Liability for Previous Owner’s Utility Bills in the Philippines

This article explains, in Philippine context, who bears liability for electricity, water, and telecom/internet charges when property changes hands—plus practical steps for buyers, sellers, and lessors. It is general information, not legal advice.

Executive summary

General rule: A prior owner’s unpaid utility bills are personal debts arising from a service contract. They do not automatically attach to the property the way real property tax or certain association dues can.
Practical wrinkle: Some utilities operate on a “no arrears at the service address” policy before reconnecting or transferring service, to deter account-shifting. You can usually overcome this by applying as a new customer, proving change of ownership/occupancy, and posting required deposits—or by escalating to the proper regulator if refused.
Exceptions/edge cases:
- If the same person (or a colluding party) is simply changing the account name to avoid paying, utilities may validly require arrears to be settled.
- If the contract is in the owner’s name and the owner sells the property without settling, the utility can pursue the seller (not the buyer) for the arrears; reconnection for the buyer should proceed on a new account after standard checks.
- Private water systems, subdivision/condo utilities, or local ordinances may embed “lien-like” consequences in their contracts or rules; enforceability turns on the contract, bylaws, and local law.
- Power pilferage/tampering or unsafe wiring must be corrected first; utilities can defer energization until technical compliance, irrespective of who owes past bills.

Legal framework and principles

Privity of contract; obligations are personal. Utility charges arise from a service contract between the subscriber and the provider. Unless a statute or a valid real encumbrance says otherwise, the debt follows the person, not the property. The new owner, not being a party to the prior contract, is not personally liable for the former subscriber’s arrears.
No automatic real lien for utilities. Unlike real property tax (which can become a lien) or certain association dues characterized as obligations propter rem, regular utility bills are not automatically liens on the land or unit. Providers must collect from their contracting subscriber through ordinary debt remedies.
Regulatory overlay.
- Electricity: Distribution utilities (DUs) and electric cooperatives are regulated by the Energy Regulatory Commission (ERC). They must follow approved service terms (applications, deposits, disconnections/reconnections, billing disputes).
- Water: In Metro Manila and nearby areas, the concessionaires are overseen by the MWSS Regulatory Office. Elsewhere, local water districts (under PD 198) and some LGU/private systems set their own service rules subject to public utility and consumer-protection principles.
- Telecom/Internet/Cable: Generally overseen by the NTC, with consumer-protection norms under general law.
Anti-pilferage and safety laws. Even if you owe nothing, utilities may deny or defer service for illegal connections, meter tampering, or unsafe installations until issues are rectified and any differential billing or penalties (against the responsible party) are resolved per procedure.

By utility type

A. Electricity

Who owes? The subscriber on record (often the property owner or tenant). Arrears do not carry over to a new owner/occupant as personal liability.
Common provider practices:
- Will require a new application (new Service Agreement), valid IDs, proof of ownership/occupancy (e.g., deed of sale/lease, tax declaration, barangay certification), electrical safety clearances, and a bill deposit.
- May initially insist that arrears at the same service address be settled; however, if you prove you are not the prior subscriber and are not a “successor” attempting to evade payment, the provider should process a fresh account after technical inspection.
When can a DU refuse?
- Evidence of account-shifting by the same party/household to dodge arrears.
- Unsafe wiring, tampered meters, or illegal taps.
- Unfulfilled documentary or deposit requirements applied uniformly.

B. Water (MWSS areas, water districts, private/LGU systems)

Who owes? The contract holder for the service line.
Transfer practices: Water providers often treat the connection as tied to a service line number at an address. They typically require either (i) the seller to request closure and settlement, or (ii) the buyer to apply as a new customer with proof of transfer and a deposit.
Sticky scenarios:
- Subdivision/condo-run water systems or private utilities may provide water under contractual rules that condition service transfer upon settlement of arrears on the connection. These are contract-driven (check the developer/association service agreement).
- Some LGU utilities operate under ordinances that affect disconnection/transfer. Their ability to bind the new owner is limited by contract and due process; if they refuse new service without legal basis, you can contest or escalate.

C. Telecom/Internet/Cable

Who owes? The account subscriber. New owners are not liable for prior dues.
Transfer/reconnection: Typically, cancel the old account and apply anew. Providers may require clearance for the old modem/ONT (return or pay non-return fees), but they cannot make you pay someone else’s unpaid monthly bills.

“Successor” and anti-evasion considerations

Utilities are justified in preventing evasion (e.g., the same household repeatedly opens new accounts at the same address to avoid arrears). Expect extra scrutiny if:

The name change seems nominal but the occupants are the same;
There is shared identity, control, or continuity (same business, same officers, same household head);
There is a pattern of disconnections followed by immediate “new” applications.

In genuine change-of-ownership/occupancy, bring documentation to defeat any presumption of evasion.

Buying or selling property: what to do

For buyers (due diligence and closing)

Require utility clearances at closing. Ask the seller for latest bills, official receipts, and “no-arrears” or final statements for electricity, water, and internet.
Inspect the metering and wiring/plumbing. Obtain an electrical inspection certificate and check for any tampering history or illegal taps.
Holdback/escrow. Include a temporary holdback in the purchase price (e.g., ₱___ for 60–90 days) to cover undisclosed pre-closing utility charges that surface after turnover.
Apply as a new customer promptly. File your new service application with deed of sale/possession proof, IDs, inspection certificates, and be prepared to post deposits.
Keep communications in writing. If a provider refuses service due to previous owner’s arrears, respond in writing, attach proof you’re a new owner, and request processing of a new account. Escalate if needed.

