Surviving ECQ: Basic information on Government Directives for Entrepreneurs [Part 1]

By: Domingo Angelo F. Cayosa, Harradier P. Isnani and Andrei Kristoffer G. Macandog

(Editor’s note: This article is part 1 of a series of articles entitled “Surviving ECQ: Basic information on Government Directives for Entrepreneurs.’ Click here for Part 2.)

LABOR RELATED ISSUANCES

COVID-19 ADJUSTMENT MEASURES PROGRAM (CAMP Department Order No. 209, series of 2020: Guidelines on the Adjustment Measures Program for Affected Workers Due to the Coronavirus Disease 2019[1] (as supplemented by Labor Advisory No. 12, series of 2020: Clarificatory Guidelines on the COVID-19 Adjustment Measures Program (CAMP)[2] and Labor Advisory No. 12-A, series of 2020: Clarificatory Advisory on CAMP Documentary Requirements[3])

• The Department of Labor and Employment (DOLE) promulgated the guidelines on the implementation of the CAMP.
• The CAMP is a safety net program that offers financial support to affected workers in private establishments that have adopted Flexible Work Arrangements (FWAs) or temporary closure during the COVID-19 pandemic.

Who are covered?

Under the guidelines, affected workers of affected establishments are entitled to a one-time financial assistance of P5,000 from the Government. All employees, regardless of status are entitled to such financial assistance. Probationary employees and daily wage earners are covered.

Who are not entitled to assistance?

1. Foreign workers are not entitled to financial assistance.
2. Employees recently hired, and whose name do not appear in the company payroll for the previous month prior to application are not entitled to assistance under CAMP.

Who are affected workers?

1. Those who do not receive their regular wages due to a reduction in working hours or the implementation of FWAs; and
2. Those whose employment is temporarily suspended due to their employer’s suspension of operations.

What are affected establishments?

Affected establishments include private establishments that have implemented FWAs such as reduction of work hours or work days, rotation of workers, forced leaves, and those which are temporarily closed due to the COVID-19 pandemic

What must Affected Establishments submit?

Affected Establishments must submit an establishment report and company payroll to DOLE regional offices. If payroll is unavailable, LA No. 12-A prescribes a list of alternative documents which may be submitted.

Is the employer required to advance the P5,000?

No. Employers are only required to apply for the financial assistance on behalf of their employees with DOLE

If an employee uses his/her leave credits during the quarantine period, is he/she still entitled to financial assistance?

 Yes, utilizing one’s leave credits does not disqualify an employee from receiving financial assistance

Are employees entitled to pay if they work from home?

 Yes, as long as they continue to work.

Are employees entitled to pay if work is suspended due to the ECQ?

If they refuse to utilize their leave credits, employees are not entitled to pay if work is suspended due to the Enhanced Community Quarantine (ECQ) since the no work no pay principle applies.

Can an employer compel its employees to work on-site?

By reason of the ECQ, the general rule is that an employer may not compel its employees to work on-site. However, companies that are considered essential businesses which are permitted to operate during the ECQ period may compel their employees to render work.

These essential businesses include public markets, supermarkets, groceries, convenience stores, hospitals, clinics, pharmacies, food preparation/delivery services, water refilling stations, manufacturing/processing plants of basic food products and medicines, banks, money transfer services, power, energy, water, telecommunications supply and facilities, media, and transportation.

BPO establishments and export-oriented industries are also allowed to remain open. The operation of these essential business is subject to the adoption of a skeletal workforce and strict social distancing measures.

Will the lockdown period be included in the computation of 13^th month pay?

1. If the employee’s work is suspended during the lockdown period, and the employee did not choose to avail of his/her leave credits during this time, then the period shall be deducted in the computation of the employee’s 13^th month pay.
2. If the employee continues to work from home or has used his/her leave credits, then his/her 13^th month pay should not be affected.

Is the employer required to provide the monetary equivalent of the employee’s non-monetary benefits during the lockdown period?

No, since these benefits are normally conditional in nature (such as when the employee is required to go to work)

Is the use of leave credits optional? 

DOLE has recently announced that an employer may not compel his/her employee to use their leave credits.

SOCIAL AMELIORATION MEASURES

Department of Social Welfare and Development (DSWD) Memorandum Circular No. 09-2020 – Omnibus Guidelines in the Implementation of the Emergency Subsidy Program (ESP)[4]

• The memorandum provides guidelines to streamline and harmonize the various social amelioration programs adopted by LGUs in mitigating the socio-economic impact of the COVID-19 health crisis.

What is ESP?

The ESP is a cash subsidy granted under R.A. 11469, with a minimum amount of least Five Thousand Pesos (PhP 5,000.00) to a maximum of Eight Thousand Pesos (PhP 8,000.00), based on the prevailing regional minimum wage rates, for every month for two months. The ESP shall be implemented through the Social Amelioration Programs (SAP) of concerned agencies.

Who are the target beneficiaries of the ESP?

1. 4Ps Beneficiaries; and
2. Families with low income; and
3. Indigent Indigenous People.

Who are excluded from receiving the ESP?

