Review of Related Literature

Community Quarantine Classification and Its Restrictions

Coronavirus (COVID-19), a highly transmittable disease that threatens the human population

worldwide, is considered to be the third pandemic in the 21st century (Perlman, 2020). To

contain the spread of the virus, many countries have implemented lockdowns and widespread

shelter‐in‐place orders (Fang, Wang, and Yang 2020; Yap et al. 2020). On March 16, 2020, The

Philippine government imposed a total lockdown in Luzon, known as the Enhanced Community

Quarantine (ECQ), as a preventive measure to minimize the COVID-19 outbreak. Under the

ECQ, all modes of domestic travel, including ground, air, and sea, were suspended (Prasetyo,

2020). Residents were not allowed to leave their homes except in case of emergencies. Border

closures and entry bans were also enforced. In some areas, Modified Enhanced Community

Quarantine (MECQ) were implemented where the movement is limited within zone for obtaining

essential goods and services and work, with no public transport but biking and non-motorized

transport is encouraged. According to Quadra (2020), areas with low risk of coronavirus

infection were placed under Modified General Community Quarantine (MGCQ) which is the

most relaxed lockdown level, where minors and seniors or those at high risk for contracting the

COVID-19 disease are required to stay home. In General Community Quarantine (GCQ), the

government implemented a more relaxed measures and less restriction compared to ECQ, with

public transportations and selected businesses allowed to operate in reduced capacity (Quieta,

2020). The administration also implemented, through several platforms as preventive measures

and strict social distancing (Duddu, 2020, CSIS, 2020). The COVID-19-induced quarantine

restrictions is an unprecedented event. It has rendered millions of people unemployed for an

the nation-wide lockdown has become unparalleled. The shifting quarantine classification has

severely affected business operations and workers. It was prolonged, confusing and

unpredictable in multiple ways.

Impact of COVID19 in Economy

The novel coronavirus disease, COVID-19, has brought significant change to people’s lives and

business activities nationally, regionally, and globally. The Philippines took swift action—

including enhanced community quarantine (ECQ)—to contain the pandemic and launched an

emergency subsidy program with massive public spending to support disrupted households and

businesses. The strict lockdown ran from mid-March to the end of May 2020 in the national

capital region and high-risk provinces, causing huge economic losses. Six months after the

March lockdown, the Philippine economy has moved to the recovery stage, but micro, small, and

medium-sized enterprises (MSMEs) are continuing to confront a sharp drop in demand and

revenue (Shinozaki, 2021).

Similarly, the pandemic has severely impacted economical activities including the trade, tourism

industry, aviation industry, oil industry, construction industry, telecom sector, food industry, and

healthcare industry and several other sectors (Chamola et al. 2020).  Weaknesses of the current

global supply chain have been exposed resulted in revenue loss, demand, and supply

unfulfillment in COVID-19 (Linton and Vakil 2020).

of pandemics on the global GDP from 2.2 to 4.8% (GPMB 2019). Initial predictions proposed

that global cost may touch $4.1 trillion due to COVID-19 (Hutt 2020). The IMF had asserted that

the impact of COVID-19 on the world economy will be worse than the Great Depression of

1929. Expected growth of the world GDP will be near −3.0%, much lesser than 0.1% of the

financial crisis of 2009 (Gopinath 2020). Carlsson-Szlezak, Reeves, and Swartz (2020) discussed

the COVID-19 impacts on the global economy and recognized it as a recession by making

comparison with diseases like SARS (2000), H3N2 Flu (1968), H2N2 Flu (1958), and Spanish

Flu (1918). By understanding the seriousness, the fight against COVID-19 should be in two-fold,

first, save people’s lives, and second, reform economic activities without reaching the predicted

recession. Impacts of the COVID-19 are globally visible in all the sectors as highlighted in

various reports released by IMF, World Bank, International Labour Organization (ILO), and the

United Nations.

The choice of health versus economy is a preference between quality of life and unknown

quantity of collateral damage. The ongoing pandemic and subsequent lockdown are causing

nearly US$400 million per day worth of losses in service and agricultural sectors. (Biswas, R. K.,

Huq, S., & Afiaz, A. (2020). The situation is a learning lesson for the adoption of resilience and

robustness in supply chain to help a shrinking economy (Currie et al. 2020; Ivanov 2020c;

Dolgui, Ivanov, and Sokolov 2020).

Pandemic policy is also economic policy as there is no durable end to the economic crisis

without an end to the health crisis (Argawal & Gopinath, 2021). Hence, the birth of Republic Act

(RA) No. 11494, referred to as the “Bayanihan II Act” (An Act Providing For Covid-19

Response And Recovery Interventions And Providing Mechanisms To Accelerate The Recovery

And Bolster The Resiliency Of The Philippine Economy, Providing Funds Therefor, And For

Other Purposes) took effect on 14 September 2020.

