Annulment Process and Requirements Philippines

Here’s a comprehensive, plain-English legal article (Philippine context) on Landlord Rights on Security Deposit and Rent. It’s general information—not legal advice. Facts, your written lease, and any special laws or local ordinances can change the outcome. When money or safety is at stake, consult counsel or a licensed broker/administrator.

Big picture

  • A lease is a contract: most rights come from what you and the tenant put in writing, then filled in by the Civil Code and special laws (e.g., rent control for certain residential units).

  • Two amounts get mixed up all the time:

    • Advance rent = prepayment of rent for a specified month(s).
    • Security deposit = guarantee against unpaid obligations or damage—not payment of a particular month, unless the lease says so.

1) Landlord rights on rent

A. To collect rent on the date, amount, and method agreed

  • If the lease sets a due date, payment is due then.
  • If silent, rent is generally due monthly at the beginning of the period and at the leased premises (unless you agreed otherwise).

B. Late charges, interest, and penalties

  • You may charge late fees/interest if expressly stipulated and not unconscionable.
  • Courts can strike down excessive penalties or reduce liquidated damages.

C. Rent increases

  • Commercial: largely freedom to contract—follow the escalation clause (e.g., fixed annual step-up, CPI-based).
  • Residential: may be subject to rent control caps if the unit falls within covered rent ranges and dates (these change from time to time). If covered, follow the cap and notice requirements. If not covered, follow the lease.

D. Withholding & receipts (practical)

  • Expect official receipts to be issued for rent.
  • If your tenant is required to withhold tax (common in commercial leases), collection is net of EWT, with a 2307 certificate given to you.

E. Inspection & access related to rent defaults

  • You can inspect on reasonable notice at reasonable hours, and enter without notice only for emergencies.
  • No self-help lockouts or utility cut-offs to force payment—those risk liability. Use lawful demand and, if needed, ejectment.

2) Landlord rights on the security deposit

A. Purpose and scope

  • A security deposit secures performance of the tenant’s obligations:

    • Unpaid rent/dues, utilities, charges, keys/cards, association dues (if passed through), and damage beyond normal wear and tear.
  • Normal wear and tear (e.g., minor nail holes, ordinary paint fading) is not chargeable unless the lease says otherwise in reasonable terms.

B. During the lease

  • Unless the lease allows application mid-term, the landlord may refuse a tenant’s request to “apply the deposit to last month’s rent.” The deposit is typically kept intact until move-out to protect against end-of-term risks.

C. At move-out (liquidation and return)

  • You may apply the deposit to documented unpaid items and bill the shortfall if the deposit is insufficient.
  • If there’s an excess after deductions, return the balance.
  • Best practice: itemized statement of deductions with receipts/quotes (repairs, cleaning beyond ordinary, utility bills, penalties).
  • Time to return: If the lease is silent, return within a reasonable period after surrender and inspection (commonly 30 days is used in practice). If the lease sets a period, follow it.

D. Interest on deposits

  • No automatic legal interest is due unless:

    1. The lease requires you to hold it in interest-bearing form and remit interest; or
    2. You delay returning without justification, in which case legal interest may be imposed by a court from the time of demand.

E. Documentation that protects you

  • Move-in inspection report with photos/videos signed by both parties.
  • Move-out inspection the same way.
  • Keep receipts, work orders, meter photos, and access card logs.

3) What you cannot do (even if tenant is behind)

  • Lockouts, changing locks, blocking access, confiscating belongings, or cutting power/water to force payment are not allowed and can expose you to damages or even criminal complaints.
  • Seizing the deposit early without basis (or refusing to return the balance) can also expose you to claims.

4) Ending the lease and recovering possession

A. When you can terminate

  • Material breach (e.g., chronic nonpayment, unauthorized sublease, serious damage, illegal use) per the lease and the Civil Code.
  • Expiration of the term (fixed term leases end without need of notice, unless renewed/extended).

B. Required demands

  • Serve a clear written demand (to pay and/or vacate), delivered to the unit and to any other agreed address (plus email if allowed). Attach rent ledger and computation.
  • Keep proof: photos of posting, courier receipts, email logs, witness affidavit.

C. Ejectment cases (unlawful detainer)

  • If the tenant fails to comply, file an ejectment case with the Metropolitan/Municipal Trial Court where the property is located.
  • Reliefs you can ask for: possession, unpaid rent, reasonable compensation for use and occupancy, attorney’s fees, and costs.
  • Courts can issue interim relief (e.g., order to deposit current rent while the case is pending).

D. Barangay conciliation

  • If parties live or are situated in the same city/municipality, many disputes must first go through the Barangay Justice System (conciliation/mediation) before filing in court—unless an exception applies (e.g., parties are corporations, urgent relief is needed, or you fall under a recognized exemption). Bring your lease, ledger, and demands.

5) Landlord preference over tenant’s movables (important but often misunderstood)

  • The law gives landlords a preferred credit over the tenant’s movables found in the leased premises for unpaid rent (usually limited to recent arrears).
  • However, this is not a license for self-help seizure. Enforcement typically happens through court process (e.g., levy by sheriff on execution) and priority in insolvency/attachment.
  • Practical takeaway: Document what movables were present; if you sue and win, your claim over those movables may rank ahead of other unsecured claims.