1. Elected and Appointed government official/s or personnel contracted in any National Government Agency, Government-owned and Controlled Corporation, Local Government Unit and GOCCs with original charter;
2. Employees in the private sector, or those in the formal economy, including those who are employees of GOCCs without original charters, regardless of the existence of employee-employer relationship, and regardless of the fact that they are receiving salary or wage; (c) Retired individuals who are receiving pension; and
3. Families with independent financial capacity consistent with the intent of RA 11469 to provide ESP only to low income families.

How will the beneficiaries be identified?

The beneficiaries will be profiled through the use of a Social Amelioration Card (SAC). The SAC is a barcoded form with series numbers, distributed at the Barangay level, that captures the family profile which will be the mechanism to monitor the provision of the social amelioration programs of the government and the DSWD.

The SAC shall be the mechanism to monitor the eligible families in receiving any social amelioration programs from any government agency. However, this shall not be a prerequisite for the transfer of funds, as the case may be, but will only be employed by the DSWD for monitoring purposes or to ensure that there will be no duplication of assistance given to the same beneficiaries or fraudulent payments.

HOLIDAY PAY

Labor Advisory No. 13, series of 2020: Payment of Wages for the Regular Holidays on April 9 and 10, 2020 and Special Day on April 11, 2020[5]

• The Advisory prescribes rules for pay on regular holidays (April 9 and 10) and special non-working days (April 11).

How will holiday pay be computed?

Depending on certain conditions, the holiday pay for each holiday may be computed as follows:

April 9 (Araw ng Kagitingan and Holy Thursday) – Regular Holiday

Conditions	Computation
Unworked, provided the employee was present or on leave with pay on the workday prior to the start of the ECQ on 17 March 2020	(Basic wage + COLA) x 200%
Worked	(Basic wage + COLA) x 300%
Additional pay for work done in excess of 8 hours	(Hourly rate of the basic wage) x (number of hours worked) x 300% x 130%
Worked, and falls on the rest day of the employee	[(Basic wage + COLA) x 300%] + [(basic wage x 300%) x 30%]
Additional pay for work done in excess of 8 hours, and falls on the employee’s rest day	(Hourly rate of the basic wage) x (number of hours worked) x 300% x 130% x 130%

 

April 10 (Good Friday) – Regular Holiday

Conditions	Computation
Unworked, provided the employee was present or on leave with pay on the workday prior to the start of the enhanced community quarantine (ECQ) on 17 March 2020	(Basic wage + COLA)
Worked	(Basic wage + COLA) x 200%
Additional pay for work done in excess of 8 hours	(Hourly rate of the basic wage) x (number of hours worked) x 200% x 130%
Worked, and falls on the rest day of the employee	[(Basic wage + COLA) x 200%] + [(basic wage x 200%) x 30%]
Additional pay for work done in excess of 8 hours, and falls on the employee’s rest day	(Hourly rate of the basic wage) x (number of hours worked) x 200% x 130% x 130%

 

April 11 – Special (Non-Working) Day

Conditions	Computation
Unworked	“No work, no pay” principle applies unless there is a favorable company policy, practice, or collective bargaining agreement granting payment on a special day
Worked	(Basic wage x 130%) + COLA
Additional pay for work done in excess of 8 hours	(Hourly rate of the basic wage) x (number of hours worked) x 130% x 130%
Worked, and falls on the rest day of the employee	(Basic wage x 150%) + COLA
Additional pay for work done in excess of 8 hours, and falls on the employee’s rest day	(Hourly rate of the basic wage) x (number of hours worked) x 150% x 130%

 

Labor Advisory No. 13-A, series of 2020: Deferment of Payment of Holiday Pay for the April 2020 Holidays[6]

• Employers are allowed to defer payment of holiday pay on April 9, 10 and 11, 2020, pursuant to Labor Advisory No. 13, series of 2020 until such time that the present emergency situation has been abated and the normal operations of the establishment are in place

May the payment of holiday pay premiums be deferred?

Yes. Employers may defer the payment of the holiday pay premium until such time that the present emergency situation has been abated and the normal operations of the business are in place

Which holidays are covered

April 9, 2020, April 10, 2020 and April 11, 2020

Are businesses which are closed/non-operational during the ECQ period required to pay holiday pay premium for these holidays?

No, businesses which are closed or non-operational during the ECQ period are exempted from the payment of holiday pay premium.

PROBATIONARY EMPLOYMENT

Labor Advisory No. 14, series of 2020: Clarification of the Non-Inclusion of the One-Month ECQ Period on the Six-Month Probationary Period[7]

• For purposes of determining the six-month probationary period, the one-month ECQ period is not included therein

Which employees are covered?

Current probationary employees or those undergoing the six-month probationary period, when the ECQ was implemented.

Will the ECQperiod be considered as part of the six-month probationary period?

No, the one (1)month ECQ period will not be considered as part of the six-month probationary period.

Will the extension of the ECQ period be counted as part of the six-month probationary period?

It depends. If current ECQ measures are still implemented, the extended ECQ period shall still remain not included. However, if the provisions of the extension of the ECQ will be more relaxed, allowing for employees to render work, the extension period may be included in the six-month probationary period.

Are probationary employees who continue to report to work (essential businesses) or those who are directed to work from home covered?

