The Legality of Increasing Condominium Dues in the Philippines

Condominium living relies on a shared financial spine: the association’s assessments (often called “condo dues”) that fund maintenance, utilities for common areas, security, insurance, management, and long-term repairs. Because costs change, boards sometimes raise dues. This article explains when, how, and how much dues may legally be increased in the Philippines, what due process looks like, and what unit owners (and tenants) can do if they disagree.

1) Legal Foundations

Condominium dues and any increase flow from three layers of law and contract:

Statute
- The Condominium Act (Republic Act No. 4726) establishes condominium ownership, common areas, and the association (often a non-stock corporation) that administers the project and levies assessments for common expenses.
- The Revised Corporation Code (RCC, RA 11232) governs how the association is run—board powers, meetings, notice, quorum, voting, by-laws, financial reporting, and members’ rights to inspect corporate books and records.
- The Department of Human Settlements and Urban Development (DHSUD) and the Human Settlements Adjudication Commission (HSAC) handle regulation and adjudication of condo disputes.
Governing Instruments
- Master Deed and Declaration of Restrictions: allocates percentage interests in the common areas (usually tied to floor area) and sets the basis for sharing common expenses.
- Articles and By-Laws: detail the association’s structure, the board’s authority to set budgets and levy regular and special assessments, required votes, notice, penalties/interest for late payment, and audit/reporting rules.
Board Resolutions and Approved Budgets
- The board proposes and adopts the annual budget and any special assessment, subject to the thresholds and procedures in the by-laws and the RCC.

Bottom line: Any increase in dues is valid only if it’s (a) authorized by the master deed/by-laws, (b) passed by the body with legal authority (board and/or members, depending on your by-laws), and (c) done with proper notice, documentation, and voting.

2) What Condo Dues Can (and Cannot) Cover

Proper purposes

Maintenance and repair of common areas (lobbies, elevators, corridors, façade, roofs, parking common areas, amenities).
Common utilities (electricity/water for common areas), janitorial, landscaping, pest control.
Security and building management/administration costs.
Insurance for the building/common areas.
Professional services (auditors, legal counsel, engineers).
Reserve/sinking funds for capital replacements (elevators, pumps, waterproofing, repainting).

Improper or questionable purposes

Expenses that benefit specific units only (unless charged back to those units).
Costs that are developer obligations during pre-turnover defects/rectification (snag list) if the developer still controls the board or has outstanding deliverables under the master deed or sale documents.
Fines or penalties not expressly authorized by the by-laws/resolutions.
Discriminatory charges against certain classes of owners or tenants.

3) Who Has the Power to Increase Dues?

Check your by-laws first. Typical frameworks:

Regular assessments (monthly dues): The board prepares the annual budget and computes dues (often by each unit’s percentage interest). Many by-laws authorize the board alone to set or adjust regular dues if the increase stays within specified parameters.
Special assessments (one-off or major projects): Often require member approval by a stated vote (e.g., simple or supermajority). By-laws may also limit the board’s power to impose special assessments above certain amounts without a members’ vote.
Emergency spending: By-laws may empower the board to levy urgent assessments for safety or legal compliance, with later ratification.

If the by-laws are silent, the RCC’s general corporate governance principles apply: the board manages corporate affairs but material changes that substantially affect members’ obligations typically require member participation per custom and fairness.

4) Due Process Requirements for a Valid Increase

While wording varies by project, procedural fairness is crucial:

Proposed Budget and Rationale
- A line-item budget and explanation (cost drivers, bids/quotes for major contracts, projected savings, status of reserves).
- Basis of allocation (percentage interest or other formula stated in the master deed/by-laws).
Notice
- Written notice of the meeting or board action following by-laws (method and lead-time).
- Availability of supporting documents for members’ inspection before the vote or adoption.
Meeting and Vote
- Quorum and voting thresholds per by-laws (different thresholds may apply to regular vs. special assessments).
- Clear minutes and a board resolution (and members’ resolution, if required).
Disclosure and Record-Keeping
- Circulated minutes, the approved budget, the computation matrix per unit, and the implementation date.
- Annual audited financial statements presented to members; members’ RCC right to inspect books and records at reasonable times.
Reasonableness and Non-Discrimination
- The increase must be reasonable, connected to legitimate common expenses, and uniformly applied per the allocation formula in the master deed/by-laws.

Failure in any of these steps is a common ground to challenge an increase.

5) Allocation and Computation

Default: proportional to each unit’s percentage interest in the common areas (often tied to floor area).
Commercial vs. residential: some mixed-use projects adopt different loadings (e.g., higher share for commercial) if the master deed/by-laws say so.
Exclusive-use areas (e.g., limited common elements like balconies or certain parking slots) may be treated specially if the governing documents provide for it.

6) Penalties, Interest, and Collection

Late charges/interest are lawful only if authorized in the by-laws or a properly adopted schedule of fees.
Privilege suspensions (e.g., guest access to amenities) may be allowed if by-laws permit, but essential services and legal rights of access to your unit cannot be arbitrarily curtailed.
Disconnection of utilities you pay directly to a public utility is not within the association’s power; however, associations can withhold non-essential services per by-laws.
Associations may collect judicially (small claims/regular courts) or through HSAC actions; they can also annotate liens when authorized by governing documents and law.

