Double Collection of Association Dues: Developer vs HOA—Legal Remedies (Philippines)

This article explains when a developer and a homeowners/condominium association (HOA/condo corp) may lawfully collect dues, what “double collection” is, how to stop it, and the practical and legal remedies available under Philippine law. It is written for subdivision lot buyers, condominium unit owners, HOA/condo board members, and developers.

I. Key Statutes and Regulators

Presidential Decree (PD) 957 – Subdivision and Condominium Buyers’ Protective Decree (with Implementing Rules and Regulations).
Republic Act (RA) 4726 – The Condominium Act (master deed, condominium corporation, common areas, assessments).
RA 9904 – The Magna Carta for Homeowners and Homeowners’ Associations (rights and powers of HOAs, recognition/registration, governance).
RA 11201 – Created the Department of Human Settlements and Urban Development (DHSUD) and transferred quasi-judicial functions to the Human Settlements Adjudication Commission (HSAC) (formerly HLURB).
Local Government Code (for open space/road turnover to LGUs) and relevant civil law principles (e.g., unjust enrichment, obligations and contracts).

Current primary venues for disputes:

HSAC – Exclusive and original jurisdiction over many subdivision/condominium controversies between buyers, developers, and associations; can issue cease-and-desist orders (CDOs) and award refunds/damages in proper cases.
Regular courts – For civil actions (injunction, damages, declaratory relief), especially when outside HSAC’s specialized jurisdiction or for enforcement of liens/levies already adjudged.
DHSUD – Policy/regulatory oversight and developer licensing; administrative sanctions for certain violations of housing laws and permits.

Katarungang Pambarangay note: Disputes involving a juridical person (e.g., a corporation/HOA) are generally not covered by mandatory barangay conciliation. Many HOA–developer disputes can be filed directly with HSAC or court.

II. Who May Charge “Association Dues”?

A. Subdivisions (non-condominium)

Developer (during development / pre-turnover):
- May collect fees only if expressly allowed by the Deed of Restrictions (DoR), sales contracts, or a cost-sharing scheme for specific services (e.g., security, street lighting, garbage hauling) the developer actually provides before turnover.
- Charges must be reasonable, tied to actual services rendered, and non-duplicative of government-provided services.
Homeowners’ Association (HOA):
- Under RA 9904, a duly organized and recognized HOA may levy assessments/dues approved per its by-laws and budget to fund common services and facilities.
- After turnover (control/management of the subdivision common areas and services), the HOA becomes the proper entity to collect periodic dues. The developer, if it remains a lot owner, pays dues like any other owner but ordinarily should no longer separately impose its own community charges.
Turnover indicators (subdivision):
- Execution/implementation of turnover of open spaces, roads, facilities to the HOA or LGU, as applicable.
- HOA recognition/registration, adoption of by-laws and budget, election of officers, assumption of service contracts.
- Cessation of developer’s interim property management (except as contractor hired by HOA).

B. Condominiums

Condominium Corporation (or Association):
- Created under RA 4726 and the Master Deed with Declaration of Restrictions; it must collect assessments/dues to operate, maintain, and insure the common areas. These assessments typically constitute a lien on units until paid (subject to the master deed/by-laws).
Developer:
- As long as the developer controls the board per the master deed/by-laws (often tied to unsold unit percentage), it acts through the condominium corporation and collects via the corporation—not in parallel.
- After turnover of board control to unit owners, separate developer charges (outside the approved corporate budget) are generally improper, unless:
  - The developer is providing distinct, optional services under a contract with consenting unit owners; or
  - The master deed/by-laws clearly allow a specific developer fee (rare and often contestable if it results in duplication).

III. What Counts as “Double Collection”?

“Double collection” occurs when two entities simultaneously demand overlapping or duplicative payments for the same or substantially similar common services or facilities over the same period. Common scenarios:

Developer continues to bill a “maintenance fee” after the HOA/condo corp has already taken over and is collecting association dues for security, cleaning, and utilities.
Both developer and HOA require ID/vehicle stickers with separate fees funding the same gate security.
HOA dues include garbage collection while the developer bills a “sanitation” fee for the same pickups through the same contractor.
In a condo, the developer sends direct invoices for common-area electricity while the condo corp budget already covers MERALCO bills.

