This article is a practical guide for business tenants and landlords in the Philippines. It explains how the Civil Code and standard commercial leasing practice allocate rights and obligations when “permanent repairs” or alterations are needed in a leased commercial space. It is for general information only and is not legal advice.

1) Big picture

In Philippine commercial leasing, the landlord (lessor) must deliver and maintain the premises in a condition fit for the agreed commercial use and make necessary repairs within a reasonable time. The tenant (lessee) must pay rent, use the property with due care, and ordinarily cannot make permanent repairs or alterations without the landlord’s consent—unless the work is urgently needed to preserve the premises or comply with law. Cost allocation depends on the type of work (necessary vs. useful vs. luxurious), urgency, and what the lease says.

2) Sources of rules

Civil Code of the Philippines (Lease of Things) – default (gap-filling) rules on delivery, maintenance, repairs, improvements, remedies, and end-of-lease outcomes.
Parties’ Lease Contract – almost always contains detailed provisions that supersede defaults (except mandatory laws).
Special laws and regulations – Philippine Building Code, Fire Code, local ordinances, accessibility rules, PEZA/BCDA zone rules (if applicable), and condominium/estate house rules.
Insurance policies – property, machinery breakdown, business interruption; and condominium/estate master insurance.
Permitting authorities – LGU (building permit, occupancy), BFP (fire safety), DOLE (workplace safety for fit-outs), and utility providers.

3) What counts as “permanent repairs”?

Commercial practice distinguishes among:

Necessary repairs – required to keep the premises tenantable/safe or to prevent deterioration (e.g., structural reinforcement, roof leak remediation, fire-sprinkler repair to code). These are typically the landlord’s responsibility and benefit the property as a whole.
Useful improvements / permanent alterations – not strictly necessary for habitability but increase utility or efficiency for the tenant’s operations (e.g., demising walls, MEP upgrades for data centers, grease traps for restaurants). Usually tenant-initiated; consent and cost rules depend on the lease.
Luxurious/voluntary additions – aesthetic or brand-specific features with no functional necessity (e.g., feature staircases, showpiece façades). Typically at tenant’s cost, removable at end if removal won’t damage the building.

In contracts, all of the above may be grouped under “Alterations,” “Fit-out Works,” or “Capital Improvements,” each with different approval and cost-sharing rules.

4) Core legal duties and default rules (Civil Code baseline)

Landlord duties
- Deliver the premises fit for the intended use and do necessary repairs during the lease.
- Maintain tenant’s peaceful and adequate enjoyment of the premises.
- Bear structural/latent defects not attributable to tenant’s misuse.
Tenant rights (by default)
- Demand necessary repairs; if the landlord fails to act within a reasonable time, the tenant may in urgent situations undertake what is indispensable to preserve the premises and seek reimbursement or set-off against rent (subject to notice and documentation).
- Rent relief in severe cases – proportionate reduction or suspension may be available when the premises become partially or totally unfit due to causes attributable to the landlord or to major necessary repairs not timely done (commonly refined by the contract).
- Termination (rescission) – if the premises become unusable for the agreed purpose and the landlord does not cure within a reasonable period, the tenant may terminate without penalty (again, often detailed by the lease).
- Improvements at tenant’s initiative – for useful improvements, the landlord may choose to appropriate them on exit by paying a portion of the value, or the tenant may remove them if this can be done without damage and with restoration of the premises; no compensation for purely luxurious additions unless agreed.
- No default right to alter the building fabric – permanent structural works usually require prior written consent.

Your lease can—and typically will—modify how these default rules apply (e.g., strict pre-approval, detailed notice/cure periods, and waiver of certain Code remedies). Courts generally uphold negotiated commercial terms.

5) Consent: when the tenant can proceed, and how

Always check the lease first. Most commercial leases require:

Detailed plans (architectural/MEP), method statements, and specs.
Compliance confirmations (Building Code, Fire Code, accessibility, environmental).
Contractor credentials (licensed, insured; mall/estate-accredited if applicable).
Indemnity and safety commitments.
Reinstatement plan showing how the tenant will “make good” at lease end.

Typical exceptions allowing immediate action by the tenant (with post-facto notice/documentation):

Emergency works to prevent imminent danger or major damage (e.g., burst main, electrical hazard).
Government-mandated corrections with compliance deadlines (e.g., BFP directive).
Business-critical remedial works where the landlord has notice and unreasonably withholds or delays consent.

Even in emergencies, give prompt written notice, take photos/videos, keep invoices, and obtain as-built plans.

6) Who pays? Cost allocation frameworks

A. Necessary repairs (landlord-side by default)

Structural elements, waterproofing, base building MEP, common systems (sprinklers, risers, main switchgear), statutory upgrades imposed on the building.
If failure to repair substantially impairs tenant use, rent abatement or termination may be available.
Tenant may advance emergency costs to preserve the premises and claim reimbursement/set-off (document thoroughly).

