Commercial Lease Agreement (Philippines)
COMMERCIAL LEASE AGREEMENT
This Commercial Lease Agreement ("Agreement") is entered into as of [Lease Start Date], by and between:
LESSOR: [Lessor Name], represented by [Lessor Representative], with address at [Lessor Address] (hereinafter "Lessor");
LESSEE: [Lessee Name], represented by [Lessee Representative], with principal address at [Lessee Address], BIR TIN [Lessee T I N] (hereinafter "Lessee").
1. LEASED PREMISES AND PERMITTED USE
The Lessor hereby leases to the Lessee the commercial space located at [Unit Address], a [Space Type] with a gross leasable area of approximately [Floor Area] square meters (hereinafter "Leased Premises").
The Leased Premises shall be used exclusively for the following purpose: [Permitted Use]. The Lessee shall not use the Leased Premises for any other purpose without the prior written consent of the Lessor. Any change of use shall require a written amendment to this Agreement and compliance with applicable zoning regulations and barangay permits.
2. LEASE TERM
This Agreement shall commence on [Lease Start Date] and shall expire on [Lease End Date], unless earlier terminated in accordance with the provisions hereof. A fit-out/construction period of [Fit Out Period] shall be granted to the Lessee commencing from the date of turnover of the Leased Premises.
Upon expiration of this Agreement, the Lessee shall surrender the Leased Premises to the Lessor in good condition, with all original improvements restored and all fit-out works removed or retained as the Lessor shall direct, at the Lessee's cost.
3. RENT, VAT, AND ESCALATION
The monthly base rent for the Leased Premises is PHP ₱[Monthly Rent], exclusive of Value Added Tax (VAT). The applicable VAT rate is [Vat Rate] pursuant to the National Internal Revenue Code (RA 8424 as amended by TRAIN Law, RA 10963). The total monthly rent inclusive of VAT shall be computed accordingly.
The base rent shall escalate at the rate of [Escalation Rate] per annum, effective on each anniversary date of this Agreement. Rent is payable on or before the [Rent Due Day]th day of each calendar month. Withholding tax on rental income shall be deducted and remitted to the BIR by the Lessee as required by law.
Upon signing, the Lessee shall pay: (a) Security Deposit of PHP ₱[Security Deposit]; and (b) Advance Rent of PHP ₱[Advance Rent]. The security deposit shall be returned within thirty (30) to sixty (60) days after lease expiration less valid deductions. Fit-out allowance: [Fit Out Allowance].
4. FIT-OUT, ALTERATIONS, AND SIGNAGE
The Lessee shall obtain the Lessor's and building management's prior written approval before commencing any fit-out works, alterations, or installations in the Leased Premises. All approved fit-out plans must comply with the National Building Code (PD 1096), Fire Code (RA 9514), and applicable local government permits.
Operating hours: [Operating Hours]. Exterior signage allowed: [Signage Allowed]. Subletting or assignment allowed: [Subletting Allowed].
Additional terms: [Additional Terms].
5. TERMINATION
Either party may terminate this Agreement upon a material breach by the other party that remains uncured for thirty (30) days after written notice of the breach. The Lessor may terminate immediately for: non-payment of rent for two (2) consecutive months; use of the Leased Premises for illegal activities; or insolvency or bankruptcy of the Lessee.
Termination for cause requires written demand and compliance with Rule 70 of the Rules of Court for ejectment proceedings. Self-help eviction (changing locks, cutting utilities) is prohibited under Philippine law and may constitute grave coercion under Article 286 of the Revised Penal Code.
6. GENERAL PROVISIONS
This Agreement shall be governed by the Civil Code of the Philippines (RA 386). This Agreement is not subject to the Rent Control Act (RA 9653), which covers only residential units. Any dispute shall be settled by voluntary arbitration under RA 9285 (Alternative Dispute Resolution Act) or by the proper courts of competent jurisdiction.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date first written above.
Lessor / Authorized Representative
________________
Signature
Lessee / Authorized Representative
________________
Signature
Witness
________________
Signature
What Is a Commercial Lease Agreement (Philippines)?
A Commercial Lease Agreement in the Philippines creates a tenancy over the premises and records the agreed rent, deposit handling, permitted use and the grounds on which it may end.
