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This is a briefing on developments in the Philippines relating to the COVID-19 pandemic, as of March 18, 2020.
A. Philippine Government Declares an Enhanced Community Quarantine over Luzon from March 17, 2020 to April 12, 2020
The Philippine President issued Proclamation No. 929 (Declaring a State of Calamity Throughout the Philippines Due to Corona Virus Disease 2019) dated March 16[1] which declared a State of Calamity over the country for six months, and placed the island of Luzon under an Enhanced Community Quarantine from March 17 to April 12.
The Memorandum dated March 16 issued by the Executive Secretary[2] provides that during the Quarantine Period, (1) a strict home quarantine is observed; (2) public mass transport is suspended; and (3) only private establishments providing basic necessities (such as groceries, hospitals, pharmacies, banks, telecommunications facilities) remain open. BPOs and other export-oriented enterprises are allowed to operate provided they observe social distancing measures and procure accommodations for their personnel.
The officials of the Executive Branch of the government will be working from home during this period except for those involved in, among others, health and emergency services and the police.
In a subsequent Memorandum dated March 18, which provides for additional guidelines of the community quarantine over Luzon, the Executive Secretary stated that BPOs and other export-oriented enterprises have until March 20 to (1) transfer “necessary equipment… to facilitate work from home arrangements;” and (2) “make arrangements with hotels for basic lodging.”
B. Bureau of Internal Revenue (BIR) Confirms that Annual Income Tax Returns are still due on April 15, 2020
The Commissioner of Internal Revenue issued Revenue Memorandum Circular (RMC) No. 25-2020 dated March 16[3] to prescribe the guidelines in the filing of the 2019 Income Tax Returns and submission of required attachments. In the circular, the Commissioner clarified that even with the imposition of the Enhanced Community Quarantine over Luzon, taxpayers observing the calendar year should still file their annual income tax returns (AITR) and settle their taxes by April 15, which is the statutory deadline. However, in the event that the taxpayers make errors in the determination of their income tax, they may file an amended AITR provided their tax year 2019 has not been subject to an audit by the BIR. Additional income taxes that may have to be paid as a result of the amendment may be paid without penalties provided the amended AITR is filed and the additional taxes are paid no later than June 15, 2020.
The circular also allows taxpayers to submit the attachments to their electronically filed AITRs by June 15.
In RMC No. 26-2020 (which prescribes the guidelines in the filing and payment of the corresponding taxes due per BIR Form Nos. 2550M (monthly VAT), 1600WP (percentage tax on winnings and prizes), 2550Q (quarterly VAT declaration), 1702Q (quarterly income tax return), 2000 (DST), 2000-OT (DST), 1600 (creditable VAT and percentage taxes), 1601C (income tax withheld on compensation) and 2200M (excise tax on metallic minerals),[4] the BIR reminded the taxpayers that they should still comply with the deadlines for tax filings and payments even if these are within the Enhanced Community Quarantine period. Taxpayers may file tentative returns by the due dates provided the final returns are filed 30 days thereafter.
The submission of certain annual information tax returns on creditable, final withholding taxes (i.e., BIR Form Nos. 1604-CF, 2316, 1604-E) has been extended from March 31 to April 30.
On March 18, the BIR posted a notice[5] that “[a]ll revenue offices, except those that might be ordered to close by LGUs… will continuously be open during the 30-day period Community Quarantine in the National Capital Region from March 16, 2020 to April 14, 2020,” but these will be operated by a skeleton staff. It also mentioned that from March 28 to April 15 (including on March 28 and April 4, the two Saturdays within this period), the BIR will establish eFiling Centers in various locations.
C. Supreme Court Extends the Period for Filing of Submissions to Courts for 30 days from April 16
The Supreme Court issued Administrative Circular No. 31-2020[6] on March 16. It provides the following, among others:
1. The filing of any court submission, including petitions, appeals, motions, and pleadings, “which fall due from March 15, 2020 to April 15, 2020,” is extended for 30 calendar days from April 16.
2. Court actions scheduled from March 15 to April 15 which are not urgent (as described in the circular) are also suspended and shall be rescheduled. Those actions with prescribed periods shall be extended for 30 days from April 16.
3. Courts nationwide, including the Supreme Court, will reduce operations, will operate only from 9 AM to 3 PM, and will act only on urgent matters (e.g., resolution of urgent matters and cases, release of the 2019 Bar Examinations) brought before them. The operation of night courts is suspended.
4. Hearings in courts nationwide are suspended, except on urgent matters such as “bail and habeas corpus, promulgation of judgements of acquittal, reliefs for those who may be arrested and detained during this period, and other related actions that may be filed in relation to measures imposed at the local or national levels to address the declared health emergency.”
D. Securities and Exchange Commission (SEC) Notices posted on March 17
Below are notices posted at http://www.sec.gov.ph/public-information-2/investors-education-and-information/notices/ in view of the declaration of the Enhanced Community Quarantine over Luzon.
