Landlord Withholding Security Deposit Without a Signed Lease (Philippines)

A practical legal explainer for tenants and small landlords. Philippine context. General guidance only—specific facts and current regulations can change outcomes.

1) First principles: a lease can be oral and still be enforceable

Under the Civil Code, a contract of lease exists when the parties agree that the tenant (lessee) may use/enjoy the property for a price (rent) over a period.
No written contract is required for validity in ordinary residential leases. A lease may be proven by conduct and documents such as rent receipts, bank/e-wallet transfers, text messages/emails, move-in photos, inventory checklists, and turnover communications (the Rules on Electronic Evidence allow texts/emails as evidence if authenticity is shown).
If there’s no written lease, the law and the parties’ proven arrangements (course of dealing) supply the terms—e.g., rent amount and due date, deposit purpose, duration (month-to-month if nothing else is proven), and duties on care and repairs.

2) What a security deposit is—and is not

Purpose: A security deposit is tenant’s money held by the landlord to answer for (a) unpaid obligations (last bills, unpaid rent, damage beyond normal wear) and (b) performance of lease covenants.
Not automatically “last month’s rent”: Unless clearly agreed, a security deposit does not convert into advance or final rent. Some leases set a separate advance rent (sometimes called “one month advance”)—that is different from the security deposit.
Trust-like handling: Even without a written lease, a landlord may not treat the deposit as a windfall. It’s conditional, to be returned after legitimate deductions are accounted for.

3) When may a landlord keep or deduct from the deposit?

Permissible deductions (must be proven with receipts/estimates/photos):

Unpaid rent and contracted charges (e.g., association dues if the tenant agreed to shoulder them).
Unpaid utilities up to move-out/turnover date (electricity, water, internet)—backed by bills/reading.
Damage beyond normal wear and tear (e.g., broken fixtures, holes, burns, pet damage).
Key/amenity replacements only if loss/damage is attributable to the tenant and reasonably priced.

Not permissible (absent clear proof/agreement):

Normal wear and tear (e.g., minor nail holes, ordinary paint fading, gentle scuffing).
Routine repainting or cleaning that a prudent lessor would do between tenancies even without tenant fault.
Arbitrary penalties not anchored in the parties’ agreement or law.
“Liquidated damages” that are unconscionable or not shown to be a reasonable pre-estimate of loss.

Burden of proof: The landlord must substantiate deductions. The tenant should also document the unit’s condition at move-in and move-out (time-stamped photos/videos, witness, inventory).

4) Return of deposit: timing and accounting

The Civil Code requires parties to act in good faith. Even without a written clause, the landlord should:
1. Conduct move-out inspection promptly;
2. Issue a written accounting of deductions with copies of bills/receipts/quotes; and
3. Return the balance within a reasonable time after turnover and receipt of final bills (practice often ranges from ~2–4 weeks, but “reasonable” depends on circumstances like billing cycles).
Interest: If a landlord unjustifiably withholds the deposit after demand, the balance may earn legal interest from the date of demand until full payment (rate per prevailing Supreme Court guidelines).

5) Rent control coverage (why it can matter)

Some residential leases fall under the Philippine rent control regime (periodically extended/updated by the government).
If covered, rules typically cap the maximum deposit and advance (commonly not more than two months’ deposit and one month’s advance, historically), and may set procedural protections on increases and eviction.
Coverage depends on factors like monthly rent amount, location, and type of unit—and updates occur over time. Check the latest issuance to confirm whether your unit is covered and what caps/requirements apply.

Even if not under rent control, the general principles above (proper purpose, proof, reasonable timing) still apply.

6) No signed lease: how do you prove the terms?

Use totality of evidence, such as:

Payment proofs: bank/e-wallet transfers, receipts acknowledging “security deposit,” “advance,” or “rent” (the labels matter).
Messages: Viber/WhatsApp/SMS/email discussing deposit amount, conditions, move-in/move-out, repairs.
Conduct: Landlord’s acceptance of deposit and rent; tenant’s care and surrender of the unit; inspection arrangements.
Third-party records: Condo admin memos, gate passes, move-out permits.
Condition evidence: Before/after photos, contractor quotes, utility closing bills.

Courts and barangay mediators commonly decide who is more credible and better documented.

7) Early termination, abandonment, or holding over

Early termination by tenant: If the tenant leaves before the agreed end (or reasonable notice on a month-to-month), the landlord may claim actual losses (e.g., unpaid rent up to proper move-out/notice date, damages). The deposit can answer for proven losses—not for speculative “vacancy loss” unless specifically and reasonably agreed.
Abandonment: Landlord may apply the deposit to arrears and necessary repairs, but should still prepare a clear, receipted accounting; self-help entry and seizure of personal property risks liability.
Holding over (tenant stays past agreed period): Landlord may collect reasonable compensation (rent) for the extended occupancy and deduct from the deposit if unpaid, again with proper accounting.

