AB Agosto

Clarifying “Market Value” in the Supreme Court’s Pasay–Arellano Decision Post

The Supreme Court of the Philippines recently released a press statement. It is titled “SC: Just compensation in land expropriation must consider all relevant factors, not just market value.” This statement refers to its decision in G.R. No. 260038 (City Government of Pasay v. Arellano University).

The ruling reiterates a fundamental principle in expropriation law. Just compensation must be real, full, and fair. It is determined not by a single administrative figure, but through judicial evaluation of all circumstances surrounding the property.

However, the Court’s post also offers a chance to clarify a common terminological confusion. The use of “market value” as cited in the post does not refer to true open-market value. Instead, it refers to the Schedule of Market Values (SMV). Local assessors use this administrative instrument for taxation purposes.

Arellano University owned an 805-square-meter parcel of land in Barangay San Isidro, Pasay City. The City Government turned this property into a public road. It is now known as Menlo Street. This was done without expropriation proceedings or payment of just compensation.

The Pasay City Assessor’s Office had assigned the land a value of Php200 per square meter. This was based on its 1978 Schedule of Market Values. The trial court later used this figure to compute compensation.

The Supreme Court, however, clarified that such assessor-based valuations are not determinative of just compensation. They can guide fiscal assessments, but they are not substitutes for market evidence or judicial determination.

Market Value vs. Schedule of Market Values

This distinction lies at the heart of both valuation and constitutional law.

Concept	Meaning	Purpose	Authority
Market Value	The price a willing buyer would pay to a willing seller in an open market. Both parties act knowledgeably and without compulsion.	Reflects real market behavior, used in appraisals, investments, and expropriation.	Defined under PVS 102 and IVS 104; affirmed in Republic v. CA, G.R. No. 146587 (2002).
Schedule of Market Values (SMV)	A uniform benchmark value prepared by the local assessor for tax assessment purposes.	Ensures equity in real property taxation under the Local Government Code.	Authorized under Sections 212–216, LGC of 1991.

The PVS (Philippine Valuation Standards) and IVS (International Valuation Standards) define market value as:

The estimated amount as the price for which an asset exchanges between a willing buyer and a willing seller. This occurs in an arm’s-length transaction after proper marketing. The parties act knowledgeably, prudently, and without compulsion.

In contrast, the Schedule of Market Values is an administrative tool. It is updated every few years. It is designed to standardize taxation but not to represent real-time market dynamics.

The Supreme Court has consistently drawn this line in cases such as NPC v. Manubay Agro-Industrial Corp. and Republic v. CA: the SMV may be indicative. However, it cannot replace the judicial process of valuation. This process ensures constitutionally mandated just compensation.

My Letter to the Supreme Court

To support accurate public understanding of this distinction, I have respectfully written to the Supreme Court Public Information Office.
My letter explains that the “Php 200 per square meter market value” is mentioned in the decision. It comes from the 1978 Schedule of Market Values. This should not be mistaken for actual market value as understood in valuation and jurisprudence.

You may read my full letter here.

In essence, my correspondence acknowledges the Court’s sound reasoning. It emphasizes the need to maintain terminological precision. This principle is crucial not only to valuation professionals but also to the legal system itself.

The phrase “market value” may appear technical. However, in matters of public taking, it defines the line between administrative convenience and constitutional fairness.
When government takes private property, just compensation must reflect the property’s true worth—its economic value, not its tax-assessed figure.

Ensuring this distinction honors both the rule of law and the integrity of valuation practice. It safeguards landowners’ rights and guides courts, assessors, and appraisers toward a shared language of fairness and precision.

The City of Pasay v. Arellano University decision reinforces a timeless principle:

Just compensation is not a matter of administrative convenience—it is a constitutional right grounded in fairness and factual valuation.

As valuation professionals, we have a responsibility to ensure that public discourse around “market value” remains technically accurate. It must also be legally sound. Clarity in language leads to clarity in justice.

How Econometric Analysis Solved a Client’s Valuation Challenge in BGC

In today’s volatile property market, even fully leased buildings can face uncertainty when interest rates rise and yields compress. One of our clients is a developer with a 30-storey, 76-unit office tower in Bonifacio Global City. They sought clarity on whether their investment was still performing as expected. Through econometric analysis, we transformed complex market data into actions. This gave them financial insight that helped them see beyond occupancy rates. They focus on true value, risk, and return.