For sellers

Settle and close accounts as of turnover. Arrange final meter readings, settle final bills, and submit a closure or transfer request to each provider.
Turnover package. Provide the buyer with official receipts, final statements, account numbers, and any clearances.
Warranties and indemnities. Include in the deed an undertaking to indemnify the buyer for pre-closing utility charges.

Landlord–tenant scenarios

If the account is in the tenant’s name, the tenant bears liability. On move-out, require proof of settlement and account closure or transfer to the next tenant.
If the account is in the owner/lessor’s name, unpaid bills by a tenant remain the owner’s liability to the provider, and the owner must collect from the tenant under the lease.
Best practice: Require tenants to place accounts in their own names (where feasible), collect deposits, and inspect/photograph meter readings at turnover.

Foreclosures and “as-is, where-is” acquisitions

Banks commonly sell as-is. You are not personally liable for prior owner’s utility debts, but reconnection may be delayed by provider policies or safety issues.
Budget for technical remediation, new deposits, and possibly negotiated settlements if timing is critical (paying under protest while preserving claims against the prior owner or intermediary).

Remedies and escalation

First-level resolution with provider.
- Submit a written request for new service/transfer, attach proof of ownership/occupancy, and cite that you’re not the prior subscriber.
- Ask them to pursue arrears against the former account holder and to process your new account subject to inspection and deposit.
Regulatory escalation (depending on utility):
- Electricity: File a complaint or request for assistance with the ERC if a DU insists you pay someone else’s arrears despite clear proof of change of ownership.
- Water: For MWSS areas, approach the MWSS Regulatory Office; for water districts/LGU/private systems, use their board/office grievance channels and, if unresolved, consumer arbitration or court.
- Telecom/Internet: Elevate to the provider’s Cx escalation team; if needed, complain to the NTC.
Consumer and civil remedies. If a provider’s refusal amounts to unfair practice or causes damages despite compliance on your part, consider demand letters, mediation, or civil action. Keep a paper trail.

Frequently asked questions

1) Can a utility refuse to connect me unless I pay the previous owner’s arrears? They can investigate and require deposits and inspections. Absent evasion or special contract/ordinance, they should open a new account without forcing you to pay someone else’s debt.

2) The meter/line is the same—does that make me liable? No. The physical meter/line does not convert a personal debt into a real lien. Liability still turns on who the contracting subscriber was—subject to anti-evasion and safety rules.

3) What if the previous owner’s account is in the property owner’s name and I bought the property? You still do not assume their personal debt by mere purchase. The provider should collect from the seller. You apply as a new subscriber.

4) Are HOA or condo dues different? Often yes. Association dues (and sometimes charges for association-run utilities) can be treated as obligations propter rem under the master deed/bylaws—they can affect your title/clearance. Check the bylaws and condo/subdivision documents.

5) Can providers disclose the old subscriber’s bills to me? Expect limited disclosure due to privacy rules. Providers can usually confirm whether arrears exist and how to proceed without sharing the prior owner’s personal data.

Sample contractual language (for your deed or contract)

Seller’s Utility Settlement and Indemnity. “The Seller represents and warrants that all charges for electricity, water, and telecommunications services relating to the Property up to and including the Closing Date have been fully paid. The Seller shall indemnify and hold the Buyer harmless from any claims for pre-Closing utility charges and shall cooperate in the closure or transfer of service accounts. The Parties agree to a holdback of ₱[amount] from the purchase price for [60/90] days after Closing, to be released upon presentation of proof of settlement and account closure/transfer.”

Template: letter to a utility provider (new owner)

Subject: Application for New Service / Clarification on Prior Arrears – [Service Address] To: [Utility Provider] – [Branch/Email] I am the new owner/occupant of [address], effective [date], as shown by the attached [Deed of Absolute Sale/Lease/Barangay Cert]. I am not the prior subscriber and have no relation to the unpaid account previously linked to this service address. Please process my new service application under my name, subject to your standard inspection, documentary requirements, and deposits. Kindly pursue any arrears against the former subscriber. If you believe any rule prevents new service despite a bona fide change of ownership, please cite the specific policy so I can address it or escalate appropriately. Attachments: IDs, proof of ownership/occupancy, electrical/water inspection (if any), completed application forms.

Practical checklist

✅ Ask for final meter reads and receipts at turnover
✅ Include indemnity + holdback in the sale contract
✅ Apply as a new customer; prepare deposits and inspections
✅ Keep written records of any refusals and reasons
✅ Escalate to ERC/MWSS-RO/NTC (as applicable) if impasse persists
❌ Don’t accept blanket liability for someone else’s debts
❌ Don’t proceed with occupancy without safety clearance (electrical/plumbing)

Bottom line

In the Philippines, utility arrears belong to the person who incurred them, not to the property itself. While providers can (and should) guard against evasion and enforce safety rules, a bona fide new owner or tenant should not be made to pay another person’s past bills. Use documentation, proper applications, and—when necessary—regulatory escalation to ensure a fair and lawful outcome.