B. Tenant-driven useful improvements

Generally tenant’s cost, unless the lease provides a landlord contribution (fit-out allowance) or rent credit.
On expiry: (i) remove and restore; or (ii) leave in place if landlord elects to appropriate (sometimes with compensation set by formula or appraisal).

C. Luxurious additions

Tenant’s cost; removal and restoration at tenant’s expense unless the landlord opts to keep them (usually without compensation).

D. Code compliance triggered by tenant’s use

If the tenant’s specific use (e.g., commercial kitchen, hazardous storage) triggers added compliance, tenant pays for those upgrades and their maintenance, even if “permanent.”

E. Insurance and force majeure

Casualty damage (fire, typhoon, earthquake): landlord typically insures base building; tenant insures fit-out, stock, and BI. Leases set repair timelines, rent abatement during restoration, and termination rights if the building is a total loss or repairs exceed a stated period.

7) Procedure tenants should follow for permanent repairs

Issue a written notice: identify defects, risks to operations/safety, and requested remedy; cite lease provisions.
Set a reasonable cure period tied to operational impact and safety.
Escalate per the lease (property manager → landlord’s asset manager → formal demand).
Document everything: engineer’s report, photos, logs, quotes.
Government compliance: secure or ensure landlord secures building permits, BFP clearances, as-built approvals.
Perform works (if authorized or in emergencies): use licensed contractors; observe site safety; coordinate work hours and access with building admin.
Accounting: keep itemized invoices; isolate costs that are (a) base-building vs. (b) tenant improvements; claim reimbursement or rent set-off only to the extent allowed by the lease/Civil Code.
Turnover: obtain as-built drawings, warranties, commissioning and test certificates; lodge them with landlord/building admin.

8) Remedies if the landlord does not act

Specific performance – compel landlord to do necessary repairs.
Self-help (limited) – for urgent, indispensable works to preserve the premises after notice; later seek reimbursement/set-off.
Rent relief – reduction or suspension proportionate to loss of usable area or downtime, if provided by law or contract.
Termination – if premises are unusable for the agreed purpose and landlord fails to remedy within a reasonable period.
Damages – for losses caused by landlord’s breach or negligence (subject to proof and contractual limitations).
Injunctive relief – to prevent unlawful interference with works or operations.

Many commercial leases require notice and cure before exercising these remedies. Follow them strictly to preserve rights.

9) End-of-lease: who owns the improvements? who removes what?

Fixtures and base-building upgrades that cannot be removed without substantial damage usually become part of the property; no removal, and compensation depends on the lease or default Civil Code options for useful improvements.
Tenant trade fixtures/equipment (machinery, gondolas, server racks) generally remain tenant’s property and are removable if removal does not materially injure the premises and the tenant restores the space.
Most leases impose “make-good” obligations: remove tenant improvements identified for removal, patch/paint, restore to base condition; surrender keys/access cards; settle utilities; hand over as-built and permits.

10) Practical drafting tips (for tenants)

Define “Base Building” vs. “Tenant Improvements.” Attach base building specs and drawings.
Repairs matrix: schedule that allocates responsibility (structure, façade, waterproofing, MEP, life safety, vertical transport, plumbing, drainage, grease interceptors, exhaust, chillers/FCUs).
Alterations clause: clear thresholds (e.g., structural, egress, fire systems) that require landlord approval; specify approval timeframes and deemed-approval mechanics.
Emergency works: carve-out allowing immediate action to preserve safety/property with prompt notice.
Landlord contribution: fit-out allowance or rent credit; milestones; liquidated damages for late delivery of a “warranted condition.”
Casualty and rent abatement: objective triggers, repair deadlines, step-down rent schedule, termination rights if repair exceeds X days.
Code-triggered upgrades: who pays when regulations change mid-lease.
Make-good options: (i) remove and restore; or (ii) pay agreed cash-settled make-good.
Dispute resolution: escalation, expert determination for technical disputes, arbitration venue.

11) Common scenarios and how they are handled

Leaky roof over retail space

Landlord’s necessary repair. Tenant gives notice; if water ingress impairs trading, seek proportionate rent abatement per lease until rectified. Emergency protection (tarping) can be tenant’s temporary self-help with reimbursement claim.

Restaurant installs grease trap and exhaust

Tenant’s permanent improvement to suit use; requires permits and landlord approval. Tenant funds, maintains, and removes or leaves in place per exit rules.

Fire sprinkler deficiencies flagged by BFP

If system is a building common system, landlord repairs at cost; if tenant altered head locations during fit-out, tenant corrects at own cost. Coordinate for re-inspection.

Structural column reinforcement to support tenant’s heavy machinery

If reinforcement is beyond base building design due to tenant’s special loads, cost is usually tenant’s; landlord approval and structural sign-off are mandatory.

