Security Deposit Rules in the Philippines: Return and Deductions

Direct answer: Philippine law sets no single return deadline for every lease. The landlord must return the unused balance of the security deposit after the lease ends and legitimate deductions are computed, on the timeline in the lease or within a reasonable time if the lease is silent. A landlord may keep only amounts that match proven unpaid rent, utilities or damage beyond ordinary wear and tear. For rent-controlled units, RA 9653 caps the deposit at two months and requires interest to go back to the tenant.

What a security deposit is for

A security deposit secures the tenant’s performance of the lease. It answers for rent the tenant fails to pay, utility bills left behind, and damage the tenant causes. It is different from advance rent, which pays for a specific month of occupancy.

Because the deposit is security, the landlord holds it for a purpose. When the lease ends and the tenant has paid everything and returned the unit in proper condition, the purpose is spent and the money goes back to the tenant. Keeping it without a legal basis is unjust enrichment, which Article 22 of the Civil Code prohibits.

The lease governs most details: the amount, when it will be returned, what may be deducted, and whether it can be applied to the last month’s rent. Under Article 1306, parties may agree on terms that are not contrary to law, morals, good customs, public order or public policy. A lease clause cannot override the Rent Control Act for covered units.

Deposit limits under the Rent Control Act

Maximum and interest: For a unit covered by RA 9653, Section 7, the landlord may demand at most one month advance rent and two months security deposit. Yes, the tenant is entitled to all bank interest accrued on that deposit at the lease’s expiration, subject to valid deductions under Section 7. These statutory limits must be applied only after checking coverage. The section provides:

• The lessor cannot demand more than one month advance rent.
• The lessor cannot demand more than two months deposit.
• The deposit must be kept in a bank under the lessor’s account name for the whole lease.
• All interest that accrues must be returned to the lessee when the lease expires.
• If the lessee fails to pay rent, electric, telephone, water or other utility bills, or destroys house components and accessories, the deposit and its interest are forfeited in favor of the lessor only in the amount commensurate to the actual damage.

Which units are covered

RA 9653 covers residential units, such as apartments, houses, rooms, dormitories, boarding houses and bedspaces used for dwelling. As originally enacted, it covered monthly rents up to ₱10,000 in Metro Manila and highly urbanized cities, and up to ₱5,000 elsewhere. Its coverage has been extended by the housing board several times.

Check coverage before applying the statutory limits. The NHSB’s 2024-001 resolution continues rental regulation through December 31, 2026. Its 2026 rent-increase cap of 1% applies to qualifying units occupied by the same tenant in 2025 at ₱10,000 monthly rent or less who continue or renew in 2026; a newly vacant or newly leased unit is not automatically subject to that same increase cap. The scope of a particular lease and the statutory deposit rules must be assessed from RA 9653 and the applicable NHSB issuance, rather than the rent amount alone. See DHSUD’s explanation of the 2025–2026 resolution and the rent-increase guide.

When the deposit must be returned

How long after move-out? There is no single statutory 30-day or 60-day deadline for every Philippine residential lease. Check the contract’s refund period first. If it says 30 or 60 days, that is a contractual term, not a universal rule. If silent, request the unused balance promptly after the lease ends and the unit is surrendered, allowing a reasonable period to inspect the premises and settle final bills; ask for an itemized computation and a definite payment date.

For units actually covered by RA 9653, Section 7, accrued bank interest is to be returned to the tenant at expiration of the lease, subject to the statute’s deductions for actual pecuniary loss. The landlord should account for the principal and interest and return the remaining balance once valid deductions are determined.

If payment is withheld, send a dated written demand with the lease, proof of surrender and the amount sought. Whether the landlord is legally in delay and whether interest is recoverable depend on the due date, demand and nature of the monetary claim under the applicable Civil Code rules; do not assume a flat 6% begins automatically on move-out.

When a landlord can keep the security deposit

What can be deducted? A landlord should identify each obligation and show its amount, cause and supporting record. Depending on the lease and whether RA 9653 applies, the principal categories are:

• Unpaid rent already due, shown by the lease and payment ledger.
• Unpaid electricity, water, telephone or other utilities attributable to the tenancy, supported by final bills and meter readings.
• Damage to house components or listed furnishings beyond ordinary wear and tear caused by the tenant, supported by move-in and move-out evidence and reasonable repair or replacement cost, with age and prior condition considered.
• Other valid lease obligations only if a lawful clause and actual amount support them; for a rent-controlled unit, Section 7 limits forfeiture to the loss recognized there and the amount commensurate with actual pecuniary damage.

Subtract supported deductions and return the unused balance. A blanket deduction for repainting, routine cleaning, old fixtures, or a purported penalty merely because a tenant moved out is not automatically justified. RA 9653, Section 7 governs covered units; Civil Code Articles 1665–1667 address condition and tenant responsibility.