Commercial leases in the Philippines typically cover office buildings in Makati CBD, Bonifacio Global City (BGC), Ortigas Center, and Cebu Business Park; retail spaces in shopping malls operated by Ayala Malls, SM Supermalls, Robinson's Malls, and other retail chains; warehouse and logistics facilities in special economic zones regulated by the Philippine Economic Zone Authority (PEZA) under RA 7916; and industrial lots in Clark Freeport Zone (CFZ) and Subic Bay Freeport Zone (SBFZ). PEZA-registered enterprises enjoy preferential tax treatment and their lease agreements must comply with PEZA lease regulations.
For commercial premises in the Philippines, the Bureau of Internal Revenue (BIR) requires lessors to issue official receipts for all rent payments (as required by BIR Revenue Regulations No. 18-2012), and to remit 5% expanded withholding tax (EWT) if the lessee is a company or professional required to withhold under BIR regulations. Lessors must have a BIR Certificate of Registration (Form 2303) to legally issue official receipts. Withholding tax certificates (BIR Form 2307) are issued by the lessee to the lessor and may be used by the lessor to offset income tax.
Value Added Tax (VAT) under NIRC Section 106 applies to lessors who are VAT-registered (annual gross receipts exceeding PHP 3,000,000). VAT-registered lessors charge 12% VAT on top of the rent, which the lessee may claim as input VAT for VAT-registered lessees. Lessors with gross receipts below the VAT threshold are subject to 3% percentage tax under NIRC Section 116.
The legal framework governing the Commercial Lease Agreement (Philippines) in Philippines draws on several key statutes and regulatory bodies. Under Philippine law, the Civil Code of the Philippines (Republic Act No. 386) governs contractual obligations. The Revised Corporation Code (Republic Act No. 11232) regulates corporate entities through the Securities and Exchange Commission (SEC). The Labor Code of the Philippines (Presidential Decree No. 442) and Department of Labor and Employment (DOLE) govern employment matters. The Data Privacy Act of 2012 (Republic Act No. 10173) and the National Privacy Commission (NPC) protect personal data. The Bureau of Internal Revenue (BIR) administers tax obligations under the National Internal Revenue Code. Parties executing a Commercial Lease Agreement (Philippines) in Philippines should confirm the document reflects current law, including any amendments enacted since the original drafting date. The Rent Control Act (RA 9653) sets the foundational requirements.
When Do You Need a Commercial Lease Agreement (Philippines)?
A Commercial Lease Agreement in the Philippines is required whenever business premises are rented for commercial, office, retail, or industrial purposes.
A Commercial Lease Agreement is needed when a startup, SME, or multinational corporation rents office space in a Makati CBD, BGC, or Ortigas Center building for its Philippine operations. Philippine companies registered with the SEC under the Revised Corporation Code (RA 11232) need a formal office lease for their registered principal office address.
A Commercial Lease Agreement is required when a retailer, food and beverage operator, or franchise licensee rents a mall space from operators like SM, Ayala, or Robinson's. Mall lease agreements are typically on the mall operator's standard form, but parties may negotiate key commercial terms.
A Commercial Lease Agreement is needed when a logistics company, manufacturer, or e-commerce retailer rents warehouse space in a logistics hub, PEZA special economic zone, or industrial park. Warehouse leases involve provisions on loading docks, power supply (megawatt hours), floor load capacity, and fire safety compliance with the Bureau of Fire Protection (BFP).
A Commercial Lease Agreement is required when a PEZA-registered export enterprise or IT-BPO company rents space in a PEZA-accredited IT Park or Ecozone Building. PEZA regulations require that the lease be for a space within a PEZA-registered building and that the lessee maintain its PEZA registration status.
A Commercial Lease Agreement is needed when a foreign corporation with a branch or representative office registered with the SEC leases commercial space in the Philippines. The lease, along with the SEC registration, is a required document for the company's Annual BIR registration renewal and Mayor's Permit application with the local government unit (LGU).
Parties in Philippines should prepare a Commercial Lease Agreement (Philippines) proactively rather than waiting for a dispute to arise. Courts interpret agreements based on the written terms rather than oral representations. Under Philippine law, the Civil Code of the Philippines (Republic Act No. 386) governs contractual obligations. The Revised Corporation Code (Republic Act No. 11232) regulates corporate entities through the Securities and Exchange Commission (SEC). The Labor Code of the Philippines (Presidential Decree No. 442) and Department of Labor and Employment (DOLE) govern employment matters. The Data Privacy Act of 2012 (Republic Act No. 10173) and the National Privacy Commission (NPC) protect personal data. The Bureau of Internal Revenue (BIR) administers tax obligations under the National Internal Revenue Code. Where the transaction involves regulated activities, prior approval from the relevant authority may be required before execution.
