Dear PAO,
I owned a parcel of land adjacent to a subdivision project. My property is a lowland, so I understand that run off waters coming from the adjacent project will naturally fall to my land creating a drainage issue. I talked to the manager of the project to address the issue, but the same fell on deaf ears. One neighbor told me that the developer’s inaction may be considered an unsound real estate business, and I may file a complaint before the Human Settlement Adjudication Commission (HSAC). Is he correct?CastogakDear Castogak,A complaint for unsound real estate business falls under the jurisdiction of the Human Settlements Adjudication Commission (HSAC) in consonance with Section 16 of Republic Act 11201, or the Department of Human Settlements and Urban Development Act, which provides that:“The Regional Adjudicators shall exercise original and exclusive jurisdiction to hear and decide cases involving the following:“(a) Cases involving subdivisions, condominiums, memorial parks and similar real estate developments:“(1) Actions concerning unsound real estate business practices filed by buyers or homeowners against the project owner or developer, which cause prejudice to the buyers or committed with bad faith and disregard of the buyers’ rights; xxx”Unsound real estate business was not defined in the afore-stated law. However, in Velasquez Jr. vs. Lisondra Land Inc., GR 231290, Aug. 27, 2020, which was penned by Associate Justice Mario Lopez, the high court stated that:“There is no clear cut definition of what is unsound real estate business practice. However, based on the context of PD (Presidential Decree) 1344, it is inferable that an act by the real estate owner/developer that would cause prejudice upon its buyers may be classified as such.”Nonetheless, what is clear from the law is that a complaint for unsound real estate business before the regional adjudicators of the HSAC must be filed by the buyer/s or homeowner/s. This is backed by the pronouncement of the high court in the case of Miracle Heights Development Corp. and Lim vs. Court of Appeals and Spouses Amparo, GR 270086, Sept. 30, 2025, penned by Associate Justice Jhosep Lopez, which held that:“Legal personality to sue refers to the fact that plaintiff is the real party in interest to the case. Rule 3, Section 2 of the Rules of Court states that “[a] real party in interest is the party who stands to be benefited or injured by the judgment in the suit, or the party entitled to the avails of the suit.” xxx“In case of unsound real estate business practices, it is not just the act complained of but also the party complaining that must be examined before the HLURB. (Now HSAC) may exercise its jurisdiction. As shown by the enactments and issuances mentioned above, the complaint for unsound real estate practice must emanate from buyers of a subdivision lot or condominium unit. This serves as a protection to buyers to give them an exclusive venue to resolve their grievances against subdivision or condominium developers.”Applying the above-quoted decision in your situation, a complaint for unsound real estate business must be filed by a real party in interest, i.e., a buyer or homeowner of the project. Thus, while your concern may pertain to unsound real estate business, you are not a real party in interest who may file such a complaint before the HSAC. Your complaint may pertain to the regular courts.We hope that we were able to answer your queries. This advice is solely based on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.Thank you for your continued trust and support.Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to dearpao@manilatimes.net.
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