Increasing HOA Dues Without a By-Laws Provision (Philippine Context)

This practical legal article explains how a Philippine homeowners’ association (HOA) can validly increase regular dues even if its current by-laws are silent on the mechanics of increases. It also covers member rights, governance requirements, due process, and remedies. It is general information—not a substitute for legal advice on a specific community.

1) First principles: what gives an HOA the power to charge dues?

In the Philippines, a duly registered HOA is a non-stock, non-profit corporation organized to manage and maintain the subdivision or village for the common benefit of its members. Three layers typically empower an HOA to collect money:

Statute. Philippine law on homeowners’ associations (the “Magna Carta” for HOAs) recognizes that an association may levy and collect reasonable dues, fees, and assessments necessary to carry out its purposes and maintain common areas and services.
Corporate charter. The Articles of Incorporation state the HOA’s purposes (security, garbage collection, streetlights, parks, drainage, etc.)—these are the legitimate ends for which money may be raised.
Internal rules. The By-Laws distribute powers between the Board and the members (meetings, quorum, voting, finance procedures), and may contain explicit formulas for dues or rules for changing them.

Key takeaway: Even when the by-laws don’t spell out how to increase dues, the power to levy typically exists. The legal question becomes who must approve and what process must be followed to validly implement an increase.

2) Dues vs. other charges: know what you’re increasing

Regular (periodic) dues fund the annual operating budget—security payroll, guards’ benefits, electricity for common lights, garbage hauling, administrative expenses, minor repairs, insurance, etc.
Special assessments fund specific, one-off capital projects—e.g., perimeter wall rehabilitation, water tank replacement, CCTV system rollout.
User fees cover opt-in amenities—e.g., clubhouse rental, pool passes.
Fines/penalties deter violations—e.g., illegal parking, construction without permits.

If the by-laws are silent about “increases,” an HOA can still seek member approval for (a) an increase to regular dues, or (b) a special assessment for defined projects. The approval threshold may differ (see §4–§5).

3) When by-laws are silent: who can approve an increase?

A. Board-only action is usually not enough

Because dues affect members’ property interests and are quasi-tax-like, member approval is generally required when the by-laws do not delegate rate-setting to the Board. Absent an explicit by-laws grant, a unilateral Board resolution is risky and vulnerable to challenge as ultra vires (beyond authority) or unreasonable.

B. What default rules apply?

Where the by-laws do not address a matter:

Member meeting quorum: ordinarily a majority of the total membership (not just those present by proxy unless allowed).
Voting threshold for ordinary business (including budgets/dues): typically a majority of members present with quorum—unless a higher threshold is prescribed by law or your by-laws.
Amendment thresholds:
- By-laws amendment—commonly: majority of the Board and majority of the members at a meeting with due notice.
- Articles of Incorporation amendment—higher (often two-thirds (2/3) of the members).

Practical rule: If your by-laws do not empower the Board to fix dues, take the question to the members at a properly noticed meeting and secure the required majority. For recurring, predictable adjustments, consider amending the by-laws to include a clear mechanism (see §6).

4) A lawful path to increase regular dues (without a by-laws clause)

Here is a conservative, litigation-resistant process that aligns with corporate governance norms and due-process expectations:

