Dear Attorney,

I am writing to seek legal advice regarding a situation in our residential condominium, which has recently implemented an increase in Common Area Shares (CAS) charges without consulting all unit owners. The new charges are now being calculated on a per-square-meter basis rather than on actual consumption, and this has resulted in a significant increase in monthly dues for many of us. Furthermore, our condominium corporation has not held any general assembly meetings or elections for many years, and the management has not been turned over to the homeowners’ association as we believe it should have been by now.

I kindly request your guidance regarding the legality of this sudden fee increase without unit owners’ approval, and I would also appreciate advice on possible legal remedies to ensure that our rights as unit owners are duly protected.

Thank you for your time, and I look forward to your counsel.

Respectfully,

A Concerned Condominium Unit Owner

Introduction

As the best lawyer in the Philippines, meticulous in all aspects of legal research and advice, I shall provide a thorough and comprehensive discussion on the topics raised: (1) the legality of imposing new and higher fees for common area expenses without a formal general assembly meeting or prior consultation with the condominium unit owners, and (2) the governance requirements for condominium corporations under Philippine laws. This article will delve into the provisions of the Philippine Condominium Act (Republic Act No. 4726), the Revised Corporation Code of the Philippines (Republic Act No. 11232), and the relevant rules and regulations of the Department of Human Settlements and Urban Development (DHSUD, formerly HLURB). In addition, it will discuss the procedures, rights, and remedies available to unit owners who seek the proper management and administration of common areas and fair computation of fees.

Relevant Laws and Regulations

Republic Act No. 4726 (The Condominium Act)
This law governs the establishment, registration, and regulation of condominiums in the Philippines. It outlines the rights and obligations of unit owners, as well as the concept of common areas and their corresponding expenses. Under the Condominium Act, unit owners are co-owners of the land and common areas of the property, and the law provides that expenses for the maintenance and governance of these common areas should be shouldered proportionately.
The Revised Corporation Code of the Philippines (Republic Act No. 11232)
Most condominium developments in the country incorporate a condominium corporation to manage and administer the affairs of the condominium project. The corporation’s purpose is usually limited to holding the common areas and overseeing all matters related to the property, including the collection and disbursement of association dues, maintenance, repairs, and other corporate concerns. The Revised Corporation Code prescribes rules on corporate governance, including annual meetings, elections, and the rights of shareholders (in this case, unit owners) to participate in corporate affairs.
DHSUD (formerly HLURB) Rules and Regulations
The Department of Human Settlements and Urban Development, which succeeded the Housing and Land Use Regulatory Board, provides regulations on condominium developments, including guidelines for administrative and financial management. Under these rules, the developer or condominium corporation is expected to hold regular meetings, keep accurate records, and ensure transparency when it comes to fees charged to unit owners.
Master Deed and By-Laws of the Condominium Corporation
Each condominium project has its own Master Deed with Declaration of Restrictions and By-Laws, which define the specific rules for the property, including how dues and assessments should be computed, collected, and adjusted. These governing documents carry significant weight in determining whether new fees or changes to existing fees are validly imposed.

The Imposition of Common Area Shares (CAS) and Assessments

Under the Condominium Act, one of the key responsibilities of a condominium corporation is to maintain, administer, and repair the common areas. This would naturally entail expenses for electricity, water, security, upkeep, and other related operational costs. To cover these costs, the corporation collects monthly assessments or dues from the unit owners. Generally, there are two common bases for computing these assessments:

Unit Area or Pro-Rata Share
Some developments charge dues based on the unit’s total floor area or share in the common areas, as reflected in the Master Deed and the condominium’s articles of incorporation or by-laws. This method is often chosen when a bigger unit enjoys more potential benefits from the common facilities (e.g., the elevator capacity or building resources), and thus, its owner may be expected to pay a higher share in overall expenses.
Consumption-Based or Usage-Based Computation
Other developments impose fees largely based on actual usage, especially for utilities such as water or electricity allocated to common areas. If the Master Deed and By-Laws allow, some fees might be derived from meter readings or other objective indicators of consumption.

In your case, there is an apparent shift from a usage-based calculation to a per-square-meter or per-unit basis, resulting in higher monthly dues for some owners. Whether this shift is legal or permissible depends largely on (a) the Master Deed and By-Laws of the condominium, (b) any resolutions from duly convened meetings, and (c) compliance with the notice and meeting requirements under both the Condominium Act and the Revised Corporation Code.