8) Change of landlord (sale of property)

The deposit follows the property/lease. The new owner steps into the shoes of the old landlord and becomes responsible for returning the deposit (less lawful deductions), while the seller should turn over the deposit amount to the buyer at closing. Tenants should request written acknowledgment from the new owner of the deposit on file.

9) Remedies if your deposit is withheld

A) Negotiate with documentation

Send a polite, detailed demand with: (i) move-out date, (ii) condition summary, (iii) attached photos/bills, (iv) computation of what’s due, and (v) bank details and deadline (e.g., 10 banking days).
Offer reasonable deductions (e.g., final electric bill) to show good faith.

B) Barangay conciliation (Katarungang Pambarangay)

Mandatory pre-condition for many disputes between natural persons who reside or do business in the same city/municipality.
File at the barangay where the property or the respondent resides (practice varies). If one party is a corporation (e.g., developer-lessor), barangay conciliation may not apply; you can proceed to the proper forum.
If settlement fails, you’ll be issued a Certificate to File Action.

C) Small claims or regular civil action

If the dispute is purely for money (return of deposit, interest, and modest damages), consider Small Claims in the first-level court (no lawyers required above certain roles; threshold amount is set by the Supreme Court and gets updated from time to time—verify the current limit).
If you also seek damages beyond small-claims coverage, or there are other issues (e.g., ownership, ejectment), file the appropriate civil action in the proper court (venue rules apply).
You may claim legal interest, costs, and—where warranted—attorney’s fees.

10) Remedies for landlords (to do it right)

Inspect and document immediately at move-out; make a written inventory noting each issue (with photos).
Obtain quotes/receipts for repairs; compute only actual, reasonable costs.
Account in writing within a reasonable time, attach receipts, and return the balance via traceable payment.
Avoid blanket forfeiture of the entire deposit without proof; it risks liability for unjust enrichment, damages, and interest.

11) Practical checklists

For tenants

Before move-in: Photograph the unit; list pre-existing defects; ask for an acknowledgment that ₱___ is security deposit (even a text/email).
Before move-out: Give proper notice (if month-to-month, commonly at least one full rental period); settle utilities; photograph the cleaned unit; secure turnover acknowledgment.
After move-out: Send a written demand with attachments and a firm deadline.

For landlords

At acceptance: Clarify what the deposit covers (rent arrears, utilities, damage beyond wear), and the need for receipts.
At move-out: Conduct joint inspection, note meter readings, and agree on a timeline for bills/return.
After: Issue accounting + return balance promptly.

12) Sample Demand Letter (edit to fit)

Subject: Demand for Return of Security Deposit

Dear [Landlord Name], I rented [Unit/Address] from [Start Date] to [Move-out Date]. I paid a security deposit of ₱___ on [Date] (see attached proof). I surrendered the unit on [Date], with keys turned over and final photos attached.

Please provide a written accounting of any lawful deductions (with receipts/bills). Absent such proof, kindly return the full deposit to my account [details] within 10 banking days of this letter.

If I do not receive either the accounting or payment within that period, I will pursue barangay conciliation and, if needed, file an action to recover the deposit with legal interest and costs.

Thank you, [Tenant Name | Address | Mobile | Email]

13) Frequently asked questions

Q1: There’s no lease, so can the landlord just keep the money? No. An oral lease is valid, and the deposit remains the tenant’s property subject to lawful, proven deductions only.

Q2: The landlord says repainting is always on the tenant. Not by default. Normal repainting/cleaning between tenants is generally a landlord upkeep item. Deduction needs proof of damage beyond ordinary wear.

Q3: Can I just stop paying last month’s rent and use the deposit? Risky unless clearly agreed. Many disputes arise here. Safer to pay rent and demand the deposit back with proof at move-out.

Q4: How long must I wait? The law speaks of reasonableness. If you’ve provided turnover, receipts, and there are no pending bills, a short window (often a couple of weeks) is reasonable before making a formal demand.

Q5: What if utilities bill arrives after move-out? Landlord may withhold only the amount reasonably needed to cover that specific bill, then return the balance with the bill copy.

14) Bottom line

Even without a signed lease, Philippine law protects both sides: the tenant’s deposit must be returned after lawful, proven deductions, and the landlord may recover actual, reasonable costs for arrears and tenant-caused damage. Document everything, transact in writing, act within reasonable timeframes, and—if talks fail—use barangay conciliation and the proper court to enforce rights.