Homeowners Association Authority to Evict for Non-Payment of Dues in the Philippines

Introduction

In the Philippines, Homeowners Associations (HOAs) play a crucial role in managing residential subdivisions, condominiums, and other community developments. These associations are responsible for maintaining common areas, enforcing community rules, and ensuring the overall welfare of residents. A key aspect of their operations is the collection of association dues, fees, and assessments, which fund these activities. However, when homeowners fail to pay these dues, questions arise about the HOA's authority to enforce payment, particularly through drastic measures like eviction.

This article explores the legal framework governing HOAs' powers in the Philippine context, focusing on their authority—or lack thereof—to evict homeowners for non-payment of dues. It draws from primary statutes such as Republic Act No. 9904 (Magna Carta for Homeowners and Homeowners' Associations), Republic Act No. 4726 (Condominium Act), Presidential Decree No. 957 (Subdivision and Condominium Buyers' Protective Decree), and related jurisprudence. Importantly, while HOAs have various remedies for delinquencies, direct eviction is not typically within their unilateral power. Instead, enforcement often involves suspension of rights, imposition of liens, foreclosure proceedings, or court intervention, which may indirectly lead to loss of possession.

The discussion is divided into key sections: the legal basis for HOAs, their powers to collect dues, remedies for non-payment, distinctions between property types (e.g., condominiums vs. subdivisions), procedural requirements, homeowner rights, and relevant case law.

Legal Basis for Homeowners Associations

HOAs in the Philippines are primarily regulated by Republic Act No. 9904 (RA 9904), enacted in 2010, which serves as the Magna Carta for Homeowners and Homeowners' Associations. This law defines an HOA as a non-stock, non-profit corporation registered with the Housing and Land Use Regulatory Board (HLURB, now part of the Department of Human Settlements and Urban Development or DHSUD) or the Securities and Exchange Commission (SEC). Its purpose is to manage and administer common areas and facilities in subdivisions, condominiums, or planned communities.

Complementary laws include:

Republic Act No. 4726 (RA 4726), the Condominium Act of 1966, which specifically governs condominium projects and provides for the creation of condominium corporations (akin to HOAs for condos).
Presidential Decree No. 957 (PD 957), the Subdivision and Condominium Buyers' Protective Decree of 1976, which regulates the sale and development of subdivisions and condominiums, including provisions on assessments.
Republic Act No. 11201, which reorganized the HLURB into the DHSUD, maintaining oversight over HOAs.

Under these laws, HOAs derive their authority from their articles of incorporation, by-laws, and deed restrictions agreed upon by homeowners at the time of purchase. Membership in an HOA is mandatory for property owners in covered developments, as per Section 6 of RA 9904.

Powers of HOAs to Collect Dues and Assessments

Section 10 of RA 9904 enumerates the powers and duties of HOAs, including the authority to:

Adopt and amend by-laws, rules, and regulations.
Collect reasonable association dues, fees, and charges to finance operations.
Enforce collection through appropriate remedies.

Dues are typically outlined in the HOA's by-laws and may include regular monthly fees, special assessments for repairs or improvements, and fines for violations. These must be "reasonable" and approved by a majority of members, as mandated by Section 9 of RA 9904. Unreasonable or arbitrary dues can be challenged before the DHSUD or courts.

In condominiums, Section 9 of RA 4726 allows the condominium corporation to levy assessments proportional to the owner's share in the common areas. Failure to pay creates a lien on the unit, as per Section 20.

Remedies for Non-Payment of Dues

HOAs do not have inherent police power or judicial authority to evict homeowners directly. Eviction, in legal terms, refers to the forcible removal of a person from property, typically through ejectment suits (forcible entry or unlawful detainer) under Rule 70 of the Rules of Court. This is more common in landlord-tenant relationships, not owner-association dynamics.

Instead, RA 9904 and related laws provide graduated remedies for delinquencies:

