Property: RA 9653 - checkmate Law limits rent hike to seven percent yearly

Dear PAO,
My wife and I are renting a small apartment. Since it is in front of a busy road, we decided to put up a small business stand just right outside our apartment and sell soft drinks, cigarettes and candies.
The income we get from this small business helps us in paying some of our daily expenses. Unfortunately, the owner of our apartment informed us that our rent will increase this year and the increase is about 20 percent of what we are currently paying. According to the owner, we have already converted the apartment to a commercial space, so the increase is justified. But we have not converted the apartment into a commercial space. We still live there and we only sell trivial items. He also said that he will eject us if we do not pay the new rent. Is he correct?
Roger

Dear Roger,
It may be said that the nature of the apartment you are leasing has not changed from a residential unit to a commercial unit even if you placed a small business stand in front of your house. It is only when you have substantially transformed the apartment for mainly commercial use that it can be considered as a commercial unit. If the primary use of your apartment remains to be the residence of your family, then it is still considered as a residential unit. It is worth mentioning that under Section 3 [b] of Republic Act [RA] 9653, otherwise known as the Rent Control Act of 2009, residential unit is defined as “an apartment, house and/or land on which another’s dwelling is located and used for residential purposes and shall include not only buildings, part or units thereof used solely as dwelling places, boarding houses, dormitories, rooms and bedspaces offered for rent by the owners, x x x but also 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.”

Accordingly, the owner of the apartment which you are renting may not increase your rental fee by 20 percent because RA 9653 limits the allowable increase in rent of a residential unit to a maximum of 7 percent yearly (Sec. 4, id). In addition, he may not simply eject you from the apartment. It is necessary that you have a total of three months in your rental arrears before he can validly file for judicial ejectment (Sec. 9 (b), id).

Notwithstanding, we advise you to consider communicating your concern to the owner of the apartment you are leasing. Perhaps he may reconsider his decision of increasing your rental fee given that what he desires to impose contravenes the provisions of RA 9653. If he insists on the 20 percent increase, you may opt to file a complaint against him. As provided for under Sec. 13, id, a fine of not less than P25,000 nor over P50,000, or imprisonment of not less than one month and one day to not more than six months or both shall be imposed on any person found guilty of violating any provisions of RA 9653.

We hope that we were able to answer your queries. Please be reminded that this advice is based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.