Understanding the Rent Control Act in the Philippines

For anyone renting or planning to rent a property in the Philippines, understanding the Rent Control Act is crucial. This law aims to protect tenants from unreasonable rent increases while ensuring landlords can still fairly profit from their properties. Let’s break down the key aspects of this act to help both tenants and landlords navigate their rights and responsibilities. 

What is the Rent Control Act? 

The Rent Control Act of the Philippines refers to Republic Act No. 9653, also known as the "Rent Control Act of 2009", as extended by subsequent regulations. It governs rental pricing, increases, and disputes for residential units within specific rent ranges, particularly in urban areas. 

The law primarily covers: 

- Residential units with a monthly rent of up to ₱10,000 in Metro Manila. 

- Units with a monthly rent of up to ₱5,000 in other cities and municipalities. 

 Key Provisions 

1. Limit on Rent Increases 

   Landlords cannot increase rent by more than 7% annually for covered properties, provided the same tenant occupies the unit. 

2. Protection Against Eviction 

   Tenants cannot be evicted except under specific circumstances, such as: 

   - Non-payment of rent for three consecutive months. 

   - Subleasing without the landlord’s consent. 

   - The landlord needing the property for personal use or renovations. 

3. Advance Payments and Deposits 

   - Landlords are allowed to collect up to one-month advance rent and two months’ deposit. 

   - Deposits must be returned to the tenant upon moving out, minus any deductions for damages. 

4. Rental Contracts 

   Both tenants and landlords are encouraged to have a written rental agreement specifying the terms and conditions of the lease, including rent, duration, and responsibilities. 

 Who Benefits from the Rent Control Act? 

The act primarily benefits low- to middle-income families, students, and employees who rent affordable housing. It ensures they are not priced out of their homes due to sudden, excessive rent increases. 

 What the Rent Control Act Doesn’t Cover 

The Rent Control Act does not apply to: 

- Commercial properties. 

- Residential units rented out for over ₱10,000 per month in Metro Manila and ₱5,000 per month in other areas. 

- New leases not covered by existing agreements. 

 Recent Updates 

While RA 9653 officially expired, the Philippine government often extends similar provisions to address housing affordability. As of today, tenants and landlords should stay updated with the latest housing and rental policies implemented by the Housing and Land Use Regulatory Board (HLURB) or other government bodies. 

 Tips for Tenants 

- Always sign a written agreement and understand its terms before moving in. 

- Keep records of your payments and communications with your landlord. 

- Report any violations of the Rent Control Act to local housing authorities or barangay offices. 

 Tips for Landlords 

- Familiarize yourself with the Rent Control Act to avoid legal disputes. 

- Clearly communicate rental terms and increases with tenants in writing. 

- Maintain the property to ensure tenants receive value for their rent. 

 Final Thoughts 

The Rent Control Act is a critical safeguard for renters and a guide for landlords in managing rental properties. Whether you’re a tenant or landlord, understanding this law can foster a fair and harmonious rental relationship. 

Stay informed about changes to rental policies and consult legal or housing experts for specific concerns. After all, a well-informed rental community benefits everyone. 

Source: Zigguratrealestate.ph

How to Probate a Will in the Philippines: A Comprehensive Guide

 Introduction

The probate of a will is a judicial process that validates and authenticates a deceased person's will, ensuring that it was executed in compliance with legal formalities and reflects the true intentions of the testator (the person who made the will). In the Philippines, probate is mandatory for all wills, whether they are notarial (executed before a notary public) or holographic (entirely handwritten by the testator). Probate guarantees that the estate is distributed according to the will's provisions and under Philippine law, particularly regarding the rights of compulsory heirs.

This comprehensive guide walks you through the probate process in the Philippines, from the filing of the petition to the final distribution of the estate.

 Legal Framework for Probate in the Philippines

Probate proceedings are governed by the Rules of Court under Rule 73 to Rule 77, as well as by the provisions of the Civil Code of the Philippines (Articles 838 to 841) concerning the execution and validity of wills. A will must undergo probate to be legally enforceable, and the court will determine:

1. Whether the will was properly executed.

2. The mental capacity of the testator at the time of execution.

3. Whether the will was free from fraud, duress, or undue influence.

4. Whether the provisions comply with the rules on compulsory heirs and legitime.

 Types of Wills in the Philippines

1. Notarial Will: This type of will is formal, requiring witnesses and notarization. It must be in writing and signed by the testator and at least three credible witnesses. Notarial wills must comply with strict formalities under Article 805 of the Civil Code.