The Client’s Challenge

A private developer approached our team with a critical question:

“Is our 30-storey, 76-unit office building in Bonifacio Global City still financially viable under current market conditions?”

The client had completed construction two years earlier. The building was fully leased. They were concerned about rising interest rates. Modest rental escalations are eroding investment returns.

The property’s leasing structure appeared competitive. It includes a mix of bare-shell and fitted office units. These units range from PhP1,500 to PhP1,800 per sqm per month. However, management wanted to know if the building’s cash flows truly reflected its economic value. They questioned whether adjustments in pricing, escalation, or capital structure were necessary.

In short, the challenge was not occupancy — it was understanding profitability in a tightening capital market.

Our Approach

Instead of relying on conventional yield assumptions, our team applied econometric modeling. This is an analytical framework that links property-level performance to measurable macroeconomic drivers.

We began by reconstructing the building’s income statement. We also reconstructed rental schedules across 76 office units and all 30 floors. We factored in current lease terms and 3% annual escalations. Additionally, we used observed market data from Pinnacle Real Estate Consulting and Arcadis Philippines.

From there, we derived two distinct discount rates using both finance-based and property-specific risk models:

Method	Formula	Result
Finance-Based (CAPM)	R=Rf+β(ERP)+SRP	17.40%
Real Estate Build-Up	R=Rf+∑RiskPremiums	13.16%

Each parameter was anchored to empirical data. This includes the risk-free rate, beta, and risk premiums. These were tied to data from the Bangko Sentral ng Pilipinas, PSA inflation series, and Damodaran’s country risk tables.

By integrating these variables, we aligned the building’s valuation with economic reality rather than static, one-size-fits-all assumptions.

Findings: Translating Data into Decision

Our projection model covered a 10-year period, reflecting the economic life of the building’s interior improvements.

Discount Rate	Present Value of Cash Flows (PhP)	Fit-out & Equipment Cost (PhP)	NPV (PhP)	Interpretation
13.16%	11,801,358	12,472,358	–671,000	Breakeven (stabilized scenario)
17.40%	10,655,646	12,472,358	–1,816,000	Slightly negative (equity scenario)

Despite the modest NPV results, the cash inflows were sufficient to recover the capital outlay within the project’s economic life. This indicated a financially balanced asset — not speculative, but self-sustaining and capital-preserving.

The key insight for the client was that profitability was not being lost. It was simply redefined by changing macroeconomic conditions. In other words, the property’s yield had adjusted to reflect a maturing market.

We extended the analysis to examine how the project would perform under various economic shocks:

A 1% increase in the discount rate (e.g., due to rising interest rates) would reduce the property’s value by approximately PhP700,000.
A 1% increase in rental escalation would improve valuation by about PhP500,000.

This confirmed that interest-rate and capital-market movements have a greater effect on value than marginal rental adjustments.

The adopted PhP1,800 per sqm rate for fitted offices is advantageous. It places the property squarely within the prime BGC rental range of PhP1,400–PhP1,900. The effective yield is 7–8% per annum. This is a level consistent with institutional benchmarks in Metro Manila’s investment-grade office sector.

The results of the econometric analysis allowed the client to make well-informed and financially sound decisions. Our findings confirmed the current rental rate structure of PHP 1,500 to PHP 1,800 per square meter per month. This rate was aligned with prevailing market conditions. These rates match the conditions in Bonifacio Global City. Attempting to increase the rates further would risk higher tenant turnover without producing a proportional increase in building value. Hence, the most strategic course was to maintain existing rents, ensuring consistent occupancy and stable revenue streams.

Second, the study validated the client’s 3% annual escalation policy. It demonstrated that this policy accurately reflected the average inflation rate. It also matched the standard lease renewal adjustments in the area. This approach ensured that income growth would remain sustainable and competitive, balancing tenant affordability with long-term asset performance.

Finally, we advised the client to reclassify the building’s investment profile—from a short-term growth-driven asset to a core income property. This repositioning recognized that the building had already reached stabilization, with 100% occupancy and predictable cash inflows. The property could now serve as a capital preservation anchor within the client’s portfolio. It would provide reliable income to offset higher-risk, higher-yield developments elsewhere.

What initially seemed like a modest or even negative Net Present Value (NPV) was reinterpreted. It became a measure of financial efficiency. The building’s inflows matched its cost of capital. This indicated that it was performing exactly as expected in a mature market like BGC. Through this shift in perspective, the client gained a clearer understanding of the property’s value. The client also gained a more strategic framework for portfolio management, anchored in data, discipline, and economic logic.

