The Validity of Landlord-Tenant Agreements on Rent Increases and Repair Costs in the Philippines
(A practitioner-oriented survey as of 29 May 2025)
1. Sources of Philippine landlord-tenant law
| Source | Key Provisions Relevant to Rent & Repairs |
|---|---|
| Civil Code of the Philippines (1950), Book IV, Title VIII (Lease) | Arts. 1654–1659 (lessor’s duty to make and pay for necessary repairs), Arts. 1657–1659 (lessee’s remedies), Art. 1306 (autonomy of contracts, but subject to “law, morals, good customs, public order, or public policy”). |
| B.P. Blg. 877 (1985) & successor rent-control statutes ▪ R.A. 7658 (1992) ▪ R.A. 8437 (1997) ▪ R.A. 9161 (2002) ▪ R.A. 9653 (2009, “Rent Control Act of 2009”) ▪ R.A. 11571 (2021, extended coverage to 31 Dec 2024) |
Annual cap on rent increases (currently max 7 % for units ≤ ₱10 000/month in NCR and other highly urbanised cities; 10 % elsewhere); 1-month security-deposit limit; 30-day written notice prerequisite; criminal penalties for overcharging. |
| Local Government Codes & Housing Ordinances | Some LGUs (e.g., Manila, Quezon City, Cebu City) add registration, notice, or inspection requirements that condition any valid rent increase. |
| Supreme Court jurisprudence | Validity of escalation clauses (e.g., Santos v. CA, G.R. No. 77434, 28 June 1989); distinction between “necessary” and “useful” repairs (Spouses Abellera v. Spouses Lacuata, G.R. No. 172508, 14 July 2010); effect of landlord’s waiver of repairs (Heirs of Malate v. Gamboa, 1 Aug 2000). |
2. Freedom to stipulate vs. statutory ceilings
Autonomy of Contracts (Art. 1306) Parties may predetermine rent-adjustment formulas, cost-sharing for repairs, or escalation schedules provided the stipulations do not:
- exceed the statutory cap in force during the life of the lease;
- shift to the tenant a statutory obligation that the law declares “indispensable” on the lessor (Arts. 1654-1655); or
- violate public policy (e.g., unconscionable penalty clauses).
Rent-Control overrides private agreement
- Even a freely negotiated escalation clause is void pro tanto once it oversteps the percentage cap under the current rent-control law.
- If rent control lapses (Congress sometimes allows a gap year), the private clause revives only prospectively; a landlord cannot retroactively collect “lost” increases.
Notice requirement is jurisdictional
- The 30-day written notice in R.A. 9653 (and echoed in many city ordinances) is a condition precedent. Without it, a demanded increase—even within the cap—is unenforceable and cannot support an ejectment suit for non-payment.
3. Allocation of repair costs
3.1 Classification of repairs
| Type | Civil-Code Rule | May Cost Be Passed to Tenant by Contract? |
|---|---|---|
| Necessary repairs (structural, to keep dwelling “fit for the use intended”) | Art. 1654 (2) – Duty of lessor; tenant may cause repairs and deduct cost from rent if lessor is remiss after demand. | No. Any stipulation shifting the burden is void (Art. 1654 juncto Art. 1306). |
| Ordinary repairs & minor maintenance (e.g., light bulbs, door knobs) | No express statutory duty; courts treat as tenant’s obligation flowing from diligence of a good father of a family (Art. 1163). | Yes, parties may allocate freely. |
| Useful or luxurious improvements (increase value or comfort but not indispensable) | Tenant may remove if detachable without damage (Art. 1678) or claim reimbursement if lessor consents. | Allocation valid only if expressly agreed and not prohibited by local ordinance (some LGUs ban capital-expense pass-through). |
3.2 Repair-cost pass-through clauses
Valid if:
- Limited to ordinary or tenant-triggered damage; and
- Disclosed in writing at contract execution.
Void if:
- Covering hidden structural defects existing at delivery (Art. 1654 (1));
- Imposing blanket liability “for any and all repairs,” which courts strike as against public policy.
4. Procedural safeguards and enforcement
Documentation
- Written lease advisable for terms >1 year (Statute of Frauds) and to prove notice of escalation.
