Executive summary

In Philippine commercial leasing, design responsibility for tenant renovations (“fit-outs”) is primarily on the tenant, subject to the lessor’s prior written approval, building rules, and full regulatory compliance (Building/Fire/Accessibility codes). The lessor typically retains responsibility for the base building (structure, common areas, main utilities, and statutory upgrades not triggered by tenant works). Contracts often split obligations through: (1) scope boundaries (base-building vs fit-out), (2) design and permit signatories, (3) review/approval rights, (4) indemnities and insurance, (5) make-good and restoration, and (6) defects and warranty regimes.

1) Legal backbone

A. Civil Code rules on lease (selected principles)

Delivery fit for agreed use: The lessor must deliver premises in a condition suitable for the stipulated commercial use and keep it so, making extraordinary/structural repairs; the lessee handles ordinary repairs.
Alterations require consent: The lessee may not introduce changes that alter the form or substance of the property without landlord consent. Unauthorized alterations can justify rescission or damages.
Liability for deterioration: The lessee is liable for deterioration caused by its fault or by persons it allows on the premises.
Peaceful and adequate use: The lessor must ensure the lessee’s peaceful use; the lessee must use the property as a diligent proprietor consistent with agreed purpose.

B. Public law overlay (who “owns” compliance)

Regardless of private allocation, public compliance is non-delegable:

National Building Code (P.D. 1096) and IRR (building permits, ancillary permits, occupancy certificates).
Fire Code (R.A. 9514) (Fire Safety Evaluation Clearance; Fire Safety Inspection Certificate).
Accessibility Law (B.P. 344) and its IRR (barrier-free design).
Professional regulations (licensed architects, civil/structural, electrical, mechanical, sanitary/plumbing, and electronics engineers as signatories).
Sanitation/health codes, Energy and Green Building ordinances (LGU-dependent), and signage ordinances.
OSH Law (R.A. 11058) and DOLE issuances (Construction Safety and Health Program, DOLE DO 13 for construction sites).

Bottom line: The tenant’s design must be sealed by qualified professionals and pass LGU and BFP approvals; the landlord’s approval never substitutes for government permits.

2) Base building vs. tenant fit-out—who does what?

A. Typical “base building” responsibilities (Lessor)

Structure: foundations, columns, beams, slabs; seismic/progressive collapse upgrades; fire-rated enclosures of shafts and structural fireproofing.
Building envelope: façade, roof waterproofing.
Core/common areas: lobbies, service corridors, toilets (unless demised), stairwells, fire exits.
Primary MEPF risers and infrastructure: main electrical switchgear, emergency power plant, main water supply, fire protection mains, chilled water or condenser water mains, main exhaust/stack, telco risers.
Life safety systems: central fire alarm control panel, sprinklers/standpipes to the demise line, smoke management for common areas.
Statutory upgrades not triggered by tenant works (e.g., government-mandated building-wide retrofits).

B. Typical “tenant fit-out” responsibilities (Lessee)

Interior architectural layout: partitions, ceilings, finishes, storefronts.
Distribution systems within the premises: electrical panels and circuits; lighting; IT/ELV; HVAC terminals (FCUs, DX units) and ducts; secondary plumbing; internal sprinklers/detectors; kitchen/grease lines; lab exhaust; acoustic treatments.
Specialty systems: security/CCTV, access control, POS, UPS, cold rooms, labs, kitchens, showrooms.
Design deliverables and permits: full architectural and engineering (A&E) packages; building permit and ancillary permits (architectural, structural, electrical, mechanical, sanitary/plumbing, electronics); FSEC/FSIC; As-Built drawings; Occupancy Permit for the unit.
Interface with base building: tapping points, capacities, and no-harm obligations to existing systems.

3) Design responsibility and approvals

A. “Design responsibility” defined

The party who prepares/seals the design and coordinates code compliance bears primary design responsibility. In commercial leases, that is usually the tenant’s design team (Architect-of-Record and Engineers-of-Record), who must:

Verify load/clearance limits and base-building capacities furnished by the landlord.
Coordinate interfaces: fire alarm loops, sprinkler head counts and K-factors, available electrical load, HVAC tonnage/static pressure, water pressure, floor loading, penetrations.
Produce Code Matrix and Accessibility compliance notes.

B. Lessor review rights (not a transfer of liability)

Landlords typically reserve review and approval rights to protect the building. Contracts should clarify that:

Approval ≠ assumption of design liability.
Lessor review is limited to conformance with base-building standards, structural integrity, and legal/insurance requirements.
The lessee and its professionals remain liable for code compliance and design adequacy within the premises.