2. Holographic Will: A simpler form, a holographic will is entirely handwritten, dated, and signed by the testator. It does not require witnesses, but the handwriting and signature must be verified during probate.

 Importance of Probate

Probate is essential for ensuring the distribution of the estate according to the testator's wishes and in accordance with the law. Without probate, the will cannot be executed, and the estate would be distributed according to the rules of intestate succession (when no will exists). Probate protects both the estate's beneficiaries and any creditors of the deceased.

 Step-by-Step Guide to Probating a Will in the Philippines

1. Filing a Petition for Probate

The first step in probating a will is filing a petition for probate with the appropriate Regional Trial Court (RTC). The petition may be filed by an executor, a beneficiary, or any person interested in the estate. The petition must contain:

- The name and address of the deceased.

- The date and place of death of the testator.

- The names of heirs and beneficiaries.

- A summary of assets and liabilities.

- The will to be probated (either notarial or holographic).

The petition must be filed in the RTC of the place where the decedent resided at the time of death.

2. Court Issuance of Notice and Publication

After the petition is filed, the court will issue a notice of hearing to all interested parties, such as the heirs, beneficiaries, and creditors of the deceased. The court may also order the publication of the notice in a newspaper of general circulation for three consecutive weeks. This allows any interested parties to oppose the probate of the will if they believe it is invalid.

3. Opposition to Probate (If Any)

If any interested party believes that the will is not valid (for example, if it was executed without proper formalities, under undue influence, or by a mentally incapacitated testator), they may file an opposition to the probate. The opposition must be supported by evidence, and the court will conduct hearings to evaluate the claims.

4. Presentation of Evidence

During the probate hearings, the petitioner will present evidence to prove the validity of the will. This may include:

- Testimony from the witnesses who signed the notarial will.

- Presentation of the holographic will and verification of the testator’s handwriting by credible witnesses or experts.

- Medical records or testimony if the testator's mental capacity is questioned.

The court will ensure that the will complies with the legal formalities outlined in the Civil Code and the Rules of Court.

5. Probate of Notarial and Holographic Wills

The court will differentiate between the types of wills during probate:

- For notarial wills, the court will verify whether the will was signed by the testator and witnessed in the presence of a notary public. The formalities under Articles 805 and 806 of the Civil Code must have been observed.

- For holographic wills, the court will ensure that the will was entirely handwritten, dated, and signed by the testator. The court may require witnesses to authenticate the handwriting and signature.

6. Court Decision and Issuance of Probate Order

After evaluating the evidence, the court will issue its decision on the validity of the will. If the court finds the will valid, it will issue a probate order. This order confirms that the will is valid and that the estate can be administered according to the will’s provisions.

If the will is found invalid (e.g., due to improper execution, mental incapacity, or fraud), the court will declare it null, and the estate will be distributed according to intestate succession laws.

7. Appointment of Executor or Administrator

Once the will is probated, the court will appoint the executor named in the will (if any) to administer the estate. If no executor is named or the named executor is unable or unwilling to serve, the court will appoint an administrator.

The executor or administrator is responsible for:

- Collecting the assets of the deceased.

- Paying debts and taxes.

- Distributing the remaining estate to the beneficiaries as per the will.

8. Estate Settlement

The final step in the probate process is the settlement of the estate. After debts, taxes, and expenses have been paid, the executor or administrator will file a final accounting of the estate with the court. Once approved, the court will issue an order for the distribution of the estate according to the terms of the will.

 Key Considerations in the Probate Process

1. Rights of Compulsory Heirs:

   - Philippine law protects the rights of compulsory heirs, such as legitimate children, surviving spouse, and parents. Even if the testator makes a will, they cannot disinherit compulsory heirs without a valid reason, and they are entitled to a legitime, a portion of the estate reserved by law.

2. Intestate Succession:

   - If the will is invalidated or there is no will, the estate will be distributed through intestate succession, which follows the legal order of heirs under Articles 978 to 1019 of the Civil Code.

3. Probate Fees:

   - Probate can be costly, involving court fees, publication fees, and the cost of hiring a lawyer to guide the executor or administrator through the legal process.

4. Timeline:

   - The probate process can take several months to years, depending on the complexity of the estate and whether any opposition is filed. Simplified estates with no opposition can proceed faster.

5. Taxes:

   - Estate taxes must be settled before the assets can be distributed. Under the Tax Reform for Acceleration and Inclusion (TRAIN) Law, the estate tax rate is 6% of the net estate.

