How much advance rent and deposit can I require in the Philippines?

For residential units covered by the Rent Control Act (RA 9653) — those with monthly rent up to ₱10,000 in Metro Manila and other highly urbanized cities of the Philippines, or up to ₱5,000 elsewhere — Section 6 caps advance rent at one (1) month and Section 5 caps the security deposit at one (1) month. For uncovered units, the freedom of contract principle of Article 1306 of the Civil Code applies, and Philippine market practice is one (1) to two (2) months advance and two (2) to three (3) months deposit. Higher amounts may be challenged as unconscionable or contrary to public policy, particularly for first-time Filipino lessees.

How long can a residential lease run in the Philippines?

There is no maximum statutory term for residential leases in the Philippines, but Article 1643 of the Civil Code limits the duration of a lease of things to ninety-nine (99) years. Most Philippine residential leases run for one (1) year and renew by mutual agreement. Article 1670 establishes the rule of tacita reconducción (implied new lease): if at the end of the contract the lessee remains in possession for fifteen (15) days with the lessor's acquiescence and without notice to the contrary, an implied new lease arises with the same terms, except duration. The new implied lease runs day-to-day, week-to-week, month-to-month, or year-to-year depending on the original payment frequency.

Can the lessor increase the rent during the term?

For RA 9653 covered units, Section 8 prohibits any rent increase during the first year of the lease and caps subsequent increases at seven percent (7%) per year for as long as the same lessee continues to occupy the unit in the Philippines. For uncovered units (above ₱10,000 in Metro Manila / ₱5,000 elsewhere), the lessor and lessee may agree on any escalation formula in the contract, subject to the freedom of contract principle of Article 1306 of the Civil Code. Mid-term unilateral increases without contractual basis are unenforceable in Philippine courts and may amount to constructive eviction giving rise to damages under Articles 19, 20, and 21 of the Civil Code.

What grounds allow ejectment of a tenant in the Philippines?

For RA 9653 covered units, Section 7 lists six exclusive grounds for judicial ejectment: (a) subleasing or assignment of lease without the written consent of the lessor; (b) arrears in payment of rent for at least three (3) months; (c) legitimate need of the lessor or any of his immediate family to repossess for own use; (d) need for the lessor to make necessary repairs ordered by competent Philippine authority that render the unit uninhabitable; (e) expiration of the period of the lease; (f) condemnation of the building. For uncovered units, the Civil Code grounds of Article 1673 apply: expiration of the period, lack of payment of the price stipulated, violation of conditions, lessee devoting the thing to a use other than agreed. In every case, a written Notice to Vacate served on the lessee is a precondition to filing an unlawful detainer action under Rule 70 of the Rules of Court.

Is barangay conciliation mandatory before filing ejectment?

Yes, when both lessor and lessee are Filipino natural persons residing in the same Philippine city or municipality, Sections 408-422 of the Local Government Code (RA 7160) require prior conciliation before the Lupong Tagapamayapa of the barangay where the property is located. The Punong Barangay must issue a Certificate to File Action before the Metropolitan or Municipal Trial Court will entertain the case. The requirement does NOT apply when (a) one party is a corporation, government instrumentality, or public officer acting in official capacity, (b) the parties reside in different cities or municipalities, (c) the action is coupled with provisional remedies such as preliminary injunction or attachment, or (d) the offence is punishable by more than one year of imprisonment or a fine exceeding ₱5,000.

Does the lease have to be notarized in the Philippines?

No. Under Article 1356 of the Civil Code of the Philippines, contracts are obligatory in whatever form they have been entered into, provided all the essential requisites for validity are present. A signed but unnotarized residential lease is fully valid and enforceable between the parties. However, Article 1358(1) requires public instrument form for contracts creating, transmitting, modifying, or extinguishing real rights over immovable property exceeding one (1) year, and registration with the Philippine Register of Deeds is only available for notarized leases. Notarization before a Notary Public commissioned under A.M. No. 02-8-13-SC converts the lease into a public document with full evidentiary weight under Section 19, Rule 132 of the Rules of Court.

What taxes must a Philippine lessor pay on rental income?

