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THIRTEENTH CONGRESS OF THE ) 
REPUBLIC OF THE PHILIPPINES 
) 
First Regular Session 
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Senate Bill No. 19 
(Prepared by the Committee in substitution of S. No. 1324, taking into consideration H. No. 3356) 
AN ACT 
ESTABLISHING REFORMS IN THE1 REGULATION OF RENTALS OF CERTAIN 
RESIDENTIAL UNITS, PROVIDING THE MECHANISMS THEREFOR AND FOR 
OTHER PURPOSES 
Be it enacted by the Senate and the House of Representatives of the Philippines in Congress assembled: 
SECTION 1. Shod Title. - This Act shall be known and cited as the "Rental 
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Reform Act of 2005. 
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SEC. 2. Declaration Of Policy. - The State shall, for the common good, 
undertake a continuing program of urban land reform and housing which will make 
available at affordable cost decent housing and basic services to its citizens. 
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certain residential units. 
Toward this end, the State shall establish reforms in the regulation of rentals of 
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SEC. 3. Monthly Rentals and Maximum Increases. - Upon the effectivity of 
this Act until 31 December 2011, the monthly rentals of all residential units in the 
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National Capital Region and other highly urbanized cities not exceeding Seven 
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thousand five hundred pesos (P7,500.00) and the monthly rentals of all residential units 
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in all other areas not exceeding Four thousand pesos (P4,OOO.OO) shall not be 
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increased annually by the lessor, without prejudice to existing contracts, by more than 
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ten (10%) percent. 
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understood as: 
SEC. 4. Definition of Terms. - 
The following terms as used in this Act shall be 
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(a) "Rental" shall mean the amount paid for the use or occupancy of a residential 
unit whether payment is made on a monthly or other basis. 
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(b) "Residential unit" shall refer to an apartment, house and/or land on which 
another's dwelling is located and used for residential purposes and shall include not 
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only buildings, parts or units thereof used solely as dwelling places, boarding houses, 
dormitories, rooms and bedspaces offered for rent by their owners, except motels, motel 
rooms, hotels, hotel rooms, and those used for home industries, retail stores or other 
business purposes if the owner thereof and his or her family actually live therein and 
use it principally for dwelling purposes. 
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(c) “Immediate members of family of the lessee or lessor” for purposes of 
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repossessing the leased premises, shall be limited to his or her spouse, direct 
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descendants or ascendants, by consanguinity or affinity. 
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(d) “lessee” shall mean the person renting a residential unit. 
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of the residential unit. 
(e) “Owner/Lessor” shall include the owner or administrator or agent of the owner 
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(f) “Sublessor” shall mean the person who leases or rents out a residential unit 
leased to him by an owner. 
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from a sublessor. 
(9) “Sublessee” shall mean the person who leases or rents out a residential unit 
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SEC. 5. Rental and Requirement of Bank 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 advance rental. Neither can he 
demand more than two (2) months deposit which shall be kept in a bank 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. 
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SEC. 6. Assignment of Lease or Subleasing. - Assignment of lease or 
subleasing of the whole or any portion of the residential unit, including the acceptance 
of boarders or bedspacers, without the written consent of the owner/lessor is prohibited. 
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following grounds: 
SEC. 7. Grounds for Judicial Ejectment. - Ejectment shall be allowed on the 
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owner/lessor; 
(a) Assignment of lease or subleasing of residential units in whole or in part, 
including the acceptance of boarders or bedspacers, without the written consent of the 
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(b) Arrears in payment of rent for a total of three (3) months: 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 
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or municipal treasurer, as the case may 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 accept payment. 
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The lessee shall thereafter deposit the rental within ten ( I O )  days of every current 
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month. Failure to deposit the rentals for three (3) months shall constitute a ground for 
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ejectment. 
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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; 
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(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 residential 
unit: Provided, however, That the lease for a definite period has expired: Provided, 
further, That the lessor has given the lessee formal notice three (3) months in advance 
of the lessor’s intention to repossess the property and: Provided, finally, That the 
owner/lessor is prohibited from leasing the residential unit or allowing its use by a third 
party for a period of at least one year from the time of repossession; 
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(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 residential unit and: Provided, finally, That if the 
residential 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 subsection; 
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(e) Expiration of the period of the lease contract. 
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SEC. 8. 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. 
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SEC. 9. 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 dwelling in favor of the latter. Such an agreement shall be 
exempt from the coverage of Section 3 of this Act. 
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SEC. I O .  Application of the Civil Code and Rules of the Courf 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 
residential 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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prejudice to existing contracts. 
SEC. 11. Coverage of this Act. - All residential units in the National Capital 
Region 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 residential units in 
all other areas the total monthly rental for each of which does not exceed Four thousand 
pesos (P4,OOO.OO) as of the effectivity date of this Act shall be covered, without 
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SEC. 12. Penalties. - A fine of not less than Five thousand pesos (P5,OOO.OO) 
nor more than Fifteen thousand pesos (P15,OOO.OO) or imprisonment of not less than 
one (1) month and one (1) day to not more than six (6) months or both shall be imposed 
on any person, natural or juridical, found guilty of violating any provision of this Act. 
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SEC. 13. lnformafion Drive. - The Department of the Interior and Local 
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Government and the Housing and Urban Development Coordinating Council, in 
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coordination with other concerned agencies, are hereby mandated to conduct a 
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continuing information drive about the provisions of this Act. 
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SEC. 14. Transitory Provision. - The Housing and Urban Development 
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Coordinating Council and its attached housing agencies are hereby mandated to 
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formulate within six (6) months from effectivity hereof, a transition program which will 
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provide for safety measures to cushion the impact of a free rental market. 
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remain valid and subsisting. 
SEC. 15. Separability Clause. - If any provision or part hereof is held invalid 
or unconstitutional, the remainder of the law or the provision not otherwise affected shall 
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SEC. 16. Repealing Clause. - Any law, presidential decree or issuance, 
executive order, letter of instruction, administrative order, rule or regulation contrary to 
or inconsistent with, the provisions of this Act is hereby repealed, modified or amended 
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accordingly. 
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SEC. 17. Effectivity Clause. - This Act shall take effect after fifteen (15) days 
following its complete publication in at least two (2) newspapers of general circulation. 
Approved, 
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