Core tests:

Authority – Does the charger have legal/contractual authority now?
Service identity – Are they charging for the same service or the same cost center?
Timing – Are charges for the same period?
Documentation – Do the by-laws/budget/board resolutions (HOA/condo corp) or DoR/master deed actually approve the line item?
Reasonableness/actuality – Is there a real service provided, at a reasonable cost, with traceable vendor contracts and receipts?

IV. Rights and Obligations of Owners and Associations

Owners are obliged to pay lawful assessments (HOA/condo corp) adopted according to by-laws and budgets. Non-payment may trigger interest, penalties, and collection suits; in condos, a statutory/contractual lien may attach to the unit.
Owners are not obliged to fund duplicated or unauthorized charges.
Associations must:
- Adopt a transparent annual budget, audited financials, and issue official receipts.
- Limit dues to common services/facilities; engage vendors under bona fide contracts.
- Avoid abetting developer duplication (e.g., pay directly for power/water in common areas when feasible).
Developers must:
- Turn over common areas/management when due and stop separate billing for services already assumed by the HOA/condo corp.
- Abide by PD 957 and permits/clearances; no deceptive practices or forced add-ons post-turnover.
- If acting as property manager, do so under HOA/condo corp contract and subject to its budget—not via unilateral developer invoices.

V. Practical Audit Checklist (Use Before Paying)

Identify control/turnover status
- Who controls the board/management today? Is the HOA/condo corp recognized and functioning?
Gather governing documents
- Master Deed/DoR, By-laws, House Rules, Sales Contracts, Turnover documents, Association budget/resolutions, Vendor contracts.
Map the services
- Security, janitorial, landscaping, elevator maintenance, genset diesel, common-area power/water, garbage, pest control, insurance. Who provides and who pays?
Reconcile invoices
- Match developer and HOA/condo corp billings by line item and period. Highlight overlaps.
Trace authority
- For each charge, cite the clause or resolution authorizing it. If none, flag as potentially unauthorized.
Compute reasonableness
- Compare against approved budget; check unit cost benchmarks; verify official receipts and withholding taxes where applicable.

VI. How to Stop Double Collection (Step-by-Step)

Internal Resolution
- Write the HOA/condo board (or property manager) detailing overlaps, attaching side-by-side billing comparison. Request board action (e.g., suspend duplicative line items, demand developer to cease, or negotiate credits/refunds).
- For condominiums: table the item in a members’ meeting; pass a resolution directing management to centralize all common-area costs within the corporate budget only.
Formal Demand
- Send a demand letter to the developer (and if needed, to the HOA/condo corp) to cease and desist from duplicate billing and to refund improper collections with legal interest. Cite turnover status, governing documents, and legal grounds (PD 957/RA 4726/RA 9904, unjust enrichment).
File with HSAC (Administrative)
- Relief options:
  - Cease and Desist Order against continued duplicate charges.
  - Refund/Accounting of improperly collected amounts with interest; damages for bad faith.
  - Directives to correct billing practices, honor turnover, and align with the approved association budget.
- Provisional remedies: Seek temporary orders to prevent disconnection/denial of services while the case is pending and to halt duplicate billing.
Civil Action (Courts), if needed
- Injunction to restrain unlawful collection; declaratory relief to interpret the master deed/DoR/by-laws; sum of money/damages; enforcement of refunds.
- Suitable when (a) issues exceed HSAC jurisdiction; (b) you need broader remedies or enforcement tools.
Regulatory Complaints
- DHSUD for licensing/permit issues or systemic developer violations of PD 957 and related issuances (possible administrative sanctions).
- LGU (post-turnover open spaces/roads) if a developer obstructs LGU-assumed services but still charges residents.

VII. Defenses and Counter-Arguments (and how to answer them)

“We’re still in ‘pre-turnover’, so we can bill.” → Ask for proof: pending punchlists, no acceptance of common areas, no recognized HOA/condo corp, or ongoing developer-provided services not yet assumed by the association. If the HOA/condo corp is functioning and paying vendors, developer billing is presumptively duplicative.
“Our fee is different from HOA dues.” → Check service identity. Labels (e.g., “sanitation fee”) don’t matter if it funds the same garbage contract already budgeted by the HOA.
“Deed of Restrictions allows developer to charge.” → Many DoRs allow temporary developer charges until turnover/association organization. Once turnover occurs, ongoing developer charges are typically ultra vires unless the developer is a contracted service provider paid by the HOA/condo corp (not by owners directly).
“Owners approved this when they signed.” → Consumer protection under PD 957 disfavors unjust charges. Adhesion clauses or perpetual developer fees that defeat association self-governance are vulnerable, especially when they cause duplication or are unreasonable.

