Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City
Nineteenth Congress
First Regular Session
HOUSE BILL NO.________
Introduced by Rep. Bernadette Herrera-Dy
AN ACT MANDATING A MORATORIUM OF FINANCIAL OBLIGATIONS
UNDER STATE OF CALAMITY
Explanatory Note
On I I 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 "NonEssential" 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".
July 7, 2022
9:13 am
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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 l. 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)2.
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 little 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 nonessential 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,
loan 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 Il April 2020, data from the DOLE showed that I ,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.
I
https://www.rappler.com/newsbreak/in-depth/257179-heavy-impact-coronavirus-loc
kdown-micro-small-mediumenterprises
2
https://business.inquirer.net/291954/adb-on-coronavirus-likely-cost-to-ph-up-to-225
000-jobs-lost-1-9b-in-gdp-decline
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 from 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.
BERNADETTE HERRERA-DY
Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City


Nineteenth Congress
First Regular Session
HOUSE BILL NO.____
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 2022".
SECTION 2. Declaration of Po1icy.
Section 5, Article Il 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 Il 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 l , 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 are unable to make a payment to a bank, lender, creditor, landlord,
mortgagee, or other financial institution or entity at a particular time.
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"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: (l) 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:
At least
Not more than
Employees
Micro
P 3,000,000
1-9 employees
Small
P 3,000,001
P 15,000,000
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
GovernmentOwned 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 IATF 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 activities, 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 IATF 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,