Source Development Share: A Legal Perspective

Over the years, the Metropolitan Naga Water District (MNWD) has been extending its services to subdivisions and similar suburban housing owners and developers for the installation of its water supply system within its water service jurisdiction. It is the corporate objective of MNWD to ensure that all domiciles and residential areas, government agencies, commercial establishments, and industries have access to a safe and adequate supply of potable water.

At present, most subdivision developers merely tap their lines with the waterlines of MNWD and no longer expand on the development of the water source of their subdivision projects, the payment for which they have already collected from their buyers.

Relative thereto, the “Whereas Clause” of PD 957 (Regulating The Sale of Subdivision Lots and Condominiums, Providing Penalties for Violations Thereof) states that:

“Xxx, numerous reports reveal real estate subdivision owners, developers, operators, and/or sellers have reneged on their obligations to provide and maintain properly subdivision roads, drainage, sewerage, water system, lighting systems, and other similar basic requirements, thus endangering the health and safety of home and lot buyers;”. (Emphasis and italics supplied)

As such, MNWD deemed it necessary to impose Source Development Share (SDS) as a safeguard on the part of the District with respect to water service operations and as a condition precedent in the execution of the Memorandum of Agreement entered into by MNWD and subdivision developers/owners.

Based on the legal advisory issued by Atty. Elpidio J. Vega, OIC Deputy Government Corporate Counsel of the Department of Justice, the MNWD may legally impose and collect SDS from subdivision developers as a condition for the transfer of the latter’s water system to MNWD in consonance with Sec. 5, (c) of P.D. 198, as amended by P.D. 768, P.D. 1479, and R.A. 9286, specifying the express power of local water districts (LWDs), to wit:

“SEC. 5. Purpose. Local water districts may be formed pursuant to this Title for the purpose of (a) acquiring, installing, improving, maintaining, and operating water supply and distribution system for domestic, industrial, municipal and agricultural uses for residents and lands within the boundaries of such districts, (b) providing maintaining and operating wastewater collection, treatment and disposal facilities, and (c) conducting such other functions and operations incidental to water resource development, utilization and disposal within such districts, as are necessary or incidental to said purpose.” (Emphasis and italics supplied)

Corollary to this, Section 25 of the same law also states the implied or incidental powers and purposes which LWDs are authorized to exercise which are reasonably necessary to execute the express power and to carry out the purposes for which they are formed.

As mentioned above, LWDs have the express power to conduct such other functions and operations incidental to water resource development. MNWD’s imposition of SDS on subdivision developers/owners, therefore, may be deemed as an exercise of the implied powers vested on LWDs.

The MNWD solely operates in conformity with its legal mandate anchored on statutory and regulatory requirements applicable to LWDs without compromising its commitment to provide safe and clean water to the communities and customers presently dependent on it.