Congress of the Philippines Twelfth Congress REPUBLIC ACT NO. 9161 De e!

"er ##$ #%%1 AN ACT E&TABLI&'IN( RE)OR*& IN T'E RE(ULATION O) RENTAL& O) CERTAIN RE&IDENTIAL UNIT&$ PRO+IDIN( T'E *EC'ANI&*& T'ERE)OR AND )OR OT'ER PURPO&E& Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled: &e tion 1. Short Tittle. This ACT shall be known and cited as the "Rental Reform Act of 2002" &e . #. Declaration of Policy. The State shall for the common good, undertake a continuing of urban land reform an housing which will make available at affordable cost decent housing and basic services to under rivileged and homeless citi!ens in urban centers and resettlement areas. Toward this end, the State shall establish reforms in the regulation of retails of certain residential units. &e tion ,. Monthly Rental and Ma imum !ncrease. "eginning 0# $anuar% 2002 and for a duration of three &'( %ears thereafter ending on '# )ecember 200*, the monthl% rentals of all residential units in the +ational Ca ital Region and other highl% urbani!ed cities not e,ceeding Seven thousand five hundred esos &-.,/00.00( and the monthl% rentals of all residential units is all other areas not e,ceeding 0our thousand esos &-*,000.00( shall not be increased annuall% b% the lessor, without re1udice to e,isting contracts, b% more than ten &#02(. &e . -. Definition of Terms. The following terms as used in this Act shall be understood as3 &a( "Rental" shall mean the amount aid for the use or occu anc% of a residential unit whether a%ment is made on a monthl% or other basic. &b( "Residential unit" shall refer to an a artment, house and4or land on which another5s dwelling is located and used for residential ur ose and shall include not onl% buildings arts or units thereof used solel% as dwelling laces, boarding houses, dormitories, rooms and beds aces offered for rent b% their owners, e,ce t motels, motel rooms, hotels, hotels rooms, but also those used for home industries, retail stores or other business ur oses if the owner thereof and his or her famil% actuall% live therein and use it rinci all% for dwelling ur oses. &c( "6mmediate members of famil% of the lessee or lessor" for ur oses of re ossessing the leased romises, shall be limited to his or her s ouse, direct descendants or ascendants, b% consanguinit% or affinit%. &d( "7essee" shall mean the erson renting a residential unit.

&e( "8wner47essor" shall include the owner or administrator or agent of the owner of the residential unit. &f( "Sublessor" shall mean the erson who leases or rents out a residential unit leased to him b% an owner. &g( "Sublessee" shall mean the erson who leased or rents out a residential unit from a sublessor. &h( "Assignment of lease" shall mean the act contem lated in Article #9*: of the Civil Code of the -hili ines. &e . .. Rental and Deposit. Rental shall be aid in advance within the first five &/( da%s of ever% current month or the beginning of the lease agreement unless the contract of lease rovides for a later date of a%ment. The lessor cannot demand more than one &#( month advance rental and two &2( month5s de osit. &e . 6. "ssignment of #ease of Subleasing. Assignment of lease of subleasing of the whole or an% ortion of the residential unit, including the acce tance of boarders or beds acers, without the written consent of the owner4lessor is rohibited. &e . /. $rounds for %udicial &'ectment. ;1ectment shall be allowed on be the following grounds< &a( Assignment of lease or subleasing of residential units in whole or art, including the acce tance of boarders or beds acers, without the written consent of the owner4lessor. &b( Arrears in a%ment of rent for a total of three &'( months -rovided. That in the case of refusal b% the lessor to acce t a%ment of the rental agreed u on, the leased ma% either de osit b% wa% of consignation, the amount in court, or with the cit% or munici al treasurer, as the case ma% be, or in a bank in the name of and with notice to the lessor, within one &#( month after the refusal of the lessor to acce t a%ment. The lessee shall thereafter de osit the rental within ten &#0( da%s of ever% current month. 0ailure to de osit the rental for three &'( month shall constitute a ground for e1ectment. 6f an e1ectment case is alread% ending, the court u on ro er motion ma% order the lessee or an% erson or ersons claiming under him to immediatel% vacate the leased remises without re1udice to the continuation of the e1ectment roceedings. At an% time, the lessor ma%, u on the authorit% of the court, withdraw the rentals de osited. The lessor, u on authorit% of the court in case of consignation or u on 1oint affidavit b% him and the lessee to be submitted to the cit% or munici al treasure and to the bank where de osit was made, shall be allowed to withdraw the de osits< &c( 7egitimate need of the owner4lessor to re ossess his or her ro ert% for his or her own use or for the use of an% immediate member of his or her famil% as a residential unit3 Provided( ho)ever. That the lease for a definite eriod has e, ired3 Provided( further, That the lessor has given the lessee formal notice three &'( months in advance of the lessor5s intention to re ossess