A Philippine lessor must declare rental income in the annual income tax return. If gross annual rental receipts exceed ₱3,000,000, the lessor must register for VAT under Section 105 of the NIRC and charge 12% VAT on rent collected. Below the threshold, the lessor may opt for the 3% percentage tax under Section 116 or the 8% income-tax option introduced by the TRAIN Law (RA 10963, RR 8-2018) in lieu of graduated rates and percentage tax. Lessees who are top-20K corporations or government withholding agents must withhold five percent (5%) Expanded Withholding Tax (EWT) on rent under RR 11-2018. Every rent collection in the Philippines must be supported by a BIR-registered Official Receipt issued under the lessor's Authority to Print (ATP).

Rental & PropertyPH

Free Residential Tenancy Agreement Template — Philippines

A residential lease drafted in line with Philippine law for lessors and lessees of condominium units, apartments, townhouses, and houses. Compliant with Articles 1654-1688 of the Civil Code of the Philippines and the Rent Control Act (RA 9653, as extended by RA 11571 until 31 December 2027). Fill in the parties, set the rent, advance, and deposit caps, and download a professional PDF ready for signing within minutes.

Create Your Residential Tenancy Agreement

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CONTRACT OF LEASE (RESIDENTIAL TENANCY AGREEMENT)

LESSOR

Maria Cristina Reyes

Unit 1205 The Shang Salcedo, 169 H.V. Dela Costa St., Salcedo Village, Makati City 1227 · TIN 009-876-543-000 · +63 917 123 4567

LESSEE

Juan Carlos dela Cruz

45 Sampaguita St., Brgy. San Antonio, Quezon City 1105 · TIN 008-765-432-000 · +63 917 234 5678

Commencement: May 1, 2026 · Expiry: April 30, 2027

Condominium Unit · Rent: 35,000.00 PHP/month

This Contract of Lease (the "Agreement") is made and entered into on May 1, 2026 in Pasig City, Republic of the Philippines, by and between Maria Cristina Reyes ("Lessor") and Juan Carlos dela Cruz ("Lessee"). The parties, having the legal capacity to contract pursuant to Article 1318 of the Civil Code of the Philippines (Republic Act No. 386), agree to be bound by the following terms and conditions, which shall be governed by Articles 1642 to 1688 of the Civil Code, the Rent Control Act of 2009 (Republic Act No. 9653, as extended by RA 11571 to 31 December 2027), and all other applicable Philippine laws and regulations.

THE LEASED PREMISES

The Lessor hereby leases unto the Lessee, and the Lessee hereby accepts in lease from the Lessor, the residential premises described as follows (the "Premises"):

Address	Unit 2305 The Grove by Rockwell, E. Rodriguez Jr. Ave., Pasig City 1605 (Unit 2305, Tower 1)
Property Type	Condominium Unit
Description	Two-bedroom condominium unit with balcony, approximately 65 sqm, semi-furnished, with one (1) parking slot at Basement 2.
Tenure	1 year
Commencement	May 1, 2026
Expiry	April 30, 2027

TERM

The lease shall commence on May 1, 2026 and expire on April 30, 2027, a term of approximately 1 year, unless sooner terminated in accordance with this Agreement (the "Term"). Pursuant to Article 1669 of the Civil Code, this is a fixed-period lease and shall not be subject to tacit renewal upon expiration unless the parties agree in writing. Article 1670 shall apply only if the Lessee continues to enjoy the Premises for fifteen (15) days after the expiry with the acquiescence of the Lessor and no notice to the contrary has been given. Upon expiry, the Lessee shall vacate the Premises and deliver vacant possession in the same condition as at commencement, fair wear and tear excepted.

RENT

The Lessee shall pay to the Lessor a monthly rent of 35,000.00 PHP per month ("Monthly Rent"), payable in advance on or before the 5th day of each calendar month throughout the Term. Payment shall be made by bank transfer (BDO, BPI, Metrobank, GCash, InstaPay, or PESONet), cash, or such other method as the Lessor may specify in writing. The Lessor shall, upon request, issue a duly numbered BIR-registered Acknowledgement Receipt evidencing each rent payment, in accordance with the National Internal Revenue Code (NIRC) and BIR Revenue Regulations. Where the monthly rent does not exceed PHP 15,000 per month, the rental income is exempt from VAT under Sec. 109(Q) of the NIRC; otherwise, the Lessor shall observe applicable VAT rules under the TRAIN Law (RA 10963).