Build a line-item budget for the next fiscal year.
- Show last year’s actuals vs. this year’s forecast.
- Attach supplier quotations (security agency, garbage hauler), electricity estimates, wage increases, and contingency (e.g., 5–10%).
Compute the per-lot (or per-household) rate using a rational method:
- Equal shares per lot/household, or
- Pro-rata by lot area (if your governing documents use this), or
- Mixed (e.g., base fee + area multiplier). Use the same base the HOA has historically used unless there is a formal change.
Board resolution endorsing the proposed budget and dues rate for member approval.
- Cite the association’s statutory power to levy dues and the need for member approval due to by-laws silence.
- Attach the draft schedule of rates and rationale.
Notice of member meeting (annual or special).
- Send notices to all members at the addresses/emails on file and post on community boards/gates.
- Include: (i) agenda item expressly stating “Approval of FY ____ Budget and Increase of Regular Dues,” (ii) full budget packet, (iii) proposed rate table, (iv) proxy form, and (v) instructions for advance questions.
Conduct the meeting with quorum.
- Present the budget, key cost drivers, and alternatives considered.
- Allow Q&A; record minutes carefully.
- Vote: obtain the required majority of members present (or higher, if your by-laws or prior practice require it).
Adopt a confirming Board resolution recording the member approval and promulgate the new dues schedule (effective date, billing cycle, grace period, penalties for late payment if already authorized).
File/record what must be filed.
- Keep minutes, attendance, proxies, and resolutions in the corporate records.
- If your regulator requires filing of by-laws amendments (see §6) or certain finance schedules, submit the documents to the proper regional office.
- Update the HOA handbook and homeowner welcome kit.
Implement with due notice.
- Send written billing notices before the effective date.
- Provide modes of payment, installment options (if any), and a helpdesk contact.

5) Special assessments as an alternative (or supplement)

When the increase is driven by one identifiable project (e.g., CCTV replacement), it may be better to use a special assessment with a project-specific budget, timeline, and cap:

Provide an engineer’s estimate or contractor proposal.
State the total project cost, reserve draw (if any), and per-member allocation.
Seek member approval at a noticed meeting; collect in tranches tied to milestones.
Sunset the assessment once the project is completed and audited.

Special assessments are often easier to justify and defend because members can see where every peso goes.

6) Future-proofing: amend the by-laws

Silence today creates friction every budget season. Consider amending the by-laws to include:

Express rate-setting authority of the Board subject to member ratification (e.g., by simple majority) or a defined cap (e.g., up to X% above the prior year, beyond which a higher vote is required).
Indexation options (e.g., CPI-linked adjustments) with a ceiling.
Budget and audit calendar (deadlines for budget circulation, member review period, and ratification meeting).
Assessment base (per lot, per door, per square meter) and treatment of corner/irregular lots.
Penalties and interest for late payment (rate, grace period, demand protocol).
Hardship/indigency accommodations (clear, objective criteria).
Transparency provisions (audited financial statements; member inspection rights; reserve study every 3–5 years).

Approval mechanics:

Board approves proposed amendments; members approve at the thresholds required by law/by-laws; file the amended by-laws with the proper regulator.
Communicate the changes and publish an updated dues policy.

7) Due-process checklist (what makes an increase “reasonable”)

A dues increase is more likely to withstand challenge if the HOA can show:

Purpose nexus: The increase relates directly to HOA purposes (security, common lighting, sanitation, maintenance, insurance, admin).
Evidence-based budgeting: Quotes, wage/benefit adjustments, electricity tariffs, inflation assumptions.
Fair apportionment: The method (per lot/area/mixed) is consistent with governing documents or properly approved.
Member participation: Adequate notice, intelligible budget materials, Q&A, and recorded voting.
Transparency: Access to prior audited financials, reserve reports, and vendor contracts.
Non-discrimination: All similarly situated lots are treated alike.
No windfall: No accumulation of excessive, idle surpluses without earmarks or reserve policy.
Proportional penalties: Penalty/interest rates are reasonable and previously authorized.

8) Common pitfalls (and how to avoid them)

Board-only increases where by-laws are silent → Seek member ratification.
Bundling unrelated capital projects into “regular dues” → Use special assessments with project detail.
Changing the assessment base (e.g., from per lot to per sqm) without member approval → Treat as a by-laws amendment or major policy requiring member vote.
Inequitable exemptions (e.g., waiving dues for favored lots) → Avoid; adopt a written hardship policy instead.
Retroactive billing → Implement prospectively after proper notice.
No records (missing notices, proxies, signed minutes) → Maintain a paper trail; it’s your best defense.

