Security deposit rules and return in the Philippines, explained

What the law says

The Civil Code does not regulate deposits specifically; the lease does. The Rent Control Act (RA 9653, as extended) applies to residential units below the rent threshold in covered areas: it limits advance rent to one month and the deposit to two months, requires the deposit be kept in a bank with interest returned to the tenant, and bars using the deposit for rent except at the tenant's request at the end. Above the threshold, the lease governs — one month advance and two months deposit is the market norm anyway.

What you may deduct

Unpaid rent and unpaid utilities and dues the tenant owes under the lease. Damage beyond fair wear and tear, at the cost to repair or replace, evidenced by the move-in condition record and a receipt. Cleaning beyond normal, only if the lease says so. Unreturned keys or access cards at cost. Not: repainting a unit that was lived in normally, a worn mattress, general "refurbishment", or a penalty the lease does not provide.

Fair wear and tear

The gradual deterioration of normal use: scuffed walls, a sagging sofa, faded curtains, worn grout. Damage is what normal use does not cause: a hole in a door, a burn on a counter, a broken tile, a missing appliance. The move-in inspection with photos is what lets you tell them apart a year later.

The return

Within the period the lease sets, with an itemised statement: deposit held, each deduction with its basis and evidence, the amount returned, how it was paid. If deductions exceed the deposit, the statement shows what is owed and becomes a final invoice. Keep the statement and the tenant's acknowledgement; it is the document a barangay mediator will ask for.

Documenting, from day one

Record the deposit with its date and where it is held. Do a move-in inspection with photos, signed by both. Keep every repair receipt against the unit. At move-out, inspect again with the tenant present if possible, photos of anything to be deducted. Then the statement. The platform does each of these at the moment it happens and assembles the statement from them. Deposits in the platform.