Refund of Association Membership Fees After Dismissal in the Philippines

A comprehensive legal article

Abstract

When membership in an association ends through dismissal, many Filipinos ask the same question: may a member recover the fees he or she paid to the organization? The answer depends on the kind of association, the source of the fee (capital, dues, or assessments), the governing statute, and—most decisively—the association’s own by-laws. This article gathers and systematizes the Philippine rules, jurisprudence, and administrative issuances on the refund of membership fees across four of the most common types of associations: labor unions, cooperatives, homeowners’ associations, and other non-stock, non-profit corporations (NSNPCs such as professional bodies or civic clubs). It also distills practical drafting and compliance tips for counsel and secretariats.

1. Why the issue matters

Economic stakes. Membership fees can range from a few hundred pesos in a small club to six-figure share-capital subscriptions in large cooperatives.
Constitutional and statutory overlay. The right to association (Art. III §8, 1987 Constitution) co-exists with the protection against taking of property without due process (Art. III §1). Balancing these can be contentious.
Governance and trust. Clear refund rules foster member confidence and reduce litigation risk.

2. Types of associations & the character of “membership fees”

Association	Governing statute	Nature of fee
Labor union	Labor Code of the Philippines (Pres. Decree 442, as amended), esp. Arts. 258–264 (formerly 250–256)	Union dues, agency fees, special assessments
Cooperative	Cooperative Code of 2008 (RA 9520, amending RA 6938)	Share capital and membership fee (often a nominal amount)
Homeowners’ association (HOA)	Magna Carta for Homeowners & Homeowners Associations (RA 9904) + HLURB now DHSUD rules	Membership dues, monthly or annual assessments
Other NSNPCs (professional orgs., NGOs, sports clubs)	Revised Corporation Code of 2019 (RA 11232)	Admission fee, periodic dues or assessments

Key takeaway: “Membership fee” could be a donation-like charge (common in unions and NSNPCs) or a capital contribution (cooperatives). The refund rules track this distinction.

3. Sources of law

Constitution:
- Right to association (Art. III §8) implies a corollary right to dis-associate.
- Due process and equal protection (Art. III §1) govern expulsions and property rights in fees.
Civil Code:
- Contractual force of by-laws (Arts. 1315, 1370): the by-laws are the contract between the association and its members.
- Unjust enrichment (Art. 22) and quasi-contract doctrines supply residual relief where no specific statute applies.
Special statutes (see table above).
Administrative rules
- DOLE Department Orders and BLR opinions on union dues.
- CDA Memoranda on share-capital refund timing (e.g., CDA MC 2010-04).
- DHSUD–HOA Model By-laws (2021) on assessments and refund of excess funds.
Jurisprudence
- Philtranco Service Employees Ass’n v. NLRC (G.R. 78729, 31 Jan 1989) – union cannot be compelled to refund regular dues already remitted through a valid check-off.
- Coastal Development Cooperative v. CDA (CDA Case 2011-132) – cooperative must refund a withdrawing member’s share capital within 60 days after end-of-fiscal-year unless net losses justify a later payout.
- San Antonio Village HOA v. Guanzon (HLURB Case 03-05-07) – HOA dues are in genere non-refundable except to the extent of unused special assessments collected for a specific project that is later abandoned.
- People’s Broadcasting Service, Inc. v. Sec. of Labor (G.R. 179652, 6 Mar 2012) – dismissal from employment ipso facto ends union membership; however, the union retains previously paid dues absent fraud or mistake.

4. Termination of membership: grounds & procedures

Association	Voluntary withdrawal	Involuntary dismissal	Key procedural safeguards
Labor union	Allowed anytime unless under union-security clause	Loss of employment, expulsion for cause	Due process in union constitution; BLR oversight if challenged
Cooperative	Written notice (30 days typical)	Violation of by-laws, acts injurious to coop	Art. 30–34, RA 9520; board hearing, appeal to GA
HOA	Written notice, surrender of facilities/passes	Non-payment, violation of deed restrictions	§13–15, RA 9904; notice & hearing; appeal to DHSUD
NSNPC	Resignation per by-laws	Gross misconduct, non-payment of dues	Secs. 73–75, RA 11232; board action & basic due process

5. Refund rules by sector

5.1 Labor unions

Legal character. Union dues are expenses for collective representation, not capital; once validly collected through check-off under Art. 259 (b), they become union property.
Effect of dismissal. Dismissal severs union membership but does not oblige refund of dues already collected. The remedy is to challenge the dismissal itself to retain union membership.
Exception – illegal check-off. Where deductions were made without written authorization (or beyond the CBA-authorized rate), the employer and union may be solidarily liable for restitution (National Brewery Corp. v. Phil. Brewery Workers’ Union, CA-G.R. No. 38322-R, 1952).

