Landlord Over‑Charging on Sub‑Metered Utilities in the Philippines
A comprehensive doctrinal, regulatory, and practical guide
1. Overview
In Philippine residential leasing it is common for the utility company (e.g., Meralco, Maynilad, Manila Water, or a municipal water district) to install one “mother” meter for an entire apartment building or subdivision block. Individual units are then fitted with sub‑meters whose readings are used by the landlord to allocate the bill. The arrangement is lawful so long as the landlord merely passes on the exact pro‑rated cost and does not derive any profit. When a landlord adds any mark‑up, hides the base bill, or manipulates the readings, the act is deemed over‑charging and is punishable under several statutes and regulations.
2. Governing Legal Framework
| Source of Law | Key Provisions Relevant to Sub‑Metering & Over‑Charging |
|---|---|
| Constitution, Art. XVI §9 | State duty to protect consumers. |
| Civil Code (Arts. 19–22, 1654, 1655, 1658) | Standards of good faith, prohibition against unjust enrichment, landlord’s obligation to maintain essential services, tenant’s right to reimbursement of excess charges. |
| Republic Act (RA) 9136 – EPIRA (2001) | Empowers the Energy Regulatory Commission (ERC) to regulate any “onward sale” of electricity, including by landlords; Sec. 46 penalizes violators up to ₱50 000 per day. |
| ERC Rules on Sub‑Metering – Resolution 12‑2009 (as amended) – ERC Advisory 2012‑03 – ERC Resolution 10‑2021 (Penalty Schedule) |
• Landlord may not charge a rate higher than that billed by the Distribution Utility (DU) for the same rate class. • Must show tenants a copy of the DU bill and the computation sheet. • Meter must be BPS‑approved and regularly calibrated. • No additional “administrative” or “service” fees unless expressly authorized by ERC. |
| Price Act (RA 7581) & DTI Consumer Act (RA 7394) | Declares profiteering on basic necessities—including residential electricity and water—an offense; DTI may impose fines/closure. |
| Rent Control Act (RA 9653, as periodically extended) | §7(d) bars landlords from “unreasonable*” increases on rent‑inclusive charges, incorporating utilities passed on to tenants. |
| MWSS Charter (RA 6234), LWUA Manual, and MWSS Board Resolutions | Parallel rules for water: no mark‑up; cluster‑meter requirement for >6 units; MWSS Regulatory Office can order refunds and fine violators. |
| Barangay Justice System (RA 7160, Ch. VII) | Requires initial mediation before filing most civil or criminal actions if parties reside in the same barangay. |
| Revised Penal Code, Art. 315(2)(a) | Estafa by false pretences (e.g., tampering meters or fraudulent billing). |
*“Unreasonable” is interpreted in light of ERC/MWSS pass‑through prohibitions: any mark‑up is presumptively unreasonable unless strictly justified.
3. Landlord Obligations in Detail
Transparent Billing
Give each tenant a photocopy or digital image of the DU/water concession bill within five (5) days of receipt.
Provide a computation sheet that shows:
(Tenant kWh ÷ Sum of all sub‑meter kWh) × (DU total bill) = Tenant Share
No Profit Principle
The landlord may not add:
- “Service fees,”
- “Meter reading fees,” or
- A surcharge for common‑area consumption unless either: a. The common area is separately sub‑metered and proportionately allocated, or b. The lease expressly provides a fixed peso amount (not percentage) for common‑area utilities and the amount is disclosed before lease signing.
Meter Standards & Access
- Sub‑meters must be Philippine National Standards (PNS) / BPS certified.
- Tenants have the right to inspect and photograph both mother‑ and sub‑meter readings at any reasonable time.
Record‑Keeping
- Keep three (3) years of billing and reading records; present them on tenant request or to the ERC/MWSS.
- Failure to keep records creates a presumption of over‑charging.
Refund & Interest
- Over‑collections must be refunded within one billing cycle with interest at the legal rate (currently 6 % p.a.) starting from the month of over‑collection.
4. Red Flags Constituting Over‑Charging
| Practice | Why It Is Illegal |
|---|---|
| Charging a flat per‑head or per‑unit “electricity fee” divorced from actual kWh use. | Violates ERC pass‑through rule; deemed profiteering. |
| Using commercial or industrial rate in the landlord’s computation when the DU bills the building at residential rate (or vice‑versa). | Distorts the true cost; tenant pays more than landlord’s actual liability. |
| Embedding “maintenance,” “association dues,” or “service charge” in the utility line item without clear lease basis and without ERC approval. | Separate charges must be in a distinct column and must not masquerade as utility cost. |
| Reading sub‑meters irregularly or based on estimates during vacancy periods. | Leads to biased allocation; ERC requires actual monthly readings. |
| Billing tenants for system losses or VAT higher than those appearing on the DU bill. | Pass‑through amounts must mirror the DU invoice exactly. |
5. Tenant Remedies & Enforcement Pathways
Self‑Help & Documentation
- Secure copies of all bills and meter photos.
- Compute your own share using ERC formula; compare against landlord’s invoice.
