Liability of Consumers for Unregistered Electricity Consumption

In a world powered by electricity, the relationship between power providers and consumers hinges on accurate metering. But what happens when electricity consumption goes unregistered—whether due to defective meters or other causes? Can utility companies charge consumers for electricity that was not recorded by the meter? More importantly, are consumers legally liable for such unregistered usage?

In the Philippines, this issue was addressed head-on in the landmark Supreme Court case Ridjo Tape & Chemical Corp. v. Manila Electric Co. (G.R. No. 126074, February 24, 1998). This case set important guidelines on the rights and obligations of both utility providers and consumers when it comes to electricity billing.

Understanding Unregistered Electricity Consumption

Unregistered electricity consumption typically occurs when:

• The electric meter is defective, and fails to record usage accurately.

• There is meter tampering or bypassing (an illegal act).

• There are technical malfunctions in the provider’s system that affect reading accuracy.

This often leads to disputes, especially when consumers receive back-billed charges for months—or even years—of previously unregistered usage.

The Ridjo Case: Setting the Legal Framework

In Ridjo Tape & Chemical Corp. v. MERALCO, the petitioners were industrial consumers who received a massive bill from Manila Electric Co. (MERALCO) for “unregistered consumption” after the utility discovered their meters were not accurately recording electricity use. The consumers challenged the charges, claiming they should not be made to pay for electricity not recorded by the meter.

Supreme Court Ruling: Key Takeaways

• Consumers are liable for electricity actually consumed, even if the meter failed to register it, as long as consumption can be proven or reasonably estimated.

• MERALCO was found negligent for failing to detect the defective meters in a timely manner, despite regular inspections.

• The Court ruled that both parties share responsibility: the consumer for using the electricity, and MERALCO for poor equipment oversight.

• Billing must be based on a fair estimate, not arbitrary amounts. The Court allowed MERALCO to collect payments based on a three-month average consumption prior to the period of defective metering.

  
  

What the Law Says

Consumer Act of the Philippines (R.A. 7394)

This law protects consumers from unfair and deceptive practices. However, it also requires consumers to pay for the goods and services they use—including utilities like electricity.

Energy Regulatory Commission (ERC) Guidelines

The ERC allows utility companies to conduct “billing adjustments” in cases of defective meters, subject to rules:

• Back-billing is generally limited to a maximum of 6 months unless fraud is involved.

• The consumer must be notified and given a chance to contest the charges.

• The adjustment should be based on historical consumption data.

  
  

Practical Guidelines for Consumers

1. Monitor Your Monthly Consumption

   • Unusual dips or spikes may signal meter issues.

2. Report Suspected Meter Defects Immediately

   • Notify your utility provider in writing and request an inspection.

3. Never Tamper With Electric Meters

   • Meter tampering is illegal and can result in disconnection, fines, or even criminal charges.

4. Keep Billing Records

   • Past billing statements are essential for estimating usage in case of disputes.

5. Know Your Rights

   • You are entitled to due process. The utility company must present proof of under-registration and apply a fair billing adjustment.

     
     

Conclusion

In the Philippines, consumers can be held liable for unregistered electricity use if it is proven they actually consumed the power, even if the utility meter failed. However, utility companies also bear the responsibility of maintaining accurate and functioning metering systems. The law aims to strike a balance: consumers must pay for what they use, but utility companies must act with competence, diligence, and fairness.

The Ridjo Doctrine, as established by the Supreme Court, affirms that while no one should get electricity for free, back-billing must be reasonable, based on actual data, and never the result of the provider’s own negligence.

Source: Ziggurat Real Estate

Should Airbnbs Be Banned In Tourist Destinations

The temptation to ban short-term rentals is strong. But cities would do better to step up regulation.

The Predicament

Talk to any resident of a world city popular with visitors, and two complaints inevitably come up: Rents are too high, and there are too many tourists.