7) Transparency and Owners’ Rights

The RCC and standard by-laws give owners the right to:

Inspect financial records, contracts, and minutes at reasonable times.
Receive audited financial statements annually.
Question expenses that appear outside the common purpose (e.g., marketing events, political donations, or developer obligations).
Demand competitive bidding or at least multiple quotes for large contracts if by-laws or board policies require it.

8) Special Assessments and Reserve (Sinking) Funds

Reserve funds are industry-standard and—often by by-law—segregated for capital replacements (elevators, façade, MEPF equipment).
Special assessments fund major projects not covered by the regular budget (e.g., structural repairs, repainting cycles).
Validity usually turns on: (a) clear scope and necessity, (b) proper vote/thresholds, (c) transparent costing (engineer’s report, bids), and (d) segregation and tracking of collections.
Boards should avoid using reserves for operating shortfalls unless by-laws allow and members are informed.

9) Tenants vs. Owners

Liability for dues rests on the unit owner. Leases commonly pass this on to the tenant, but the association may still pursue the owner.
Associations may require tenant registration and can enforce house rules against tenants, but dues increases are ultimately a matter between the association and the member-owner.

10) Developer-Controlled Boards and Turnover

Before turnover, developers may control the board subject to legal timelines and the master deed.
Disputes arise where increases cover punch-list/defect rectification or amenities not yet delivered. Owners can challenge such charges, arguing they are developer obligations rather than common expenses.
After turnover, owners—through the association—assume operating costs; proper defect claims/warranties should be pursued against the developer instead of funding them from dues.

11) Challenging an Increase: Practical Steps

Read the governing documents (master deed, by-laws, rules). Identify the authorization clause, thresholds, and notice requirements.
Request documents: proposed and approved budgets, supporting quotations, the board resolution, minutes, audited FS, reserve schedules.
Engage internally: write the board, ask questions at meetings, propose alternatives (e.g., phased increases, cost controls, rebidding).
Check process defects: Was notice proper? Was quorum met? Was the computation per percentage interest? Are charges for proper purposes?
Seek mediation: Many associations or property managers entertain conciliation to avoid protracted disputes.
File a case with HSAC (or courts where appropriate) if due process was violated or the increase is unreasonable/ultra vires. You may seek injunctive relief to halt enforcement pending adjudication, especially if there is immediate harm.
Keep paying the undisputed amount: Withholding all dues can expose you to penalties; a safer route is to pay what you concede is due and escrow or protest the disputed portion while you challenge.

12) Common Red Flags (and How Boards Can Fix Them)

No line-item budget → Provide detailed budgets and the basis for each major cost.
One supplier, no bids → Get competing quotes; disclose selection criteria.
Lack of audited statements → Engage an external auditor; present annually.
Unequal or ad-hoc charges → Revert to the written allocation formula; pass a proper amendment if a change is needed.
Perpetual “temporary” fees → Sunset dates or periodic member ratification.
Using reserves to plug operating gaps → Disclose, obtain member consent, rebuild reserves with a structured plan.

13) FAQs

Q: Can the board raise dues without a members’ meeting? A: If the by-laws authorize the board to set the annual budget and dues, then yes—for regular assessments—provided notice, documentation, and reasonableness standards are met. Special assessments usually need a members’ vote.

Q: Is there a cap on percentage increases? A: There is no universal statutory cap. Any cap would be in your by-laws. Courts and HSAC focus on authority, process, and reasonableness, not a fixed percentage.

Q: Can the association back-bill increases retroactively? A: Increases generally apply prospectively from the effective date after proper approval/notice, unless your by-laws expressly allow catch-up assessments and the process was followed.

Q: Can amenities be shut off for non-payment? A: Non-essential privileges may be restricted if by-laws allow and due process is observed. Essential access to your unit and services you directly contract with public utilities should not be arbitrarily cut.

Q: Are parking slots treated the same? A: If titled as separate units, they usually carry their own percentage interests. If appurtenant to a unit, their share is folded into the unit’s percentage. Check the master deed.

14) Compliance Checklist for a Lawful Increase (Board Use)

By-law clause authorizing assessment/increase identified
Draft line-item budget and narrative rationale
Competitive quotes/engineer reports for big-ticket items
Notice sent per by-laws; documents available for inspection
Meeting held; quorum and voting thresholds met
Board/members’ resolutions passed and minuted
Computation matrix per percentage interest reviewed
Implementation date and billing mechanics announced
Segregation of reserves and reporting plan set
Audited FS and record-inspection procedures scheduled

15) Key Takeaways

Authority lives in your by-laws and master deed; start there.
Process matters: notice, documentation, quorum, voting, and clear minutes.
Reasonableness and purpose: increases must track legitimate common expenses and the agreed allocation formula.
Transparency is both a legal duty and the best defense to disputes.
Owners have remedies—inspection rights, internal challenges, mediation, and recourse to HSAC or the courts.

Final word

A dues increase is lawful when authorized, properly adopted, transparent, and reasonable. Boards that budget rigorously and disclose fully rarely face legal challenges; owners who keep communications open and focus on documents and process usually resolve disputes faster—and at lower cost—than those who litigate first. If large sums or structural issues are involved, consult counsel to review your specific master deed/by-laws and to calibrate the approval steps before you implement or contest an increase.