THIRTEENTH CONGRESS OF THE REPUBLIC ) 
5 ,WE 23 ?:? :5.- 
OF THE PHILIPPINES 
1 
Second Regular Session 
) 
~ 
Introduced by Senator Miriam Defensor Santiago 
a 
EXPLANATORY NOTE 
The Constitution expressly guarantees the people's right to earn a decent 
living. Section 1, Article XI11 states: 
Congress shall give highest priority to the enactment of measures 
that shall protect and enhance the right of all people to human 
dignity; reduce social, economic and political inequities.. . The 
State shall regulate the acquisition, ownership, use and disposition 
of property and its increments. 
Commercial buildings and spaces, by their very nature, become a public concern once 
offered for rent. 
It has been observed that some building owners indiscriminately raise the rent they 
charge - sometimes to unreasonable levels despite the steady depreciation in the value and 
quality of these buildings. This effectively kills most small and medium business enterprises 
which cannot afford a large amount of increase in their rentals; they are forced to close shop and 
lay off their employees, or transfer elsewhere and start again. 
Against the backdrop of the current economic crisis, the regulation of rentals and 
increases in rentals of commercial buildings and spaces is urgently needed. As the economy 
struggles to keep afloat, there is a need to aid small and medium business entrepreneurs, who 
rent these buildings and/or spaces, to prevent the collapse of their businesses, and equally 
important, to prevent more laborers from losing jobs. 
Unemployment because of business closure is not a matter that should be taken lightly. 
The pressure created by lessors because of high rental costs and their subsequent unrestrained 
increases (along with wage hikes and the unrelenting rise on the prices of goods) is one of the 
common causes of closure of small business enterprises which sadly translates to increased 


unemployment. Thus, any substantial increase in rental rates of commercial spaces not, only 
negatively affects small and medium enterprises but also detrimentally impacts on employee 
income, including earned benefits, and employment potential. 
These are compelling remons to enact a law to regulate the rent and protect small and 
medium business entrepreneurs considering that they comprise approximately ninety percent 
(90%) of business society providing employment to the general public. 
The urgent passage of this bill is thus recommended. 


THIRTEENTH CONGRESS OF THE REPUBLIC ) 
OF THE PHILIPPINES 
23 p 
.r, 
1 
1 
5 
L. . _ , I  
Second Regular Session 
) 
Introduced by Senator Miriam Defensor Santiago 
AN ACT 
ESTABLISHING COMPREHENSIVE RENTAL CONTROL ON 
COMMERCIAL BUILDINGS AND SPACES, AND PROVIDING 
PENALTIES FOR VIOLATION THEREOF 
Be it enacted by the Senate and the House of Representatives ofthe Philippines in 
Congress assembled: 
SECTION 1. Short Title. - This act shall be known as “Comprehensive Commercial 
Units Rental Act of 2005.” 
SECTION 2. Declaration of Policy. -The State shall, for the common good, undertake a 
continuing program of urban land reform which will make available at affordable cost, 
commercial units for Small and Medium Business Enterprises (SMBE) in the National Capital 
Region (NCR) and other urban areas. 
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SECTION 3. Monthly Rentals and Maximum Increases. - Beginning 1 January 2005 and 
for a duration of three (3) years thereafter ending on 31 December 2008, the monthly rentals of 
all commercial units in the NCR and other urban areas shall not be increased by more than the 
annual average rate of devaluation of the Philippine currency or more than ten percent (10Y0) 
cumulative in every year thereafter. 
SECTION 4. Definition of Terms. -As used in this Act, the following terms shall mean: 
(a) “Rental” is the amount paid for the use or occupancy of a commercial 
building whether payment is made on a monthly or other basis. 
(b) “Commercial Buildinflnit” is a commercial building or land, including parts 
or units thereof, offered for rent for business and/or residential purposes. 


(c) “Immediate members of family of the lessee or lessor” for purposes of 
repossessing the leased premises, shall be limited to the spouse, direct descendants or 
ascendants, by consanguinity or affinity. 
(d) “Lessee” is the person renting a commercial unit for commercial purposes 
andor commercial and residential uses. 
(e) “Owner/Lessor” shall include the owner or administrator or agent of the owner 
of the commercial unit. 
(0 “Sublessor” is the person who leases or rents out a commercial unit leased to 
him by an owner. 
(g) “Sublessee” shall mean the person who leases or rents out a commercial unit 
from a sublessor. 
(h) “Assignment of lease” shall mean the act contemplated in Article 1649 of the 
Civil Code of the Philippines. 
SECTION 5. Rental and Deposit. - Rental 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’s 
advance rental and three (3) months’ deposit. 
SECTION 6. Assignment of Lease or Subleasing. - Assignment of lease or subleasing of 
the whole or any portion of the commercial unit, without the written consent of the owner/lessor, 
is prohibited. 
SECTION 7. Right of Tenancy of the Tenant. -As long as the tenant is religiously paying 
his monthly rental, the lessor can not eject the tenant, unless embodied in the provisions of 
Section 8 of this Act. The tenant has the priority right over the lessor to extend and/or renew his 
contract of lease. 
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I 
SECTION 8. Grounds for Judicial Ejectment. - Ejectment shall be allowed on the 
following grounds: 
(a) Assignment of lease or subleasing of commercial units in whole or in part, 
without the written consent of the owner/lessor; 