No. While the Labor Advisory does not explicitly state, it seems that those probationary employees who continue to work on site or those who work from home are not covered. Hence, the 1 month ECQ period shall be included in the computation of the six-month probationary perio

FLEXIBLE WORKING ARRANGEMENTS (FWAs)

Labor Advisory No. 09, series of 2020: Guidelines on the Implementation of FWAs as Remedial Measure Due to the Ongoing Outbreak of Coronavirus Disease 2019 (COVID-19)[8] (as supplemented by Labor Advisory No. 11, series of 2020: Supplemental Guidelines Relative to Remedial Measures in View of the Ongoing Outbreak of Coronavirus Disease 2019 (COVID-19))[9]

• This Advisory is issued to assist and guide employers and employees in the implementation of various FWAs as alternative coping mechanism, remedial measures and observance of strict social distancing measures, i.e. at least one (1) meter radius between and among workers

 

What are Flexible Work Arrangements or FWAs?

Flexible Work Arrangements or FWAs refer to alternative arrangements or schedules other than the traditional or standard work hours, workdays, and work week

Are FWAs allowed?

Yes. Employers may adopt FWAs, but these shall be temporary in nature, subject to prevailing conditions of the company.

What options are there for FWAs?

1. Reduction of Workhours and/or Workdays – normal workhours or workdays per week are reduced.
2. Rotation of Workers – employees are rotated or alternately provided work within the week.
3. Forced Leave – employees are required to go on leave for several days or weeks utilizing their leave credits, if any.

What are the requirements for the implementation of the FWA?

1.       Prior consultation and due notice. 2.       The terms must be acceptable to both the employer and employees. 3.       Posting a copy of the Advisory in a conspicuous location in the workplace. 4.       Notify the DOLE through the Regional / Provincial / Field Office which has jurisdiction over the workplace.

 

DISTRESSED OFWs

Department Order No. 211, series of 2020: Prescribing Guidelines Governing the Provision of Hotel Accommodation for Distressed Landbased and Seabased Filipino Workers During the Period of Enhanced Community Quarantine or the OWWA Project Care[10]

• Accommodation establishments such as hotels are permitted to accept distressed land-based and sea-based Filipino workers during the period of ECQ in accordance with the guidelines provided in this DO.

Who are covered?

This DO shall cover distressed arriving or departing land-based or sea-based OFWs during the period of implementation of the ECQ, who are bound for their residences outside NCR

What may be presented as proof of eligibility

Present proof of employment, i.e. Travel document, Overseas Employment Contract, etc.

 

What kinds of assistance are provided?

1. Certificate of Eligibility to Project Care – as proof of eligibility
2. Transportation Assistance
3. Temporary Shelter – shall be housed in nearest partner hotels of OWWA

 

Department Order No. 212, series of 2020: Prescribing Guidelines on the Provision of Financial Assistance for Displaced Land-based and Sea-based Filipino Workers Due to the Corona Virus (COVID-2019) “DOLE-AKAP for OFWs[11]

• The DOLE shall provide displaced OFWs on account of COVID-19 with a one-time financial assistance (DOLE-AKAP) of USD200.00 or PhP10,000 or its equivalent to the local currency of the host country and promulgates the guidelines on the availment thereof.

 

Who are covered?

1. Regular/Documented OFW, or those:
   1. Who possess a valid passport and visa/permit to work in receiving country; AND
   2. Whose contract of employment has been processed by POEA or POLO
2. Qualified Undocumented OFW or those:
   1. Originally regular/documented but lost their status
   2. Not registered with POEA or POLO but have taken actions to regularize their status
   3. not registered with POEA or POLO but are active OWWA members
3. Balik Manggagawa who are unable to return to the host country in view of host country lockdown due to COVID-19

 

Who shall be eligible for the DOLE-AKAP?

1. Those who have experienced job displacement due to the receiving country’s lockdown or quarantine protocol
2. Must be still at overseas jobsites, or in the Philippines as Balik Manggagawa, or already repatriated to the Philippines
3. Must not receive financial support/assistance from the receiving countries/employers

 

Are OFWs from all countries covered?

No. DO 212-20 lists down priority countries which may be qualified for the DOLE-AKAP

 

How can one apply for DOLE-AKAP?

Application procedures are provided for in DO 212-20.

 

RETRENCHMENT AND CLOSURE OF BUSINESS

Department Order No. 147-15, series of 2015: Amending the Implementing Rules and Regulations of Book VI of the Labor Code of the Philippines, as amended[12]

 

Is retrenchment allowed?

Yes, retrenchment to prevent losses is one of the authorized causes for an employee’s termination.

It is resorted to during periods of business recession, industrial depression, or seasonal fluctuations or during lulls occasioned by lack of orders, shortage of materials, conversion of the plant for a new production program or the introduction of new methods or more efficient machinery or of automation.

For an entrenchment to be valid, the following are required:

1. The retrenchment must be reasonably necessary and likely to prevent business losses
2. Losses must be substantial and actual, or reasonably imminent, and must be proven
3. Must be made in good faith
4. There must be fair and reasonable criteria in determining who would be terminated.

There must be a written notice served on the workers and DOLE at least one month before the intended date of termination. The employee/s terminated must also be paid separation pay.

 

Is termination of an employee due to closure of business allowed?