This case highlights how econometric reasoning transforms real estate valuation from a static appraisal into a dynamic decision-making tool. We treated rents, yields, and escalation rates as variables linked to broader economic conditions. This approach helped us uncover not just the property’s value but also the logic behind it. The client learned that a neutral or breakeven NPV is not necessarily a weakness. It can signify equilibrium and maturity in a market. In this market, stability is the new form of strength.

For investors, the key takeaway is that macro-driven valuation brings clarity in times of uncertainty. Understanding how discount rates move with monetary policy provides a sharper sense of timing. Recognizing how escalation aligns with inflation sharpens your understanding of risk and opportunity. For developers, the lesson is strategic. Once a building reaches full occupancy and stable returns, it should be viewed as a core income asset. This asset anchors the portfolio and preserves capital rather than being seen as a speculative venture.

Ultimately, the study demonstrates that data and discipline lead to confidence. In Bonifacio Global City, every percentage point of yield and risk can mean millions in value. Econometric analysis offers a distinct advantage. It gives clients the ability to move beyond intuition. Consultants can also ground their investment strategies on measurable, defensible evidence.

By: AB Agosto, JD, REA, REB, REC, MA Economics (University of San Carlos)
Paralegal – Real Estate, Environmental & Corporate Law

The Impact of the WorldRisk Report on Philippine Real Estate

The Philippines, a nation of islands situated in the typhoon belt, remains one of the world’s most disaster-prone countries. The WorldRisk Report 2025 is a publication of Bündnis Entwicklung Hilft. It is also published by the Institute for International Law of Peace and Armed Conflict (IFHV) of Ruhr-University Bochum. It places the country among those with the highest global risk exposure. This conclusion is once again highlighted. The report has a special focus on floods. Floods are the most frequent and destructive natural hazard worldwide. Between 2000 and 2009, floods accounted for 44 percent of all global catastrophes, affecting more than 1.6 billion people and causing losses exceeding USD 650 billion. In the Philippines, flood vulnerability continues to rise because of climate-related rainfall intensification. Unregulated urbanization contributes to the risk. The degradation of natural buffers such as wetlands and mangroves exacerbates the situation.

These recurring flood events are no longer isolated environmental phenomena. They are now central to understanding how real estate functions. They are also central to understanding how real estate is valued. Climate risk directly influences property demand, development feasibility, and investment decisions. What once defined value purely in economic terms—location, accessibility, and market trends—now includes resilience, adaptability, and sustainability. Floods not only damage structures and displace communities but also recalibrate the long-term performance and desirability of land.

The Real Property Valuation and Assessment Reform Act (RA 12001), enacted in 2024, reflects this changing reality. It establishes a uniform national valuation framework, standardizes market-based approaches, and introduces mechanisms for adaptive reassessment. Among its provisions, Section 18 explicitly recognizes that disasters and calamities can alter property market values. It authorizes local government units to revise their Schedules of Market Values. This occurs whenever “significant changes” happen due to calamities or disasters. These changes can be man-made or natural. This provision marks a significant legal milestone. It integrates disaster risk into valuation governance. It acknowledges that climate events are legitimate economic variables. These variables can affect land and building worth.

This legal recognition aligns with the 2025 WorldRisk Report findings. The report calls for an integrated response. It combines four key perspectives: political, technological, social, and ecological. Political measures emphasize decentralized governance and the inclusion of risk management in land-use planning. Technological innovation encourages the use of satellite data, LiDAR mapping, and AI-based flood forecasting to inform planning and decision-making. Social resilience underscores community preparedness and traditional knowledge systems that reduce vulnerability. Ecological solutions advocate for mangrove reforestation, wetland restoration, and nature-based flood control, which simultaneously protect biodiversity and buffer human settlements.

In real estate valuation, these four dimensions translate into practical implications. Under the cost approach, flood exposure accelerates physical deterioration. It shortens the remaining economic life of improvements. Appraisers must apply higher depreciation rates. They also need to use more conservative estimates of useful life. The income approach must consider flood-induced operating expenses. It should also factor in reduced rentability and risk-based capitalization rates. These considerations help to account for uncertainty in income streams. Meanwhile, the market approach must segregate comparable sales based on hazard exposure. This is important since properties within flood-prone zones typically transact at discounted prices. These properties also exhibit longer marketing periods.

