The Rent Control Act of 2009 used to protect tenants and landlords so both parties can arrive at an agreement. However, the law has already expired on December 31, 2015. While most landlords and tenants in the Philippines rely on verbal agreement, oral contracts are often breached when one party realizes later on, that it was not a fair deal. Even without the written contract, both parties can meet halfway.
Rent Control Act of 2009
Section 4. Limit on Increases in Rent. - For a period of one (1) year from its effectivity, no increase shall be imposed upon the rent of any residential unit covered by this Act: Provided, That after such period until December 31, 2013, the rent of any residential unit covered by this Act shall not be increased by more than seven percent (7%) annually as long as the unit is occupied by the same lessee: Provided, further, That when the residential unit becomes vacant, the lessor may set the initial rent for the next lessee: Provided, however, That in the case of boarding houses, dormitories, rooms and bedspaces offered for rent to students, no increase in rental more than once per year shall be allowed.
Section 5. Coverage of this Act. - All residential units in the National Capital Region and other highly urbanized cities, the total monthly rent for each of which ranges from One peso (P1.00) to Ten thousand pesos (P10,000.00) and all residential units in all other areas, the total monthly rent for each of which ranges from One peso (P1.00) to Five thousand pesos (P5,000.00) as of the effectivity date of this Act shall be covered, without prejudice to existing contracts.
Section 6. Authority to Continue Rental Regulation. - Notwithstanding he lapse of the period provided in Section 4 of this Act. the Housing and Urban Development Coordinating Council (HUDCC) is hereby granted the authority to continue the regulation of the rental of certain residential units, to determine the period of regulation and its subsequent extensions if warranted, to determine the residential units covered and to adjust the allowable limit on rental increases per annum, taking into consideration, among others, National Statistics Office (NSO) census on rental units, prevailing rental rates, the monthly inflation rate on rentals of the immediately preceding year, and rental price index.
Section 7. Rent and Requirement of Bank Deposit. - Rent shall be paid in advance within the first five (5) days of every current month or the beginning of the lease agreement unless the contract of lease provides for a later date of payment. The lessor cannot demand more than one (1) month advance rent. Neither can he/she demand more than two (2) months deposit which shall be kept in a bank under the lessor's account name during the entire duration of the lease agreement. Any and all interest that shall accrue therein shall be returned to the lessee at the expiration of the lease contract.
The act covered various aspects of renting a property such as the requirement of bank deposit, rental regulation, policies and much more. Just because the act has expired does not mean landlords and tenants are no longer protected. Both parties have the option to negotiate. In terms of deposits, the tenant and landlord can discuss the option that works for both of them. There are landlords that do not rely on oral contract. This is where a written contract comes in. Written contracts will require tenants a security deposit worth 2 to 3 months' rent. If the tenant does not wish to renew the contract, the deposit will be returned provided, the unpaid bills and deductions for repairs have been made.
When it comes to the duration of contract, the landlord assumes that the contract has been renewed if the tenant stays in the unit 15 days after the contract has expired. The landlord will furnish a new copy of the contract but with a different term. However, if you are in the lower end of the market, both parties rely on oral contracts. In this case, the landlord has the right to eject a tenant if they fail to pay the rent for three months. Most landlords do not allow subleasing and a violation of which will also be a ground for ejection. If the landlord decides to use the property, the tenant will be given three months' formal notice to vacate the place.
Problems involving landlords and tenants are usually mediated by town tribunals. Matters will be taken to court if they have not been resolved at the town level. You may also refer to the Civil Code of the Philippines to know the general guideline for the conditions of lease of urban and rural lands. The guidelines can be found in Articles 1654-1688.
