Quick answer

No. The absence of a signed lease renewal does not, by itself, allow a landlord to forfeit a security deposit.

What happens depends on the tenant’s actual situation:

If the tenant moved out when the lease ended, the landlord may deduct only amounts legally or contractually chargeable—such as unpaid rent, utilities, or proven damage beyond ordinary wear and tear—and should return the balance.
If the tenant stayed for at least 15 days after expiry, the landlord allowed the continued occupancy, and neither side had previously given contrary notice, an implied new lease may have arisen. The landlord may continue holding the deposit as security while that lease remains in effect.
If the lease contains a valid forfeiture or penalty clause covering a specific breach, the exact wording and facts matter. A clause cannot override mandatory rent-control protections, and a court may reduce an iniquitous or unconscionable penalty.

The key question is therefore not simply whether a renewal was signed. It is whether the tenancy actually ended, continued by agreement or conduct, or was breached.

When an unsigned renewal may still result in a valid lease

Under Article 1670 of the Civil Code, an implied new lease—called tacita reconducción—may arise when:

The original lease has expired;
The landlord did not give the tenant notice to vacate or another notice rejecting continued occupancy; and
The tenant remained for at least 15 days with the landlord’s acquiescence.

The Supreme Court applied these requirements in Samelo v. Manotok Services, Inc. Acceptance of rent after expiry, continued issuance of receipts, and the landlord’s failure to object can be evidence of acquiescence, although the entire course of conduct must be considered. Civil Code, Articles 1670 and 1687; Samelo v. Manotok Services, Inc., G.R. No. 170509.

For an urban property where rent is paid monthly, the implied lease is generally month-to-month—not another full year—unless the parties validly agree otherwise. Terms of the old lease that are relevant to continued possession and use may be revived, but the original fixed period is not.

Consequently, if the tenant is still occupying the unit under an implied lease, the security deposit generally remains held as security. It is not yet due for final settlement merely because the parties did not sign another annual contract.

An implied lease ordinarily does not arise if the landlord objected to continued occupancy, gave a timely notice to vacate, or clearly refused renewal. Acceptance of money after such notice may also be treated as payment for use and occupancy rather than consent to renew, depending on the documents and circumstances.

If the tenant moved out when the lease expired

When the tenant vacates, returns the keys, and surrenders possession, the landlord must account for the deposit according to the law and the lease.

The Civil Code requires a tenant to return the property substantially as received, except for deterioration caused by:

The passage of time;
Ordinary wear and tear; or
An inevitable cause.

The tenant can be responsible for deterioration caused by the tenant, household members, guests, or visitors. If the original lease contains no written description of the unit’s initial condition, the law presumes that it was received in good condition unless there is proof to the contrary. Civil Code, Articles 1665–1668.

A landlord may therefore claim legitimate amounts such as:

Unpaid rent;
Unpaid electricity, water, telephone, internet, or other agreed utility charges;
Missing keys, fixtures, appliances, or furnishings;
Repair costs for holes, breakage, burns, unauthorized alterations, or other tenant-caused damage; and
A valid contractual charge or penalty triggered by an actual breach.

A landlord should not charge the tenant for ordinary fading, minor scuffing from normal use, age-related deterioration, or repairs that are the landlord’s responsibility. Replacing an old item with a new one does not automatically justify charging the tenant the full replacement price; the landlord must connect the amount claimed to the actual compensable loss.

The landlord should provide a written, itemized computation and supporting evidence. If only part of the deposit is justified, only that part should be retained.

Special rules for rent-controlled residential units

The current National Human Settlements Board regulation covers the period from January 1, 2025 through December 31, 2026. Residential units renting for ₱10,000 per month or less are generally within the current regulated category, subject to the resolution’s detailed coverage conditions. NHSB Resolution No. 2024-01.

For a covered unit, Section 7 of the Rent Control Act of 2009 provides that:

The landlord cannot demand more than one month’s advance rent;
The security deposit cannot exceed two months’ rent;
The deposit must be kept in a bank under the landlord’s account name during the lease;
Interest earned must be returned to the tenant when the lease expires; and
The deposit and interest may be applied to unpaid rent or utilities and destruction of house components or accessories only in an amount commensurate with the monetary damage.

These protections apply to covered residential arrangements such as apartments, houses, rooms, dormitories, and bedspaces. Hotels, motels, and units outside the current coverage require separate analysis. Republic Act No. 9653, Sections 3 and 7.

For a covered unit, keeping the entire deposit solely because the tenant did not sign a renewal is difficult to reconcile with Section 7 unless there is an independently valid and proven obligation equal to that amount.