Earthquake damages

Casualty: landlord repairs structure; tenant repairs its fit-out/equipment; rent abatement and termination per casualty clause and insurance.

12) Compliance and permitting snapshot

Before works: building permit (LGU), fire safety evaluation (BFP), estate/condo admin approval, contractor accreditation, safety plan (DOLE OSH).
During works: inspections, change order approvals, method statements for hot works, shutdown permits for sprinklers/electrical.
After works: occupancy/clearance updates, fire safety inspection certificate (FSIC), as-builts, test & commissioning records, warranties.

Failure to follow permitting can result in stop-work orders, fines, and potential lease default.

13) Evidence & accounting (to preserve reimbursement or rent relief)

Written notices and landlord responses.
Engineer or third-party consultant reports linking the defect to habitability/safety.
Photos/video time-stamped before, during, after works.
Distinct cost codes for base building repairs vs tenant improvements.
Proof of payment; VAT invoices; official receipts.
As-built plans and completion certificates.
Records of downtime/trading loss (for BI insurance or rent abatement computations).

14) Negotiation levers for tenants

Rent commencement conditioned on delivery of premises meeting specified criteria (e.g., watertight, power capacity, chilled water availability).
Step-in right for critical base building failures after written notice and a short cure period, with self-help and set-off capped to a defined amount.
Most-favored maintenance standard in multi-tenant assets (e.g., “no worse than comparable buildings in the district”).
Performance SLAs for landlords and building managers (response and rectification times).
Fit-out allowance or “turnkey” delivery for permanent works that add long-term value (e.g., additional risers).
Cap-and-basket limits on tenant’s make-good.

15) Quick checklist for tenants contemplating permanent repairs

Identify if the work is necessary, useful, or luxurious.
Read the lease: approvals, timelines, responsibility matrix, remedies.
Send written notice and request approval (or emergency notice).
Confirm permits and insurance.
Keep detailed records (reports, photos, invoices).
Coordinate with building admin for access and shutdowns.
Plan make-good and end-of-lease treatment now.
Reserve rights (reimbursement, rent relief) explicitly in your correspondence.

16) Model clause language (for reference)

Landlord Repairs. Lessor shall, at its sole cost, promptly perform all repairs to the Structure and Building Systems necessary to maintain the Premises in a condition fit for the Permitted Use and compliant with applicable Laws. If Lessor fails to commence such repairs within [X] days after Lessee’s written notice, Lessee may undertake emergency measures strictly necessary to preserve persons or property and recover the reasonable costs as a set-off against Rent, not exceeding [cap], provided Lessee furnishes supporting invoices and as-built documentation.

Tenant Alterations. Lessee shall not make any Alterations of a structural nature or affecting Building Systems without Lessor’s prior written consent, not to be unreasonably withheld, conditioned, or delayed. Lessee’s submission shall include stamped plans, method statements, and contractor details. Lessor shall respond within [X] business days; failure to respond shall constitute deemed approval.

Useful Improvements; End of Term. On expiry, Lessor may elect to retain any Useful Improvements by paying [agreed formula or fraction of appraised value]; otherwise, Lessee shall remove such improvements and restore the Premises to the agreed Yield-Up Condition, fair wear and tear excepted.

Casualty and Abatement. If the Premises are rendered wholly or partially unusable due to casualty or necessary repairs to Building Systems, Rent shall abate proportionately from the date of impact until the earlier of (i) restoration of substantial use or (ii) termination if restoration is not reasonably achievable within [X] days.

17) Frequently asked questions

Can I suspend rent while waiting for the landlord’s repairs? Possibly, where the lease or default law provides for abatement due to loss of use from necessary repairs or defects not caused by you. Follow notice and documentation requirements.

Can I just fix it and deduct from rent? Only for urgent, indispensable repairs to preserve the premises after giving the landlord notice (or if notice is impossible in an emergency). Otherwise, get written consent.

Do I get paid for improvements I leave behind? Only if the lease provides compensation or the landlord elects to appropriate useful improvements. For brand-specific or luxurious items, expect no compensation.

Who handles permits? Usually the party performing the works, but base building permits often require the landlord’s participation as building owner. Coordinate with the building admin and LGU/BFP.

What if the building fails new regulations mid-lease? Base-building compliance is typically landlord’s burden; use-specific upgrades are the tenant’s. Your lease should allocate mid-lease code changes.

18) Bottom line

Landlords carry the duty to do necessary repairs and keep the premises fit.
Tenants may do permanent works with consent, and may act without consent only for urgent preservation and legal compliance—with notice and proof.
The lease text governs: negotiate clear repair/alteration rules, emergency carve-outs, rent-abatement mechanics, casualty timelines, and end-of-term make-good.

If you’d like, share your lease clauses on repairs/alterations and I can annotate them line-by-line to flag risks and add tenant-friendly language.