Dear PAO,

I rented an apartment unit in Makati City for a period of one year, beginning January 2025 until December 2025. I paid one month rent and two months security deposit to the lessor. On May 31, 2025, I noticed large cracks on the wall of the apartment which, I am afraid, would give way at any time. Moreover, during heavy rains, the rainwater flows directly through the cracks which flooded the entire apartment unit. Hence, I informed my lessor that I will terminate my lease contract as soon as possible, to which he agreed.

When I finally moved out and paid all the rent due, I asked for the refund of my security deposit, but the landlord said I will no longer receive the money as I had terminated the contract before its expiry. Is he correct? What should I do to claim my security deposit if he refuses to refund it?

Annica

Dear Annica,

A security deposit is a sum of money provided by the lessee at the beginning of the contract, which serves as a bond to guarantee the faithful compliance of the terms of the lease agreement. It is used to cover unpaid utility bills or damages to the property not attributable to normal wear and tear. Hence, at the end of the lease, any unpaid bills or repair costs shall be deducted from the security deposit, and the remaining balance shall be returned to the lessee.

Generally, when a lessee terminates a lease contract prior to its expiry, it is best to refer to the lease agreement to determine whether the security deposit may be refunded. This is in consonance with Article 1159 of the New Civil Code of the Philippines which states that “[o]bligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith.”

However, if one party pre-terminates a lease contract due to conditions that pose imminent and grave danger to life or health; then, the lessee may rescind the agreement instantly. Article 1660 of the same Code is instructive:

“ARTICLE 1660. If a dwelling place or any other building intended for human habitation is in such a condition that its use brings imminent and serious danger to life or health, the lessee may terminate the lease at once by notifying the lessor, even if at the time the contract was perfected the former knew of the dangerous condition or waived the right to rescind the lease on account of this condition”.

Thus, in applying the foregoing in the instant case, you may rescind your lease contract at any time, provided that the apartment unit is indeed uninhabitable and poses an imminent threat to your life. In fact, the lessor, having failed to deliver his part of the obligation to provide a livable and usable unit, may even be held liable for damages under Article 1659 of the New Civil Code, which states that [i]f the lessor or the lessee should not comply with the obligations set forth in articles 1654 and 1657, the aggrieved party may ask for the rescission of the contract and indemnification for damages, or only the latter, allowing the contract to remain in force.

Therefore, the lessor is incorrect in retaining the security deposit. He is not entitled to the security deposit as he is the party at fault, for not keeping his part of the bargain or contract.

Relative thereto, you may seek an action for the refund of your security deposit by sending your lessor a demand letter. If despite the letter of demand, your claim is unheeded, you may file a complaint with the Katarungang Pambarangay or small claims with the Municipal Trial Court where you or your lessor resides.

We hope that we were able to answer your queries. This advice is 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.

We appreciate your 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 [email protected]