Yes, it is a failure of the design to prevent the damage. Now, it may be that the building was never designed to avoid water damage under those particular conditions. So in that sense it's not a "design failure".If a building's basement sustains water damage, does that mean the entire building's/building's design factor of safety was surpassed? Does that mean the entire building's design failed?
It's not something I know a lot about, but, googling it just now, it does seem like there's a lot of knowledge about how to design buildings to avoid flooding. A good engineer would be able to look at a building (or a plan for one) and say whether it's likely to flood under normal and/or extreme rainfall.