Civil liability in condominium disputes: The Supreme Court clarifies the HSAC’s jurisdiction

The rise of condominium developments across the Philippines has inevitably given rise to a plethora of issues and disputes between buyers and developers. To address these, the current legal framework provides various remedies against erring developers. For instance, Presidential Decree No. 957, or the Subdivision and Condominium Buyers’ Protective Decree, allows buyers to pursue criminal cases against developers who fail to deliver condominium titles.

But what happens when buyers also want to seek damages for the harm that they have suffered? Should their claims for civil liability be filed with the Human Settlements Adjudication Commission (HSAC, formerly the HLURB or Housing and Land Use Regulatory Board), which has jurisdiction over various housing-related disputes, or with the regular courts?

The Supreme Court answered this in the case of Vivien M. Cadungog v. Sung Ha Jung (G.R. No. 254543, April 2, 2025), which involved a criminal case filed by a buyer against a developer for failure to deliver the title to the condominium unit.

THE CASE
The dispute arose out of a Contract to Sell between a buyer and a developer of a condominium building in Cebu City. Under the contract, the buyer agreed to pay a downpayment for the unit, with the balance to be paid upon its delivery.

Upon the completion of the unit, the developer refused to deliver it, claiming that the buyer had not yet fully paid the purchase price. This prompted the buyer to file a criminal complaint against the developer for violation of Presidential Decree No. 957. The buyer alleged that the developer failed to deliver the title of the unit despite acceptance of the full purchase price of the condominium unit.

The Regional Trial Court dismissed the criminal complaint, finding that since the buyer had yet to pay the full purchase price for the unit, then the developer was under no obligation to deliver the title. However, the Regional Trial Court ruled that the developer was civilly liable, ordering either the delivery of the condominium unit to the buyer upon full payment or reimbursement of the amount already paid by the buyer.

The developer then questioned the award of civil liability, arguing that jurisdiction over the civil aspect of the case belonged to the HLURB.

The Supreme Court found that the civil liability of the developer did not arise out of a crime, but from the parties’ contractual obligations. The Supreme Court noted that the dispute between the parties arose out of the Contract to Sell that they entered into. Since the dispute involved a condominium developer and a buyer, jurisdiction over the civil aspect fell exclusively with the HLURB’s authority.

THE HLURB’S (NOW HSAC) JURISDICTION
While regular courts exercise general jurisdiction over contractual disputes, P.D. No. 957, as amended, expressly vested the HLURB with exclusive and original jurisdiction over contractual disputes between condominium developers and buyers.

With the passage of Republic Act No. 11201, the HLURB was reconstituted, and its adjudicatory functions were transferred to the HSAC. Today, the HSAC continues to exercise jurisdiction over disputes between condominium developers and buyers.

The HSAC’s specialized jurisdiction over matters involving real estate development and homeowners associations is intended to provide an efficient and accessible forum for resolving disputes, while at the same time helping to decongest the dockets of regular courts.

THE SUPREME COURT’S CLARIFICATION
Acquittal from a criminal case does not necessarily mean that the accused is free from civil liability (Dominguez v. People, G.R. No. 167546). In fact, when an accused is acquitted due to the prosecution’s failure to establish guilt beyond reasonable doubt, civil liability ex delicto (or that which arises out of the crime) may still be recovered in the same criminal case, except if the source of the obligation stems from a contract (Cheng v. People, G.R. No. 207373).

While the criminal aspect of the case is within the jurisdiction of the Regional Trial Court, since the HLURB was not specifically conferred with power to hear and decide cases which are criminal in nature, the same cannot be said about the civil aspect of the case.

Since the civil liability of the developer did not arise out of a crime, but out of a contract, specifically a contract between a condominium developer and a buyer, then the jurisdiction over the civil aspect of the case is under the exclusive jurisdiction of the HLURB (now HSAC). This being the case, the Regional Trial Court had no jurisdiction to rule on the civil liability of the developer.

The Supreme Court’s ruling in Cadungog provides guidance to parties on the proper forum and remedy when pursuing claims against erring developers.

The views and opinions expressed in this article are those of the author. This article is for general informational and educational purposes only and not offered as and does not constitute legal advice or legal opinion.

Juan Carlo C. Cabero is an associate of the Litigation and Dispute Resolution department of the Angara Abello Concepcion Regala & Cruz Law Offices (ACCRALAW).

(632) 8830-8000

jccabero @accralaw.com