C. Third-party peer review

For complex uses (data centers, kitchens with heavy exhaust, assembly loads), leases may require independent peer review (tenant-paid) and commissioning (TAB for HVAC, IR testing for electrical, sprinkler/FA testing with BFP witnessing).

4) Permits and sequence (commercial fit-out)

Landlord consent to concept/schematic (test-fit).
Design development and A&E signoff (with code matrix).
Base-building coordination (capacity letters, tapping points).
LGU Building Permit + Ancillary Permits; BFP Fire Safety Evaluation Clearance.
Construction Safety & Health Program (CSHP) approval with DOLE; site safety officer mobilized.
Fit-out execution; inspections; coordination with building admin.
Testing & commissioning; as-builts + O&M manuals.
BFP inspection → FSIC; LGU Occupancy Permit (or Certificate of Completion/Occupancy for the unit).
Turn-over to operations; start of rent if tied to occupancy.

5) Risk allocation: who bears which risks?

Risk	Default Market Allocation	Notes
Code-compliance of tenant works	Lessee	Through design professional warranties; indemnity to lessor.
Structural harm from penetrations/loads	Lessee (if caused by works)	Pre-approval + method statements; landlord may require structural check.
Fire/life safety impairment	Lessee	Hot-works permits; isolation procedures; re-certification.
Base-building capacity shortfall	Lessor (if promises made)	Otherwise lessee bears upgrades beyond allowances.
Design errors/omissions	Lessee’s designers/contractors	PI insurance; DLP/latent defect liability.
Regulatory delays	Lessee	Unless caused by lessor’s approval or building documentation delays.
Existing hazardous materials	Lessor	Disclosure and remediation if in base building.
Fit-out damage to common areas	Lessee/Contractor	Repair at cost; security deposit drawdown.

6) Money terms that shape design decisions

Tenant Improvement Allowance (TIA): Lump sum or per-sqm subsidy; usually reimbursable against approved design/permit/works costs; often excludes movable furniture and signage unless agreed.
Fit-out period / rent commencement: Rent often starts upon earlier of (a) statutory occupancy/operation, (b) lapse of x days from permit issuance/turnover. Extensions may apply for force majeure or landlord-caused delays.
Utilities and demand charges: Caps for electrical kVA, chilled water RT, make-up air volume; over-runs at tenant’s cost.
Change management: Variations must maintain code compliance; landlord may charge review fees.

7) Construction and safety responsibilities

Contractor licensing (PCAB) for works over regulatory thresholds.
OSH compliance: safety officer, toolbox talks, PPE, fall protection, confined space permits, lock-out/tag-out, hot-works.
Work permits from building admin (delivery, noisy works windows, night work).
Insurance: Contractor’s All-Risk, Third-Party Liability, Employer’s Liability; Professional Indemnity for designers; Property/Betterments insurance post-turnover.

8) IP rights and deliverables

Design ownership: Tenant commonly owns the custom design, granting the landlord a limited license to retain and use as-builts for operation, safety, and future coordination.
As-built drawings (editable CAD/BIM) and O&M manuals must be turned over as a condition to occupancy and later surrender.

9) Make-good / reinstatement at lease end

Market approaches:
- “White box” return (remove partitions, non-standard finishes; cap and make safe services).
- “As is” acceptance (landlord keeps improvements).
- Hybrid (landlord can elect, within a notice window, whether tenant should remove or leave specified improvements).
Hazardous removal (e.g., grease traps, fuel tanks, heavy-duty exhaust) to tenant’s account unless landlord opts to retain.
Netting against security deposit for unperformed obligations.

10) Family of clauses you’ll want in your lease (model language)

A. Design responsibility and compliance

Tenant Design & Compliance. Lessee shall, at its sole cost, design and construct all interior improvements within the Premises (“Fit-Out Works”) in accordance with (i) the National Building Code and applicable IRRs; (ii) the Fire Code and B.P. 344; (iii) LGU ordinances; (iv) Lessor’s Building Standards; and (v) good engineering practice. All plans shall be prepared and sealed by duly licensed professionals. Lessee is solely responsible for the sufficiency, safety, and code compliance of the Fit-Out Works.

B. Lessor review (approval not a waiver)

Lessor Review. Plans and specifications are subject to Lessor’s prior written approval, which may be withheld only for non-conformity with Building Standards, structural or life-safety concerns, or adverse impact on base-building systems. Lessor’s review or approval shall not constitute a warranty of code compliance nor a waiver of Lessee’s obligations.

C. Interfaces and no-harm

Base-Building Interfaces. Lessee shall connect only at designated tapping points and shall not impair structural members or building systems. Penetrations require method statements and Lessor approval. Any damage or impairment shall be promptly rectified at Lessee’s cost.