the ro ert% and3 Provided finally< That the owner4lessor is rohibited from leasing the residential unit or allowing its use b% a third art% for a eriod of at least one %ear from the time of re ossession< &d( +eed of the lessor to make necessar% re airs of the leased remises which is the sub1ect of an e,isting order of condemnation b% a ro riate authorities concerned in order to make the said remises safe and habitable3 Provided. That after said re air, the lessee e1ected shall have the first reference to lease the same romises3 Provided( ho)ever. That the new rental shall be reasonabl% commensurate with the e, enses incurred for the re air of the said residential unit and3 Provided( finally< That if the residential unit is condemned or com letel% demolished, the lease of the new building will no longer be sub1ect to the aforementioned first= reference rule in this subsection< and &e( ;, iration of the eriod of the lease contract. &e . 0. Prohibition "gainst &'ectment by Reason of Sale or Mortgage. +o lessor or his successor=in=interest shall be entitled to e1ect the lessee u on the ground that the leased remises have been sold or mortgaged to a third erson regardless of whether the lease or mortgage is registered or not. &e tion 9. Ret*to*+)n Scheme, At the o tion of the lessor, he or she ma% engage the lessee in a written rent=to=own agreement that will result in the transfer or ownershi of the articular dwelling in favor of the latter. Such an agreement shall be e,ce t from the coverage of Sec. ' of this Act. &e . 1%. "pplication of the Civil Code and Rules of Court of the Philippines, ;,ce t when the lease is for a definite eriod, the rovisions of aragra h &#( of Article #9.' of the Civil Code of the -hili ines, insofar as the% refers to residential units covered b% this Act, shall be sus ended during the effectivit% of this Act, but other rovisions of the Civil Code and the Rules of Court on lease contracts, insofar as the% are not in conflict with the rovisions of this Act shall a l%. &e . 11. Coverage of this "ct. = All residential units in the +ational Ca ital Region and other highl% urbani!ed cities the total monthl% rental for each of which does not e,ceed Seven thousand five hundred esos &-.,/00.00( and all residential units in all other areas the total monthl% rental for each of which does not e,ceed 0our thousand esos &-*,000.00( as of the effectivit% date of this Act shall be covered, without re1udice to e,isting contracts. &e . 1#. Penalties. = a fine of not less than 0ive thousand esos &-/,000( nor more than 0ifteen thousand esos &#/,000.00( or im risonment of not less than one &#( month and &#( da% to not more than si, &9( month or both shall be im osed on an% erson,natural or 1uridical, found guilt% of violating an% rovision of this Act. &e . 1,. !nformation Drive. = The )e artment of the 6nterior and 7ocal >overnment and the ?ousing and @rban )evelo ment Coordinating Council, in coordination with other concern agencies, are hereb% mandated to conduct a continuing information drive about the rovisions of this Act.

&e . 1-. Transition Program. = The ?ousing and @rban )evelo ment Coordinating Council is hereb% mandated to formulate, within si, &9( months from effectivit% hereof, a transition rogram which will rovide for safet% measures to cushion the im act of a free rental market. &e . 1.. Separability Clause. = 6f an% rovision or art hereof is held invalid or unconstitutional, the remainder of the law or the rovision not otherwise affected shall remain valid and subsisting. &e . 16. Repealing Clause. = An% law, residential decree or issuance, e,ecutive order, letter of instruction, administrative order, rule or regulation contrar% to or inconsistent with, the rovisions of this Act is hereb% re ealed, modified or amended according. &e . 1/. &ffectivity Clause. = This Act shall take effect on 0# $anuar% 2002 following its ublication in at least two &2( news a ers of general circulation. Approved3 &Sgd(

)RAN1LIN *. DRILON -resident of the Senate

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2O&E DE +ENECIA$ 2R. S eaker of the ?ouse of Re resentatives This Act which is a consolidation of ?ouse "ill +o. #:*: and Senate "ill +o. 2#* was finall% assed b% the ?ouse of Re resentatives and the Senate on 20th )ecember 200#

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O&CAR (. 3ARE& Secretar% of the Senate

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ROBERTO P. NA4ARENO Secretary $eneral House of Representatives

Approved: December 22, 2001

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GLORIA MACAPAGAL-ARROYO Pre !de"# o$ #%e P%!&!pp!"e