- Inventory & condition report prevent later disputes on “wear and tear.”
Barangay conciliation (Lupong Tagapamayapa)
- For disputes where parties reside in the same city/municipality (< ₱400 000 claim), Katarungang Pambarangay Law requires mediation before court filing; failure to conciliate is fatal to jurisdiction.
Summary ejectment (Rule 70, Revised Rules of Court)
- Landlord may sue for ejectment if tenant refuses to pay the validly increased rent.
- Courts will first examine compliance with rent-control caps and notice; absence thereof defeats the cause of action.
Criminal sanctions
- Overcharging rent, demanding key money beyond one-month security, or retaliatory eviction constitutes a criminal offense under R.A. 9653 (fine ₱5 000–₱15 000, imprisonment 1-6 months).
5. Typical invalid stipulations (void or unenforceable)
| Clause Sample | Why Invalid |
|---|---|
| “Tenant shall shoulder any and all repairs, major or minor, during the lease.” | Shifts necessary repairs in violation of Art. 1654(2). |
| “Rent shall increase by 15 % every year.” | Exceeds 7 %/10 % statutory cap. |
| “No written notice of rent increase is required; posting on lobby suffices.” | Waives the 30-day written-notice requirement contrary to R.A. 9653. |
| “Failure to pay increased rent within five (5) days authorises immediate eviction without court process.” | Waives court process; contrary to Rule 70 and due-process clause. |
| “Tenant waives right to deduct cost of urgent repairs.” | Invalid under Art. 1657(3). |
6. Practical drafting tips for compliant leases (2025-26)
Escalation clause template
“Commencing on the 13th month and every 12 months thereafter, monthly rent may be increased by the LESSOR up to the maximum percentage allowed by law and/or by local ordinance then in force, subject to at least thirty (30) calendar days’ prior written notice to the LESSEE.”
Repair clause template
“The LESSOR shall, at its own cost, undertake structural and other necessary repairs under Article 1654. The LESSEE shall bear the cost of minor day-to-day maintenance, and of damage caused by its negligence or misuse.”
Separate rider for capital improvements If parties agree that the tenant may renovate (e.g., air-conditioning installation), put it in a rider specifying: (a) who owns the fixture at end of lease; (b) whether cost may offset rent; (c) compliance with building permits.
**Ensure consistent LGU compliance
- Verify whether the city/municipal council has issued implementing guidelines—many require a Certificate of Increase Registration before collection.
- Attach the latest rent-control law or ordinance as an annex for transparency.
7. Recent legislative outlook (as of May 2025)
The Department of Human Settlements and Urban Development (DHSUD) has endorsed a draft bill that would:
- Raise the covered rent ceiling in NCR to ₱15 000;
- Continue the 7 % annual cap to 31 Dec 2028;
- Introduce a tax credit for landlords who upgrade energy efficiency without passing costs to tenants.
Until enacted, R.A. 11571 remains the operative framework, so continue to observe its caps and notice rules.
8. Checklist for assessing validity of any landlord agreement
- Identify whether the unit’s rent falls within the current statutory coverage (check ceiling & location).
- Compute proposed increase versus cap (7 % or 10 %).
- Check notice: Was a 30-day written notice given?
- Examine repairs clause: Does it shift necessary repairs or allow deduction rights to be waived? If yes, void.
- Confirm LGU compliance: Registration or permit obtained?
- Verify consent & signatures: Statute of Frauds compliance (>1 year).
- Advise client on remedies: conciliatory demand, deduction, refusal to pay unlawful increase, or ejectment defense.
Conclusion
In Philippine law, freedom to stipulate ends where rent-control statutes and the Civil Code begin. Landlords and tenants may craft bespoke escalation and repair-cost arrangements, but only within the monetary caps, notice protocols, and non-waivable duties that Congress and the Supreme Court have declared sacrosanct. A clause that offends these limitations is not partially voidable—it is void ab initio and produces no legal effect. Careful drafting, periodic legal audits, and adherence to both national law and local ordinances are the safest path to enforceable, profitable, and dispute-resistant lease agreements in the Philippines.
(This article is for informational purposes only and does not constitute legal advice. For fact-specific concerns, consult Philippine counsel.)