Understanding Property Maintenance Fees When Renting Commercial Space In The Philippines

Commercial leases in the Philippines often look straightforward on the surface — a monthly rent, a security deposit, maybe a mention of association dues. But the real cost of occupying a space goes well beyond the base figure, and the line between what the landlord covers and what lands on the tenant is one of the most frequently misunderstood parts of any lease agreement.

For anyone renting commercial space in the Philippines — whether for a restaurant, office, retail shop, or coworking hub — understanding who pays for what, and how those costs are structured, can mean the difference between a predictable monthly expense and a recurring surprise. The Civil Code provides a default framework, but modern commercial leases routinely override it.

How Maintenance Fees Are Structured in Commercial Leases

The key distinction is between base building elements — exterior walls, structural beams, concrete slabs, and the roof — which the landlord maintains, and everything inside the four walls of your unit, which typically falls to you. That division is not automatic; it’s written into the lease, and the default rules under the Civil Code can be shifted almost entirely onto the tenant through a well-drafted contract.

What the Civil Code Says vs. What Leases Actually Do

Under Article 1654(2) of the Civil Code, the lessor (landlord) is obliged to make all necessary repairs to keep the property suitable for its intended use. Article 1657(2) requires the lessee (tenant) to use the property as a diligent father of a family — essentially, not to cause damage through neglect or misuse. That sounds like the landlord carries the heavy end of maintenance, and in a residential lease, that’s largely true.

Commercial leases are different. Philippine law grants commercial parties broad freedom to negotiate terms, and most modern contracts deliberately shift interior upkeep, fixture replacement, and even structural repairs onto the tenant. There are no statutory caps on rent increases, security deposits, or advance rent for commercial spaces, unlike residential units covered by the Rent Control Act. This means the lease agreement itself is the single most important document governing who pays for what.

One common scenario that catches new tenants off guard involves HVAC. In many stand-alone buildings or mall units, the tenant must purchase and install the air conditioning system at their own cost. If the system breaks down five years into a seven-year lease, replacement is also the tenant’s expense. That can run into hundreds of thousands of pesos — far more than the monthly CUSA fee suggests.

Hidden Costs, Fine Print, and Common Surprises

VAT on Everything

Value Added Tax at 12% applies to base rent, CUSA fees, and most service charges. A space quoted at PHP 100,000 per month effectively costs PHP 112,000 before utilities. Some tenants negotiate a “VAT-inclusive” rate, but the default is that VAT stacks on top.

Utilities Can Exceed Rent in Some Businesses

Electricity, water, and internet can add 30 to 50 percent on top of base rent, according to industry estimates. For businesses with high power consumption — restaurants, bakeries, data centers, or coworking spaces with heavy air conditioning — utility costs can rival or surpass the rent itself. The lease may also require the tenant to pay for a separate meter installation if the unit isn’t individually metered.

Make-Good Clauses

Many commercial leases require the tenant to restore the unit to its original condition at the end of the lease — demolishing built-in shelving, removing partitions, patching floors, and repainting walls. This “make-good” obligation is often a condition for refunding the security deposit. Tenants who spent heavily on fit-outs can face a second large expense when moving out.

Improvements That Become the Landlord’s Property

Under Article 1678 of the Civil Code, if a tenant makes useful improvements in good faith, the landlord must pay one-half of their value at lease termination, or the tenant may remove them even if it damages the property. However, modern commercial leases almost always override this by stating that all permanent improvements become the landlord’s property without reimbursement. Tenants should assume that anything bolted to the floor or built into the walls stays behind.

What to Do Before Signing a Commercial Lease

Map Every Maintenance Obligation in the Lease

Do not rely on verbal promises. The lease should explicitly list which repairs are the landlord’s responsibility and which are the tenant’s. Look for language around HVAC, plumbing, electrical systems, roofing, and structural elements. If the lease is silent on a particular item, the Civil Code default applies — but in practice, silence often leads to disputes.

• 1
  Request a breakdown of all recurring charges

  Ask for the CUSA fee rate per square meter, how it’s calculated, and whether it has historically increased year over year. Get the same for parking fees, if applicable.

• 2
  Clarify the fit-out and make-good terms

  Who pays for the initial build-out? What happens to improvements at lease end? Is there a make-good clause, and what standard must the unit meet?

• 3
  Confirm utility metering and billing

  Is the unit sub-metered or on a building-wide meter? Are utilities billed at government rates or with a building surcharge? Get this in writing.

• 4
  Document the unit’s condition at move-in

  Take dated photos and a video walkthrough. Have both parties sign a condition report. This is the single best protection against disputed security deposit deductions.

Negotiate the Big-Ticket Items

While base rent gets the most attention, the items that cost the most over a lease term are often negotiable: a cap on annual CUSA increases, a landlord contribution to HVAC replacement, or a waiver of the make-good clause for certain improvements. Landlords may be more flexible on these than on the monthly rent, especially in a market with high vacancy.

Know the Dispute Resolution Path

Maintenance disputes are civil matters. Under Republic Act No. 11576, claims not exceeding PHP 2,000,000 fall under the exclusive original jurisdiction of Metropolitan Trial Courts (MeTC) or Municipal Trial Courts (MTC). Claims involving title or possession of real property exceeding PHP 400,000 go to Regional Trial Courts (RTC). Most lease disputes start with barangay conciliation, so factor that timeline into any decision to withhold rent or demand repairs.

Frequently Asked Questions

Making Sense of the Full Cost

The monthly rent is only one piece of the picture. CUSA fees, VAT, utilities, fit-out costs, HVAC replacement, and make-good obligations can collectively double or triple the effective cost of occupying a commercial space. The lease agreement is the only document that determines who bears each of these costs, and the default rules of the Civil Code are routinely overridden by contract. Before signing, get every charge in writing, document the unit’s condition, and understand what happens to your improvements when you leave. A few hours of due diligence upfront can prevent years of unexpected expenses.

If this was useful, you might also want to read our breakdown of commercial vs. residential leasing in the Philippines.

Sources

Renting Commercial Space for Coworking in the Philippines — A practical guide for coworking operators navigating lease terms, fit-out costs, and shared utility arrangements.

Navigating Energy Leases in the Philippines — Explains how utility-heavy businesses can structure leases to manage electricity and HVAC costs.

Civil Code of the Philippines (Republic Act No. 386). Official Gazette, 1949.

Philippines National Commercial Maintenance Obligations. Landager.

Office Rental in Manila: What You Need to Know. Move and Stay.

Who Pays for Repairs in a Rented Unit? Tenant and Landlord Obligations in the Philippines. Respicio & Co.