Yes, the employee may also be validly terminated if the business decides to close or cease its operation.

The closure must be made in good faith, and employer must have been left with no other option.

There must be a written notice served on the workers and DOLE at least one month before the intended date of closure. The employee/s terminated must also be paid separation pay.

 

How is separation pay computed?

The worker affected by retrenchment or by closure of the business shall be entitled to a separation pay equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year.

Where closure of business is due to serious business losses or financial reverses, no separation pay is required.

 

CUSTOMS RELATED ISSUANCES

ACCREDITATION PASS

Bureau of Customs: OCOM MEMO No. 62-2020 – Guidelines for the Application and Issuance of Accreditation Pass to Bureau of Customs (BOC) stakeholders[13]

• Guidelines for the Application and Issuance of Accreditation Pass to Bureau of Customs (BOC) stakeholders may only be availed by BOC accredited importers, licensed customs brokers, declarants or any of their duly authorized representatives.
• It shall cover all BOC official transactions requiring physical submission of documents for any pending application, or any transaction requiring physical presence or appearance within the authorized BOC premises.

What is the objective of the Memorandum?

1. To grant an exemption from the implementation of the ECQ to authorized BOC stakeholders.
2. To grant BOC stakeholders physical access to authorized BOC premises to facilitate the processing of any official transaction, such as but not limited to the immediate release of shipments.

Who may avail of these guidelines?

Guidelines for the Application and Issuance of Accreditation Pass to Bureau of Customs (BOC) stakeholders may only be availed by BOC accredited importers, licensed customs brokers, declarants or any of their duly authorized representatives.

 

What is an Accreditation Pass?

This refers to the order issued to a qualified BOC stakeholder allowing physical access to BOC authorized premises which may be presented at any established checkpoints during the implementation of the ECQ. An accreditation pass shall be valid only for a one-time use depending on the time and date indicated therein.

When should a BOC stakeholder file his application? How a BOC stakeholder file for an application?

All applications by the BOC stakeholders for the issuance of the Accreditation Pass shall be made at least 72 hours or 3 days prior to the intended visit to the BOC.

All BOC stakeholders are encouraged to use the Customer Care Portal System for applications or transactions which do not require physical presence in the BOC premises, such as communication for following up of documents, renewal of accreditation, electronic submission of letter request such as lifting of abandonment, among others. (see OCOM Memo No. 62-2020 for the procedure of availing the Accreditation Pass)

Bureau of Customs: OCOM MEMO No. 61-2020 – Guidelines for the Application and Issuance of Accreditation Pass to Bureau of Customs (BOC) stakeholders[14]

• The Bureau of Customs (BOC) provides an option for BOC stakeholders to avail of the Online Filing of Goods Declaration due to the declaration of Enhanced Community Quarantine.

What is Online Filing of Goods?

Online Filing of Goods Declaration refer to the temporary acceptance of electronic copy of goods declaration and its supporting documents subject to the submission of the original copy thereof after 12 April 2020 or upon lifting of the declaration of Enhanced Community Quarantine, whichever comes earlier.

Who can avail of Online Filing of Goods?

Only BOC accredited importers, licensed customs brokers and declarants can avail of the Online Filing of Goods Declaration.

When should the Online Filing of Goods Declaration be made?

The Online Filing of Goods Declaration shall be made within forty-eight (48) hours from lodgment of provisional goods declaration or regular consumption of goods declaration in the E2M.

 

TAX AND DUTY EXEMPTIONS

Customs Administrative Order No. 06-2020 – Tax and duty exempt transactions under Section 4(o) of the Bayanihan to Heal as One Act[15]

• Covers the conditionally tax and/or duty exempt importations specifically enumerated in Section 800 of the Customs Modernization and Tariff Act (CMTA).

 

What should an importer do to be exempt from payment of duties and taxes on his importations?

All importation under Section 800 of the CMTA must secure Tax Exemption Indorsement (TEI) from the Department of Finance-Revenue Office, except for aquatic products under subparagraph (a), balikbayan boxes under subparagraph (g), coffins and urns containing human remains under subparagraph (q), accompanied goods under subparagraph (h- 1), and properly marked diplomatic pouches/bags meeting the requirements of Article 27 of the Vienna Convention on Diplomatic Relations and Optional Protocols.

BOC shall require submission of import bill of lading/airway bill properly endorsed by the shipping lines/airlines, original import invoice, packing list, and permits/clearances from regulatory agencies, if applicable. BOC may also require submission of additional documents.

What is a Tax Exemption Indorsement (TEI)?

TEI refers to an indorsement from the Revenue Office (RO) of the Department of Finance (DOF) evidencing exemption of a particular importer from payment of duties and/or taxes on his importations.

Customs Administrative Order No. 07-2020 – Tax and duty exempt transactions under Section 4(o) of the Bayanihan to Heal as One Act[16]

• Exempts from duties, taxes, and fees the importation of health equipment and supplies deemed as critical or needed to carry out the objective of the Bayanihan to Heal as One Act (Act).

What items imported are exempted from duties, taxes and fees?

