Question

Marvin entered into a written agreement with his landlord, Mr. Santos, on January 1, 2020, to lease a commercial space for a term of five years. The agreement specifically stated that the monthly rental fee would remain fixed at Php 30,000 for the entire duration of the lease.

In June 2021, a new law was enacted, which mandated a decrease in the allowable rental fees for commercial spaces. The law stated that the maximum allowable rental fee should not exceed 10% of the assessed value of the property.

In November 2021, Mr. Santos demanded an increase in Marvin's rental fee, citing the new law. Marvin, on the other hand, argues that the new law should not apply to their existing agreement since it would negatively affect his vested rights.

Discuss the retroactivity of laws and the application of the vested rights principle in the given scenario. What law governs the rental fee in Marvin and Mr. Santos' situation? Explain your answer.