6) Residential vs. commercial differences

Topic Residential Commercial
Rent increases May be capped if unit falls under rent control; follow statutory caps/notice. Contract-driven escalation (step-ups, CPI).
Deposits Typical 1–2 months deposit + advance; beware of caps if any are imposed by special rules during certain periods. Often higher; may include fit-out bonds, LCs, or surety.
Repairs Landlord handles major structural; tenant handles minor/tenant-caused; define clearly in lease. Clearly allocate base building vs. tenant improvements; restoration at end of term is common.
Taxes Tenant typically pays utilities; RPT/assn dues allocation is by contract. EWT/VAT implications are common; align rent net vs. gross.

7) “Wear and tear” vs. “damage” (what you can deduct)

  • Wear & tear (not deductible): minor wall scuffs, normal paint fade, hairline tile grout discoloration, small nail holes, ordinary appliance lifespan.
  • Chargeable damage: broken windows/doors, holes needing putty + repaint of a wall section, burned countertops, missing appliances/keys, pest infestation due to negligence, cleaning far beyond ordinary (document with photos and cleaning invoices).
  • Utilities/dues: unpaid electricity, water, internet, condo/association dues chargeable if the lease says tenant bears them.

8) Advance rent vs. security deposit—how to draft & use

Best-practice clauses (plain language you can adapt with a lawyer):

  1. Advance rent: “Tenant pays ₱___ as advance rent to be applied to the rent for ___ (month). It is not a security deposit.”
  2. Security deposit: “Tenant pays ₱___ as a security deposit to answer for unpaid rent, utilities, charges, keys/cards, and damage beyond normal wear and tear. It shall not be applied to current rent without Landlord’s written consent.”
  3. Accounting/return: “Within 30 days from surrender of the unit and keys/cards, Landlord shall provide an itemized statement and either return any unused balance or bill the excess.”
  4. Inspection: “Landlord may enter on 24-hour prior notice for inspection and repairs, and without notice for emergencies.”
  5. Restoration: “Tenant shall return the premises clean and in substantially the same condition, less normal wear and tear; Tenant shall remove fixtures/improvements if required and repair resulting damage.”
  6. Default & remedies: “Failure to pay rent on due date plus __ days grace constitutes default. Landlord may terminate after written demand and proceed with ejectment, without prejudice to damages and legal fees.”

9) Move-in / move-out checklists

For move-in

  • Baseline photo/video inventory (walls, floors, appliances, meters).
  • Read and record electric/water meter.
  • Provide house rules/condo rules.
  • Note number of keys/cards/remotes.

For move-out

  • Pre-inspection with tenant (so they can remedy issues).
  • Final inspection upon turnover; collect keys/cards; take meter photos.
  • Gather bills/receipts/quotes and issue itemized statement.
  • Process deposit return or balance billing.

10) Common disputes & quick answers

Q: Can the tenant insist on using the deposit as last month’s rent? A: No, unless the lease allows it or you consent in writing.

Q: The tenant left without notice and owes two months—what now? A: Apply the deposit to the documented arrears/damages, demand the balance, and consider ejectment (if they’ve not surrendered) or a collection case for sums due.

Q: How much can I deduct for repainting? A: You may deduct only the cost attributable to tenant-caused damage (e.g., heavy stains/graffiti). General repainting due solely to time/use is wear and tear.

Q: Can I hold the deposit until association dues are cleared? A: Yes, if the lease makes tenant liable for those dues and you have proof of non-payment.

Q: The lease expired but tenant stays and pays—can I raise rent? A: If the lease expired, you may set new terms (subject to rent control if applicable). Provide written notice ahead of the next period.

Q: Tenant’s equipment is still inside—can I sell it to pay the arrears? A: Don’t self-sell. Secure the unit, demand, then pursue lawful court process so any levy/sale is done by the sheriff and your preference is respected.


11) Practical drafting tips (to avoid fights)

  • Separate “advance rent” and “security deposit” clearly.
  • State what the deposit covers, when and how you will account/return, and what documentation you’ll provide.
  • Build a notice clause (physical + email addresses).
  • Add a dispute-resolution step (e.g., barangay for residential, mediation for commercial), then litigation in the proper court.
  • Clarify repair responsibilities and restoration.
  • Include a house rules schedule (pets, noise, alterations, parking).
  • If residential and possibly covered by rent control, mirror the current caps and notice rules in your lease so you don’t accidentally violate them.

12) Quick landlord action plan (one-page)

  1. Know your lease (due dates, escalation, deposit rules).
  2. Invoice and receipt promptly; keep a running ledger.
  3. On default: written demand (pay and/or vacate) with exact amounts and deadline.
  4. Document everything (photos, bills, emails, delivery proofs).
  5. If unresolved: barangay (if required), then ejectment/collection.
  6. At turnover: inspect, itemize deductions, return balance of deposit or bill shortfall within a reasonable period.
  7. Keep communications polite and written—judges read your letters.

Want help tailoring lease clauses or an itemized deposit-liquidation template you can hand to a tenant? Tell me if it’s residential or commercial, monthly rent, deposit amount, and your usual issues (late payment, repainting, keys, utilities), and I’ll draft language you can paste into your contract and your move-out statement.

Disclaimer: This content is not legal advice and may involve AI assistance. Information may be inaccurate.