The importation of health equipment and supplies deemed as critical or needed to carry out the objective of the Act and address the COVID-19 public health emergency shall be exempt from duties, taxes, and fees, including:

1. PPE such as gloves, gowns, masks, goggles, face shields, surgical equipment and supplies;
2. Laboratory Equipment and its re-agents;
3. Medical equipment and devices;
4. Support and maintenance for laboratory and medical equipment;
5. Surgical equipment and supplies;
6. Medical supplies, tools, and consumables such as alcohol, sanitizers, tissue, thermometers, hand soap, detergent, sodium hydrochloride, cleaning materials, povidone iodine, and common medicines;
7. COVID-19 testing kits; and
8. Other as may be identified by the DOH.

Who else can benefit from the exemption?

Manufacturers included in the Master List of DTI and other incentive granting bodies of the National Government may avail of the tax and duty exemption provided under Section 4(o) of the Act for their importation of materials necessary for the production of health equipment and supplies deemed as critical or needed to carry out the objective of the Act.

 

SEC RELATED ISSUANCES

 

EXTENSIONS ON FILING

Securities and Exchange Commission (SEC) Memorandum Circular No. 5-2020 – EXTENSION OF FILING OF THE 2019 ANNUAL REPORTS INCLUDING THE APPLICABLE QUARTERLY REPORTS FOR YEAR 2020 AND 2019 AUDITED FINANCIAL STATEMENTS (AFS)[17]

• To provide adequate protection to the frontline service personnel of the Electronic Records Management Division, ICTD (ERMD-ICTD) from undue exposure to the risk of Covid-19

How may clients request for plain/authenticated copies of SEC documents?

SEC grants the following affected companies an extension of time without penalty, within which to submit the Annual Reports and/or AFS for the period ended 31 December 2019:

 

For companies doing domestic operations only:	–          an extension of time until 30 June 2020
For companies with domestic and foreign operations	–          an extension of time until 30 June 2020 or 60 days from that date of lifting of travel restrictions/ban by the concerned government authorities, whichever comes later.

 

What are the requirements for Publicly Listed Companies to avail of the extension?

1. Submission of a written request to the Commission through the Markets and Securities Regulation Department for an extension of time not later than five (5) days before the filing deadline;
2. Sworn certification of the requesting company signed by its President and Treasurer confirming that all of the following conditions are met:
   1. Its financial year-end is 31 December 2019
   2. It has significant business operations or significant subsidiaries in areas/countries/territories affected by COVID-19; and
   3. The preparation of financial statements and timely completion of statutory audit of the company’s financial statements as of 31 December 2019 have been affected by the travel restriction/ban, temporary suspension of business operations, and/or measures imposed by the authorities or companies in response to the COVID-19.
3. The request shall be accompanied by a sworn certification by the company’s external auditor confirming the items (ii) and (iii) of paragraph (b) above.
4. The company shall continuously observe its disclosure obligations under the SRC and the Philippine Stock Exchange Consolidated Listing and Disclosure Rules. This means that all material information, whether price-sensitive or trade sensitive, must be disclosed on a timely basis. Where the company’s operations are materially affected by the COVID-19 outbreak, disclosure on the financial impact or any other material aspects should be made immediately.
5. Given the impact of the delayed release of annual reports, the requesting company must submit to the Commission an indicative date to convene the Annual Stockholders’ Meeting.

Considering further that Annual Report for the year 2019 is material and necessary for the completion and filing of the applicable Quarterly Reports (SE C Form 17-Q) for each quarter of year 2020, the Commission likewise extends the period for filing of the same for publicly-listed companies whose requests for extension to file Annual Reports (SE C Form 17-A) were granted by the Commission.

What are the requirements for Companies which are Not Publicly Listed to avail of the extension?

All non-publicly listed companies that will be filing their 31 December 2019 Annual Reports and/or AFS, shall attach the following documents:

1. A sworn certification signed by the company’s President and Treasurer that it fulfills all the conditions set forth under items (i) to (iii) of paragraph (b) above; and
2. External auditor’s sworn certification of its confirmation on items (ii) and (iii) of paragraph (b) above.

The filing of applicable Quarterly Reports (SE C Form 17-Q) of concerned registered issuers of securities is likewise extended.

CONDUCT OF MEETINGS VIA REMOTE COMMUNICATION OR TELECONFERENCING

SEC Memorandum Circular No. 6-2020 – 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 [18]

• The guidelines provide corporations guidance in formulating their internal procedures and bylaws which will allow their directors, trustees, stockholders, members and other persons to participate and vote in meetings in absentia or through remote modes of communication as defined in these guidelines, pursuant to the Revised Corporation Code

BOARD MEETINGS

How can directors participate in Board Meetings?

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.

Are proxies allowed in Board Meetings conducted through remote communication?

No. Directors or trustees cannot attend or vote by proxy at board meetings.

How can a director or trustee participate in the meeting through remote communication?

If a director or trustee intends to participate in a meeting through remote communication, he/she shall notify in advance the Presiding Officer and the Corporate Secretary of his/her intention. The Corporate Secretary shall note such fact in the Minutes of the meeting.

How will the Notices of the Meeting be sent to the directors?

Notice of meetings may be sent to all directors or trustees through electronic mail, messaging service or such other manner as may be provided in the bylaws or by board resolution. Notice of regular or special meetings stating the date, time and place of the meeting must be sent to every director or trustee at least two (2) days prior to the scheduled meeting, unless a longer time is provided in the bylaws. A director or trustee may waive this requirement, either expressly or impliedly.