5.2 Cooperatives

Statutory right. Art. 30 (¶3) & Art. 72, RA 9520: withdrawing or expelled members are entitled to:
1. Refund of share capital at par or book value (whichever is lower) within 60 days after the close of the fiscal year in which membership ceased, subject to availability of retained earnings and liquidity.
2. Patronage refunds and interest on share capital already declared before the effective date of termination.
Membership fee (a one-time, often nominal amount) is generally non-refundable because it is treated as a sunk organizational cost, unless by-laws say otherwise.
Set-off. The cooperative may deduct any unpaid obligations of the member.

5.3 Homeowners’ associations

Statutory framework. RA 9904 is silent on refunds, so the by-laws control. Common clauses:
- Regular dues are non-refundable.
- Special assessments tied to a discrete project (e.g., road resurfacing) must be returned pro-rata if the project is abandoned or generates a surplus.
Case guidance. The HLURB has ordered refunds where (a) the amount collected exceeded actual cost by >10 %, and (b) the member exited before the funds were spent for the intended purpose.

5.4 Non-stock, non-profit corporations

Revised Corporation Code provisions.
- Sec. 34 – membership is personal and non-transferable unless the by-laws provide otherwise.
- Sec. 43(e) – boards may fix and collect dues and assessments … and impose sanctions for non-payment.
Refundability. In the absence of an express by-law clause, courts treat dues as consideration for services/privileges already enjoyed, hence non-returnable.
Equitable relief. If dismissal is found void for violation of due process, reinstatement with restoration of rights—including arrears in benefits financed by dues—may be ordered (St. Luke’s Medical Center Employees Ass’n v. St. Luke’s, NLRC RAB-IV-02-15348-12-2013).

6. Tax treatment of refunded amounts

Cooperative share-capital refund – not subject to income tax in hands of the member (Revenue Memorandum Circular 12-2010).
Excess HOA assessments returned to members – treated as return of capital; no VAT or income tax.
Union dues refund – generally de minimis and nontaxable as a mere restitution of over-withheld salary.

7. Practical drafting & compliance tips

Issue	Best-practice clause
Define fee categories	“Admission fee (non-refundable), Share Capital (refundable under Art. 72, RA 9520), Regular Dues (non-refundable), Special Assessment for Project X (excess refundable)”
Set refund timetable	“The cooperative shall pay the refundable amount not later than 60 days from the close of the fiscal year, unless the Board, for solvency reasons certified by the Audit Committee, defers payment up to an additional 180 days.”
Provide for set-off & documentation	“Any refund shall first be applied to outstanding obligations. A statement of account shall accompany the refund.”
Detail dispute mechanism	Multi-tiered grievance: Committee → Board → agency (BLR/CDA/DHSUD) → courts.

8. Common pitfalls

Omitting refund rules altogether in by-laws, leading to expensive litigation.
Treating member capital as working capital indefinitely and ignoring liquidity risk when several members resign at once.
Failure to secure individual check-off authorizations for union dues—later resulting in bulk refund orders.
Using special assessments for unrelated purposes without a fresh member vote.

9. Recommendations for counsel

Audit the by-laws annually for compliance with the latest statutes (e.g., RA 11232, RA 11535 for cooperatives engaged in insurance).
Create a refund reserve in the association’s budget equal to at least 10 % of annual dues or one-year’s projected withdrawals, whichever is higher.
Use clear exit forms that spell out (a) termination date, (b) refundable items & amounts, and (c) release of claims.
Educate members at onboarding about the non-refundable nature of certain fees.

10. Conclusion

Whether a dismissed member can recover his or her membership fee in the Philippines is never a one-size-fits-all rule. The decisive hierarchy is:

Special statute (e.g., RA 9520 for cooperatives).
Association by-laws (as the contract).
Civil-law equity (unjust enrichment) where neither of the above settles the matter.

Proper drafting, transparent accounting, and strict adherence to due-process safeguards not only minimize refund disputes but also strengthen the very associative bonds the Constitution seeks to protect.