Notice and Demand: The HOA must first issue a written notice to the delinquent member, specifying the amount due, deadline for payment, and consequences of non-payment (Section 11 of RA 9904).
Imposition of Interest and Penalties: By-laws may allow for interest (e.g., 1-2% per month) and penalties on overdue amounts.
Suspension of Membership Rights: Under Section 11, delinquent members may be suspended from:
- Voting in meetings.
- Using common facilities (e.g., pools, parks, clubhouses).
- Holding office in the HOA. This suspension does not affect the owner's right to occupy their property but can make living in the community inconvenient.
Lien on Property:
- In condominiums (RA 4726, Section 20), unpaid assessments constitute a lien on the unit, superior to all other liens except real estate taxes and mortgages registered prior to the declaration of condominium.
- In subdivisions, RA 9904 (Section 10) allows HOAs to enforce liens if provided in the by-laws or deed of restrictions. PD 957 (Section 27) also permits developers to include such provisions in sales contracts.
Foreclosure of Lien:
- This is the closest mechanism to "eviction." The HOA can foreclose on the lien through judicial or extrajudicial means, leading to the sale of the property at public auction.
- For condominiums, foreclosure follows the procedures in Act No. 3135 (as amended) for extrajudicial foreclosure or through court action.
- Upon sale, the new owner (potentially the HOA itself) can then seek possession, which might involve evicting the former owner if they refuse to vacate.
- However, foreclosure requires due process: notice, hearing (if contested), and compliance with redemption periods (one year for judicial foreclosure under the Civil Code).
Civil Action for Collection: The HOA can file a collection suit in court for the unpaid amount, plus damages and attorney's fees. If a lien exists, this can be combined with foreclosure.
Criminal Action (Rare): In extreme cases, if non-payment involves fraud or estafa (under Article 315 of the Revised Penal Code), criminal charges might apply, but this is uncommon for simple delinquencies.

Direct self-help eviction (e.g., locking out the owner or cutting utilities) is illegal and can expose the HOA to liability for damages, as it violates due process under Article III, Section 1 of the 1987 Constitution.

Distinctions Between Condominiums and Subdivisions

The authority to enforce payment varies by property type:

Condominiums: Stronger remedies due to RA 4726's explicit lien and foreclosure provisions. The unit owner holds a separate title to their unit plus an undivided interest in common areas. Non-payment directly threatens the project's financial stability, justifying liens.
Subdivisions: Governed more by PD 957 and RA 9904. Liens are possible if stipulated in the deed of restrictions, but foreclosure is less straightforward. HOAs in subdivisions often rely on suspension of rights or court collection suits. Eviction-like outcomes require proving the delinquency amounts to a breach of contract warranting rescission of the sale (Civil Code, Article 1191), which is rare.

In mixed developments (e.g., townhouses), the governing law depends on the project's registration.

Procedural Requirements and Due Process

Any enforcement action must adhere to due process:

HOA Board Resolution: Actions require board approval and member notification.
DHSUD Mediation: Disputes, including delinquencies, can be mediated by the DHSUD before litigation (RA 9904, Section 21).
Court Jurisdiction: Small claims courts handle amounts up to PHP 400,000; regular courts for higher amounts or foreclosure.
Prescription: Claims for unpaid dues prescribe in 10 years (Civil Code, Article 1144 for written contracts).

HOAs must act in good faith; abusive enforcement can lead to dissolution or penalties under RA 9904, Section 23.

Rights of Homeowners

Homeowners are protected by:

Right to Contest Dues: Challenge unreasonable assessments via HOA meetings or DHSUD petitions.
Redemption Rights: In foreclosure, redeem the property within the statutory period.
Constitutional Protections: Against deprivation of property without due process.
Buyers' Protections: Under PD 957, developers cannot forfeit payments arbitrarily, and this extends to HOA assessments in some cases.

Delinquent owners can negotiate payment plans or seek injunctions if enforcement is improper.

Relevant Jurisprudence

Philippine courts have clarified HOA powers in several cases:

Valley Golf & Country Club, Inc. v. Vda. De Caram (G.R. No. 158805, 2004): Emphasized that HOAs' rules must be reasonable and not violate property rights.
China Banking Corp. v. Lozada (G.R. No. 164919, 2008): Upheld condominium liens' priority in foreclosure.
Sta. Lucia Realty & Dev., Inc. v. Cabrigas (G.R. No. 134757, 2001): Stressed due process in enforcing subdivision restrictions, implying similar for dues.
More recent decisions from the DHSUD and courts reinforce that eviction without judicial process is void, as in cases involving unauthorized utility cutoffs.

Conclusion

In summary, while Philippine HOAs have robust mechanisms to collect dues—ranging from suspensions and liens to foreclosure—they lack direct authority to evict homeowners for non-payment. Eviction typically results indirectly from foreclosure proceedings, where the property is sold, and the new owner enforces possession through legal channels. This framework balances the HOA's need for financial stability with homeowners' property rights.

Homeowners facing delinquency should promptly address issues through dialogue or mediation to avoid escalation. HOAs, meanwhile, must exercise powers judiciously to prevent legal backlash. For specific cases, consulting a lawyer or the DHSUD is advisable, as outcomes depend on the HOA's by-laws, property type, and factual circumstances. This ensures compliance with evolving interpretations of the law in the Philippine legal system.