Question

Scenario 1:

Mr. Santos entered into a lease agreement with Mr. Gomez for a commercial property in January 2020. The lease agreement stipulated a monthly rent of Php 50,000 and a term of five years. In February 2021, Republic Act No. 1234 was enacted, which increased the rate of value added tax (VAT) applicable to commercial properties. The increase in VAT resulted in an increase in operational costs for lessors.

Mr. Santos, as the lessor, seeks to pass on the increased VAT cost to Mr. Gomez by demanding an adjustment in the monthly rent. Mr. Gomez, on the other hand, argues that the lease agreement cannot be modified because it was already perfected in January 2020.

Question: In the given scenario, is Mr. Santos allowed to demand an adjustment in the monthly rent based on the increased VAT cost? Explain your answer.

Scenario 2:

In 2018, the Philippine Congress enacted a law imposing stricter emissions standards for motor vehicles. The law stated that all motor vehicles manufactured on or after January 1, 2022, must comply with the new emissions standards. Mr. Cruz purchased a brand-new car in December 2021, which was manufactured before the said date. After the purchase, the government announced that the new emissions standards would be applied retroactively to all motor vehicles, regardless of the date of manufacture.

Question: In the given scenario, can the government retroactively apply the stricter emissions standards to Mr. Cruz's car? Explain your answer.