Liability for Garbage-Collection Fees Not Stated in a Philippine Lease Agreement (A Comprehensive Primer for Landlords, Tenants, Property Managers & Counsel)
1. Background: What Exactly Is a “Garbage-Collection Fee”?
Local Government Units (LGUs) may levy a “garbage, refuse or sanitary service fee” under their police power and their delegated taxing power in the Local Government Code of 1991 (Republic Act No. 7160, “LGC”). The enabling provisions are:
| LGC Provision | Key Text (paraphrased) | Take-away |
|---|---|---|
| § 16 & 17 | LGUs must ensure basic environmental-sanitation services. | Authority to operate collection system. |
| § 130 (a) | Gives LGUs the power to “create sources of revenue.” | Basis for imposing fees. |
| § 147 (a) | Cities & municipalities may fix “service fees or charges” for garbage collection. | Formally classifies the levy as a fee, not a real-property tax. |
Because the fee is service-oriented (not a tax on ownership), it is ordinarily assessed periodically (monthly, quarterly, annually) and is collectible from whoever the ordinance designates—often “the owner, administrator, occupant or person in charge.”
2. Default Contractual Allocation Under the Civil Code
| Civil Code Article | Default Rule | Relevance to Garbage Fees |
|---|---|---|
| Art. 1654(1) | The lessor must “deliver the thing leased.” | Clean, tenantable premises are implied. |
| Art. 1655 | The lessor must pay property-related “taxes and charges” unless there is a stipulation to the contrary. | Many treat property taxes—not service fees—as the clear obligation of the lessor. |
| Art. 1657(1) | The lessee must “pay the price of the lease” plus other stipulated expenses. | If the lease is silent, lessee pays only rent and those utilities he actually consumes. |
| Art. 1308 / 1370 | Contracts are law between the parties; when terms are clear, they control. | Courts will first look for an express clause. |
Key Insight: In the absence of a clause, the Civil Code makes the owner/lessor primarily answerable for public charges on the property itself, but does not expressly shift service fees for waste collection to either party. That gap is filled by:
- The LGU ordinance (public law) – which may name both owner and occupant as solidarily liable; and
- Usage & equity – commercial practice often passes day-to-day operational charges to the tenant.
3. What Do Typical LGU Ordinances Say?
Although wording differs, three patterns appear:
Owner-Centric Ordinances
“The owner or administrator of any building shall pay a quarterly garbage fee…” Effect: Owner cannot legally force LGU to bill the tenant, but may contractually recover the amount.
Occupant-Centric Ordinances
“Every household or business occupant shall remit its monthly garbage service charge…” Effect: LGU can collect directly from a tenant even if the landlord is silent.
Joint & Several (“Solidary”) Liability
“The owner, lessor, lessee, or person in actual control shall be solidarily responsible…” Effect: LGU may sue any one; the payor can in turn seek reimbursement from the other under their lease.
In practice, Manila, Quezon City, Makati, Cebu City and Davao City each follow one of the above models in their Revenue Codes. (Text differs, but the patterns hold.)
4. Philippine Jurisprudence Touchpoints
| Case (G.R. No.) | Core Holding | Relevance |
|---|---|---|
| City of Manila v. Colet (1986) | Garbage fees are a valid exercise of police power distinct from a real-property tax. | Confirms LGU authority; fee can attach to occupancy. |
| Tolentino v. Secretary of Finance (1995) | Distinction between tax and fee: fees are for services, not revenue generation per se. | Supports treating garbage charge as a service fee chargeable to the user of the service. |
| Misamis Oriental Ass’n of Coco Traders v. Municipal Treasurer (1992) | A user fee may be exacted from those who benefit from an LGU service. | Tenant as beneficiary = proper subject of fee. |
| J. M. Tuason & Co. v. L. R. C. (1968) | Where a statute or ordinance puts liability on the property, owner ultimately answers to the State. | Owner can be pursued if tenant defaults. |
No Supreme Court decision squarely says “lessor must pay garbage fees when lease is silent,” so the allocation remains a fact-specific inquiry into:
- The LGU ordinance wording;
- The nature of the fee (service vs. tax); and
- Any implied stipulations from usage or equity.
5. Contract Drafting & Risk-Allocation Techniques
Express Clause (Most Common)
“Tenant shall, at its sole cost, pay all municipal charges including but not limited to garbage-collection fees, sanitary and environmental fees, and any similar assessments pertaining to its occupancy and use of the Premises.”
“Additional Rent” Formulation (allows eviction remedies)
“…Such charges shall be deemed Additional Rent and failure to pay shall constitute a default in payment of rent.”
Gross-Up / Pass-Through Provision (multi-tenant buildings)
“Landlord may equitably allocate garbage-service charges among all occupants based on floor area or usage.”
