In the Philippines, the collection, management, and return of security deposits are primarily regulated by Republic Act No. 9653 (the Rent Control Act of 2009) for covered residential units. These strict provisions aim to prevent landlords from overcharging tenants at the start of a lease and ensure fair practices upon move-out.

This guide outlines the critical security deposit rules that Philippine landlords must follow.

Maximum Security Deposit Limits

For residential units governed by RA 9653 (monthly rent of ₱10,000 or below in Metro Manila and highly urbanized cities, or ₱5,000 or below elsewhere):

• Maximum Security Deposit: Landlords may demand no more than two (2) months' rent as a security deposit.
• Advance Rent: Alongside the security deposit, landlords can only request a maximum of one (1) month's advance rent.

It is illegal to exceed these caps. Requiring a tenant to pay, for instance, six months' advance rent or three months' security deposit exposes the landlord to penalties if the unit is covered under the Rent Control Act.

Proper Management of Deposit Funds

Unlike many other jurisdictions where a landlord can commingle deposit funds, the Philippines requires specific handling of security deposits under RA 9653:

• Bank Account Requirement: The security deposit must be kept in a bank account under the landlord's name for the entire duration of the lease contract.
• Accrued Interest: Any interest earned on the deposit during the tenancy must be returned to the tenant at the expiration of the lease contract, along with the principal amount.

When Can a Landlord Withhold a Deposit?

The security deposit is intended to guarantee the tenant's compliance with lease obligations. Under Philippine law, landlords may make deductions for:

• Unpaid Rent: Any outstanding rent at the termination of the lease.
• Damages: The cost to repair damages to the property beyond normal wear and tear caused by the tenant, their family, or guests.

• Unpaid Utilities: Unpaid water, electricity, telephone, or other utility bills associated with the unit.

[!IMPORTANT] Landlords should conduct thorough move-in and move-out inspections. Documenting the property's condition with photographs and inspection checklists helps prevent disputes over deductions for property damage.

Returning the Security Deposit

Upon the expiration of the lease or the vacancy of the premises, the landlord must refund the deposit (plus accrued interest) to the tenant. If deductions are made for unpaid bills or damages, these should ideally be itemized.

If a tenant leaves the property with unpaid bills or damages that exceed the deposit amount, the deposit is forfeited in favor of the landlord, who may then pursue legal action for the remaining balance.

Exemptions

For residential properties whose monthly rent exceeds the thresholds outlined in the Rent Control Act (e.g., a luxury condominium renting for ₱50,000/month), the amounts for security deposits and advance rent are entirely open to negotiation between the landlord and the tenant. These are strictly governed by the lease contract under the Philippine Civil Code's principle of freedom to stipulate.

See our Rent IncreasesPodgląd niedostępny guide for details regarding changes to the base rent amount.

Stay Compliant with Landager

Manually calculating deposit interest and tracking return deadlines can lead to disputes. Landager allows Philippine property owners to securely track deposit balances, log condition reports with photos to justify deductions, and automate accounting to ensure compliance with RA 9653.

Back to Philippines Landlord-Tenant Laws OverviewPodgląd niedostępny.