VIII. Remedies: What You Can Recover

Refunds of unauthorized/duplicative payments, with legal interest from collection dates.
Damages: actual (e.g., penalties paid due to contested non-payment), and in cases of bad faith, moral and exemplary damages.
Attorney’s fees and costs where justified.
Administrative penalties against developers for PD 957 and related violations (through DHSUD/HSAC processes).
Structural relief: orders mandating proper turnover, unified billing under the HOA/condo corp, and transparent budgeting.

IX. Evidence Package (Build This Before You File)

Sales documents: Contract to Sell/Deed of Sale, reservation agreement, DoR/Master Deed, house rules.
Association documents: Articles and By-laws, recognition/registration, annual budgets, board resolutions, minutes, audited FS, assessment schedules.
Turnover papers: acceptance certificates, punchlists, inventory of common areas, service handover.
Invoices/ORs: side-by-side developer vs HOA/condo corp billings; vendor contracts; utility statements (MERALCO/MWCI/MWSI/local water district); proof of payments.
Correspondence: emails/letters showing objections, developer responses, and any threats (e.g., service denial).

X. Risk Management for Boards and Developers

For HOA/Condo Boards

Adopt a single-point billing policy for all common services.
Publish a clear Chart of Accounts and Service Map (who pays for what).
Require board approval for any third-party (including developer-affiliated) charges; avoid owner-direct parallel billing.
Contract a neutral property manager with clear KPIs and audit rights.

For Developers

Time-bound any interim fees; terminate them automatically on turnover.
If retained as property manager, switch to an HOA/condo-funded contract, not owner-direct charges.
Facilitate early HOA/condo organization and training to enable smooth turnover.
Keep separate company and association accounts; avoid commingling.

XI. Payment Withholding: Do or Don’t?

Withholding payment can be strategic, but weigh risks: late penalties, possible service disruption, and collection actions.
A safer approach is escrow or conditional payment under protest while pursuing HSAC relief—especially in condos where liens can attach.
If withholding, issue a written protest specifying the disputed items only, and continue paying undisputed lawful dues.

XII. Sample Outline: Demand Letter (Condensed)

Heading/Parties/Units
Statement of Facts – Turnover status, association in place, overlapping invoices.
Legal Basis – RA 4726/RA 9904/PD 957; lack of authority; unjust enrichment.
Specific Overlaps – Table of duplicate items, periods, amounts.
Demands – (a) Cease duplicate billing; (b) Refund within 15 days with interest; (c) Accounting; (d) preserve services.
Notice of Action – If not heeded, filing with HSAC (and/or court) for CDO, refund, and damages.
Attachments – Bills, budgets, resolutions, turnover docs.

XIII. FAQs

1) Can both developer and HOA/condo corp charge at the same time? Only in narrow, clearly documented circumstances (e.g., developer still lawfully provides specific, non-duplicative interim services pre-turnover). Post-turnover, association-only collection is the norm.

2) Are “move-in fees,” “activation fees,” and “ID/sticker fees” always illegal? Not automatically. They must be authorized, one-time, reasonable, and not duplicates of services already covered by dues.

3) What if the master deed says the developer can charge a percentage forever? Per consumer protection policy and association self-governance principles, perpetual developer take-rates face strong legal headwinds—especially when they duplicate association costs or undermine owners’ control.

4) Can utilities be cut if I dispute duplicate charges? Cut-offs for common areas are highly disfavored and can be restrained. For unit-level utilities, avoid arrears; pay undisputed amounts and put the rest in escrow while you challenge the duplicates.

XIV. Bottom Line

The default after turnover is one collector: the HOA/condo corporation.
Parallel developer billing for common services is presumptively improper unless clearly authorized and non-duplicative.
HSAC provides a focused, faster venue to stop double collection, order refunds, and realign governance.
A strong paper trail, quick board action, and a targeted demand + HSAC filing are the most effective path to results.

This article is general information for Philippine settings and not a substitute for specific legal advice. Facts vary; consult counsel for tailored guidance, especially before withholding payments or filing cases.