions,

(iii) materials and supplies,

(iv) utilities,

(v) mortgage payments,

(vi) insurance payments,

(vii) commercial and residential rent,

(viii) creation of new businesses and renewal of existing business,

(ix) repurposing existing capital, and

(x) any other financial obligations that were incurred before the covered period.

Provided, however, that in the event that any of the aforementioned financial obligations be
required to be paid by a Presidential decree or order, for purposes of ensuring the continuity
of the economy, emergency measures shall be applied in order to protect the payor MSME,
including but not limited to economic and social amelioration, tax payment credit for future
payments, economic bailout, and other analogous situations.

SECTION 6. Duties of Financial Institutions. Financial institutions are mandated to grant a
‘moratorium on the payment of financial obligations of Non-Essential Businesses, MSMEs, and
other debtors.

They are likewise directed to continue rendering their respective services and activities from
the time prior to the calamity until six (6) months after the lifting of the ECQ of 2020, without
incurring interests, penalties, fees, evictions, and other charges.

SECTION 7. General Principles in Relieving Non-Essential Businesses and MSMEs.

a. Sustainability: businesses shall be temporarily relieved of pending financial obligations
for the purpose of avoiding laid off or displaced workers and business closure, and
ensuring continued operations;


b. Security: deferral of financial obligations enables businesses and workers to save,
prioritize and allocate their funds for any losses or damages incurred during the
COVID-19 outbreak;

c. Self-sufficiency or resiliency: businesses that have adopted new arrangements and
operations to adjust and adapt to the COVID-19 outbreak and ECQ impositions shall
be more prepared and protected from future economic shocks.

SECTION 8. Establishment of Crisis or Calamity Inter-Agency Taskforce. To set a
conducive environment for moratorium, the participation of Government agencies is needed,
and the Inter-Agency Task Force is hereby established, comprising of the Departments of Trade
and Industry (DTI, Finance (DOF), Budget and Management (DBM), Labor and Employment
(DOLE), National Economic and Development Authority (NEDA), and the Bangko Sentral ng
Pilipinas. Their national, regional, and provincial offices shall, to their best efforts, provide
grants, necessary support and assistance to financial institutions mandated to grant moratorium
under this Act.

The IATF shall create a centralized database, in which all [ATF members can access with ease
for the purpose of monitoring the compliance of financial institutions in implementing
moratorium within the prescribed period of this Act, and ensuring that the total amount of
assistance received by the financial institutions are rational and appropriate to the response
needed to continue their operations and rendered services and activies, retain workforces, and
maintain payroll costs.

SECTION 9. Oversight Body for MSMEs. To specifically protect the growth and
development of MSMEs, the Micro Small and Medium Enterprises Development (MSMED)
Council shall help establish the necessary environment and opportunities conducive to the
MSME sector including the monitoring the compliance of financial institutions in
implementing moratorium for MSMEs and recommending policies to Congress on concerns
affecting MSMEs.

SECTION 10. Recompense. The IATF shall repay/grant financial institutions the total amount
to carry out and sustain moratorium measures, with the schedule and period of repayment to
be determined.

Not later than fifteen (15) days after the date of enactment of this Act, the IATF shall issue
guidelines and regulations implementing this section, including the target beneficiaries and the
estimated total amount of grants to be provided for repayment.

SECTION 11. Monitoring the Economic Impact of Moratorium. NEDA shall continue to
monitor and analyze the impact of COVID-19 on the economy in order to ensure the proper use
of funds, and submit a monthly report to Congress. Upon the recommendation of NEDA, the [ATF
may adjust the allocation of the funds provided. Should any adjustment be made, the report and
pronouncement must be published.

NEDA shall submit to Congress its summarized findings of the economy during the COVID-19
outbreak and the impact of moratorium on different sectors and industries, along with a recommended


long-term plan for building economic preparedness and resilience, not later than six (6) months
after the lifting of the ECQ. The recommendation plan shall serve as a strategy for measuring
economic preparedness and resilience and as a means to address structural reforms needed to
strengthen the ability of the economy to withstand disruptions such as the COVID-19 outbreak.

SECTION 12. Release and Use of Funds. - The amount to be allocated shall be released by
the DBM to the relevant agencies of the IATF-EMI in compliance with pre-existing
accounting, auditing, and budgeting laws, rules and regulations. The DBM and NEDA, in
coordination with the IATF, shall issue the guidelines necessary for the appropriate expenditure
of this budget.

SECTION 13. Fund Sources. - The amounts necessary to implement this Act shall be
included in the annual General Appropriations Act.

SECTION 14. Existing Industrial Policies — Industrial policies that obstruct the responses of
Non-Essential Business and MSMEs in coping with the economic effects of COVID-19 shall
be revised accordingly.

The DTI, in consultation with the Anti-Red Tape Authority (ARTA), shall review existing
industrial policies and will recommend the removal or revision of rules and regulations that
hinder the goals of business security sustainability during and post-ECQ period.

SECTION 15. Penal Provisions. — Anyone found to be in violation of Section 6 shall be
penalized with a fine of not less than one hundred thousand pesos (Php 100,000.00) but not
more than one million pesos (Php 1,000,000.00) and imprisonments from two (2) months to
six (6) months, or both.

Provided, however, That if the offender is a corporation, association, partnership or juridical
person, the penalty shall be imposed upon the executive(s), directors, managers, or managing
partners who participated in the offense, or who have knowingly permitted or failed to prevent
the offense of the same.

Provided, further, That if the offender is a public official or employee, he shall, in addition to
the penalties prescribed herein, suffer perpetual or temporary absolute disqualification from
office, as the case may be.

SECTION 16. Separability Clause. If, for any reason or reasons, any part of the provision of
this Act shall be held to be unconstitutional or invalid, other parts or provisions hereof which
are not affected thereby shall continue to be in full force and effect.

SECTION 17. Repealing Clause. All laws, decrees, orders, rules, and regulations, or parts
thereof, inconsistent with the provisions of this Act are hereby repealed, amended, or modified
accordingly.

SECTION 18. Effectivity Clause. This Act shall take effect after fifteen (15) days following
its publication in the Official Gazette and at least two (2) newspapers of general circulation.

Approved,