Unlike residential rentals, which are heavily regulated by the Rent Control Act of 2009, commercial tenancies in the Philippines are primarily governed by the Civil Code of the Philippines. The overriding principle for commercial leases is the "freedom to stipulate," meaning the signed lease agreement acts as the governing law between the landlord and the commercial tenant.

This guide explores the foundational rules surrounding commercial leases in the Philippines.

1. Freedom of Contract

Under Philippine Civil Law, commercial landlords and tenants are free to negotiate virtually all terms of the lease, provided they do not violate law, morals, public policy, or good customs.

There are no statutory caps on commercial rent increases, and no maximum limits on commercial security deposits or advance rent.

See our Commercial Lease RequirementsIl-preview mhux disponibbli guide for the essential clauses you must secure in writing.

2. Commercial Rent Increases

Because commercial properties are exempt from the Rent Control Act (RA 9653), rent escalation clauses are strictly a matter of contractual agreement. Landlords can impose any percentage of annual increase, provided the lessee agrees to the terms during the contract signing.

A standard commercial lease in the Philippines typically includes an escalation clause of 5% to 10% per annum, but this is entirely negotiable.

See our Commercial Rent IncreasesIl-preview mhux disponibbli guide for drafting enforceable escalation clauses.

3. Commercial Security Deposits

Without statutory boundaries, commercial security deposits are entirely dictated by the risk profile of the tenant and the landlord's demands. It is common for commercial landlords to demand:

• Security Deposit: 3 to 6 months' rent (sometimes more for high-risk build-outs).
• Advance Rent: 3 to 12 months' advance rent.

The conditions for refunding or forfeiting these deposits—such as covering unpaid common use service areas (CUSA) fees, damages, or unpaid rent—must be explicitly detailed in the lease contract.

See our Commercial Security DepositsIl-preview mhux disponibbli guide to understand withholding practices.

4. Maintenance and Build-Outs

The Civil Code requires the lessor to deliver the property in a state fit for its intended use. However, commercial contracts frequently shift the burden of maintaining the interior space entirely to the lessee.

• "As-Is, Where-Is": Many commercial spaces are rented bare (shell condition). The tenant is responsible for the build-out, subject to the landlord's approval of the architectural plans.
• Ordinary vs. Extraordinary: Unless stipulated otherwise, the Civil Code expects the tenant to handle ordinary repairs, while the landlord handles necessary/extraordinary repairs (e.g., structural foundation fixes).

See our Commercial Maintenance ObligationsIl-preview mhux disponibbli guide for allocating repair duties.

5. Commercial Evictions

Commercial evictions follow the same procedural framework as residential evictions: the landlord must file an Unlawful Detainer suit.

Despite the commercial nature of the contract, Philippine courts strictly prohibit landlords from using extrajudicial "self-help" measures to forcibly eject a commercial tenant. Padlocking a store, cutting power, or physically blocking employees without a court order can result in civil damages and criminal liability for grave coercion.

See our Commercial Eviction ProcessIl-preview mhux disponibbli guide for the steps to secure a judicial eviction.

Stay Compliant with Landager

Managing complex commercial portfolios with varying escalation clauses and massive deposits requires precision. Landager helps commercial landlords track diverse CUSA fees, automate escalating rent schedules based on lease terms, and securely log tenant communications to streamline property oversight in the Philippines.