9) Member rights and remedies

Homeowners who believe an increase is unlawful or unreasonable may:

Use internal remedies
- Request access to financials and minutes.
- Elevate to the grievance/ethics committee.
- Petition for a special meeting if thresholds are met (often 20% of members).
Regulatory/administrative
- Seek mediation/conciliation with the housing authorities.
- File an administrative complaint against the HOA/Board for ultra vires acts, denial of due process, or unreasonable assessments.
Judicial
- File for injunctive relief to stop collection of an invalid increase, and/or seek damages where warranted.

Practical tip for HOAs: Settlement via revision of rates, phasing, or converting part of the increase into a time-bound special assessment often resolves disputes without litigation.

10) Documentation toolkit (ready-to-adapt)

A. Board Resolution (for member approval of dues increase)

Title: Endorsing the FY ____ Operating Budget and Proposed Increase of Regular Dues for Member Approval Whereas: (1) The Association is mandated to maintain security, sanitation, lighting, and other common services; (2) Forecasted costs for FY ____ exceed current collections; (3) The by-laws are silent on rate-setting mechanics; Resolved: (a) To approve and endorse the FY ____ budget (Annex “A”); (b) To recommend the regular dues schedule (Annex “B”) for member approval at a duly noticed meeting; (c) To authorize the President/Secretary to issue notices and receive proxies.

B. Notice of Meeting (excerpt)

Agenda Item 3: Approval of FY ____ Budget and Increase of Regular Dues Materials: Budget packet with last year actuals, supplier quotes, proposed rate table, and FAQs Voting: Majority of members present with quorum (unless your by-laws prescribe a higher threshold) Proxy: Enclosed form; submit 48 hours before the meeting.

C. Member Resolution (for adoption at the meeting)

Resolved: That the membership hereby approves the FY ____ budget (Annex “A”) and the increase of regular dues effective __ ______ 20__, as per the schedule in Annex “B”, and authorizes the Board to implement collection and related measures consistent with the by-laws and applicable law.

11) Special issues & FAQs

Q1: Our by-laws say nothing about penalties. Can we impose late-payment interest with the increase? Not via a dues-increase vote alone. Penalties and interest should be expressly authorized in the by-laws or a duly approved policy clearly referenced in your notice and resolution.

Q2: Are tenants or non-member residents bound by the increase? The obligation falls on the lot owner/member. Many HOAs require owners to ensure their tenants comply; some allow billing to a tenant with owner consent, but non-payment liability remains with the owner.

Q3: Can we deny gate stickers or IDs for non-payment? Reasonable administrative measures that don’t compromise safety are common, but essential access and security may not be withheld. Use lawful collection remedies rather than punitive access restrictions.

Q4: We already approved the annual budget; do we still need a separate vote for the increase? If the budget approval explicitly included the dues schedule (and this was in the notice and discussed), that can suffice. When in doubt, re-ratify the dues schedule.

Q5: Can we back-bill the approved increase to earlier months in the same year? Avoid retroactivity. Implement prospectively from a date after proper notice.

Q6: What if quorum repeatedly fails? Use layered notice (email + posting + SMS/Viber), proxies, and schedule at peak availability. If your by-laws allow adjourned meetings with reduced quorum, follow that rule strictly. Otherwise, call another meeting; do not treat silence as consent.

12) A short compliance roadmap (one page)

Assemble the numbers → budget, quotes, variance vs. last year.
Choose the charging base → per lot/area/mixed (consistent with existing rules).
Board endorses → resolution + full packet.
Notify members → clear agenda, full materials, proxy.
Hold meeting → quorum, presentation, Q&A, vote; keep minutes.
Formalize → Board resolution confirming member approval; publish schedule & effective date.
Record & file → keep notices/proxies/minutes; submit filings as required.
Implement → billing, grace period, payment channels; monitor and report.
Audit and report → circulate financials; evaluate reserve needs.
Amend by-laws → adopt a durable mechanism for annual adjustments.

Final word

When by-laws are silent, the safest path is member-centered approval on a transparent record. Good process—clear notice, intelligible budgeting, fair allocation, and faithful documentation—is your best defense and the surest way to keep the lights on, the guards paid, and the neighborhood thriving.