It’s tempting (and, data suggest, not unjustified) to place some of the blame for these woes on Airbnb Inc., Vrbo and other websites that facilitate short-term rentals. Critics accuse them of reducing the supply of available homes and saturating popular neighborhoods with wild partygoers. Shops catering to these visitors end up elbowing out other smaller businesses, making daily life even harder for locals.

In response, many cities have already introduced restrictions on short-term rentals, with some moving toward total bans. Barcelona requires property owners to apply for a tourist license for rentals of fewer than 31 days. Earlier this year, authorities there announced they would stop issuing licenses and not renew existing ones until after November 2028. Others are following suit: In September, residents in Budapest’s sixth district narrowly voted in favor of a total ban that would take effect in 2026.

But bans also penalize city residents and visitors, including short-stay hosts conscientiously trying to follow rules and be good neighbors and guests who mind their manners. Is there a compromise that enshrines the ben­efits of short-term stays without driving up costs and frustrations for year-round residents?

The Case For

Because renting out homes by the day is often more profitable than by the month, Airbnb and its ilk are an irresistible draw for landlords. Critics say the proliferation of short-stay listings leaves prospective tenants chasing a dwindling number of long-term rentals, jacking up prices and pushing out those who can no longer afford them.

A 2018 study by New York City’s comptroller found that whenever the number of short-stay listings in a given area increased 1%, average rents in that neighborhood rose 1.6%. The spread of Airbnb and competitors, the study said, was responsible for 9.2% of all annual NYC rent increases from 2009 to 2016.

The Booming Short-Stay Market

To limit this impact, cities ­including New York have placed restrictions on short-term stays. But enforcement is a challenge. A 2017 study of publicly available agreements found that Airbnb and other platforms rarely provided exact addresses for dwellings to cities seeking to monitor locations. Even in cases where rule-­breaking can be proven, hosts often go unpunished. According to a 2022 study, the city of Los Angeles fined or sent warning letters to only a third of the illegal listings detectable within the city that year.

City governments might be more tolerant of short-term rentals if there were a clear economic case. But studies cited by the Economic Policy Institute found they jeopardize revenue flowing into municipal coffers because the recording and implementing of tax obligations from short-stay hosts are less comprehensive than for hotels, partly because some local agreements cede responsibility in this area to the short-stay platforms themselves.

There are also concerns that short-term rentals leave travelers more exposed to scams and other types of harm, compared with hotel stays. Then there’s the nuisance factor: Barcelona’s Airbnb ban comes after widespread public protest in the city against antisocial behavior from tourists, notably late-night noise from tenants of short-stay lettings. Add it all up, and it’s no surprise that many city leaders are contemplating wholesale bans, rather than more stringent regulations.

The Case Against

Airbnb and its competitors may be unfairly taking heat for housing crises that are largely not of their own making. When a country such as the UK would need to build another city the size of London to satisfy its current housing needs, it’s clearly insufficient home-building, rather than tourism trends, that’s to blame. There are also tentative signs that curbs on short-term stays may not be having the desired effect on easing long-term rental costs—and not just because of a lack of enforcement. In September 2023, New York City banned the renting of entire units for fewer than 30 days. (Spare rooms within homes permanently occupied by hosts were exempted from the rule.) One year on, many apartments previously offered for short stays have simply shifted to medium-length stays of more than 30 days, a market that’s even less regulated, while the modest rent decreases observed since then have been attributed to other factors.

“As we have seen in New York City, short-term rental bans do not alleviate housing challenges,” Theo Yedinsky, Airbnb’s vice president for public policy, said in a statement, “only benefitting large hotel chains that rapidly increase their rates. Airbnb has always welcomed reasonable regulations that balance the needs of communities with the ability of residents to earn additional income.”

It’s also important to note that not all Airbnb listings are suitable, or even viable, for full-time rental. Beach or winter sports resorts, for example, commonly have apartment buildings that were always intended as seasonal housing. Additionally, even if most vacation apartments are run by hosts with multiple listings, comprehensive bans penalize ­single-listing hosts who rely on the platforms to supplement their income.