What to Include in Your Commercial Lease Agreement (Philippines)
A valid Commercial Lease Agreement in the Philippines must contain the following elements.
Parties: Full legal names, addresses, and authorized signatories of both lessor and lessee. For corporate parties, include the SEC registration number (Revised Corporation Code, RA 11232), registered office address, and a Board Resolution or Secretary's Certificate authorizing the signing officer. For foreign corporation lessees, include the SEC Certificate of Authority to Do Business in the Philippines.
Leased Premises: Precise description of the commercial premises — exact floor level, unit number, gross floor area (GFA) in square meters, and the building or complex name and address. For shell spaces, specify whether the premises are delivered bare or with basic fit-out. For PEZA-registered buildings, state the PEZA registration number.
Lease Term and Commencement: Specific start and end dates, plus provisions for fit-out period (typically 30-60 days free of base rent while the lessee constructs its fit-out). Options to renew — the number of renewal periods, the duration of each, and the mechanism for exercising the option (written notice period, typically 90-180 days before expiration) — must be expressly stated.
Rent and Escalation: Monthly base rent in PHP ₱ per square meter, total monthly rent, and escalation rate (typically 5%-10% per annum for Philippine commercial leases). Whether rent is quoted gross (all-in) or net (excluding CAM charges, VAT, and association dues) must be specified. VAT at 12% under NIRC Section 106 and 5% expanded withholding tax (EWT) obligations under BIR Revenue Regulations must be addressed.
Common Area Maintenance (CAM) Charges: Monthly CAM charges per square meter covering building maintenance, security, elevator, air-conditioning, and common area cleaning. CAM charges are a standard component of Philippine commercial leases and are typically billed separately from base rent.
Security Deposit: Amount (typically two to three months' base rent plus CAM), conditions for application (unpaid rent, restoration costs), and refund timeline. Unlike residential leases, there is no statutory limit on commercial security deposits.
Permitted Use and Exclusivity: The specific business use for which the premises may be used (restaurant, IT-BPO, retail pharmacy, etc.) and any exclusivity provisions — particularly in mall leases where the operator may grant territorial exclusivity to certain anchor tenants.
Fit-Out and Restoration: Requirements for fit-out plans approval by the building/mall management, building access during fit-out, and the lessee's obligation to restore the premises to original condition (or a specified condition) upon lease expiration at the lessee's cost.
Additional compliance elements for a Commercial Lease Agreement (Philippines) used in Philippines include: Under Philippine law, the Civil Code of the Philippines (Republic Act No. 386) governs contractual obligations. The Revised Corporation Code (Republic Act No. 11232) regulates corporate entities through the Securities and Exchange Commission (SEC). The Labor Code of the Philippines (Presidential Decree No. 442) and Department of Labor and Employment (DOLE) govern employment matters. The Data Privacy Act of 2012 (Republic Act No. 10173) and the National Privacy Commission (NPC) protect personal data. The Bureau of Internal Revenue (BIR) administers tax obligations under the National Internal Revenue Code. Forms-legal.com provides this template as a starting point for Philippines-compliant documentation.
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Reference this free template in an article, syllabus, or research note:
Forms Legal. (2026). Commercial Lease Agreement (Philippines) (Philippines) [Legal document template]. Forms Legal. https://forms-legal.com/philippines/real-estate/leases/commercial-lease-agreement-philippines
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author = {{Forms Legal}},
title = {Commercial Lease Agreement (Philippines) (Philippines)},
year = {2026},
howpublished = {\url{https://forms-legal.com/philippines/real-estate/leases/commercial-lease-agreement-philippines}},
note = {Free legal document template. Based on Rent Control Act (RA 9653)}
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Frequently Asked Questions
The Rent Control Act of 2009 (Republic Act No. 9653) does not apply to commercial leases in the Philippines. RA 9653 covers only residential units used for dwelling purposes — including houses, apartments, condominium units used as residences, boarding houses, and dormitories — with monthly rent at or below the prescribed thresholds (PHP 10,000 in Metro Manila and highly urbanized cities, PHP 5,000 elsewhere). Commercial leases — for offices, retail spaces, warehouses, factories, and other business premises — are entirely outside the scope of RA 9653 and are governed exclusively by the Civil Code of the Philippines (RA 386), Articles 1642-1688, supplemented by the parties' agreement. This means commercial landlords and tenants are free to negotiate all terms: rent amount and escalation rate, security deposit amount and conditions, lease duration, renewal options, eviction procedures, and permitted uses. The parties' written lease agreement is the primary governing document, and Philippine courts will enforce its terms unless contrary to law, morals, public order, or public policy.
