Severe flooding hit several parts of the capital, shutting businesses and government offices and adding to the city's already chronic traffic problems.
Several roads outside the city were submerged under water up to 1.5 metres deep.
As of early Thursday, forecasters said the storm was moving in a northwesterly direction and would pass close to the northernmost province of Batanes on Saturday, but would not make a direct hit.
|The storm has already triggered heavy rains |
and flooding in parts of Manila [Reuters]
If it follows that course it would then churn towards southern Taiwan and mainland China, although typhoons are hard to predict.
Taiwan has already issued a sea warning and told fisherman to return to port.
Philippine officials say Sepat could become even more powerful, becoming a super typhoon as it passes the country.
"It can wash out everything not made of cement or steel with that wind," Philippine government forecaster Lucrecio About said.
Last week a series of storms triggered landslides and flooding in rural areas of Luzon, killing at least eight people, civil defence officials said.