Beyond appraisal technique, the relationship between flood risk and property value also reflects broader behavioral and institutional adjustments. Developers now prioritize elevation, drainage systems, and green design. Lenders are requiring flood-risk assessments before approving mortgages. Insurers have introduced differentiated premiums based on hazard classification. These market adjustments demonstrate that resilience has become a form of economic capital—one that safeguards value and attracts investment.

Yet the transformation brought by the WorldRisk Report and RA 12001 extends far beyond valuation methodology. It is reshaping the Philippine real estate sector as a whole. Urban planning now integrates flood risk into Comprehensive Land Use Plans (CLUPs). Developers incorporate retention ponds and elevated designs as standard practice. Financial institutions are embedding environmental risk into credit assessments. The convergence of scientific data, legal frameworks, and market adaptation signals a new era in property governance. In this era, resilience is not peripheral but central to defining and protecting value.

In this evolving landscape, real estate valuation has likewise been methodologically reshaped. It is no longer a static appraisal of economic worth but a dynamic assessment of risk, sustainability, and adaptive capacity. Properties are now judged by their performance under pressure. This includes how they resist, how they recover, and how they remain useful during climate events. The very meaning of “value” has expanded: it now includes the ability to endure.

Ultimately, the 2025 WorldRisk Report and RA 12001 together redefine the fundamentals of real estate in the Philippines. The former provides the global scientific context for understanding hazard exposure. The latter establishes the national legal mechanism to respond to this exposure. Together, they transform how property is developed, managed, financed, and valued. In the age of climate uncertainty, the true measure of real estate is no longer limited to its square meters. It is also not defined by its location. Instead, it lies in its resilience per square meter.

In this century of rising tides and shifting ground, resilience is not just protection—it is value itself.

References

Bündnis Entwicklung Hilft & IFHV Ruhr-University Bochum. WorldRiskReport 2025. Available at: https://weltrisikobericht.de/worldriskreport/
Republic Act No. 12001. Real Property Valuation and Assessment Reform Act of 2024. Official Gazette of the Republic of the Philippines.
Department of Finance – Bureau of Local Government Finance. Philippine Valuation Standards (PVS 2023).

⚖️ Legal Brief in Real Estate

By: AB Agosto, JD

When an earthquake caused the collapse of the Ruby Tower in Manila in 1968, the tragedy raised a profound legal question: could the contractors, architects, and engineers be held liable for damages, or was the destruction purely an act of God? This question was resolved in Nakpil & Sons v. Court of Appeals (G.R. No. L-47851, October 3, 1986), a case that remains a cornerstone of Philippine jurisprudence on real estate liability.

The petitioners argued that the earthquake was a fortuitous event, beyond human control, and that under Article 1174 of the Civil Code, they should be exempt from liability. The Court, however, examined the evidence and concluded that negligence in design and construction had contributed to the building’s collapse. The ruling made it clear: a fortuitous event does not excuse liability when human negligence concurs in producing the damage.

The Court declared, “The principle of fortuitous event cannot apply where the negligence of the obligor concurs with the fortuitous event in producing the damage. Negligence is not excused by fortuitous event.” In other words, while the earthquake was indeed an act of nature, the faulty workmanship and design defects were man-made, and together they caused the catastrophic failure.

This case remains directly relevant to real estate practice because it clarifies how responsibility is allocated when property is damaged by natural disasters. For builders and developers, Nakpil is a stern warning. It shows that compliance with the Building Code, zoning ordinances, and engineering standards is not optional but a legal duty. An earthquake may be unavoidable, but if poor materials, inadequate structural design, or shortcuts in construction contribute to the collapse, liability attaches. Developers cannot simply invoke force majeure; their reputation, financial exposure, and even criminal liability may be at stake.

For appraisers, the ruling highlights a subtle but crucial point. When valuing damaged property, it is necessary to ask: Was the loss caused solely by the disaster, or was it aggravated by negligence? If the latter, the cost to cure or diminution in value may be subject to claims against contractors, engineers, or insurers. This affects appraisal reports for insurance claims, litigation support, and even expropriation where consequential damages are assessed.

For insurers, Nakpil clarifies the boundaries of coverage. Many property policies exclude “acts of God” like earthquakes, but this case shows that where negligence coexists with a natural event, liability persists. Thus, insurers must carefully examine claims to determine if negligence by contractors or owners triggered coverage. It also guides insurers in drafting clearer clauses about fortuitous events, exclusions, and subrogation rights.

