Dear PAO,
I am looking to rent a condo unit or an apartment here in Metro Manila with a monthly rent of P10,000. My potential landlord is charging me a three-month deposit worth of rent, plus payment of one-month advance before moving in. What is the purpose of the deposit? Is this even legal? If not, can my landlord be penalized under the law?
-Valentin
Dear Valentin,
Considering your monthly rent threshold of P10,000, the answer to your query is found in Republic Act (RA) 9653, otherwise known as the Rent Control Act of 2009. Foremost, Section 7 of the law provides:
“Section 7. Rent and Requirement of Bank Deposit. – Rent shall be paid in advance within the first five (5) days of every current month or the beginning of the lease agreement unless the contract of lease provides for a later date of payment. The lessor cannot demand more than one (1) month advance rent. Neither can he/she demand more than two (2) months deposit which shall be kept in a bank under the lessor's account name during the entire duration of the lease agreement. Any and all interest that shall accrue therein shall be returned to the lessee at the expiration of the lease contract.
“In the event however, that the lessee fails to settle rent, electric, telephone, water or such other utility bills or destroys any house components and accessories, the deposits and interests therein shall be forfeited in favor of the latter in the amount commensurate to the pecuniary damage done by the former.”
Thus, it is clear that the law sets a ceiling with regards the amount a lessor can demand upon signing the contract of lease. Before moving in or upon signing the contract of lease, a lessor can only demand an amount equivalent to one month advance rent fees, plus two months worth of rent fees as deposit. Hence, your landlord cannot demand the payment of three months deposit plus one month advance as it is beyond the ceiling set by RA 9653.
Additionally, the law emphasized that the deposit is not a payment for rent, but rather a security which may be used to settle your unpaid utility bills. It may also be used to compensate the lessor for any damages caused to the rented unit and its accessories. In case there are no unpaid bills and/or damages caused to the rented unit, the deposit shall be returned to you in full.
Lastly, Section 13 of RA 9653 provides a fine of not less than P25,000 or more than P50,000 or imprisonment of not less than one month and one day to not more than six months, or both, to any person, natural or judicial, found guilty of violating any of its regulatory and prohibitory provision.
We hope that we were able to answer your queries. This advice was based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.
Thank you for your continued trust and support.
Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to dearpao@manilatimes.net.