ADVANCE RENT AND SECURITY DEPOSIT

Upon execution of this Agreement, the Lessee shall pay to the Lessor: (a) 1 month advance rent equivalent to 35,000.00 PHP, which shall be applied as rent for the first month of the Term; and (b) a security deposit equivalent to 2 months' rent in the amount of 70,000.00 PHP (the "Security Deposit"). These amounts comply with the maximum permitted under Sec. 6 of RA 9653 (Rent Control Act): one (1) month advance + two (2) months deposit for residential units within the rent control thresholds. The Security Deposit shall not be applied as rent but shall be held as security for the Lessee's faithful performance and shall be returned (less permitted deductions for unpaid rent, unpaid utilities, and damage beyond fair wear and tear) within 30 days after the Lessee's vacation of the Premises and joint inspection. The Lessor shall provide an itemised statement of any deductions made.

UTILITIES AND OUTGOINGS

The Lessee shall be solely responsible for all utility accounts and charges including electricity (Meralco or applicable distribution utility), water (Maynilad/Manila Water or local water district), liquefied petroleum gas (LPG), broadband internet, cable television, and association dues (where billed directly to occupant). The Lessee shall arrange for the transfer of utility accounts (Meralco, Maynilad/Manila Water, broadband, cable) into the Lessee's name on or before commencement and shall arrange for accounts to be reverted or settled upon expiry or earlier termination. Real property tax (RPT) under the Local Government Code (RA 7160) and association dues (for condominium units under RA 4726) shall be borne by the Lessor, except for in-unit consumption charges and fees specifically attributable to the Lessee's occupancy.

PERMITTED USE

The Lessee shall occupy and use the Premises solely as a private residential dwelling for the Lessee and the Lessee's immediate family members (and registered occupants disclosed to the Lessor). The Lessee shall not use the Premises or permit them to be used for any business, commercial, illegal, or immoral purpose, or for any purpose that may constitute a nuisance under Articles 694-707 of the Civil Code or annoyance to neighbouring occupants, or that may invalidate any insurance maintained by the Lessor. The number of occupants shall not exceed the capacity declared at commencement and shall comply with applicable Local Government Unit (LGU) regulations and (for condominium units) the Master Deed and House Rules of the condominium corporation under the Condominium Act (RA 4726).

OBLIGATIONS OF THE LESSOR

Pursuant to Articles 1654 to 1656 of the Civil Code, the Lessor shall: (a) deliver the Premises in a condition fit for the use intended; (b) make all necessary structural repairs during the lease in order to keep the Premises suitable for the use to which they are devoted, except for repairs caused by the fault of the Lessee or persons residing with the Lessee; and (c) maintain the Lessee in peaceful and adequate enjoyment of the Premises for the entire duration of the lease. The Lessor warrants the Lessee against any disturbance of right under Article 1655, but is not bound to answer for mere acts of trespass which a third person may cause to the use of the Premises (Article 1664).

OBLIGATIONS OF THE LESSEE

Pursuant to Articles 1657 to 1666 of the Civil Code, the Lessee shall: (a) pay the Monthly Rent according to the terms stipulated; (b) use the Premises as a diligent buen padre de familia (good father of a family) and only for the purpose stipulated; (c) pay the expenses for the deed of lease and notarisation, where notarised; (d) make ordinary repairs caused by ordinary wear and tear, and minor repairs not exceeding two thousand pesos (PHP 2,000) per occurrence; (e) notify the Lessor in writing within seventy-two (72) hours of any usurpation or untoward act of which a third person may have committed against the Premises (Art. 1663); (f) notify the Lessor of the necessity of any repair properly chargeable to the Lessor; and (g) return the Premises upon the expiration of the lease in the condition received, fair wear and tear excepted.

