AN ACT ESTABLISHING REFORMS IN THE REGULATION OF RENT OF CERTAIN RESIDENTIAL UNITS

Case Overview and Summary

Summary of the Rent Control Act of 2009 (Republic Act No. 9653)

Objective and Policy (Section 2):
- The State aims to encourage affordable housing development for lower income groups.
- The State shall protect housing tenants from unreasonable rent increases.

Definitions (Section 3):
- "Rent" refers to the amount paid for using or occupying a residential unit.
- "Residential unit" includes apartments, houses, dormitories, rooms, and bedspaces offered for rent, except motels, hotels, and units used primarily for business purposes.
- "Immediate family members" are limited to spouse, direct descendants or ascendants for repossession purposes.
- Definitions of "lessee", "owner/lessor", "sublessor", and "sublessee" are provided.

Rent Increase Limits (Section 4):
- No rent increase for 1 year from the law's effectivity.
- After 1 year until December 31, 2013, rent increase shall not exceed 7% annually for the same lessee.
- Lessor may set the initial rent for a new lessee when the unit becomes vacant.
- For student housing, only one rent increase per year is allowed.

Coverage (Section 5):
- Covers residential units in the National Capital Region and highly urbanized cities with monthly rent ranging from ₱1 to ₱10,000.
- Covers residential units in other areas with monthly rent ranging from ₱1 to ₱5,000.

Continuing Rental Regulation (Section 6):
- The Housing and Urban Development Coordinating Council (HUDCC) is authorized to continue rental regulation after the lapse of Section 4.
- HUDCC can determine the period of regulation, covered residential units, and allowable rent increase limits.

Rent Payment and Deposits (Section 7):
- Rent shall be paid within the first 5 days of the month or as specified in the lease contract.
- Lessor cannot demand more than 1 month's advance rent and 2 months' deposit.
- Deposits shall be kept in a bank account, and interest shall be returned to the lessee upon lease expiration.
- Deposits and interest may be forfeited for unpaid bills or damages caused by the lessee.

Assignment of Lease or Subleasing (Section 8):
- Assignment of lease or subleasing, including accepting boarders or bedspacers, is prohibited without the lessor's written consent.

Grounds for Judicial Ejectment (Section 9):
- Unauthorized assignment of lease or subleasing, including accepting boarders or bedspacers (Section 9a).
- Arrears in rent payment for 3 months, with provisions for consignation (Section 9b).
- Legitimate need of the owner/lessor to repossess the property for personal or immediate family use, with 3 months' notice and prohibition on leasing for 1 year (Section 9c).
- Need for necessary repairs due to an order of condemnation, with the lessee having first preference to lease after repairs (Section 9d).
- Expiration of the lease contract (Section 9e).

Prohibition Against Ejectment Due to Sale or Mortgage (Section 10):
- Lessors or their successors-in-interest cannot eject the lessee due to sale or mortgage of the leased premises.

Rent-to-Own Scheme (Section 11):
- Lessors have the option to engage the lessee in a written rent-to-own agreement for ownership transfer.
- Rent-to-own agreements are exempt from the coverage of Section 5.

Application of Civil Code and Rules of Court (Section 12):
- Provisions of Article 1673 of the Civil Code on residential units are suspended during the law's effectivity, except for definite period leases.
- Other Civil Code and Rules of Court provisions on lease contracts apply if not in conflict with this law.

Penalties (Section 13):
- Violators shall be fined between ₱25,000 and ₱50,000, or imprisoned for 1 month and 1 day to 6 months, or both.

Information Drive (Section 14):
- The Department of the Interior and Local Government and HUDCC shall conduct a continuing information drive about the law's provisions.
- Information shall be translated into major regional dialects and posted in public places.

Review of Rental Regulation (Section 15):
- HUDCC shall conduct a review every 3 years on the law's implementation and the need for continuing regulation or deregulation.

Transition Program (Section 16):
- HUDCC and its agencies shall formulate and implement a 2-year transition program to cushion the impact in case of a regulation-free rental housing market.

Separability Clause (Section 17), Repealing Clause (Section 18), and Effectivity Clause (Section 19) are also included.