The COVID-19 pandemic has given rise to an even greater focus on tax, including as a crucial

means for providing initial relief as an immediate response and, longer term, to stimulate growth

that will be critical to fund the social and economic recovery efforts as well as to reduce deficits

(KPMG, 2020). The salient TAX features of the Bayanihan II Act are as follows:

1. Exemption from income tax, and subsequently withholding taxes (when applicable), for:

 “COVID-19 special risk allowance” for all publicly and privately employed

health workers

 Provision of compensation to public and private health workers who have

contracted COVID-19 in the line of duty

 Actual hazard duty pay received by all medical and allied medical staff from the

government, who are temporarily hired to complement or supplement the

current health workforce or to man the temporary medical facilities, serving in

the front line during the state of national emergency

 Retirement benefits received by officials and employees of private firms,

whether individual or corporate, from 05 June 2020 until 31 December 2020

equipment or essential goods

3. Moving of 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 (CQ).

4. Exemption from documentary stamp tax (DST) on loan term extensions or restructuring of

loans for (but not limited to) salary, personal, housing, commercial, and motor vehicle loans,

amortizations, financial lease payments and premium payments, as well as credit card payments,

but the exemption from DST will not be applicable to interbank loans and bank borrowings

5. Exemption from donor’s tax, and exemption from import duties and taxes, on the donation or

importation (for donation) of personal computers, laptops, tablets, or similar equipment

appropriate for use in schools, donated for distribution to public schools regardless of level,

including state universities and colleges and vocational institutions under the Technical

Education and Skills Development Authority (TESDA)

6. Allowing the net operating loss of the business or enterprise for taxable years 2020 and 2021

to be carried over as a deduction from gross income for the next five (5) consecutive taxable

years immediately following the year of such loss

7. Removal of the percentage tax on shares of stock sold or exchanged through Initial Public

Offering (IPO)

The response to the challenges posed by the pandemic has been actively manifested in tax

measures aimed at supporting citizens and businesses. Considering the reduction of tax revenues
to the budget, the regulation of taxation is the main tool for influencing economic and social

processes in the country. (Viktoriia Tyshchenko, Viktoriia Ostapenko and Daria Ivanova (2020).

Restructured Operation

In the CSC Resolution No. 2000540, the Civil Service Commission (CSC) has made available

multiple alternative work arrangements (AWA) that government agencies can adopt while the

country is placed under a state of public health emergency due to the coronavirus disease 2019

(Covid-19) pandemic.

These are work-from-home arrangement, skeleton workforce, four-day or compressed

workweek, and staggered working hours. An agency may also adopt work arrangements

consisting of a combination of these, or other work arrangements appropriate and applicable to

the agency considering the prevailing community quarantine in the area where it is located and

the nature of work performed by its employees.

CSC Resolution No. 2000540 (Revised Interim Guidelines for Alternative Work Arrangements

and Support Mechanisms for Workers in the Government During the Period of State of National

Emergency Due to Covid-19 Pandemic), promulgated on May 7, 2020 and circularized via CSC

Memorandum Circular No. 10, s. 2020, contains the complete set of guidelines for implementing

the said AWA.

Work-from-home (WFH)

Work-from-home (WFH) refers to an output-oriented work arrangement that authorizes the

worker to produce outputs or results and accomplishments outside of the office. This shall be
adopted in areas placed under enhanced community quarantine (ECQ) by the president. For

agencies in areas placed under general community quarantine (GCQ), where public

transportation is limited and physical/social distancing in the workplace is required, WFH is an

option.

For areas placed under GCQ, employees aged below 21 and those who are 60 years old and

above, as well as those with immunodeficiency, co-morbidities or other health risks, pregnant

women, including those who reside with the aforementioned, shall be under WFH arrangement,

except when their services are indispensable under the circumstances or when office work is

permitted.

As all organizational changes, WFH too has some advantages and disadvantages. Usually,

adopting this flexible way of working has been presented as a planned choice that requires a

period of design, preparation, and adaptation to allow organizations to effectively support

employees’ productivity and ensure them better work-life balance (Shockley, 2015). However,

the COVID-19 outbreak has substantially forced most organizations to adopt this way of

working, often without providing employees with the necessary skills required for remote work

(Ingusci, 2020, Godderis, 2020). As previously mentioned, studies have reported both

advantages and disadvantages related to remote work (Verhoogen, 2017). Its effects, therefore,

have been quite explored (Zappala, 2020). On the other side, the need to examine how WFH, as

a “new way of working,” (Steenbergen, 2020) has affected the well-being and productivity of

employees with no prior remote work experience and to identify specific work conditions

affecting remote work during the COVID-19 crisis (Vander Elst T, Verhoogen R, Godderis L,

2020 ) is imperative.
Skeleton (skeletal) workforce

Skeleton (skeletal) workforce pertains to a work arrangement where a minimum number of

employees is required to man the office to render service when full staffing is not possible.