ALTERATIONS AND IMPROVEMENTS

The Lessee shall not make any structural alterations, additions, or improvements to the Premises without the prior written consent of the Lessor and, where applicable, the condominium corporation, homeowners' association, or LGU. Any approved improvements affixed to the Premises shall, at the Lessor's election under Article 1678 of the Civil Code, vest in the Lessor at the end of the Term without indemnity (other than one-half of the value if useful improvements were made in good faith and consent was given), or be removed by the Lessee at the Lessee's expense, restoring the Premises to their original condition.

10.

PROHIBITION AGAINST SUBLEASE AND ASSIGNMENT

The Lessee shall not sublet the Premises (in whole or in part) or assign the Lessee's rights under this Agreement to any third party without the prior written consent of the Lessor. Pursuant to Article 1650 of the Civil Code, the Lessee may sublet the thing leased, in whole or in part, only when the contract does not prohibit it; the Lessor expressly prohibits subletting under this Agreement. Any unauthorised sublease shall constitute a material breach of this Agreement and a ground for ejectment under Sec. 7(a) of RA 9653 (Rent Control Act).

11.

INSURANCE AND RISK OF LOSS

The Lessor shall maintain customary fire and structural insurance over the Premises (the building structure). The Lessee shall be solely responsible for insuring the Lessee's own personal property and contents within the Premises. In the event of total destruction of the Premises by a fortuitous event without the fault of either party, the lease shall be deemed extinguished pursuant to Articles 1262 and 1655 of the Civil Code. In the event of partial destruction, the Lessee may either elect a proportionate reduction of rent or rescission of the lease.

12.

INSPECTION

The Lessor or the Lessor's authorised representative shall be entitled to inspect the Premises upon reasonable notice of not less than forty-eight (48) hours (except in case of emergency or imminent risk of damage), at a time agreed with the Lessee, to verify compliance with this Agreement and the condition of the Premises. The Lessor shall not unreasonably interfere with the Lessee's quiet enjoyment of the Premises.

13.

GROUNDS FOR EVICTION

The Lessor shall be entitled to demand judicial ejectment of the Lessee upon any of the grounds enumerated under Section 7 of RA 9653 (Rent Control Act), namely: (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 Lessor; (b) arrears in payment of rent for a total of three (3) months, provided that in case of refusal of the Lessor to accept payment, the Lessee may file the same with the court, with the City or Municipal Treasurer, or in a bank, in the name of and with notice to the Lessor; (c) legitimate need of the Lessor to repossess the Premises for the use of the Lessor or any immediate member of the Lessor's family as a residential unit; (d) need by the Lessor to make necessary repairs of the Premises subject of an existing order of condemnation by appropriate authorities; and (e) expiration of the period of the lease contract. These grounds are exclusive and reflect public policy under the Rent Control Act.

14.

LATE PAYMENT PENALTY

Where the Monthly Rent or any other sum due under this Agreement remains unpaid five (5) days after the due date, the Lessee shall pay, in addition to the principal amount: a liquidated late payment penalty of 5% on the unpaid amount, as expressly stipulated under Article 1226 of the Civil Code and conventional interest at 12% per annum on the unpaid amount from the due date until full payment, pursuant to Article 2209 of the Civil Code and BSP Circular 799-2013. These amounts represent the parties' genuine pre-estimate of the Lessor's loss and are reasonable under Article 1229 of the Civil Code. Repeated late payment may also constitute a ground for the termination of this Agreement and ejectment under Sec. 7(b) of RA 9653.

15.

BARANGAY CONCILIATION

The parties acknowledge that, where both Lessor and Lessee reside in the same city or municipality, any dispute arising from this Agreement must first undergo conciliation before the Lupon Tagapamayapa of the appropriate Barangay pursuant to Section 412 of the Local Government Code (Republic Act No. 7160), prior to the filing of any court action. The parties shall comply in good faith with the conciliation procedure under Sections 408-422 of RA 7160 and the Katarungang Pambarangay Rules. Failure to comply with this requirement is a ground for dismissal of any subsequent court action, in line with Aquino v. Aure, G.R. No. 153567, February 18, 2008. This requirement does not apply where parties reside in different cities/municipalities or where the action is one of the exceptions enumerated in Sec. 408 RA 7160.

16.

