Declaration of Policy
- The State commits to developing affordable housing for lower-income groups.
- Protection of tenants in lower income brackets from unreasonable rent increases is a priority.
Limit on Increases in Rent
- Rent increases are limited to a maximum of 10% annually for the same lessee.
- Upon vacancy, the lessor may set a new initial rent for the next tenant.
Definitions
- "Rent" refers to payment for occupancy of residential units, whether monthly or otherwise.
- "Residential Unit" includes apartments, houses, boarding houses, dormitories, and similar dwellings used principally for residence.
- Certain commercial uses are included if the owner and family live therein primarily as a home.
- Immediate family members for repossession purposes include spouse and direct blood relatives.
- Definitions of lessee, lessor (including agents), sublessor, and sublessee are provided.
Rent and Bank Deposit Requirements
- Rent payment must be made in advance within the first five days of the month or lease agreement start.
- No more than one month’s advance rent can be demanded.
- Security deposits capped at two months’ rent must be kept in a bank under the lessor’s name.
- Interest accrued on deposit must be returned to the lessee after lease expiration.
- Deposits may be forfeited to cover unpaid rent, utilities, or damages.
Assignment of Lease or Subleasing
- Assignment or subleasing, including accepting boarders or bedspacers, is prohibited without written consent from the lessor.
Grounds for Judicial Ejectment
- Ejectment allowed for unauthorized subleasing or lease assignment.
- Non-payment of rent for three months is ground for ejectment, with provisions for rent deposit in case of lessor’s refusal.
- Legitimate need by the owner/lessor or immediate family to repossess after lease expiration, with three months’ formal notice.
- The lessor cannot lease or allow third-party use for one year after repossession.
- Ejectment permitted for necessary repairs under official orders; lessee given preference to lease after repairs.
- Lease expiration also grounds for ejectment.
Prohibition Against Ejectment Due to Sale or Mortgage
- Lessees cannot be ejected solely because the property has been sold or mortgaged.
Rent-to-Own Schemes
- Lessors may enter a rent-to-own agreement resulting in transfer of ownership to the lessee.
- Such agreements are exempt from the rent increase limits.
Application of Other Laws
- Article 1673(1) of the Civil Code regarding indefinite leases is suspended during this Act’s effect for covered residential units.
- Other Civil Code and Rules of Court provisions on leases apply unless conflicting with this Act.
Coverage of the Act
- Applies to residential units in National Capital Region and highly urbanized cities with monthly rents not exceeding P10,000.
- Applies to all other areas with rents not exceeding P5,000 monthly.
- Existing contracts are respected.
Penalties
- Violations incur fines between P5,000 to P15,000, or imprisonment from 1 month and 1 day to 6 months, or both.
Information Drive
- Mandates DILG and HUDCC, with other agencies, to conduct ongoing public information campaigns about the Act.
Transitory Provision
- HUDCC and related agencies must develop a transition program within six months to mitigate impacts of rent deregulation post-Act.
Separability Clause
- Invalidity of any provision does not affect the validity of the remaining law.
Repealing Clause
- Contradictory laws and regulations are repealed or modified accordingly.
Effectivity
- The Act takes effect 15 days after publication and remains effective until December 31, 2008.