The relationship between landlords and tenants is governed not only by private contracts but also by stringent regulatory frameworks designed to prevent predatory pricing of essential services. In the Philippines, the resale of electricity—specifically by a landlord to a tenant—is a common point of contention. When a landlord imposes rates higher than those charged by the Distribution Utility (DU) like Meralco or local electric cooperatives, they may be in violation of Philippine energy laws and consumer protection acts.
I. The General Rule: No Profit on Electricity
Under the Electric Power Industry Reform Act of 2001 (EPIRA) and the guidelines set by the Energy Regulatory Commission (ERC), a landlord or building owner is generally prohibited from making a profit on the resale of electricity to tenants.
The principle is simple: A landlord may only pass through the actual cost of electricity. If the landlord is not a licensed "Retail Electricity Supplier" (RES) or a "Distribution Utility," they cannot add a markup to the generation, transmission, or distribution charges. Any excess amount collected beyond the DU's billed rate is considered "overcharging."
II. Common Forms of Overcharging
- Arbitrary Rate Setting: Charging a flat, "all-in" rate per kilowatt-hour (kWh) that is significantly higher than the DU’s prevailing residential or commercial rate.
- Administrative Fees: Tacking on "maintenance fees" or "service charges" specifically to the electric bill to mask a markup.
- Inaccurate Metering: Using "sub-meters" that have not been calibrated or sealed by the ERC, leading to inflated consumption readings.
III. Legal Remedies and Recourse
Tenants who suspect they are being overcharged have several avenues for legal redress.
1. Demand for Transparency (The Right to Information)
Before filing a formal complaint, a tenant has the right to demand a breakdown of the electricity charges. Under the Retail Rules and the Consumer Protection Act, consumers are entitled to clear and accurate billing.
- Action: Request a copy of the main DU bill (e.g., the Meralco bill) for the entire building and the computation used to derive the sub-meter charge.
2. Filing a Complaint with the Energy Regulatory Commission (ERC)
The ERC is the primary quasi-judicial body that handles disputes involving electricity rates and "illegal resale."
- Basis: If a landlord charges more than the allowed pass-through cost, they are effectively acting as an unlicensed distributor.
- Remedy: The ERC can order the landlord to cease and desist from the overcharging and mandate a refund of the excess amounts collected, plus interest.
3. Local Government Intervention
Most lease agreements are covered by local ordinances. If the property is a residential unit covered by the Rent Control Act of 2009 (R.A. 9653), the landlord is prohibited from increasing the rent beyond the legal limit. Overcharging for utilities is often seen as a "disguised rent increase."
- Action: File a complaint with the Barangay Lupong Tagapamayapa for mediation, or the local housing board.
4. Civil Action for Sum of Money
If the overcharged amount is substantial, a tenant may file a civil case for "Collection of Sum of Money" in the appropriate court (Small Claims Court, if the amount is within the threshold).
- Legal Basis: Article 2154 of the Civil Code (Solutio Indebiti), which states that if something is received when there is no right to demand it, and it was unduly delivered through mistake, the obligation to return it arises.
IV. The Issue of Sub-meters
Landlords often use sub-meters to apportion costs. However, for a sub-meter reading to be legally binding:
- The sub-meter must ideally be ERC-tested and sealed.
- The total of all sub-meter readings plus common area usage must align with the main bill.
- If a sub-meter is found to be defective or tampered with to favor the landlord, this may constitute estafa (fraud) under the Revised Penal Code.
V. Summary of Prohibitions
| Prohibited Act | Legal Consequence |
|---|---|
| Mark-up on kWh rate | Refund of excess + ERC Administrative Fines |
| Using unsealed sub-meters | Inadmissibility of charges in a legal dispute |
| Disconnection without due process | Liability for damages/Torts |
VI. Notice on Disconnection
A landlord cannot immediately disconnect electricity as a means to coerce payment of an overcharged bill. Even in cases of non-payment, Philippine law generally requires a prior written notice and a grace period. Arbitrary disconnection can lead to a petition for a Preliminary Mandatory Injunction and a claim for moral and exemplary damages by the tenant.