NOTARISATION AND ELECTRONIC EXECUTION

For the protection of both parties and to make this Agreement a public document under Section 19, Rule 132 of the Rules of Court, the parties may have this Agreement notarised before a notary public in accordance with the 2004 Rules on Notarial Practice (A.M. No. 02-8-13-SC). This Agreement may also be executed electronically; electronic signatures and electronic documents are valid and binding under the Electronic Commerce Act of 2000 (Republic Act No. 8792), particularly Sections 7 and 8 thereof. Where this Agreement is signed electronically, both parties undertake to acknowledge it before a notary public if required for any registration, court filing, or transactional purpose.

17.

GOVERNING LAW AND VENUE

This Agreement is governed by and construed in accordance with the laws of the Republic of the Philippines. Any action or proceeding arising out of or in connection with this Agreement shall, subject to mandatory barangay conciliation under Sec. 412 of RA 7160 (where applicable), be filed before the courts of competent jurisdiction in Pasig City, in accordance with the rules on jurisdiction and venue under Rule 4 of the 1997 Rules of Civil Procedure. Ejectment actions (unlawful detainer or forcible entry) shall be filed before the Metropolitan Trial Court or Municipal Trial Court of the venue and shall be governed by the Revised Rules on Summary Procedure.

18.

GENERAL PROVISIONS

Entire Agreement: This Agreement, together with any annexes signed by both parties, constitutes the entire agreement between the Lessor and Lessee with respect to the leasing of the Premises and supersedes all prior negotiations, representations, or agreements, whether oral or written. Amendment: No amendment shall be valid unless reduced to writing and signed by both parties (Civil Code Art. 1356). Severability: If any provision is held invalid or unenforceable, the remaining provisions shall continue in full force and effect. Waiver: The failure or delay of either party to enforce any provision shall not constitute a waiver. Counterparts: This Agreement may be executed in counterparts (including electronically), each of which shall constitute an original. Headings: Clause headings are for convenience only and do not affect interpretation. Successors: This Agreement binds and inures to the benefit of the parties' respective heirs, successors, and permitted assigns.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective Date first written above.

LESSOR

Maria Cristina Reyes

Date: ____________________

LESSEE

Juan Carlos dela Cruz

Date: ____________________

What is a residential tenancy agreement?

A residential tenancy agreement — also referred to in the Philippines as a Contract of Lease, Kasunduan ng Pag-uupa, or simply lease contract — is the binding instrument by which a lessor (property owner) grants the lessee (tenant) the use and enjoyment of residential premises for a fixed term in consideration of rent. Articles 1642-1688 of the Civil Code of the Philippines (Republic Act 386) govern the contract of lease, while Articles 1654 and 1657 set out the principal obligations of the lessor and the lessee respectively. The lease is consensual and binding from the moment the parties agree on the price and the thing leased, even before notarization or written formalisation.

In the Philippines, the lease of urban residential units is additionally regulated by the Rent Control Act (Republic Act 9653), originally enacted in 2009 and extended until 31 December 2027 by Republic Act 11571 of 2022. Section 4 of RA 9653 covers all residential units in Metro Manila and other highly urbanized cities with monthly rent up to ₱10,000, and units elsewhere in the Philippines with monthly rent up to ₱5,000. For these covered units, Section 5 caps the security deposit at one (1) month, Section 6 caps advance rent at one (1) month, and Section 8 limits the annual rent increase to seven percent (7%) for as long as the same lessee occupies the property. Units outside the price thresholds fall back on the Civil Code and the freedom of contract principle of Article 1306.

Beyond the Civil Code and RA 9653, several Philippine statutes shape every residential tenancy in practice. Republic Act 7160 (Local Government Code), Sections 408-422, requires barangay conciliation before the Lupong Tagapamayapa as a precondition to filing ejectment or rent collection cases when both parties reside in the same Philippine city or municipality. The 2004 Rules on Notarial Practice (A.M. No. 02-8-13-SC) recommend notarization to convert the lease into a public document with full evidentiary weight. The Rules on Summary Procedure govern unlawful detainer actions filed before the Metropolitan or Municipal Trial Court (MTC) of the place where the property is located in the Philippines.

