Governing Laws

Lease relationships in the Philippines are primarily governed by the Civil Code of the Philippines (Republic Act No. 386), specifically Articles 1654–1688 on the Contract of Lease. For residential units with monthly rent not exceeding certain thresholds (currently ₱10,000 in NCR and ₱5,000–₱8,000 in other areas, depending on the latest extension), Republic Act No. 9653 (Rent Control Act of 2009), as repeatedly extended by Congress (latest extension under RA 11960 until December 31, 2027), provides additional tenant protections.

The Consumer Act of the Philippines (RA 7394) and jurisprudence from the Supreme Court also apply, particularly on unconscionable contract terms, overcharging, and the implied warranty of habitability.

I. Utility Bills (Electricity, Water, Internet, Association Dues)

1. General Rule on Payment Responsibility

The tenant is responsible for the payment of consumed utilities (electricity, water, internet, cable) unless the lease contract expressly states that they are included in the rent.

The landlord may not shift the payment of master-meter charges to the tenant through “package” or “fixed utility fee” arrangements if these result in overcharging beyond actual consumption.

2. Submetering and Overcharging

When the building is under one master meter and the landlord installs submeters, the landlord acts as a “retail electricity supplier” or “water distributor.”

The landlord is prohibited from charging higher than the actual rates of Meralco, Maynilad/Manila Water, or other utility providers.
Any markup, “administrative fee,” or “loss and pilferage charge” is illegal.
Supreme Court decisions (e.g., Chua v. Timog Heights Condominium Corporation, G.R. No. 206376, 2016, and WLH Land, Inc. v. Lazo, G.R. No. 224989, 2021) have consistently ruled that landlords may only recover actual consumption cost.
Tenants who have been overcharged for years may file a claim for refund with 6% legal interest per annum.

3. Utility Deposits

Landlords commonly require one-month utility deposit.
This is allowed, but the deposit must be refunded (less any unpaid bills) upon termination of the lease and turnover of the unit in good condition.
Failure to refund the utility deposit is unjust enrichment and may be claimed in small claims court.

4. Disconnection of Utilities as Coercion

It is illegal for the landlord to disconnect or cause the disconnection of electricity, water, or internet to force the tenant to pay rent or vacate.
This is a prohibited act under Section 11 of RA 9653 (for rent-controlled units) and constitutes unlawful self-help even for non-rent-controlled units (violative of Article 536 of the Civil Code prohibiting desahucio arbitrario).
The Supreme Court has repeatedly ruled (e.g., Sur v. CA, G.R. No. 212805, 2018) that only a court order can authorize disconnection or eviction.
Tenants whose utilities are illegally cut may:

File criminal cases for violation of RA 9653 (₱25,000 fine and/or 6 months imprisonment)
File for unjust vexation or robbery (if padlocked with belongings inside)
Sue for damages and apply for a Temporary Protection Order under RA 9262 if violence or threats are involved (applicable even to male tenants via jurisprudential expansion)

II. Penalties, Forfeiture Clauses, and Excessive Charges

1. Late Payment Penalties

A penalty/interest clause for late rent is valid, but it must be reasonable.
Common clauses of 3–5% per month (36–60% per annum) have been repeatedly struck down by the Supreme Court as unconscionable and iniquitous (Medina v. Hon. Asistio, G.R. No. L-75450, 1988; Ligon v. CA, G.R. No. 127681, 2002; Toring v. Spouses Ganzon-Olan, G.R. No. 194259, 2014).
Courts routinely reduce penalties to 1–2% per month or 12% per annum.
Penalty clauses that allow automatic forfeiture of deposits or advance rents for late payment of one month are void (Article 1308 and 1229, Civil Code).

2. Forfeiture of Advance Rent and Deposits

Lease contracts often state that if the tenant is late even once, all advance rents and deposits are forfeited as “liquidated damages.”
This is void for being a penal clause in disguise and highly disproportionate.
The Supreme Court has ruled in numerous cases (Tan v. G.V. Florida Transport, G.R. No. 213592, 2017; Lim v. Development Bank of the Philippines, G.R. No. 204798, 2022) that such forfeiture clauses are unconscionable and will not be enforced.
All advance rents must be applied to the remaining period, and deposits must be refunded minus actual unpaid rent or damages.

3. “Automatic Termination” or “Self-Executing Eviction” Clauses

Clauses stating that the contract is “automatically terminated” upon non-payment or violation are void.
Only a judicial order can terminate a lease and evict a tenant (Rule 70, Rules of Court).
Landlords who padlock units or confiscate belongings without court order commit robbery or grave coercion.

III. Pest Infestation (Rats, Cockroaches, Bedbugs, Termites)

1. Implied Warranty of Habitability

Under Article 1654 and Article 1660 of the Civil Code, the lessor is obliged to:

Deliver and maintain the premises in a condition suitable for habitation
Make all necessary repairs during the lease to preserve the property in tenantable condition

Severe pest infestation renders the unit uninhabitable and breaches the warranty of habitability.

2. Pre-existing or Structural Infestation

If the infestation existed before turnover or is caused by structural defects (old wooden beams, leaking pipes, poor plumbing, adjacent vacant infested units), the landlord is absolutely liable for extermination costs.
The landlord cannot pass the cost to the tenant.

3. Infestation Caused by Tenant’s Actions

If clearly proven that the infestation resulted from the tenant’s unsanitary habits (leaving food out, garbage accumulation), the tenant may be held responsible.
However, landlords rarely succeed in proving this in court because common pests (cockroaches, rats) are usually due to building age or neighboring units.

4. Tenant Remedies When Landlord Refuses Pest Control

The tenant may: a. Send a formal demand letter (via registered mail or email with read receipt) giving the landlord 7–15 days to conduct pest control.
b. If the landlord fails, the tenant may:

Undertake the pest control himself and deduct the cost from rent (Article 1657, Civil Code – reparations necessaires)
Withhold rent until the unit is made habitable (Article 1658) – but deposit the rent in court via consignation to avoid eviction for non-payment
File a case for specific performance with damages in the Municipal Trial Court
Terminate the lease and demand refund of deposits and advance rent if the infestation is severe and prolonged (constructive eviction)

5. Bedbugs and Termites

Bedbugs and termites are considered structural/pre-existing in almost all cases.
Landlords who refuse treatment have been ordered by courts to shoulder full extermination costs (heat treatment for bedbugs can cost ₱40,000–₱100,000) plus moral/exemplary damages.

Practical Remedies Available to Tenants

Barangay conciliation (mandatory for rental disputes below ₱1M in Metro Manila)
Small Claims Court (for money claims up to ₱1,000,000) – ideal for refund of overcharged utilities, deposits, or pest control costs
Regular ejectment case with counterclaim for damages
Complaint with the Department of Human Settlements and Urban Development (DHSUD) for violation of RA 9653
Criminal complaint for violation of RA 9653 (illegal disconnection, refusal to refund deposit)

Conclusion

Philippine law heavily favors residential tenants on issues of habitability, utility fairness, and penalty clauses. Provisions that appear ironclad in lease contracts are frequently void or unenforceable when challenged in court. Tenants who document everything (photos, receipts, demand letters, chat screenshots) almost always prevail when they assert their rights properly.

Knowledge of these rights has enabled countless tenants to recover hundreds of thousands in overcharged utilities, forfeited deposits, and pest control costs that landlords wrongly tried to impose.