When a forfeiture clause may matter

Philippine law generally treats a contract as the law between the parties, provided its provisions are not contrary to law, morals, public order, or public policy. A lease may therefore contain a valid clause making the deposit answer for a failure to complete the agreed term, insufficient notice, unauthorized pretermination, or another specified breach.

In D.M. Ragasa Enterprises, Inc. v. Banco de Oro, Inc., the Supreme Court enforced an express clause forfeiting a commercial tenant’s deposit after the tenant prematurely ended a five-year lease. The ruling turned on the specific contract, the actual breach, and a commercial lease that was not governed by the residential deposit limits discussed above. It does not create a general rule that every unsigned renewal permits forfeiture. D.M. Ragasa Enterprises, Inc. v. Banco de Oro, Inc., G.R. No. 190512.

A landlord relying on a forfeiture clause should be able to identify:

The exact clause allegedly breached;
The act that constituted the breach;
Whether notice or demand was required;
Whether the tenant merely allowed the lease to expire or instead ended it early;
Whether the landlord accepted conduct inconsistent with forfeiture; and
Whether the unit is protected by the Rent Control Act.

Under Article 1229 of the Civil Code, a court may reduce a contractual penalty when the main obligation was partly or irregularly performed or when the penalty is iniquitous or unconscionable. Civil Code, Articles 1226–1229.

Is there a fixed deadline for returning the deposit?

The Rent Control Act does not state a nationwide “14-day,” “30-day,” or similar fixed deadline for refunding a residential security deposit. Check the lease for an agreed return or accounting period.

If the contract is silent, the landlord should account for the deposit promptly after surrender of the unit and once final bills and legitimate deductions can reasonably be determined. An indefinite or unexplained hold is vulnerable to challenge. If one final utility bill is still pending, the parties can agree on a reasonable temporary holdback while the landlord returns the undisputed balance.

A tenant should send a written demand rather than rely on calls or verbal promises. Under Articles 1169 and 1155 of the Civil Code, an extrajudicial demand can place an obligor in delay and interrupt prescription. Keep proof that the demand was received.

Practical steps for the tenant

1. Establish whether the lease ended

Collect evidence showing:

The original expiration date;
The date the tenant actually vacated;
When the keys and access cards were returned;
Whether the landlord accepted rent after expiry;
Whether either party sent a notice to renew, not renew, or vacate; and
Whether the landlord allowed continued occupancy for at least 15 days.

These facts determine whether there was a completed move-out, an implied month-to-month lease, or continued occupation over the landlord’s objection.

2. Read the deposit and termination clauses together

Look for provisions on:

Renewal and holdover;
Required notice before moving out;
Early termination;
Permitted deductions;
Deposit forfeiture;
Move-out inspection;
Utility clearance; and
The promised refund period.

Do not read a general “non-refundable” label in isolation. Its enforceability may depend on rent-control coverage and whether the clause is a lawful penalty, a genuine security arrangement, or contrary to mandatory law.

3. Request an itemized accounting

Ask the landlord in writing for:

The original deposit amount;
Any interest due for a covered unit;
Every deduction;
The date and reason for each deduction;
Receipts, invoices, photographs, inspection reports, and utility statements; and
The balance to be returned.

Dispute specific items rather than simply stating that every deduction is unacceptable.

4. Send a formal demand

The demand should identify the parties and property, state the move-out and key-turnover dates, compute the amount sought, dispute unsupported deductions, and give a reasonable payment deadline. Include a bank account or another practical payment method.

Send it through a method that creates reliable proof of delivery, such as registered mail, an accredited courier, acknowledged email, or a messaging channel the landlord regularly used.

5. Use barangay conciliation when required

Barangay conciliation is generally a precondition before filing in court when the dispute is between natural persons who actually reside in the same city or municipality, unless a statutory exception applies. Obtain the appropriate Certificate to File Action if settlement fails. Local Government Code, Sections 408–412.

Filing with the Punong Barangay interrupts the prescriptive period, but the interruption generally cannot exceed 60 days. Do not assume that barangay proceedings suspend all deadlines indefinitely.

6. Consider a small-claims case

A claim solely for payment or reimbursement of money arising from a lease may use the Rule on Small Claims if it does not exceed ₱1,000,000, exclusive of interest and costs.

File Form 1-SCC with the proper Metropolitan Trial Court, Municipal Trial Court in Cities, Municipal Trial Court, or Municipal Circuit Trial Court. Attach the required affidavits, certified copies of actionable documents, and all available evidence. Evidence not submitted with the Statement of Claim may be excluded unless the court finds good cause. Court personnel must provide information about the forms and procedure. Rules on Expedited Procedures in the First Level Courts, Rule IV.

The Supreme Court provides current small-claims forms and instructions. Confirm the initial filing method and required copies with the Clerk of Court. Current electronic-filing guidance treats initiatory pleadings differently from later filings.

