Letter to a Lawyer

Dear Attorney,

I am reaching out to seek clarification about a matter involving the electricity charges imposed by my landlord. I currently reside in a rental unit where we are using a submeter to measure our electricity consumption. However, my landlord is charging ₱30 per kilowatt-hour (kWh), which is significantly higher than the actual rate charged by Meralco, which is ₱12 per kWh.

I am concerned about the legality of this arrangement and whether landlords are permitted to impose such a markup on utility charges. Could you please explain the legal framework governing this issue and advise me on what steps I could take if this practice is unlawful?

Sincerely,
A Concerned Tenant

Legal Analysis of Landlord Markup on Electricity Charges in the Philippines

The situation described above raises critical questions about the rights and obligations of landlords and tenants concerning electricity charges. Let us examine the legal framework governing this issue in detail.

1. Overview of the Legal Framework

A. Legal Basis for Utility Charges

Utility charges, such as electricity, are regulated in the Philippines to ensure fairness and prevent exploitation. The Energy Regulatory Commission (ERC) oversees electricity rates, while the Consumer Act of the Philippines (Republic Act No. 7394) protects consumers from unfair practices, including unreasonable pricing.

In cases where a submeter is used, the rental arrangement is still subject to the guidelines set forth by the ERC and relevant laws, which prohibit profiteering and abusive practices.

B. Submetering Arrangements

Submetering refers to the practice of measuring electricity consumption for individual units within a property using submeters. While legal and commonly used in rental properties, the charges imposed on tenants must reflect the actual cost of electricity billed by the distribution utility (e.g., Meralco).

The ERC explicitly provides guidance on submetering arrangements in its various rulings and circulars. Landlords are prohibited from imposing surcharges or profiting from the resale of electricity to tenants.

2. Key Legal Provisions Applicable

A. The Electric Power Industry Reform Act (EPIRA) - Republic Act No. 9136

EPIRA regulates the Philippine electricity industry and aims to ensure transparent and reasonable pricing. Section 43 of EPIRA tasks the ERC with ensuring that electricity rates are fair and equitable. The Act prohibits entities, including landlords, from charging rates beyond what is allowed by the ERC.

B. Energy Regulatory Commission (ERC) Circulars

ERC Resolution No. 12, Series of 2009, and subsequent circulars govern submetering practices. These documents emphasize the following:

The landlord may only charge tenants based on the actual rate billed by the distribution utility.
Administrative fees or maintenance costs for the submeter may be charged but should be reasonable, transparent, and explicitly agreed upon in the rental contract.
Profiteering, defined as charging excessive rates for services such as electricity, is strictly prohibited.

C. The Consumer Act of the Philippines (Republic Act No. 7394)

This Act protects consumers from unfair trade practices and unreasonable price markups. Under Article 52, acts amounting to unconscionable or excessive pricing are prohibited and subject to penalties.

D. Civil Code of the Philippines

The Civil Code (Articles 19-21) prohibits abusive conduct, including bad faith in contractual dealings. If the landlord imposes an exorbitant electricity charge, this may constitute an abuse of rights or an unjust enrichment claim under the law.

3. Analysis of the Markup in the Concern

Charging ₱30 per kWh when the actual Meralco rate is ₱12 per kWh raises several legal red flags:

A. Profiteering

By charging more than double the actual cost of electricity, the landlord may be engaging in profiteering. This is explicitly prohibited under ERC guidelines and consumer protection laws.

B. Lack of Transparency

If the additional charge is not justified (e.g., covering maintenance costs) or disclosed in the rental contract, the landlord may be acting in bad faith. Transparency is a legal requirement in contractual arrangements, particularly when it involves consumer goods or services.

C. Excessive and Unconscionable Pricing

Charging ₱30 per kWh may be deemed unconscionable under the Consumer Act, especially if tenants are financially burdened by this markup. Such practices are contrary to public policy and are actionable.

4. Possible Remedies for Tenants

A. Filing a Complaint with the ERC

Tenants may report the landlord to the ERC for overcharging. The ERC has the authority to investigate such complaints and impose penalties on violators.

B. Action Under the Consumer Act

A complaint can also be filed with the Department of Trade and Industry (DTI) under the Consumer Act. The DTI can mediate the dispute and sanction unfair practices.

C. Civil Action for Damages

If the tenant suffers financial harm due to the excessive charges, they may file a civil case for damages based on unjust enrichment or abuse of rights under the Civil Code.

D. Reporting to Local Authorities

Local government units (LGUs) may also intervene if the landlord’s actions violate local ordinances on rental housing or consumer protection.

5. Practical Steps for Tenants

Request an Explanation: Tenants should formally ask the landlord to justify the markup and provide a breakdown of the charges.
Document Everything: Keep records of electricity bills, payments, and communications with the landlord.
Seek Mediation: Attempt to resolve the issue amicably through dialogue or a mediation service offered by the barangay or other authorities.
File a Complaint: If the landlord refuses to address the issue, tenants can escalate the matter to the ERC, DTI, or the courts.

6. Conclusion

The landlord's practice of charging ₱30 per kWh, significantly above Meralco's actual rate, is likely unlawful under Philippine law. Such markups constitute profiteering, a prohibited practice under ERC guidelines, EPIRA, and the Consumer Act. Tenants subjected to these practices have multiple legal remedies available, including filing complaints with regulatory bodies or pursuing civil actions.

It is essential for landlords and tenants to adhere to transparent and equitable arrangements to foster fair housing practices and consumer protection.