What information must be included in the Notice of Meeting?

The notice of meetings shall include the following information:

1. The date, time and place of the meeting;
2. The agenda of the meeting;
3. All pertinent materials for discussion which shall be numbered and marked in such manner that the director or trustee can easily follow and participate in the meeting;
4. That a Director or trustee may participate via remote communication;
5. Contact information of the Corporate Secretary or office staff whom the director or trustee may communicate;
6. When the meeting is for the election of directors or trustees or officers, the requirements and procedure for nomination and election;
7. The fact that there will be a visual and/or audio recording of the meeting; and
8. Other instructions to facilitate participation in the meeting through remote communications.

During the roll call, what shall every attendee state?

At the start of the meeting, the Presiding Officer shall instruct the Corporate Secretary to make a roll call. Every attendee shall state for the record the following:

1. Full name and position;
2. Location;
3. Confirmation that he/she can clearly hear and/or see the other attendees;
4. Confirmation that he/she received the Notice of the Meeting including the agenda and materials; and
5. Specify the device being used (i.e., smartphone, tablet, laptop, desktop, television, etc.)

How can directors who are participating through remote communication, vote?

The director or trustee participating in the meeting via remote communication may cast his vote through electronic mail, messaging service or such other manner as may be provided in the internal procedures. The vote shall be sent to the Presiding Officer and the Corporate Secretary for notation.

What are the additional duties of the Corporate Secretary during meetings conducted through remote communication?

The Corporate Secretary shall also assume the following responsibilities:

1. Ensure that suitable equipment and facilities are available for the conduct of meeting by remote communication (i.e. reliable internet connection, high bandwidth availability capable of supporting numerous simultaneous connections, etc.);
2. Ensure that the attendees are able to hear and see the other participants clearly during the course of the meeting and that attendees should be able to communicate and understood by the other party;
3. Ensure that the visual and audio recordings of the meeting are secured;
4. Ensure that the visual and audio recordings of the election/meeting are current and on-going and that there is no stoppage or interruption. Should an interruption or stoppage occur, the recording shall restart from the point where it was stopped or interrupted with proper statement of points in time;
5. Ensure to safe-keep and perpetuate in updated data storage equipment or facility the visual and audio recordings; and
6. Require those who attended the meeting through remote communication, to sign the minutes of the meeting whenever the act of signing is practicable, on a reasonable time after the meeting.

STOCKHOLDERS OR TRUSTEES MEETINGS

Can stockholders or members conduct meetings through remote communication or other alternative modes of communication?

Yes, when so provided (a) in the by-laws or (b) by majority of the board of directors.

May the stockholder or member vote via remote communication or in absentia?

Yes, the right to vote may be exercised (a) in person, (b) through a proxy, or (c) through remote communication or in absentia when so authorized in the by-laws or by a resolution of the majority of the board of directors. The resolution of the majority of the board of directors shall only be applicable for a particular meeting.

Does the right to vote via remote communication or in absentia apply to corporations vested with public interest?

Yes, this right to vote may be exercised notwithstanding the absence of a provision in the by-laws.

Are corporations required to issue their internal procedures for participation in meetings and voting through remote communication or in absentia?

No, it is not required but it is recommended that corporations issue those internal procedures for the convenience of their stockholders and members.

What should the internal procedures contain?

The internal procedures shall embody the mechanisms for participation in meetings and voting through remote communication or in absentia. It may provide for the following:

1. Mechanism to verify the identity of the stockholders or members and who among them have the right to vote during the meeting;
2. Measures to ensure that all stockholders or members have the opportunity to participate in the meeting including an opportunity to read or hear the discussion substantially;
3. Mechanism to enable stockholders or members to vote during the meeting including ensuring that the integrity and secrecy of the votes are protected;
4. Procedures for documenting the meeting and any process/motion which may be done afterwards;
5. Mechanism in making the record of the meeting, either video or audio recording, available to the stockholders or members; and
6. Other matters to address administrative, technical and logistical issues.

What factors should be considered in drafting the internal procedures?

The internal procedures may take into account the corporation’s number of stockholders or members, location of stockholders or members, importance of the matters to be discussed and voted upon in the meeting, promotion of minority rights and other factors consistent with the protection and promotion of stockholders’ or members’ rights.

How should notices of meetings be sent out to stockholders or members?

The Secretary shall send out the notices of the election/meeting to all stockholders or members in accordance with the manner of giving notice as stated in the by-laws. Written notice of regular meetings may be sent through electronic mail or such other similar manner as may be stated in the by-laws.

When should notices be sent to stockholders or members?

Notice of regular meetings which should state the date, time and place of the meeting must be sent at least twenty-one (21) days prior to the scheduled meeting, unless a longer time is provided in the by-laws. Notice of special meetings which should state the date, time and place of the meeting must be sent at least one (1) week prior to the meeting, unless a longer time is provided in the by-laws.

What other matters should be contained in the notice?