For property owners, the case is a lesson in vigilance and due diligence. Choosing competent contractors, hiring licensed engineers and architects, and ensuring that designs comply with earthquake-resistant standards are not just business decisions but safeguards against loss. Owners cannot assume that “insurance will pay” or that “the disaster was unavoidable.” The law demands that owners protect their property with foresight.

For the broader real estate industry, Nakpil underscores the link between law, valuation, and social responsibility. The safety and integrity of buildings directly affect communities, not just investors. When negligence meets disaster, lives and livelihoods are lost. By holding professionals accountable, the Supreme Court reinforced a culture of responsibility — one that appraisers, brokers, assessors, and developers must uphold in a disaster-prone country like the Philippines.

The continuing lesson of Nakpil is accountability- natural events may be unavoidable, but their impact is often determined by human foresight, planning, and diligence. In a country as disaster-prone as the Philippines, this doctrine safeguards the public by ensuring that responsibility cannot be avoided under the blanket excuse of force majeure.

Doctrine: Nakpil ensures that earthquakes and other disasters do not excuse negligence. Builders must build right, appraisers must distinguish causes of damage, insurers must test the limits of coverage, and property owners must demand quality. In real estate, accountability and preparedness remain the first defenses against natural calamities.

The ARROW Act (RA 12289): A Promise of Reform or Another Risk of Corruption?

The ARROW Act (RA 12289) promises faster infrastructure and fairer compensation for landowners — but will it curb corruption or create new risks? Learn what appraisers and property owners must know.

Massive infrastructure projects in the Philippines often carry a double meaning. On one hand, they symbolize progress — roads that connect markets, airports that open trade, and power lines that electrify communities. On the other, they are dogged by delays, undervaluation of property, and allegations of corruption in right-of-way (ROW) spending. For property owners, expropriation has too often meant dispossession without fair payment. For taxpayers, billions intended for development sometimes disappear into inefficiency or worse, into private pockets.

The Accelerated and Reformed Right-of-Way (ARROW) Act (RA 12289) was passed to address these longstanding problems. It is framed as both accelerated — ensuring faster delivery of projects through calibrated deposits, ex parte writs of possession, and anti-delay rules — and reformed — standardizing valuations, expanding compensation, and mandating transparency. In theory, the law promises to close the loopholes that have long made ROW a breeding ground for corruption.

What Appraisers Must Know

For appraisers, the Accelerated and Reformed Right-of-Way (ARROW) Act (RA 12289) raises the bar of professional responsibility in ways that cannot be overstated. Under this law, the appraisal report is no longer just a supporting document — it is the linchpin of fairness in the determination of just compensation.

Valuation now begins with the Schedules of Market Values (SMVs) prepared by local government units under RA 12001, the Real Property Valuation and Assessment Reform Act. These SMVs are intended to provide an updated, standardized baseline to reduce arbitrary valuations. In the absence of updated SMVs, zonal values from the Bureau of Internal Revenue or assessed values may be used. However, these figures are only starting points. The law explicitly requires courts to weigh comparable sales data, sworn valuations by property owners, and independent appraisal reports. This keeps professional appraisers at the very center of the process: their expertise bridges the gap between mass appraisal (which may lag behind the market) and the constitutional requirement of “just compensation,” which demands property-specific fairness.

Beyond land valuation, the ARROW Act recognizes the full range of compensable interests that appraisers must document and value. Improvements, machinery, and structures must be valued at 100% of their replacement cost, subject to depreciation when determining deposits but fully recognized in final compensation. Crops and trees must be valued at market rates based on species, maturity, and productive potential. Partial takings — where only part of a parcel is acquired — require an assessment of the diminution in value of the remaining property, a task that often calls for a before-and-after analysis. The law also expressly allows for subsurface rights acquisition (for tunnels, pipelines, and conduits), which appraisers must value as easements or partial restrictions rather than outright takings.

This broadened scope makes appraisal practice more demanding but also more consequential. Appraisers must now master not only the sales comparison and cost approaches, but also agricultural valuation, easement analysis, and diminution-in-value methodologies. They must be familiar with engineering cost indices, Department of Agriculture commodity pricing, and even geotechnical impacts in subsurface cases. Every omission or weak assumption in a report may directly affect landowners’ rights and project budgets — or worse, provide room for undervaluation schemes.