Commercial rent payments in the Philippines are subject to 5% Expanded Withholding Tax (EWT) under BIR Revenue Regulations No. 2-98 as amended, when the lessee is a company, partnership, or self-employed professional required to withhold. The withholding is made by the lessee (tenant) at the time of rent payment — the lessee remits 5% of the gross rental to the Bureau of Internal Revenue (BIR) on behalf of the lessor. The lessee issues BIR Form 2307 (Certificate of Creditable Tax Withheld at Source) to the lessor quarterly, which the lessor uses to offset their income tax liability. In addition, if the lessor is a VAT-registered entity (annual gross receipts exceeding PHP 3,000,000 under NIRC Section 109 as amended by the TRAIN Law, RA 10963), the lessor charges 12% VAT on top of the base rent. VAT-registered lessees may claim the VAT paid as input tax. Lessors below the VAT threshold pay 3% percentage tax under NIRC Section 116. The lease agreement should clearly state whether rent amounts are VAT-exclusive (most common) or VAT-inclusive.
Common Area Maintenance (CAM) charges in a Philippine commercial lease are monthly fees charged by the building or mall management to lessees for the upkeep, operation, and maintenance of common areas — lobbies, corridors, restrooms, elevators, parking areas, fire safety systems, and shared building services. CAM charges in Philippine commercial leases are typically quoted per square meter per month and billed separately from base rent. They cover costs such as: building security guards (Philippine National Police-licensed private security agencies), centralized air-conditioning (HVAC) maintenance, cleaning services, elevator maintenance, property management fees, and contributions to the building's sinking fund for capital expenditures. In PEZA-accredited IT parks and ecozone buildings, CAM charges may also include the cost of PEZA-mandated common facilities and security. The total cost of leasing commercial space in the Philippines is therefore: base rent + CAM charges + 12% VAT (if lessor is VAT-registered) + other pass-through charges (real property tax share, insurance). Tenants must review CAM provisions carefully as they can add 15%-30% to the base rent cost.
A commercial lease in the Philippines can be for any duration agreed by the parties under the Civil Code (RA 386). Article 1682 of the Civil Code provides that if no term is agreed, a lease of urban land (which includes commercial property) is deemed to expire at the end of each month for monthly rentals, or at the end of each day for daily rentals. Most Philippine commercial leases are structured as fixed terms of 1-5 years, with renewal options. Long-term commercial leases of 10-25 years are used for anchor tenants in shopping malls and for industrial or logistics facilities. Under Article 1643 of the Civil Code, leases for a fixed period expire by operation of law when the period ends, without the need for demand. Leases exceeding one year must appear in a public instrument (notarized document) under Article 1358(2) of the Civil Code, and should be registered with the Register of Deeds under the Land Registration Authority (LRA, PD 1529) to bind third parties, including subsequent purchasers of the leased property.
A Commercial Lease Agreement (Philippines) does not legally require a lawyer in Philippines, and individuals and businesses may draft and execute the document independently. The Rent Control Act (RA 9653) does not mandate legal representation for the creation or signing of this type of document. However, seeking independent legal advice from a qualified Philippines lawyer is recommended for transactions involving substantial financial value, complex regulatory requirements, or cross-border elements where multiple legal jurisdictions may apply. A lawyer can verify that the document complies with all applicable statutory requirements, identify potential risks specific to the transaction, and confirm that the terms adequately protect the interests of all parties involved. The Supreme Court of the Philippines has jurisdiction over disputes arising from this type of document, and Securities and Exchange Commission (SEC Philippines) may impose additional compliance obligations depending on the nature of the underlying transaction. Professional legal review is particularly advisable where the document will be submitted to government agencies or used as evidence in legal proceedings.
This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change over time. Consult a qualified attorney for advice specific to your situation.Full disclaimer
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