What this template covers

The Doxuno residential tenancy template includes all essential clauses required under Philippine law for an enforceable lease, plus optional Expert sections that strengthen protection in higher-value or longer-term arrangements.

Identification of the lessor and lessee

Full legal name, address, TIN, and contact details for each party in the Philippines

Property description

Condo unit, apartment, townhouse, or house — complete address and unit/floor identification

Term and commencement date

Fixed period under Civil Code Art. 1670 with renewal and tacit reconduction rules

Monthly rent and payment day

Rent in Philippine peso (₱), due day, accepted payment channels

Advance rent (max 1 month)

Compliance with Section 6 of RA 9653 for covered residential units

Security deposit (max 1 month covered units)

Section 5 RA 9653 cap and conditions for return within agreed days

Utilities and association dues

Allocation of electricity, water, association dues, and condominium fees

Late penalty and interest clause

Liquidated damages under Civil Code Art. 2226-2228 for arrears

Use, alterations and subleasing

Article 1657 obligations of the lessee — no sublease without written consent

Lessor and lessee repair obligations

Article 1654 (lessor) and Article 1663 (lessee) allocation under Philippine law

Termination and Notice to Vacate

RA 9653 Section 7 ejectment grounds and Civil Code Art. 1659 rescission

Barangay conciliation and governing city

RA 7160 Sec. 412 prerequisite for natural-person disputes in the Philippines

How to create your residential lease

No prior legal training required. The Doxuno generator walks you through each section to produce a professional PDF valid throughout the Philippines.

1
Identify the lessor and the lessee
Enter the full legal name, current Philippine address, Tax Identification Number (TIN), mobile number, and email of each party. For corporate lessors, also indicate the SEC registration number and the authorised signatory. Complete identification supports validity under Article 1305 of the Civil Code of the Philippines and ensures the lease is enforceable in any Philippine Metropolitan or Municipal Trial Court.
2
Describe the property and term
Indicate whether the unit is a condominium, apartment, townhouse, house, or boarding house, then enter the complete property address, unit number, and floor area. Set the commencement and expiry dates: Philippine residential leases are typically signed for one (1) year and renewed by mutual agreement. Note that Article 1670 of the Civil Code creates an implied new lease (tacita reconducción) when the lessee remains in possession for fifteen (15) days after expiry without objection from the lessor.
3
Set rent, advance, and security deposit
Enter the monthly rent in Philippine peso (₱), the rent due day, and the number of months for advance and security deposit. For units covered by RA 9653 (≤ ₱10,000 in Metro Manila and other highly urbanized cities, ≤ ₱5,000 elsewhere in the Philippines), the law caps advance rent at one (1) month (Section 6) and security deposit at one (1) month (Section 5). For uncovered units, the freedom of contract principle of Article 1306 applies — typical Philippine market practice is two (2) to three (3) months deposit and one (1) to two (2) months advance.
4
Configure penalties, utilities, and Expert clauses
Allocate utilities (electricity, water, association dues), set the late penalty percentage and interest rate for arrears under Civil Code Articles 1226 and 2226-2228, and decide whether to include the 7% rent-increase cap of RA 9653 Section 8. Activate Expert clauses such as the right of first refusal, the early termination penalty, the deposit-return procedure with itemised deductions, and barangay conciliation under RA 7160 — recommended when both parties are Filipino natural persons in the same Philippine city.
5
Sign and notarize
Generate the PDF and have both parties sign every page. While Article 1356 of the Civil Code makes the lease binding without notarization, Philippine market practice is to notarize before a Notary Public commissioned by the Executive Judge of the Regional Trial Court — pursuant to the 2004 Rules on Notarial Practice (A.M. No. 02-8-13-SC). Notarization converts the lease into a public document under Section 19, Rule 132 of the Rules of Court and is required in the Philippines for leases exceeding one (1) year if the parties wish to register the contract with the Register of Deeds.

Legal considerations in the Philippines

A residential tenancy in the Philippines sits at the intersection of the Civil Code, the Rent Control Act, and local-government regulation. Several legal points deserve close attention before signing.

This template is provided for informational purposes only and does not constitute legal advice. For high-value or long-term leases, condominium buy-to-let arrangements, or doubts about the application of Philippine law to your specific case, please consult a licensed lawyer admitted to the Integrated Bar of the Philippines (IBP).