 Conclusion

Probating a will in the Philippines is a complex but necessary legal process to ensure that the wishes of the deceased are carried out and that the estate is distributed fairly. Whether the will is notarial or holographic, the probate process validates the document and confirms the rightful beneficiaries of the estate. Beneficiaries, heirs, and executors must understand the probate process to protect their rights and interests and ensure compliance with Philippine inheritance laws. Given the complexity of probate, legal assistance is often crucial to navigate the various requirements and stages effectively.

Source: Ziggurat Real Estate

How are taxes different from fees?

Local government units (LGUs) enjoy the constitutional mandate to levy taxes, fees, and charges subject to the limitations set by the Philippine Congress. (Section 5, Article 10, 1987 Constitution). Any dispute regarding the decisions of LGUs with respect to the imposition of local taxes may be brought to the Regional Trial Courts (RTCs).

The Court of Tax Appeals (CTA), on the other hand, is empowered to review decisions over local tax cases pronounced by the RTCs, pursuant to its power embodied in Section 7(a)(3) of Republic Act (RA) 1125, as amended by RA 9282.

In numerous decisions, the CTA has defined "local tax cases" as disputes involving the LGUs' imposition of taxes, fees, or charges on a taxpayer's property or business, including protests of assessments, claims for tax refunds or credits, and questions on the validity of tax ordinances. It also deals with cases arising from local business tax (LBT) and real property tax (RPT) assessments.

However, not all exactions by LGUs give rise to local tax cases that are appealable to the CTA. In the recent case of DOLE Philippines Inc.–Stanfilco Division v. The Sangguniang Panlunsod of the City of Davao (CTA AC 285, Oct. 2, 2024) (the "DOLE case"), the CTA Second Division said a matter is to be regarded a local tax case only if the levy involved is, in fact, a tax and not a fee. If the matter involves the levy of a fee, the CTA has no jurisdiction to review the RTC's decision.

Accordingly, the need to distinguish whether or not the levy is a tax or a fee is crucial in determining the CTA's jurisdiction. Such determination has implications in the appeal process from the RTC decision, which either proceeds to the CTA, a court of special jurisdiction taking cognizance only of cases clearly within its jurisdiction (i.e., local tax cases), or the Court of Appeals (CA), to which RTC decisions are generally appealable.

How are taxes different from fees?

Taxes are "the enforced proportional contribution from persons and property ... for the support of government and all public needs." (Republic v. Philippine Rabbit Bus Lines Inc., GR L-26862, March 30, 1970). They emanate from the State's inherent power to tax and are essential to the government's overall mandate.

Meanwhile, fees are distinctly defined under Section 131(l) of the Local Government Code (LGC) as "a charge fixed by law or ordinance for the regulation or inspection of a business or activity."

Primary Purpose Test

Under the Primary Purpose Test, if the exaction is revenue-generating, or if revenue is at least one of the real and substantial purposes, the exaction is rightfully classified as a tax. Otherwise, if the purpose is regulatory, the exaction is deemed to be a fee, even though it incidentally raises revenue.

In the DOLE case, the CTA held that while often subsumed under the broader term "charges" indicating pecuniary liabilities, fees imposed by LGUs serve a specific regulatory function. It is associated with the State's police power, recognizing that in promoting the public welfare, certain activities must be regulated, inspected, or supervised.

In this case, the Sangguniang Panlungsod of Davao City assessed the petitioner, DOLE Philippines, for Environmental Tax levied under Article 17 of its Watershed Code. The petitioner protested the assessment, which was denied by Davao City's Office of the City Treasurer.

Aggrieved, the petitioner then filed an appeal with the RTC of Davao City. After both its appeal and motion for reconsideration had been denied, the taxpayer elevated the matter to the CTA. In dismissing the case, the CTA Second Division applied the Primary Purpose test and held that it lacks jurisdiction over the case since the charge assessed is not a tax but a fee.

In so ruling, the CTA held that the exaction is primarily a regulatory act based on Article 17 of the Watershed Code, which expressly states that the fee is mainly for "watershed protection, conservation, and management."

In SM Prime Holdings Inc. v. Barangay 350, Zone 35, District III, City of Manila (CTA AC 278, Sept. 20, 2024), the CTA also held that a charge is presumed as a tax when no inspection is provided, nor standard, qualification, or hindrance set under a "guarding eye" comes with it. The case instructs that the nomenclature given by the law is not conclusive of the charge's nature.

In sum, the delineation and distinction between taxes and fees is critical in establishing the CTA's jurisdiction over appeals on local tax cases. This reinforces the need for LGUs to clearly determine and specify the purpose of their exactions, as misclassification could impact taxpayers' recourse in contesting local assessments.

Source: Manila Times