Municipal Compliance Covenant (owner-friendly)
“Landlord shall ensure payment of garbage fees in a timely manner; Tenant shall reimburse any portion attributable to Tenant’s operations.”
Security-Deposit Set-Off – allow deduction for unpaid garbage fees on move-out.
6. When the Lease Is Silent: Practical Outcomes
| Scenario | Who Typically Pays? | Rationale |
|---|---|---|
| Residential house/apartment | Tenant, if ordinance targets “occupant”; otherwise Landlord. | Tenant generates the waste; many barangays collect door-to-door. |
| Commercial space in mall/office | Tenant, via common-area-charges (CAM) or direct billing. | Operational fee lumped with utilities. |
| Industrial land lease | Tenant (usually large volume waste). | Environmental compliance protocols. |
| Bare land lease (agri/parking) | Landlord (no waste for tenant to dispose). | Fee often levied per structure, not raw land. |
Where ambiguity exists, Philippine courts resort to equity and usage of trade (Civil Code Art. 1376) and often side with the party in “control of the waste stream”—usually the occupant.
7. Remedies for Non-Payment
LGU Enforcement
- Refusal to collect garbage.
- Issuance of notice of violation; surcharge, interest, closure order (for businesses).
Landlord Remedies Against Tenant
- Treat fee as additional rent → quick ejectment via Rule 70 unlawful detainer.
- Forfeit security deposit to cover arrears.
- Indemnity action based on unjust enrichment or breach of implied covenant to maintain premises in tenantable condition.
Tenant Defenses
- Fee was not validly imposed (ultra vires ordinance).
- Landlord had assumed the obligation by longstanding course of dealing (estoppel).
- The fee relates to structural waste (demolition debris) for which owner is responsible.
8. Tax & Accounting Treatment
| Perspective | Treatment |
|---|---|
| Tenant (business) | Garbage fee is an ordinary and necessary business expense → deductible in arriving at taxable income if supported by official receipt. |
| Landlord | If landlord pays then re-bills tenant, the re-billing is additional rental income subject to VAT and income tax. |
| Withholding Tax | Usually not subject to 5 % Expanded WHT on rent, because it is a reimbursement of a governmental charge (but practice varies; safest to withhold unless BIR ruling says otherwise). |
9. Due-Diligence Checklist
- ❑ Obtain latest LGU Revenue Code or ordinance and confirm designated payor.
- ❑ Inspect lease for: tax, utilities, CAM, or additional rent clauses.
- ❑ Ask for historical billing: How was the fee handled by prior tenant?
- ❑ Include protective language in Letter of Intent and final lease draft.
- ❑ For sale-leaseback or asset purchase, confirm no arrears—unpaid fees are a lien on the property in some LGUs.
10. Practical Tips & Best Practices
| For Landlords | For Tenants |
|---|---|
| Build the fee into the advertised rental rate when dealing with small residential tenants; this avoids later disputes. | Ask the LGU treasurer directly whose name appears on the garbage ledger. |
| In commercial-building house rules, include a schedule of “Environmental & Sanitation Charges.” | Negotiate a “cap” on garbage charges if you expect the LGU to increase rates mid-lease. |
| Keep official receipts; LGUs frequently disallow payment without proof of prior years’ clearance during permit renewal. | Obtain a transfer certificate of title (TCT) copy—some LGUs make the registered owner strictly liable despite leaseback. |
11. Sample Clause Library
Owner Pay, No Reimbursement
“Lessor shall be solely responsible for all municipal garbage-collection fees assessed upon the Premises and shall hold Lessee free and harmless therefrom.”
Tenant Pay, As Additional Rent
“Garbage-collection fees shall be deemed Additional Rent and shall be payable together with the monthly base rent. Failure to pay shall entitle Lessor to the same remedies as non-payment of rent.”
Split Liability
“Lessor shall pay the annual basic fee up to 240 kg/month. Any excess volume attributable to Lessee’s operations shall be for Lessee’s account and payable within five (5) days of demand.”
12. Conclusion
When a Philippine lease contract is silent on garbage-collection fees, three layers of rules interact:
- Public law (LGC + ordinance) – sets the primary legal liability;
- Civil Code defaults – allocate property-related taxes to the lessor, but leave service fees ambiguous; and
- Parties’ stipulations or trade usage – ultimately govern their private allocation of costs.
Best practice: Never leave the matter to implication. A one-sentence clause saves both parties from surprise LGU demand letters, surcharge penalties, and awkward “who pays?” discussions years later. Until then, expect LGUs to pursue whoever is easiest to find—owner or occupant—and for courts to uphold that collection while letting the payor seek reimbursement under general civil-law principles of unjust enrichment and implied contractual obligations.
Prepared: 25 June 2025 — Manila, Philippines.