In the Philippine legal landscape, membership in a Homeowners’ Association (HOA) or a Cooperative is not merely a social affiliation; it is a contractual and statutory relationship governed by specific laws. When a member fails to fulfill financial obligations, the entity may declare them "delinquent." However, this power is not absolute. Under the principle of due process, an association or cooperative cannot summarily strip a member of their rights without following specific procedural safeguards.
I. The Statutory Framework
The requirements for declaring delinquency differ slightly depending on the nature of the organization, though they share the same constitutional foundation of fairness.
1. Homeowners’ Associations (HOAs)
Governed primarily by Republic Act No. 9904 (The Magna Carta for Homeowners and Homeowners' Associations) and its Implementing Rules and Regulations (IRR), as overseen by the Department of Human Settlements and Urban Development (DHSUD).
2. Cooperatives
Governed by Republic Act No. 9520 (The Philippine Cooperative Code of 2008) and the regulations issued by the Cooperative Development Authority (CDA).
II. What Constitutes Delinquency?
Generally, a member is deemed delinquent when they fail to pay at least three (3) months of cumulative regular monthly dues, fees, or special assessments. However, the mere fact of non-payment does not automatically trigger the "delinquent" status. A formal declaration process is mandatory.
III. The Essential Elements of Due Process
To validly declare a member delinquent, the Board of Directors must adhere to the "Notice and Hearing" rule. Failure to follow these steps can render the declaration null and void, potentially exposing the Board to damages.
1. The Demand Letter (Preliminary Notice)
Before initiating delinquency proceedings, the association or cooperative must send a statement of account and a formal demand letter. This gives the member an opportunity to settle the arrears or contest the computation.
2. The Show Cause Order (Notice of Hearing)
If the member fails to settle after the demand, the Board must issue a formal notice. This document must:
- State the specific grounds for delinquency (e.g., total amount owed and period of arrears).
- Direct the member to explain in writing, within a specific period (usually 15 days), why they should not be declared delinquent.
- Set a date for a hearing or conference where the member can present their side.
3. The Right to a Hearing
The member must be given a fair opportunity to be heard. This is not necessarily a full-blown trial but a meeting where the member can:
- Clarify errors in accounting.
- Request a payment plan or restructuring.
- Present evidence of prior payments.
4. Formal Resolution and Notice of Decision
After the hearing (or if the member fails to appear despite notice), the Board must issue a formal Board Resolution declaring the member delinquent. A copy of this resolution must be served upon the member. The status takes effect only upon receipt or after the lapse of the period to appeal.
IV. Consequences of Delinquency
Once a member is validly declared delinquent, certain rights are suspended. These typically include:
- The Right to Vote: They cannot vote in elections or on corporate matters.
- The Right to Be Voted For: They are disqualified from running for any elective office in the association or cooperative.
- Access to Facilities: In HOAs, the board may restrict the use of common areas (e.g., swimming pools, clubhouses) but cannot deny basic access to the member’s property or essential services like water (unless specific legal thresholds are met).
V. Remedies of the Member
A member who believes the delinquency declaration was made without due process has several avenues for relief:
| Entity | Primary Remedy |
|---|---|
| Homeowners' Association | File a verified complaint with the DHSUD for the annulment of the Board Resolution. |
| Cooperatives | Undergo the Mediation/Conciliation process mandated by the CDA; if failed, it may proceed to voluntary arbitration or CDA adjudication. |
VI. Jurisprudential Reminders
The Philippine Supreme Court has consistently held that bylaws and internal rules cannot override the fundamental right to due process. Even if the bylaws state that a member is "automatically" delinquent after 90 days of non-payment, the Board must still undergo the motion of sending notice and providing a hearing.
Key Takeaway: Delinquency is a status that must be "proven and declared," not merely "assumed."