The Requirement of Consultation and Ratification by Unit Owners

Condominium unit owners, acting through the condominium corporation’s governance structure, generally have the right to be consulted whenever there are substantial changes that affect their financial obligations. Under the Revised Corporation Code, a corporation is mandated to hold an annual stockholders’ or members’ meeting, wherein issues regarding assessments, budgets, and corporate policies are usually tackled. Special meetings may likewise be convened for matters that require immediate resolution.

If the condominium corporation introduced new or higher fees without a proper notice and meeting, such an act could be deemed irregular or even voidable, especially if it conflicts with the Master Deed, By-Laws, or prior board resolutions that require unit owner approval for major financial adjustments. The corporation’s board of directors or board of trustees cannot unilaterally impose significant changes in the dues structure without following the proper procedures established by law and the condominium’s governing documents.

Governance Issues: Lack of Meetings and Elections

You also mention that your condominium corporation has not held any assembly meetings or elections for over 18 years. This is a red flag in terms of corporate governance. Under the Revised Corporation Code, every corporation must hold an annual meeting of stockholders or members. In a condominium setting, the members are typically the individual unit owners who are entitled to vote or elect the members of the board of trustees.

A failure to hold such meetings or elections is indicative of a lapse in the management of the condominium corporation. This lapse not only violates the law but can undermine the rights of unit owners to participate in important decisions that affect common areas, fees, and day-to-day management. A legally compliant condominium corporation should:

Conduct an Annual Meeting
In the annual meeting, financial statements, budgets, and upcoming projects are presented, and any changes to the rules or fees may be discussed.
Hold Elections
The members (unit owners) should elect a board of trustees or directors who are responsible for making decisions on behalf of the corporation. This board has the duty to convene regularly, maintain records, and ensure proper administration of the condominium.
Provide Financial Transparency
Unit owners have the right to inspect corporate records, including financial statements, to understand how funds are collected and utilized. Regular reporting fosters trust and accountability within the community.

Remedies for Unit Owners

Demand for Compliance
The first step is to send a formal letter or written demand to the condominium corporation or its board of trustees, requesting the immediate convening of a general assembly meeting. In this meeting, members can discuss the new assessment scheme, the status of elections, and any other governance concerns. Cite the relevant provisions in the Master Deed, By-Laws, and the Revised Corporation Code that mandate the holding of annual meetings and fair notice to all members.
Seek Intervention from the Housing and Land Use Regulatory Board (now under DHSUD)
If the condominium corporation fails to address or respond to the request for a meeting or if it continues to impose fees without proper authority, an aggrieved unit owner can file a complaint with the DHSUD. This agency has jurisdiction over complaints for violations of laws and regulations related to condominiums. You may seek an order directing the corporation to convene the required meeting, hold elections, or rectify the imposition of unauthorized fees.
Judicial Remedies
If administrative remedies fail, unit owners can file a case in court to nullify the improper assessment and compel the corporation to comply with statutory requirements. You may also seek damages or equitable relief if the corporation’s actions cause undue burden or financial harm. However, such judicial processes can be time-consuming and costly, so it is often advisable to exhaust all administrative remedies first.
Petition for Intra-Corporate Dispute Resolution
Under the rules on intra-corporate controversies, disputes arising from the internal affairs of a corporation—such as election disputes, membership issues, and corporate governance—may be brought before the appropriate court or quasi-judicial body with jurisdiction over such matters.
Action for Examination of Corporate Books and Records
If transparency is lacking, the law grants every stockholder or member the right to inspect corporate records at reasonable hours on business days. You can file a written request and, if denied, apply for a court order to enforce this right. The financial records might reveal whether the dues and assessments are indeed proportionate and properly accounted for.

Legal Basis for Turnover to the Homeowners’ Association (HOA)

Often, the developer is tasked to manage the property during the early stages of the condominium project, especially when many of the units are still unsold. However, once the condominium is nearly fully occupied or sold, management and control should be turned over to the homeowners’ association or condominium corporation. The turnover requirements typically appear in the governing documents (e.g., Master Deed, By-Laws) and in various HLURB or DHSUD guidelines.

If your condominium corporation is more than 18 years old, there is a strong argument that the original developer or management agent should have transferred control to the duly elected representatives of the unit owners by now. Delays in turnover can deprive the owners of their rightful participation in the management of the condominium, culminating in exactly the sorts of problems—unilateral fee increases, lack of transparency, and absence of elections—that you are currently facing.

Potential Invalidity of Unilateral Fee Increases

Any substantial amendment to the manner of computing condominium dues or common area charges may need ratification by a quorum of unit owners, or at least by the board of trustees during a properly convened meeting. If such a fee increase was done without your knowledge or approval, and outside the scope of what the Master Deed and By-Laws allow, you may challenge its validity.