(b) Arrears in payment of rent for one (1) month: Provided, That in the case of 
refusal by the lessor to accept payment of the rental agreed upon, the lessee may either 
deposit, by way of consignation, the amount in court, or with the city or municipal 
treasurer, as the case may be, or in a bank in the name of and with notice to the lessor, 
within one (1) month after the refusal of the lessor to accept payment. 
The lessee shall thereafter deposit the rental within ten (10) days of every current 
month. Failure to deposit the rentals for three (3) months shall constitute a ground for 
ejectment. If an ejectment case is already pending, the court upon proper motion may 
order the lessee or any person or persons claiming under him to immediately vacate the 
leased premises without prejudice to the continuation of the ejectment proceedings. At 
any time, the lessor may, upon the authority of the court, withdraw the rentals deposited. 
. 
The lessor, upon authority of the court in case of consignation, or upon joint 
affidavit by him and the lessee to be submitted to the city or municipal treasurer and to 
the bank where deposit was made, shall be allowed to withdraw the deposits; 
(c) Legitimate need of the ownerllessor to repossess his or her property for his or 
her own use or for the use of any immediate member of his or her family as a commercial 
unit; provided, however, that the lease for a definite period has expired; provided, further, 
that the lessor has given the lessee three (3) months’ advance formal notice of the lessor’s 
intention to repossess the property, an& provided, finally, that the owner/lessor is 
prohibited from leasing the commercial unit or allowing its use by a third party for a 
period of at least one year from the time of repossession; 
(d) Need of the lessor to make necessary repairs of the leased premises which is 
the subject of an existing order of condemnation by appropriate authorities concerned in 
order to make the said premises safe and habitable; provided, that after said repair, the 
lessee ejected shall have the first preference to lease the same premises; provided, 
however, that the new rental shall be reasonably commensurate with the expenses 
incurred for the repair of the said commercial unit, and; provided, finally, that if the 
commercial unit is condemned or completely demolished, the lease of the new building 


will no longer be subject to the aforementioned first-preference rule in this subaeotion; 
and 
(e) Expiration of the period of the lease contract. 
SECTION 9. Prohibition Against Ejectment by Reason of Sale or Mortgage.- No lessor 
or his successor-in-interest shall be entitled to eject the lessee upon the ground that the leased 
premises have been sold or mortgaged to a third person regardless of whether the lease or 
mortgage is registered or not. 
SECTION 10, Rent-to-Own Scheme. - At the option of the lessor, he or she may engage 
the lessee in a written rent-to-own agreement that will result in the transfer of ownership of the 
particular business unit in favor of the latter. Such an agreement shall be exempt from the 
coverage of Section 3 of this Act. 
SECTION 11. Application of the Civil Code and Rules of Court of the Philippines. - 
Except when the lease is for a definite period, the provisions of paragraph (1) of Article 1673 of 
the Civil Code of the Philippines, insofar as they refer to commercial units covered by this Act, 
shall be suspended during the effectivity of this Act, but other provisions of the Civil Code and 
the Rules of Court on lease contracts, insofar as they are not in conflict with the provisions of 
this Act, shall apply. 
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SECTION 12. Coverage ofthis Act. - All commercial units in the NCR and other highly 
urbanized cities the total monthly rental for each of which does not exceed Seven Thousand Five 
Hundred Pesos (P7,500.00) and all commercial units in all other areas the total monthly rental 
for each of which does not exceed Four Thousand Pesos (P 4,000.00) as of the effectivity date of 
this Act shall be covered, without prejudice to existing contracts. 
SECTION 13. Penalties. -A fine of not less than Fifty Thousand Pesos (P 50,000.00) but 
not more than Two Hundred Thousand Pesos (@ 200,000.00) or imprisonment of not less than 
one (6) month and one (1) day to not more than two (2) years or both shall be imposed on any 
person, natural or juridical, found guilty of violating any provision of this Act. 


Where the offender is a corporation or a juridical entity, the President or General 
Manager thereof shall suffer the penalty of imprisonment provided herein, without prejudice to 
the imposition of fine on such corporation or entity. 
SECTION 14. Infirmation Drive. - The Department of the Interior and Local- 
Government and the Housing and Urban Development Coordinating Council, in coordination 
with other concerned agencies, are hereby mandated to conduct a continuing information drive 
about the provisions of this Act. 
SECTION 15. Transition Program. - The Housing and Urban Development 
Coordinating Council is hereby mandated to formulate, within six (6) months from effectivity 
hereof, a transition program, which will provide for safety measures to cushion the impact of a 
free rental market. 
SECTION 16. Separability Clause. - If any provision of this Act is held invalid or 
unconstitutional, the remainder of the Act or the provision not otherwise affected shall remain 
valid and subsisting. 
SECTION 17. Repealing Clause. - Any law, presidential decree or issuance, executive 
order, letter of instruction, administrative rule or regulation contrary to or inconsistent with the 
provisions of this Act is hereby repealed, modified or amended accordingly. 
SECTION 18. Effectivity Clause. - This Act shall take effect fifteen (15) days after its 
publication in at least two newspapers of general circulation. 
Approved,