Reviewed by legal professionals. The content of this page and the template clauses have been reviewed against the Civil Code of the Philippines (RA 386), the Rent Control Act (RA 9653 as extended by RA 11571), and the Local Government Code (RA 7160), ensuring legal soundness for ordinary residential tenancies in the Philippines.

Rent Control Act (RA 9653) coverage and caps

The Rent Control Act of 2009 (RA 9653), originally set to expire in 2013 but extended four times — most recently by RA 11571 until 31 December 2027 — protects lessees of low- and middle-income residential units in the Philippines. Section 4 defines covered units as those with monthly rent up to ₱10,000 in Metro Manila and other highly urbanized cities of the Philippines, and up to ₱5,000 in other areas. For these units: (a) Section 5 caps the security deposit at one (1) month rent, (b) Section 6 caps advance rent at one (1) month, (c) Section 7 limits ejectment to specific grounds (subleasing without consent, arrears of three months, legitimate need to repossess for own use, need for repairs ordered by competent authority, expiration of period, condemned building), and (d) Section 8 caps annual rent increase at seven percent (7%) for as long as the same lessee occupies the unit. Units priced above the thresholds fall outside RA 9653 and revert to the freedom of contract principle of Article 1306 of the Civil Code, but courts in the Philippines retain power to reduce stipulations contrary to morals, good customs, public order, or public policy.

Lessor and lessee obligations under the Civil Code

Article 1654 of the Civil Code of the Philippines imposes three principal duties on the lessor: (1) to deliver the thing leased in such condition as to render it fit for the use intended, (2) to make all necessary repairs during the lease so that it remains fit for that use, and (3) to maintain the lessee in the peaceful and adequate enjoyment of the lease. Article 1657 imposes corresponding duties on the lessee: (1) to pay rent according to terms stipulated, (2) to use the thing leased as a diligent paterfamilias devoting it to the use stipulated, and (3) to pay the expenses of the deed of lease. Article 1663 allocates ordinary repairs to the lessee. Failure of either party to comply with these obligations entitles the aggrieved party to rescission with damages, or only damages with the contract remaining in force, under Article 1659 of the Civil Code as applied throughout the Philippines.

Barangay conciliation and ejectment procedure

Sections 408 to 422 of the Local Government Code (Republic Act 7160) — known as the Katarungang Pambarangay Law — require disputes between Filipino natural persons residing in the same Philippine city or municipality to undergo conciliation before the Lupong Tagapamayapa as a precondition to filing in court. Failure to obtain a Certificate to File Action from the Punong Barangay results in dismissal under Section 412. The requirement does NOT apply when one party is a corporation, when parties reside in different cities/municipalities, or when urgent provisional remedies are sought. Where conciliation fails or does not apply, the lessor may file an unlawful detainer or ejectment action under Rule 70 of the Rules of Court before the Metropolitan or Municipal Trial Court of the place where the property is located. The action is summary in nature, with a 30-day decision period, and must be preceded by a written demand to pay and to vacate served on the lessee in the Philippines.

Notarization, registration, and tax compliance

Article 1356 of the Civil Code provides that contracts shall be obligatory in whatever form they may have been entered into, provided all the essential requisites for their validity are present. A residential tenancy in the Philippines is therefore valid even when signed privately. However, Article 1358(1) requires that acts and contracts which have for their object the creation, transmission, modification or extinguishment of real rights over immovable property exceeding one (1) year must appear in a public instrument. Notarization before a Notary Public commissioned by the Executive Judge of the Regional Trial Court — pursuant to the 2004 Rules on Notarial Practice (A.M. No. 02-8-13-SC) — converts the lease into a public document and is required for registration with the Register of Deeds. From the tax side, lessors in the Philippines whose annual gross rental receipts exceed ₱3,000,000 must register for VAT (Section 105, NIRC) and charge 12% VAT on rent; otherwise, they pay 3% percentage tax under Section 116 (or opt for the 8% income-tax option of the TRAIN Law if they qualify). Lessors must also issue BIR-registered Official Receipts for every rent collection.

Frequently Asked Questions

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