Every time you see “ 'y “, it is the word “ay” as it becomes part of a contraction with the preceding word that ends in a vowel. It is similar to the writing or saying of “I am” as “I'm”. Ex: ko ay = ko'y ako ay = ako'y siya ay = siya'y kami ay = kami'y Amerikano ay = Amerikano'y kare-kare ay = kare-kare'y This contraction is sometimes done in informal, but not in formal writing. However, when we speak, we practically do it all the time.

It's a contraction of the first person possessive pronoun "ko" with "ay", which is an inversion marker used when the predicate (contains a verb or describes the subject of a sentence) doesn't come first. As a result, you usually find it following pronouns or nouns. For example, you could say "Maganda ang babae" or "Ang babae ay maganda" and they'd mean the same thing [the woman is beautiful]. Another would be "Gwapo ang gupit niya" and "ang gupit niya'y astig" [his haircut looks handsome]. Your example would come in sentences like "Ang bahay ko'y malayo sa kalsada" [my house is far from the road].