The burden of proof matters. A landlord who deducts should be ready to show the lease clause, the ledger, the bills, photos and repair receipts. A tenant who disputes a deduction should be ready to show move-in photos, payment receipts and move-out photos.

Ordinary wear and tear versus damage

Article 1665 of the Civil Code requires the lessee to return the property, at the end of the lease, in the same condition in which it was received, except for what has been lost or impaired by the lapse of time, ordinary wear and tear, or an inevitable cause. Ordinary wear and tear should not be charged as damage.

Two related rules help decide disputes. Under Article 1666, if the lease has no statement about the condition of the unit at the start, the law presumes the tenant received it in good condition, unless there is proof to the contrary. Under Article 1667, the tenant is responsible for deterioration or loss unless the tenant proves it happened without the tenant’s fault. This is why a signed move-in inventory with photos protects both sides.

Compare condition and cause, not just labels: fading, age and routine use are ordinarily wear; a broken fixture or deep gouge may be chargeable if the tenant caused it. Mold from an unreported leak is not automatically tenant damage: inspect the leak’s cause, whether notice was possible, and each party’s repair duties. Allow for the item’s prior condition and useful life rather than charging a full brand-new replacement for an old fixture.

Major repairs needed because of age or structural problems are usually the landlord’s responsibility. See Who Pays for Repairs: Landlord or Tenant?.

Early move-out, last month’s rent and forfeiture clauses

Leaving before the lease ends

Can the landlord keep the whole deposit as an early-exit penalty? Not automatically. For a covered unit, RA 9653 Section 7 limits forfeiture to the amount commensurate with actual pecuniary damage from the listed obligations; an automatic full-deposit penalty conflicts with that limit. Outside its coverage, a negotiated penalty clause may be considered under the Civil Code, but a court may reduce an iniquitous or unconscionable penalty or one where the obligation was partly performed (Articles 1229 and 2227). Identify any unpaid rent, legally recoverable loss and mitigation before deciding the balance. See Can a Tenant Leave Before the Lease Ends?.

Using the deposit as the last month’s rent

Can the tenant use the deposit as the last month’s rent? Only if the lease expressly permits the setoff or the landlord agrees. Advance rent and a security deposit serve different purposes; Section 7 of RA 9653 treats them separately for covered units. Without an agreement, the tenant should pay rent when due and request a written accounting and refund after surrender. Simply withholding the last rent can create arrears and a valid deduction. See What Happens if a Tenant Stops Paying Rent?.

Landlord ends the lease early

If the landlord ends the lease without a valid ground, the tenant may claim the full deposit and damages. The deposit cannot be withheld to pressure a tenant to leave. See Can a Landlord Terminate a Lease Early? and Can a Tenant Be Evicted Without a Court Order?.

Worked example: a Makati studio

Angelica Reyes leased a studio in Makati City from Ramon Cruz for ₱9,500 a month, from August 1, 2025 to July 31, 2026. Assume the unit and tenancy meet the applicable rent-control coverage conditions; the rent amount alone is not the whole coverage test. She paid one month advance (₱9,500, applied to July 2026) and two months deposit (₱19,000). Ramon kept the deposit in a savings account that earned ₱95 in interest.

Angelica moved out on July 31, 2026. On August 20, 2026, Ramon sent this computation:

• Unpaid July electricity bill: ₱2,350. Valid, supported by the bill.
• Broken cabinet door, shown in move-out photos but not in move-in photos: ₱1,800. Valid, supported by a receipt.
• Repainting the whole unit because walls had faded: ₱6,000. Not valid, ordinary wear and tear.
• Cleaning fee: ₱1,500. Not valid, because the lease had no cleaning clause and the unit was left clean.

Proper refund: ₱19,000 − ₱2,350 − ₱1,800 = ₱14,850, plus ₱95 interest, for ₱14,945. Ramon’s own computation returned only ₱7,350. Angelica sends a written demand for the ₱7,595 difference. If Ramon refuses, she can bring the matter to the barangay and then file a small claims case.

CivilLaw.ph — Move-out & security-deposit worksheet
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Move-out checklist for landlords and tenants

1. Inspect together. Walk through the unit on move-out day and document its condition with dated photos and video.
2. Compare with move-in records. Use the signed inventory and move-in photos.
3. Identify money owed. List unpaid rent, utilities, association dues or other contractual charges.
4. Separate wear and tear from damage. Charge only damage the tenant caused.
5. Put the computation in writing. Show each deduction, its basis and receipts, and the balance due.
6. Pay the balance. Return it within the lease period, or within a reasonable time, with interest for covered units.

Both sides should keep the lease, move-in and move-out photos, inspection reports, rent receipts, utility statements, repair invoices, and the written deposit computation.