1. The SEC issued a notice that its main office and other offices in Luzon are closed from March 17 until further notice. The SEC posted a list of email addresses which may be contacted for queries.[7]
We note a report[8] which provides that starting March 18, the SEC offices in Luzon shall be allowed to operate with a skeleton staff. SEC Memorandum Circular No. 7, series of 2020[9] provides that filing/submission of reports and other documents can be done through the SEC Express Nationwide Submission (SENS), which involves the use of courier services, and through registered mail (or ordinary mail or private courier if registry service is not available). Please note however that the Philippine Postal Corporation has temporarily suspended its operations until April 12.
2. From March 17, structured reports and current reports uploaded through PSE EDGE will be considered by the SEC to have been filed with the SEC.
3. From March 17, issuers of registered securities which are not listed companies can file their structured reports and current reports via email to msrd_covid19@sec.gov.ph.
E. SEC extends period to file Annual, Quarterly Reports and Audited Financial Statements (AFS) until June 30
In SEC Memorandum Circular No. 5 Series of 2020,[10] the SEC granted companies affected by the COVID-19 pandemic an extension until June 30 for the filing of their 2019 annual reports (SEC Form 17-A), including the relevant quarterly reports (SEC Form 17-Q), and of their AFS as of 2019. For a company that has operations offshore and which is affected by a travel ban, the extension is until the later of June 30 and 60 days from the lifting of the travel ban.
To avail of the extension for the filing of the annual report, the publicly listed company has to file a request at least five days before the deadline and submit sworn certifications from its President, Treasurer and external auditor which cover, among others, the operations affected by the pandemic and how the pandemic delays the preparation of the annual report. A company that is not listed need not file a request for an extension but it still has to attach the required sworn certifications to its annual report.
A company that will file its AFS within the extended period also has to attach the necessary sworn certifications from its President, Treasurer and external auditor.
F. SEC issues Guidelines for Participation via Remote Communication in Meetings of the Board of Directors/Trustees and of the Shareholders/Members
SEC Memorandum Circular No. 6 Series of 2020 (Guidelines on the Attendance and Participation of Directors, Trustees, Stockholders, Members, and other Corporations in Regular and Special Meetings through Teleconferencing, Video Conferencing, and other Remote or Electronic Means)[11] was issued on March 12 to implement the provisions of the Revised Corporation Code which allow participation in meetings through remote communication or in absentia.
1. Remote Communication is defined as “the transfer of data between two or more devices not located at the same site.” This includes videoconferencing, teleconferencing, computer conferencing, audio conferencing, or other alternative modes of communication.
2. The transitory provision of the circular provides that companies can “immediately operationalize these guidelines.”
3. Companies are allowed to adopt internal procedures on how participation can be done through remote communication.
4. The corporate secretary is tasked, among others, to make a visual and audio recording of the meeting, and to specify in the notice that such a recording will made.
5. Section 8 of the circular provides that the director/trustee “participating in the meeting via remote communication may cast his/her vote through electronic mail, messaging service or such other manner as may be provided in the internal procedures.”
6. Section 12 of the circular provides that stockholders/members may vote through remote communication or in absentia provided in the by-laws or if authorized by a resolution by majority of the board of directors for the particular meeting.
G. Intellectual Property Office of the Philippines (IPOPHL) Extends Deadlines
On March 16, IPOPHL issued Memorandum Circular No. 5[12] which provides for a 30-day extension from the due date for all papers, pleadings, documents, and payments which are due within the period of March 16 to April 14. The IPOPHL also suspended hearings, including mediation proceedings pending before it, during such period. Manual filing will also not be allowed during this period but the IPOPHL stated that “[n]ew applications for patents, utility models, industrial designs, and trademarks” can still be lodged online.
H. Other Notices
1. The Philippine Postal Corporation issued a notice[13] that it is temporarily suspending its operations from March 17 to April 12.