Agencies in GCQ areas shall adopt a skeleton workforce as one of its AWA. During ECQ, on the

other hand, a skeleton workforce may be allowed unless a different operational capacity is

provided in agencies providing health and emergency frontline services, border control, and

other critical services as identified in the IATF Omnibus Guidelines on Community Quarantine.

Four-Day (Compressed) Workweek Arrangement

In a four-day (compressed) workweek arrangement, the employees’ workweek is compressed

to four days each week. This may be adopted by agencies in areas placed under GCQ.

Staggered working hours

Agencies may also adopt staggered working hours, which applies to offices or agencies that

observe work shifting or flexible working time. For this purpose, staggered working hours refers

to the existing 24/7 shifting schedule and the flexible working time schedule. This may be

implemented as a means to limit the number of employees present at the workplace at any given

time.
A combination of two or more aforementioned AWA

Agencies may use a combination of two or more aforementioned AWA, including any other type

of work arrangement it has adopted. They shall formulate their internal rules and regulations to

effectively implement the AWA they adopted. These guidelines must include the appropriate

AWA for employees who travel to and from areas placed under different quarantine levels, e.g.,

from ECQ area to GCQ area and vice-versa or from quarantine-free area to ECQ or GCQ area.

To ensure that public service delivery is not prejudiced during the implementation of AWA, a

monitoring mechanism, such as submission of daily or weekly accomplishment reports, must be

implemented.

Safety and Health Measures

To protect government workers’ health and safety, the CSC requires agencies to implement

precautionary measures before the resumption of normal operations, such as disinfection and

decontamination activities, the conduct of health status check among employees, and

modification of workplace layout to ensure observance of physical distancing requirements.

Amendment in Audit Setting

Taxes are necessary not only to sustain the government’s operations but also to fund projects that

were developed to help promote economic growth and the welfare of its citizens. Without taxes,

the government would be paralyzed because absent the needed funds, the government, no matter

how formidable, may not be able to perform its functions effectively. Considering the rise in the

volume of government projects to ensure public welfare and safety amidst the COVID-19

pandemic, it is not surprising that the tax collection agencies, such as the Bureau of Internal
Revenue (BIR), are finding ways to strengthen its tax collection and make it more efficient.

Indeed, tax collection is of primordial importance. However, such must be exercised within the

bounds of current rules and regulations.

In order to protect taxpayers’ right to due process, Revenue Regulations (RR) No. 12-1999 was

issued to govern the procedures to be expected in the conduct of a tax examination which

includes steps such as the issuance of a Notice for Informal Conference (NIC) and a Preliminary

Assessment Notice (PAN) prior to the issuance of a Formal Letter of Demand (FLD) and

Assessment Notice. The NIC contains the initial findings of the BIR based on the examination

conducted, with a request to the taxpayer to present its defenses within 15 days from receipt of

the NIC or during the informal conference with the revenue officers who audited the taxpayer’s

records. Otherwise, the taxpayer shall be considered in default resulting to the issuance of the

PAN. On 28 November 2013, the BIR issued RR No.18-2013 which removed the requirement

for the issuance of a NIC and the conduct of an informal conference. However, RR 18-2013 was

subsequently amended by RR No. 7-2018 which reinstated the NIC and informal conference

requirements. Aside from the reinstatement of the said requirement, the RR also extended the

period of informal conference from 15 days to 30 days.

Conclusion

The situation is a learning lesson for the adoption of resilience and robustness to help a shrinking

economy (Currie et al. 2020; Ivanov 2020c; Dolgui, Ivanov, and Sokolov 2020). Lockdown

cannot be considered as a permanent solution for a long-run from an economic and social

perspective, especially when a large segment of the population is dependent on daily wages for
sustenance (Block et al. 2020). In the study of Atalan, 2020, it emphasized that the application of

lockdown by governments is thought to be effective on psychology, environment and economy

with it being effective on COVID-19. Meanwhile, the study of Barbieri, Basso, Scicchitano,

2021 find that governmental restrictions hit the sectors where the risk of contagion in the

workplace was more widespread.

Truly, these are difficult and critical times. Now more than ever, government agencies have the

need to reassess their ways of doing business, setting goals and targets, managing people, and

evaluating work performance. There is a call to move forward with a fresh perspective, knowing

that business-as-usual may no longer cut it and that innovation has now become a crucial

ingredient not only to meet organizational objectives but also to keep the employees safe,

healthy, happy, and committed while service the interest of the public.