The Common Ground

Although no city appears to have cracked the code on controlling short-term stays, most could do a better job of regulating them. Making sure hosts register their dwellings through a licensing system can make for a safer service, where tax rev­enue is also easier to collect.

Some city authorities say that for full enforcement of existing rules, they would need access to a more robust database that allows cities to click on a short-stay listing, trace it to a specific address and owner, then see how much it has been occupied across all platforms.

Airbnb has been working more closely with cities to address these concerns, moving in the direction of greater transparency. For instance, the company introduced the Airbnb City Portal in 2020, which makes it easier to check listings against licenses.

Airbnb is also involved in projects such as the Airbnb Housing Council that promote affordable housing in urban communities. “We have successfully worked with governments around the world to enforce proportionate local STR regulations,” Yedinsky said in his statement, “and believe cities should address the needs of their individual neighborhoods prescriptively as a more effective way to regulate.”

There are city leaders who say that Airbnb has been a benefit and that current restrictions are working. Rui Moreira, mayor of Porto, Portugal’s second-­biggest city and a popular tourist destination, says recent constraints placed on the number of Airbnbs permitted in its most popular neighborhoods have proved effective, encouraging hosted apartments to spread out from the city core. That’s helped spur the economic revival of run-down areas that might otherwise struggle to find funding, he says.

Source: Bloomberg

Who can seek assistance of PAO?

In the Philippines, the Public Attorney's Office (PAO) provides free legal assistance to individuals who meet specific criteria. PAO services are generally available to indigent persons, or those who cannot afford to hire private lawyers. Here are the key groups who can seek assistance from PAO, along with the requirements:

 Who Can Seek PAO Assistance?

1. Indigent Individuals:

   - Persons whose net income does not exceed the following ceilings based on the 2021 PAO Revised Operations Manual:

     - Metro Manila: ₱24,000/month

     - Other Cities: ₱22,000/month

     - Other Municipalities: ₱20,000/month

   - The income ceilings may be adjusted periodically, so checking with PAO is advised.

2. Overseas Filipino Workers (OFWs):

   - PAO can assist OFWs in specific cases, such as those involving labor disputes or repatriation.

3. Abused Women and Children:

   - Under Republic Act No. 9262 (Anti-Violence Against Women and their Children Act), PAO provides legal assistance to victims of abuse, regardless of financial capacity.

4. Senior Citizens:

   - Senior citizens may avail of PAO services, especially in cases related to abuse or disputes over benefits, subject to certain requirements.

5. Persons with Disabilities (PWDs):

   - PAO provides legal services to PWDs, particularly in cases involving their rights and welfare.

6. Victims of Human Rights Violations:

   - Individuals who have been victims of government abuses or other forms of human rights violations may seek assistance from PAO, regardless of financial status.

 Requirements for Seeking PAO Assistance

1. Proof of Indigency:

   - To qualify for free legal assistance, an applicant must present a Certificate of Indigency from the barangay or Income Tax Return (ITR), if applicable, to demonstrate that they meet the income threshold.

2. Valid Identification:

   - Applicants are usually required to present a valid government-issued ID (e.g., voter’s ID, SSS, PhilHealth).

3. Documents Related to the Case:

   - For specific legal issues, applicants may need to present supporting documents like complaints, summons, or legal notices.

4. Special Cases (e.g., Senior Citizens, Victims of Abuse):

   - Individuals who do not meet the income requirements but fall under specific categories like victims of abuse or human rights violations may also avail of PAO’s services, subject to certain proof of their situation (e.g., police reports for abuse victims).

PAO lawyers may also provide assistance in cases of criminal defense, civil cases, labor disputes, administrative cases, and other matters involving public interest. However, PAO does not represent clients in cases where there is a conflict of interest with the government.

Source: Ziggurat Real estate