2. Bureau of the Treasury - NRoSS operations are suspended from March 17 until further notice.[14]
3. Various notices involving capital markets
On March 17, trading at the Philippine Stock Exchange (PSE), clearing and settlement at the Securities Settlement Corporation of the Philippines (SCCP),[15] and PDS Fixed Income Trading, Clearing and Settlement, Payment and Transfer operations (PDDTS and RTS), as well as Depository Operations, of the PDS Group were suspended until further notice.[16] The Bankers Association of the Philippines also announced that there would be no trading of the BAP Spot USD/PHP on March 17.[17]
But around late evening of March 17, it was announced that capital markets including but not limited to the Bangko Sentral ng Pilipinas (the Central Bank of the Philippines), SEC, PSE, Philippine Dealing & Exchange Corporation, SCCP, and the Philippine Depository and Trust Corporation shall be allowed to operate effective March 18, subject to the qualification of establishing skeleton work forces in their respective establishments.[18]
The PSE then issued a memorandum stating that trading at the PSE and clearing and settlement at the SCCP will resume on Thursday, March 19.[19] Moreover, the PDS Group announced that Fixed Income Trading, Clearing, Settlement, FX Payment versus Payment, Payment and Transfer Operations (PDDTS and RTS), Depository and Registry Services will resume full operations on Wednesday, March 18, while the equity depository system will resume operations on Thursday, March 19. [20] The Bankers Association of the Philippines also announced that BAP FX USD/PHP spot market will resume on March 18. [21]
BSP employees based at the head office in Manila, Security Plant Complex in Quezon City, and Luzon regional offices and branches have been asked to work from home. A skeleton work force for selected departments has been identified for mission-critical functions.[22]
[1] https://www.officialgazette.gov.ph/downloads/2020/03mar/20200316-PROC-929-RRD.pdf; last visited at 10:58 AM on March 18, 2020.
[2] https://www.officialgazette.gov.ph/downloads/2020/03mar/20200316-MEMORANDUM-FROM-ES-RRD.pdf ; last visited at 11:53 PM on March 17, 2020.
[3] https://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/2020%20RMCs/RMC%20No.%2025-2020.pdf ; last visited at 12:30 AM on March 18, 2020.
[4] https://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/2020%20RMCs/RMC%20No.%2026-2020.pdf ; last visited at 12:30 AM on March 18, 2020.
[5] https://www.bir.gov.ph/images/bir_files/internal_communications_1/Advisory/CIR%20memo_skeletal%20workforce_copy.jpg; last visited at 3:00PM on March 18, 2020.
[6] http://sc.judiciary.gov.ph/11037/; last visited at 11:41PM on March 17, 2020.
[7] http://www.sec.gov.ph/wp-content/uploads/2020/03/2020Notice_Covid-19-Notice-SEC-Contact-Emails-Revised.pdf ; last visited at 11:56 PM on March 17, 2020.
[8] “Gov't officials give updates on COVID-19”, ABS-CBN News at https://news.abs-cbn.com/live starting at 4:55, last visited at 11:57 PM on March 17, 2020.
[9] http://www.sec.gov.ph/wp-content/uploads/2020/03/2020MCNo07.pdf ; last visited at 11:58 PM on March 17, 2020.
[10] http://www.sec.gov.ph/wp-content/uploads/2020/03/2020MCNo05.pdf; last visited at 11:59PM on March 17, 2020.
[11] http://www.sec.gov.ph/wp-content/uploads/2020/03/2020MCNo06.pdf; last visited at 5:54 PM on March 18, 2020.
[12] https://www.ipophil.gov.ph/advisories/; last visited at 11:49PM on March 17, 2020.
[13] https://www.phlpost.gov.ph/advisory.php?id=80.; last visited on March 18, 2020.
[14] Bureau of the Treasury Memorandum dated March 17, 2020; https://www.treasury.gov.ph/wp-content/uploads/2020/03/BTR-Advisory-on-Suspension-of-NRoSS-Ops-on-Mar-17-2020-due-to-ECQ-in-Luzon-NCR.pdf ; last visited at 11:50 PM on March 17, 2020.
[15] https://www.pse.com.ph/resource/memos/2020/CN_2020-0021.pdf ; last visited at 11:30 PM on March 17, 2020.
[16] https://www.pds.com.ph/index.html%3Fp=73748.html ; last visited at 11:45 PM on March 17, 2020.
[17] https://bap.org.ph/media/bap-advisory-re-bap-spot-usd-php/ ; last visited at 8:45 AM on March 18, 2020.
[18] https://www.pds.com.ph/index.html%3Fp=73758.html; last visited at 11:45 PM on March 17, 2020.
[19] https://www.pse.com.ph/resource/memos/2020/CN_2020-0025.pdf ; last visited at 12:31 AM on March 18, 2020.
[20] https://www.pds.com.ph/index.html%3Fp=73748.html ; last visited at 11:45 PM on March 17, 2020.
[21] https://bap.org.ph/media/bap-fx-usd-php-spot-market-resumes-on-march-18-2020/; last visited at 8:58 AM on March 18, 2020.
[22] BSP Facebook page ; last visited at 3:00PM on March 17, 2020.
This advisory was prepared by SyCip Salazar Hernandez & Gatmaitan (SyCipLaw) to inform its clients with recent firm updates and legal developments. This does not constitute legal advice or an opinion of SyCipLaw or any of its lawyers.
No portion of this advisory may be copied or reproduced in books, pamphlets, outlines or notes, whether printed, mimeographed, typewritten, copied in different electronic devices or in any other form, for distribution or sale, or reposted and forwarded in all forms of media without the prior written consent of SyCipLaw.
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