Renew reliable Manila duplex tenant below asking rent, or increase now?

If the tenant counters, compare the counter with your turnover worksheet rather than with PHP 135,600 alone. A slightly lower agreed rent beginning without vacancy can outperform the headline asking rent after lost occupancy and preparation costs.
 
I would not promise repeated small annual increases unless you intend to follow that pattern and it is permitted. This renewal can stand on its own. Keep future adjustments subject to the lease, conditions at the time and applicable rules.
 
A sensible sequence seems to be: verify comparable properties, inspect and list pending work, confirm the lease and local requirements, calculate vacancy costs, then make a moderate written proposal. If the tenant declines, you still have enough information to decide whether replacing them is rational.
 
The strongest fact in your post is not the market listing; it is that the tenant pays and protects the property by reporting problems. I would price that reliability into a below-asking renewal, while still making a defensible adjustment so the gap does not quietly become much harder to address later.
 
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