The notice shall be accompanied by other relevant matters such as:

1. The agenda of the meeting;
2. When attendance, participation, and voting by remote communication or in absentia are authorized, the requirements and procedures to be followed when a stockholder or member elects either option;
3. Manner of casting of votes and the period during which vote by remote communication or in absentia will be accepted;
4. Contact information of the Secretary or office staff whom the stockholder or member may notify about his or her option;
5. When the meeting is for the election of directors or trustees, the requirements and procedure for nomination and election; and
6. The fact that there will be visual and audio recording of the meetings (for future reference).

Can the corporation secure a visual and audio recording of the election or meeting conducted through teleconferencing or any other similar means?

Yes. The Secretary is duty-bound to safe-keep and perpetuate in updated data storage equipment or facility the visual and audio recordings.

What happens if there is a postponement of regular meetings?

Written notice shall be sent at least two (2) weeks prior to the date of the meeting.

If there are no provisions in the by-laws or internal procedures for the conduct of meetings through remote communication or other alternative modes of communication, may board meetings and stockholders’ and members’ meetings already be conducted through those modes?

Yes, corporations may conduct those meetings for the limited purpose of approving the provisions in their by-laws or internal procedures which will govern participation in the meetings by means of remote communication or other alternative modes of communication. This is to immediately operationalize the guidelines in this MC.

GUIDELINES ON FILING

SEC Memorandum Circular No. 7-2020 – GUIDELINES ON PREVENTIVE MEASURES AGAINST COVID-19 IN THE HANDLING OF RECORDS AT THE SECURITIES AND EXCHANGE COMMISSION[19]

• The purpose of this MC is to provide adequate protection to the frontline service personnel of the Electronic Records Management Division, ICTD (ERMD-ICTD) from undue exposure to the risk of Covid-19.

How may clients request for plain/authenticated copies of SEC documents?

Through SEC Express System. Clients may use the following options:

1. Online Application. The public may request for SEC documents through a user-friendly, web-based interface that includes online payment and courier delivery of the requested document/s nationwide. The client may log on at secexpress.com
2. Call Center Facility. The public may call Hotline Number (02) 8-737-8888 for request, mode of payment and courier delivery of requested document/s nationwide.

How may clients file/submit reports and/or other documents to the SEC?

1. Filing/submission of reports and other documents through the SEC Express Nationwide Submission (SENS) with the following procedures:
2. Client accomplishes and signs the SEC Express Nationwide Submission (checklist with undertaking, available in the SENS website).
3. Client attaches the checklist and the undertaking to the documents to be submitted.
4. Client proceeds to the courier of his/her choice and may or may not avail of the return copy. Request for return copy may be subject to the availability of service offer by the courier.
5. Courier delivers the documents to the SEC Office.
6. SEC Receiving Officer shall stamp the documents and “Received”, put his initial on the documents and distribute copies of documents to the SEC department concerned.
7. Filing and submission of reports/documents through the Philippine Postal Corp. or through ordinary mail shall be subject to the following requirements:
8. Clients may file their reports/documents through Registered Mail with return card issued by the Philippine Postal Corp.; provided, that clients may file their reports/documents through ordinary mail or private courier duly accompanied by an affidavit of service, if registry service is not available in their official place of business.
9. For return copy, client shall enclose a self- addressed envelope with sufficient amount of stamp/postage.

What are the requirements for Companies which are Not Publicly Listed to avail of the extension?

All non-publicly listed companies that will be filing their 31 December 2019 Annual Reports and/or AFS, shall attach the following documents:

1. A sworn certification signed by the company’s President and Treasurer that it fulfills all the conditions set forth under items (i) to (iii) of paragraph 1 (b) above; and
2. External auditor’s sworn certification of its confirmation on items (ii) and (iii) of paragraph 1(b) above.

The filing of applicable Quarterly Reports (SEC Form 17-Q) of concerned registered issuers of securities is likewise extended.

SEC Memorandum Circular No. 9-2020 – GUIDELINES FOR FILING OF THE GENERAL INFORMATION SHEET (GIS) DURING THE COVID-19 OUTBREAK AND ENHANCED COMMUNITY QUARANTINE[20]

• Guidelines for filing the GIS during the COVID-19 outbreak and ECQ.

After the election of Directors, Trustees and Officers is held, when and where should the GIS be submitted to the SEC?

Where an election of directors, trustees and officers was held, GIS shall be submitted within 30 days from actual meeting thru:

1. Mail (ordinary or registered),
2. Private courier, or
3. Email at [email protected], [email protected] or [email protected].

Reckoning period of date of submission shall be as follows: (i) mail: date of mailing as stamped “received” by the post office; (ii) private courier: date of actual receipt of SEC; and (iii) electronic means: date of receipt of SEC systems as reflected in the email date and hour, provided that hard copy shall be filed within 30 days from lifting of the emergency/outbreak and attaching the email notification for ease of reference.

What if the annual meeting and election of directors, or officers is not held due to health and safety reasons relating to the COVID-19 disease?

Annual meeting originally scheduled between 1 March 2020 and 31 May 2020 which is not held due to health and safety reasons in relation to the COVID-19 disease and the corporation has no facilities for remote communication shall be reported to SEC through notice within 30 days from original meeting date either through mail, courier or by electronic means; accompanied by a statement specifying a new date for election which is within 60 days from the originally scheduled date.