Parties normally appear personally, and lawyers cannot represent them at the small-claims hearing unless the lawyer is personally a party. A lawyer may still advise a party before the hearing. The decision is final, executory, and unappealable, so preparation matters.

For claims above ₱1,000,000, claims requesting relief other than money, or cases involving eviction, title, serious damages, or complex counterclaims, obtain advice about the correct court and procedure.

Evidence worth preserving

Keep original or safely backed-up copies of:

The lease and every proposed renewal;
Deposit and rent receipts;
Bank transfers and payment confirmations;
Move-in and move-out inventories;
Dated photographs and videos of every room;
Inspection reports;
Key or access-card turnover acknowledgments;
Notices to renew, vacate, or terminate;
Emails, texts, and chat messages;
Utility statements and payment clearances;
Repair estimates, invoices, and receipts;
The landlord’s itemized deductions;
The written demand and delivery proof; and
Barangay records and the Certificate to File Action.

Preserve full conversations, not isolated screenshots. Export chats where possible and retain the device or original electronic file.

Common mistakes to avoid

Treating the deposit as the last month’s rent without the landlord’s written agreement;
Moving out without documenting the unit’s condition or returning the keys formally;
Assuming that failure to sign a renewal automatically ended all obligations;
Assuming that continued rent acceptance automatically proves a new one-year lease;
Ignoring a contractual notice requirement;
Accepting vague “repair costs” without requesting an itemized computation;
Charging the tenant for ordinary wear and tear;
Signing a quitclaim before the agreed refund is received;
Waiting so long that evidence disappears or prescription becomes an issue; and
Filing in court without completing mandatory barangay conciliation.

Actions based on a written contract or an obligation created by law generally prescribe in 10 years from accrual; actions based on an oral contract or quasi-contract generally prescribe in six years. The correct classification and starting date can depend on the pleadings and facts. Civil Code, Articles 1144–1155.

When legal help is urgent

Seek prompt legal assistance if:

The landlord has locked the tenant out, cut essential utilities, or removed belongings without a court order;
Either party is threatening violence or harassment;
The landlord is demanding amounts far beyond the deposit;
There are allegations of fraud, falsified receipts, or deliberate property destruction;
An eviction demand, summons, subpoena, or court order has been received;
A contractual deadline or prescriptive period is close; or
The deposit dispute is tied to a larger claim over possession or substantial damages.

The Rent Control Act speaks of judicial ejectment; a deposit dispute does not authorize either side to use force. Contact the barangay or police for immediate safety concerns, and consult the Public Attorney’s Office, an IBP legal-aid office, or private counsel about the civil case.

Frequently asked questions

Can the landlord keep the deposit while the tenant remains after lease expiry?

Yes, if an implied or otherwise agreed continued lease exists. The deposit may remain as security while the tenancy continues. It should not be treated as forfeited merely because no written renewal was signed.

Does accepting rent after expiry prove renewal?

It is strong evidence of acquiescence, especially when accepted without reservation, but it is not conclusive in every case. Prior notices, receipt wording, lease provisions, and the parties’ communications also matter.

Can the landlord keep the whole deposit for unpaid utilities?

Only to the extent of the actual obligation. For a rent-controlled unit, Section 7 expressly limits forfeiture to an amount commensurate with the monetary loss. The balance and applicable interest should be returned.

Can the deposit be used as the final month’s rent?

Not automatically. A security deposit and advance rent serve different purposes. Obtain the landlord’s written agreement before applying the deposit to rent.

Must the landlord provide receipts for deductions?

A landlord should be prepared to prove the claimed loss with reliable evidence. Receipts, invoices, photographs, inspection records, and final utility bills are the clearest support. Unsupported estimates can be disputed.

What if the landlord never placed the deposit in a bank?

For a residential unit covered by the Rent Control Act, Section 7 requires the deposit to be kept in a bank under the landlord’s account name and requires the accrued interest to be returned at lease expiry. Request a written accounting and proof of the interest computation.

Does the lack of a new contract erase the old deposit terms?

Not necessarily. Some terms relevant to continued occupancy may carry into an implied lease, but the exact treatment depends on the old contract, the parties’ conduct, and whether a contrary notice was given.

Can the landlord forfeit the deposit because the tenant declined to renew?

Ordinarily, simply allowing a fixed lease to reach its agreed expiration is not the same as breaking it early. Forfeiture would require a lawful statutory basis or a valid contractual clause that actually covers the tenant’s conduct.

Official sources

This article provides general Philippine legal information, not legal advice for a specific dispute. Lease wording, notices, payment records, property condition, rent-control coverage, and the parties’ conduct can change the result. Sources and current rules were checked on July 20, 2026.