D. Permits and occupancy

Permits & Turnover. Lessee shall obtain all permits (including FSEC/FSIC) and shall not open the Premises to the public until issuance of the required occupancy approvals. Copies of permits, test certificates, and As-Built drawings shall be furnished to Lessor.

E. Indemnity and insurance

Indemnity; Insurance. Lessee shall indemnify, defend, and hold harmless Lessor from claims arising out of the Fit-Out Works. Throughout construction, Lessee (or its contractor) shall maintain Contractor’s All-Risk and third-party liability insurance; design consultants shall maintain professional indemnity.

F. Make-good

Surrender & Make-Good. Upon lease expiry or termination, Lessee shall (i) remove trade fixtures and non-standard improvements if required by Lessor’s written election issued not later than ___ days before expiry; (ii) cap and make safe services; (iii) repair damage from removal; and (iv) deliver As-Built drawings reflecting final removals. Failure may be remedied by Lessor at Lessee’s cost, chargeable against the security deposit.

G. Changes in law / landlord upgrades

Code Changes. If after plan approval a change in law requires modification of the Fit-Out Works within the Premises, Lessee shall implement such changes at Lessee’s cost. Building-wide upgrades not triggered by Lessee’s works shall be undertaken by Lessor at Lessor’s cost.

H. Delays and rent commencement

Fit-Out Period & Rent Commencement. A rent-free fit-out period of ___ days from turnover (or from building permit issuance, whichever is later) is granted. Rent commences upon the earlier of (a) issuance of occupancy approvals or opening for business, or (b) lapse of the fit-out period, subject to extension for force majeure or Lessor-caused delay.

11) Special settings and wrinkles

Shopping malls & estates (PEZA/IT parks): Expect Landlord/Administrator Technical Manuals, standardized review gates, and mall-wide operating hour constraints. Food tenants face stricter grease, exhaust, odor, and waste rules and may need separate environmental permits.
Multi-tenant buildings: Coordination for noise, vibration, after-hours works, and fire alarm impairments (with fire watch).
Heavy uses (labs, clinics, gyms, data rooms): Floor loading checks, vibration/acoustic isolation, clean zones, special gases, enhanced fire rating.
Signage and storefronts: Separate sign permit; landlord design guidelines (materials, illumination, size).
Green building & energy metering: Sub-metering for tenant utilities; landlord may require LEED/BERDE-aligned measures within the premises.

12) Practical checklists

A. Tenant design & build checklist

☐ Letter of intent stating use and load profiles.
☐ Test-fit approved by landlord.
☐ Confirm base-building capacities (kVA/RT/pressure/CFM/floor loads).
☐ Engage licensed Architect-of-Record and Engineers-of-Record; define BIM/CAD deliverables.
☐ Prepare code matrix (NBC, Fire Code, BP 344).
☐ Secure Building Permit + ancillary permits; FSEC.
☐ DOLE CSHP approval; appoint Safety Officer.
☐ Method statements for penetrations/hot works/energization.
☐ Pre-function testing: insulation, megger, TAB, sprinkler hydro; integrated fire alarm test with BFP witness.
☐ As-Builts and O&M manuals; occupancy/FSIC.

B. Landlord review checklist

☐ Confirm protection of structure and fire compartmentation.
☐ Verify tapping points, meter locations, isolation valves/dampers.
☐ Ensure smoke control strategy and sprinkler spacing remain compliant.
☐ Check acoustics/vibration and odor control.
☐ Ensure access for maintenance (clearances, panels, equipment weights/rigging).
☐ Coordinate emergency power and shutdown procedures.

13) Disputes and remedies

Unauthorized works: Landlord may order stop-work, require reinstatement, and charge liquidated damages for code or rule breaches.
Defects: Tenant’s contractors typically provide a Defects Liability Period (DLP); landlords may call performance bonds or retentions.
Regulatory violations: Fines, stop-work or closure orders from LGU/BFP/DOLE; parties seek indemnity per lease.

14) Key takeaways

The tenant usually owns the renovation design risk and must use licensed professionals, obtain permits, and ensure full compliance.
The landlord owns base-building conformance and can approve/reject fit-outs that compromise structure, safety, or building standards.
Approval never shifts liability: Lessee and its designers remain responsible for their design.
Well-drafted leases should include clear scope boundaries, permit/inspection protocols, indemnities & insurance, make-good, and change-of-law mechanisms.
For malls and specialized uses, expect stricter manuals, peer review, and commissioning before you can open.

This article provides general legal guidance for Philippine commercial leases. Always tailor clauses to the specific building, LGU, and use case, and engage licensed professionals for design, permitting, and safety compliance.