What if the annual meeting and election of directors, or officers is not held due to other reasons?

Non-holding of election due to reason other than provided above and non-holding of election originally scheduled on dates outside the covered period shall be reported to SEC within 30 days from date of scheduled election and shall specify the new date of election which shall not be later than 60 days from scheduled date.

Note that if it is found that the non-holding of election is unjustified under the circumstances, the SEC shall issue an order directing the issuance of a notice stating the time and place of the election.

Where should the report on non-holding of annual meeting be submitted? What should the report contain?

Report on the non-holding of annual meeting shall be submitted to [email protected] and shall contain the following: (i) corporate name; (ii) SEC Registration Number; (iii) Date of annual meeting per By-laws; (iv) Date of actual meeting; (v) reason for non-holding of meeting; (vi) venue of the intended meeting; (vii) signed and dated by the Corporate Secretary.

SEC Memorandum Circular No. 10-2020 – GUIDELINES ON SUBMISSION BY ELECTRONIC MAIL OF GIS, AFS, FORMS AND DOCUMENTS REQUIRED UNDER EXISTING LAWS, RULES AND REGULATIONS, AND RECOGNITION OF ELECTRONIC SIGNATURE[21]

• SEC adopted guidelines and procedures to allow and facilitate the filing of reportorial requirements by electronic mail.

What are covered by this Circular?

This Circular covers and allows the filing of the following documents through electronic mail during the state of public health emergency where the country has been placed under Enhanced Community Quarantine: (1) General Information Sheet; (2) Audited Financial Statements; and (3) All other General and Special Forms and Letters

What are the requirements for the submission of these documents through electronic mail?

1. The submitted documents should be in Portable Document Format (PDF), preferably with Text Layer.
2. The submitted documents should contain an Electronic Signature
3. The submitted documents should be sent as Multipurpose Internet Mail Extensions (MIME) attachments to an email from a valid company email account or address of an authorized representative.
4. The body of the email should contain a statement declaring the authenticity of the submitted documents and a commitment to submit physical versions of the exact same submitted documents to the SEC once the state of public health emergency is lifted. This statement should include the full name, corporate address, and mobile number of the authorized representative making the submission.
5. The sender should request for a Return Receipt and a Delivery Status Notification to ensure that the email has been sent and has also been received by the SEC.

The company has difficulty of securing the services of a notary public at the moment. Can we still submit the non-notarized documents?

Yes. It shall be understood, however, that the person whose signature appears on the document shall be held accountable under the appropriate provisions of the Revised Corporation Code.

Can any email address be used to send the documents?

No. The submitted documents should be from a valid company email account or address of an authorized representative.

SEC Memorandum Circular No. 11-2020 – GUIDELINES FOR THE SUBMISSION OR FILING OF SECURITIES DEPOSIT DURING THE COVID-19 OUTBREAK AND THE ENHANCED COMMUNITY QUARANTINE[22]

• SEC adopted guidelines for the filing of security deposits by foreign corporations duly licensed to do business in the Philippines, except foreign banking or insurance corporations.

What are the requirements imposed on foreign corporations licensed to do business in the Philippines?

All branch offices of foreign corporations duly licensed to do business in the Philippines mentioned in Section 143 of the RCC, shall deposit securities within 60 days after the issuance of its SEC license, securities with an actual market value of at least P500,000.00. (Section 2 of SEC Memorandum Circular No. 17, Series of 2019)

What happens if the 60-day period falls during the effectivity of the Enhanced Community Quarantine (ECQ)?

Branch offices of foreign corporations duly licensed to do business in the Philippines required to file its initial securities deposit within 60 days after the issuance of its SEC license, which period falls during the effectivity of the Enhanced Community Quarantine, shall be given thirty (30) days from the lifting of said Enhanced Community Quarantine, to file the initial securities deposit under Section 2(a) of SEC Memorandum Circular No. 17, Series of 2019.

Additional securities deposit mentioned in the schedule provided in Section 2 (b) of SEC Memorandum Circular No. 17, Series of 2019, due for deposit during the effectivity of the Enhanced Community Quarantine, shall likewise be given thirty (30) days from the lifting of Enhanced Community Quarantine to deposit additional securities.

Securities deposit that matured during the effectivity of the Enhanced Community Quarantine shall likewise be given thirty (30) days from the lifting of Enhanced Community Quarantine to file an application for substitution of securities under Section 8 of SEC Memorandum Circular No. 17, Series of 2019.

[1] Issued March 17, 2020

[2] Issued March 18, 2020

[3] Issued April 6, 2020

[4] Effective April 9, 2020

[5] Issued March 30, 2020

[6] Issued April 1, 2020

[7] Issued March 30, 2020

[8] Issued March 4, 2020

[9] Issued March 14, 2020

[10] Issued March 21, 2020

[11] Issued April 8, 2020

[12] Issued on September 7, 2015

[13] Dated March 25, 2020

[14] Dated March 24, 2020

[15] Approved March 30, 2020

[16] Approved March 30, 2020

[17] Issued March 12, 2020

[18] Issued March 12, 2020

[19] Issued March 16, 2020

[20] Effective March 18, 2020

[21] Issued March 20, 2020

[22] Effective March 26, 2020