Philippines National Commercial Lease Requirements

Disclaimer: This guide provides general legal information for educational purposes only and does not constitute legal advice. Always consult a licensed attorney in the Philippines for advice specific to your situation. Information last verified: March 2026.

In the Philippines, commercial leases are bound by the Civil Code and the concept of "freedom to stipulate," rather than the highly restrictive protections of residential tenancy laws. Therefore, the written Contract of Lease acts as the absolute governing law between the commercial landlord and the business tenant.

A poorly drafted commercial lease leaves a landlord entirely vulnerable. This guide outlines what must be included.

1. Essential Contract Elements

A standard commercial lease in the Philippines should comprehensively outline:

• Identification of Parties: The exact corporate entities or registered names involved, confirmed via SEC (Securities and Exchange Commission) or DTI (Department of Trade and Industry) registrations, signed by duly authorized representatives.
• Leased Premises: A precise description of the space, including square meterage and specific boundaries. "As-is, where-is" clauses should be clearly invoked if the space is turned over bare.
• Term: The exact duration of the lease (e.g., 3 years, 5 years) and whether there is an option to renew.
• Rent Structure: The base rent, any percentage of gross sales, the escalation clause, and accepted modes of payment (usually Post-Dated Checks). Check our Commercial Rent Increases guide for standard escalation clauses.
• Security Deposit & Advance Rent: The exact amounts required and the specific conditions covering forfeiture or deductions. Check our Commercial Security Deposits guide for common practices.

2. Mandatory Commercial Clauses

Because the Civil Code allows parties to establish their own rules, landlords should incorporate these crucial operational stipulations to protect their investments:

CUSA (Common Use Service Area) Fees

If the commercial property is within a larger complex, mall, or multi-tenant building, the lease must allocate the costs of maintaining lobbies, halls, general security, and exterior grounds. The structure of CUSA fee collection must be clearly defined in writing.

Subleasing and Assignments

Unless explicit consent is written into the lease, the Civil Code permits subleasing. Landlords must insert an anti-assignment and anti-subleasing clause to maintain complete control over the business entities occupying the premises.

Maintenance and Improvements

Who is responsible for the air conditioning systems, roofing leaks, or plumbing overhauls? The lease must delineate "ordinary wear and tear" (tenant duty) from "necessary structural repairs" (landlord duty). See our Commercial Maintenance Obligations guide for standard divisions of responsibility.

Penalties for Breach (Liquidated Damages)

To avoid lengthy court battles identifying exact monetary damages, landlords utilize liquidated damages clauses. The lease should state that upon any material breach (unpaid rent, illegal use), the landlord is entitled to keep the security deposit and perhaps an established financial penalty without having to prove the specific damages in court, provided it isn't unconscionable.

Reinstatement (Make Good Clause)

A standard clause requiring the tenant to "reinstate" or "make good" the premises at the end of the term. The tenant must demolish their custom fit-outs, partitions, and signage, returning the unit in its original condition (ordinary wear and tear accepted) before the security deposit is refunded.

See our Commercial Eviction Process guide to understand how contract breaches are ultimately enforced in the local courts.

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Stay Compliant with Landager

Commercial leases dictate the financial success of your building, yet managing paper trails across 5-year contracts is arduous. Landager helps property managers oversee complex contract details, storing critical documents securely and tracking multi-tiered payment structures (Base Rent + Escalation + CUSA + VAT) effortlessly.

Back to Philippines Landlord-Tenant Laws Overview.