Demand Letter
- Cite ERC Resolution 12‑2009 and request refund within ten (10) days; attach your computation.
Barangay Mediation (Katarungang Pambarangay)
- Mandatory first step if both parties reside in the same barangay; failure to appear thrice yields a Certification to File Action.
Administrative Complaints
Forum Jurisdiction Typical Relief ERC (electricity) RA 9136 §43 Refund, cease‑and‑desist, fines up to ₱50 000 /day or ₱4 million for third‐tier violations. MWSS RO/LWUA (water) RA 6234; LWUA Charter Refund, reconnection, fines. DHSUD‐HLURB (condos, subdivisions) PD 957; RA 4726 Refund, administrative fines, suspension of license to sell. DTI (Price Act & Consumer Act) RA 7581; RA 7394 Fines, closure, product seizure. Civil Action
- Action for return of sums unduly paid (Civil Code Art 22) plus moral and exemplary damages.
Criminal Action
- Estafa (RPC Art 315) for fraudulent billing or meter tampering.
- Profiteering (Price Act §5) punishable by up to ₱2 million fine and/or imprisonment up to 15 years.
6. Jurisprudence & Administrative Precedents
ERC Case No. 2013‑091 –* *Consolidated Building Tenants v. Meralco & A.B. Realty* Landlord added a “5 % administrative fee” on tenants’ power consumption. ERC held that any mark‑up—however labelled—violates the pass‑through principle; ordered refund with 6 % interest and imposed a ₱100 000 administrative fine.
HLURB Board Case No. R‑03‑16‑2019 – Gamboa v. Avida Land Condominium developer allocated 100 % of lobby lighting to residential meters. HLURB ruled this was an unfair burden; ordered segregation of common‑area meter and proportionate allocation.
People v. Isidoro, G.R. No. 188576 (26 Jan 2016) Supreme Court affirmed estafa conviction where lessor collected “electricity charges” grossly exceeding actual DU rates and fabricated meter readings.
These cases reinforce that profit motive or concealment converts a mere civil breach into a punishable offense.
7. Worked‑Out Billing Example
Assume Meralco’s mother bill totals ₱15 000 for 1 200 kWh. Three tenants logged the following sub‑meter readings:
| Tenant | kWh | Computation | Amount |
|---|---|---|---|
| A | 300 | 300 ÷ 1 200 × ₱15 000 | ₱3 750 |
| B | 450 | 450 ÷ 1 200 × ₱15 000 | ₱5 625 |
| C | 450 | 450 ÷ 1 200 × ₱15 000 | ₱5 625 |
*Common‑area lights (60 kWh) should either be:
- Billed under a separate common‑area meter and charged to the landlord/condo corp; or
- Pro‑rated as above only if the lease expressly so provides.*
8. Defenses & Best Practices for Landlords
| Legitimate Practice | Compliance Tips |
|---|---|
| Charging a fixed, pre‑agreed peso amount for hallway lighting or pump operation. | Must be in a separate line item, backed by receipts, and accepted by the tenant in the lease. |
| Collecting a sub‑meter maintenance deposit. | Must be placed in a segregated account and refundable upon move‑out with interest or proof of overhaul. |
| Using cluster metering approved by the DU for buildings with at least five (5) units. | Apply with DU; each unit then enjoys direct residential rates, eliminating onward sale concerns. |
9. Penalties Snapshot
| Law / Regulation | Fine Range | Other Sanctions |
|---|---|---|
| ERC Resolution 10‑2021 | ₱50 000 – ₱4 000 000 per continuing offense | Disconnection order; suspension of electrical permit. |
| Price Act (RA 7581) | ₱5 000 – ₱2 000 000 +/or 5 mo. – 15 yrs. jail | Closure of establishment. |
| Consumer Act (RA 7394) | Up to ₱300 000 +/or 1 yr. jail | Cease‑and‑desist; product seizure. |
| Estafa (RPC Art 315) | Depends on amount defrauded; may exceed 20 yrs. jail | Restitution, civil indemnity. |
10. Practical Checklist for Tenants
- Read your sub‑meter at move‑in and monthly thereafter.
- Ask for the DU or water bill every month—ERC rules entitle you to it.
- Compute and compare using the formula above.
- Send a polite written query on any discrepancy within seven (7) days.
- Escalate to Barangay → ERC/MWSS/DHSUD → Courts if unresolved.
11. Conclusion
Philippine law strikes a clear balance: landlords may allocate utility costs but may never profit from them. The doctrine is enforced administratively by the ERC, MWSS, DTI, and DHSUD, reinforced by civil and even criminal liability. Tenants need only document, demand, and—if necessary—invoke the layered enforcement mechanisms to obtain a refund and deter repeat violations. For landlords, transparent pass‑through billing, calibrated meters, and clear lease clauses are the best shields against liability.
Key takeaway: In sub‑metered arrangements, the landlord is a mere conduit, not a reseller. The peso that enters his pocket for electricity or water must be the exact peso that leaves it when he pays the utility company—nothing more, nothing less.