Remedies when the deposit is not returned

1. Gather and reconcile the record. Keep the lease, deposit and rent receipts, turnover date, key handover, move-in and move-out photos, inventory, final bills, bank-interest record if covered, and messages.
2. Request an itemized accounting. Ask the landlord to identify every deduction, its lease or statutory basis, and bills or repair proof; calculate the undisputed balance and request prompt payment.
3. Send a dated written demand. State the amount claimed, basis and reasonable deadline; keep proof of delivery. Demand can matter for delay and interest under Civil Code Article 1169, but the precise accrual and rate depend on the claim.
4. Check barangay conciliation. For disputes within the Katarungang Pambarangay jurisdiction, obtain mediation or a certificate to file action if settlement fails; residence, party status and statutory exceptions affect whether this prerequisite applies.
5. Use the appropriate money-claim process. If eligible under the current small claims rules and amount limit, file in the proper first-level court with the lease, receipts, computation and proof of demand or barangay compliance. A claim outside that scope needs the appropriate civil remedy.
6. Document a rent-control violation separately. If a covered unit was charged more than the Section 7 limit or interest was withheld, preserve the lease and payment evidence for the competent authorities and any recovery claim.

Landlords facing a tenant who stays after the lease ends should use the court process, not the deposit. See Lease Expired but Tenant Refuses to Leave.

Legal basis

Frequently asked questions

When must a security deposit be returned?

No universal number of days is set. Follow a valid refund term in the lease; 30 or 60 days is a common contractual period, not a statutory deadline. If the lease is silent, demand the unused balance within a reasonable time after surrender, inspection and final bills. For a unit covered by RA 9653, account for and return accrued deposit interest at lease expiration, subject to lawful deductions.

Can a landlord keep the security deposit?

Only to the extent of valid, provable amounts the tenant owes: unpaid rent, unpaid utilities, or damage beyond ordinary wear and tear, as the lease and law allow. For rent-controlled units, RA 9653 limits forfeiture to the actual pecuniary loss. Keeping the whole deposit as an automatic penalty is hard to justify.

How much deposit can a landlord ask for?

For residential units that meet RA 9653 and the applicable NHSB coverage conditions, the landlord may ask for no more than two months deposit and one month advance. For units outside rent control, the amount is whatever the parties agree in the lease, subject to general Civil Code limits.

Can a landlord deduct repainting and cleaning?

Only if the need goes beyond ordinary wear and tear, or the lease clearly provides for it. Repainting walls that faded with time is usually wear and tear. Repainting because of holes, stains or unapproved colors can be charged. A cleaning fee needs a lease basis or proof the unit was left unusually dirty.

Is the tenant entitled to interest on the deposit?

For rent-controlled units, yes. RA 9653 requires the deposit to be kept in a bank under the lessor’s name and all accrued interest to be returned to the lessee at lease expiration. For other units, interest is due only if the lease provides, or as legal interest after a demand is ignored.

Does the tenant lose the deposit by leaving early?

Not automatically. A forfeiture clause may apply, but courts can reduce penalties that are iniquitous or unconscionable under Articles 1229 and 2227 of the Civil Code. For rent-controlled units, forfeiture should not exceed the actual loss, such as unpaid rent for the notice period and proven damage.

What if the landlord refuses to return the deposit?

Request an itemized accounting and supporting bills, then send a dated written demand for the calculated balance. Check whether barangay conciliation is required for the parties and dispute. If the money claim fits the current small claims rules, file with the proper first-level court using the lease, receipts, inspection evidence and proof of demand and any required conciliation. A disputed claim outside that procedure needs the proper civil action.

Related CivilLaw.ph guides

• Can a Tenant Leave Before the Lease Ends?
• Who Pays for Repairs: Landlord or Tenant?
• Can a Landlord Terminate a Lease Early in the Philippines?
• What Happens if a Tenant Stops Paying Rent?
• Can a Landlord Increase Rent During the Lease?
• Can a Landlord Enter the Property Without Permission?
• Can a Tenant Be Evicted Without a Court Order?
• Lease and Rental Disputes hub

Sources and legal citations

• Republic Act No. 9653, Rent Control Act of 2009 (Lawphil): Sections 3, 7 and 13.
• Republic Act No. 386, Civil Code of the Philippines (Lawphil): Articles 22, 1169, 1229, 1306, 1665, 1666, 1667 and 2227.
• Philippine Information Agency, on NHSB Resolution No. 2024-001 (rent control for units at ₱10,000 or less).
• Rules on Expedited Procedures in the First Level Courts (A.M. No. 08-8-7-SC), which now govern small claims cases.
• Local Government Code of 1991 (Republic Act No. 7160), Book III, Title One, Chapter 7 (Katarungang Pambarangay).

Sources rechecked as of: October 3, 2026. Coverage should be rechecked when a later NHSB issuance takes effect.