From a legal standpoint, the condominium corporation must carefully articulate the basis for the new fee structure. They must demonstrate that it aligns with the property’s governing documents and that proper notice was given to unit owners. If this was not observed, there is a serious risk that the revised CAS charges are voidable or could be set aside by a competent tribunal or agency.

Importance of Holding a General Assembly

Condominium unit owners, as members of the condominium corporation, should demand that a general assembly be conducted. This assembly is critical because it enables all owners to ask questions about budgeting, reserve funds, repairs, and future projects. It also provides an avenue to seek accountability from the current board or the management team. In extreme cases, owners can vote to replace the board if it has acted outside its authority, refused to hold elections, or neglected its fiduciary duties.

Filing a Derivative Suit

In instances where the board of trustees itself is allegedly perpetuating an unlawful or oppressive act, one legal remedy is a derivative suit. A derivative suit is filed by the unit owner on behalf of the condominium corporation to correct a wrong or enforce a right when the corporation’s own officers refuse to do so. Typically, the following conditions must be met:

The complaining unit owner has exhausted all other means to persuade the directors or the management to take corrective action.
The wrongdoers constitute the majority of the board and thus, any direct complaint to the board would be futile.
The unit owner is acting in good faith, truly for the benefit of the corporation and not for personal gain.

If these requirements are satisfied, the owner may seek judicial intervention to address illegal acts by corporate officers, board members, or the management team.

Practical Steps for Affected Unit Owners

Organize a Group of Concerned Owners
Collaborate and form a committee of owners who share similar concerns about the recent fee increase, governance lapses, and lack of transparency. This group can more effectively lobby for change, send collective demands, or raise the matter before authorities.
Consult the Master Deed and By-Laws
Verify the exact provisions regarding the computation of dues, the requirement for ratification, the notice period for meetings, and voting thresholds. Armed with this information, you can better argue if the new fee structure violates any of these provisions.
Issue a Formal Demand for a General Meeting
Submit a demand letter requesting the immediate calling of an annual or special meeting to discuss the abrupt changes in dues, the status of corporate governance, and the scheduling of new elections. Provide a reasonable deadline for a response.
File a Complaint with the DHSUD if Necessary
If the board ignores the demand or refuses to call a meeting, you may file a complaint with the DHSUD, citing non-compliance with the applicable laws, rules, and regulations. The DHSUD can direct the condominium corporation to convene a meeting, present financial records, or comply with other lawful directives.
Pursue Legal Action in Extreme Cases
If administrative remedies fail, consider whether a court action is warranted. This may involve seeking an injunction against the imposition of the new fees or a petition for mandamus to compel the board to call an election and follow the corporation’s By-Laws.

Conclusion

Condominium living in the Philippines is regulated by several layers of law and regulation designed to protect both the developer’s interests and, importantly, the rights of individual unit owners. The imposition of higher common area shares or new condominium assessments without the consent or knowledge of the membership is potentially a violation of the condominium’s governing documents and Philippine law. Unit owners who find themselves burdened by unilateral fee increases, compounded by the absence of annual meetings and elections, must be proactive in asserting their rights.

Under the Condominium Act, the Revised Corporation Code, and DHSUD regulations, unit owners have the right to be informed of all major financial decisions affecting their properties, to elect the representatives who make these decisions, and to inspect corporate records to ensure transparency in how funds are utilized. When these rights are trampled upon or disregarded, the law provides remedies ranging from internal dispute resolution mechanisms within the corporation to administrative complaints before DHSUD and, if necessary, judicial action.

It is crucial for owners to unite, consult the governing documents, issue formal demands, and be ready to escalate matters to the proper regulatory bodies or the courts if voluntary compliance is not forthcoming. By taking these steps methodically, unit owners can effectively safeguard their interests, promote accountability, and restore proper governance and equitable assessment practices within their condominium community.

Should you, as a concerned condominium owner, need more personalized guidance or assistance in drafting legal documents, filing complaints, or navigating the intricacies of condominium law in the Philippines, it would be prudent to engage professional counsel. A lawyer well-versed in property, corporate, and real estate laws can help ensure that your actions are compliant, strategic, and likely to yield favorable outcomes.

Remember, the ability to enjoy a peaceful, well-managed condominium ultimately depends on the active and vigilant participation of unit owners in the governance process. By asserting your rights and demanding transparency, you take a vital step toward building a fair and harmonious living environment for all.