What Landowners Must Know

For landowners, the Accelerated and Reformed Right-of-Way (ARROW) Act (RA 12289) is both a protection and a challenge. On the one hand, it expands what counts as compensable property. On the other, it requires vigilance to make sure rights are not overlooked or eroded.

The law broadens the scope of compensation significantly. Landowners are no longer limited to being paid for the bare land alone. They are entitled to just compensation that covers the value of the land, the 100% replacement cost of improvements and machinery, the fair market value of crops and trees, and even the diminution in value of partially affected parcels. This is critical because many families rely not only on their land but also on the homes, shops, or farms built upon it. Under RA 12289, these are recognized as integral to livelihood and must be paid for.

Importantly, the law also protects those who do not yet have formal titles. Long-time possessors of untitled land can still be compensated, provided they can present evidence such as tax declarations, DENR certifications declaring the land alienable and disposable, survey plans, and affidavits from disinterested persons or barangay officials. This closes a long-standing gap where informal but legitimate claimants were previously left without remedies.

However, landowners must also recognize the practical limits built into the law. Initial deposits made by the government when filing for expropriation are deliberately modest: only 15% of the land’s market value, but 100% of the replacement cost of improvements and 15% of crops. While this ensures that owners with houses, factories, or crops receive upfront money, those whose property is land-heavy but improvement-light may feel underpaid at the start. The balance is determined later by the courts as final just compensation, but this process takes time, and owners must be prepared for the cash flow gap.

The law also introduces a two-year freeze rule. Once a notice of taking is issued, any improvements added to the property may not be recognized for compensation. This rule is meant to discourage speculative or last-minute construction intended to inflate claims. For landowners, this is a warning: avoid sinking new investments into a property already tagged for acquisition, as they will not be reimbursed.

Promise or Risk?

Here lies the central tension of the Accelerated and Reformed Right-of-Way (ARROW) Act (RA 12289). The law is carefully crafted to accelerate infrastructure delivery while at the same time protecting landowners. By anchoring valuations to Schedules of Market Values (SMVs), it seeks to bring predictability to a process that used to be haphazard. By mandating public disclosure of right-of-way transactions, it holds agencies accountable in ways that past laws never did. By imposing sanctions on officials or private entities who delay or manipulate acquisition, it promises to bring discipline to a sector notorious for inefficiency and abuse. On paper, these reforms appear to strike the balance between speed and fairness.

But every promise also carries its shadow. SMVs, while standardized, remain products of mass appraisal. If they are outdated, they can undervalue land and deprive owners of just compensation. If manipulated at the local level, they can be skewed to benefit certain political or commercial interests. The ex parte writ of possession, designed to give the State quick access to property, is a powerful tool — but it can weaken a landowner’s leverage if the final fixing of just compensation drags on. Transparency requirements are strong in theory, but history has shown that agencies often find ways to delay, obscure, or underpublish the data the public needs to verify compliance.

The ARROW Act, then, stands at a crossroads. If implemented with integrity, it could finally provide a solution that curbs corruption, ensures fair compensation, and restores trust in public projects. But if captured by vested interests, it could just as easily become another source of corruption — with mass appraisal abused to justify lowball offers, safeguards ignored in practice, and speed used as a cover for unfairness.

The outcome depends not only on the text of the law but on the people who live under it. For appraisers, professionalism, independence, and defensibility are now essential, because their reports are the first line of defense against undervaluation and collusion. For landowners, preparation and vigilance are key — they must safeguard documents, assert their rights in negotiations, and demand the transparency that the law promises. For institutions, the challenge is consistent enforcement: ensuring that timelines are met, disclosures are made, sanctions are imposed, and that the balance between public need and private rights is respected.

In the end, the ARROW Act is not just a piece of legislation but a test of political will and civic vigilance. It challenges the Philippines to prove that it can build fast without breaking trust, that progress does not have to come at the expense of justice, and that corruption does not have to be the inevitable cost of development. Whether it fulfills its promise or slips into risk will depend on how well all actors play their part in the years ahead.

Why the DOJ Holds the Key to the Witness Protection Program

One of the landmark reforms in the Philippine criminal justice system is Republic Act No. 6981, otherwise known as the Witness Protection, Security and Benefit Act. The law was enacted to encourage witnesses to testify in criminal cases by granting them immunity from prosecution and providing protection and benefits that ensure their safety and livelihood. At the heart of this reform is the central role of the Department of Justice (DOJ), whose authority was tested in the high-profile case of Webb v. De Leon (G.R. Nos. 121234, 121245, 121297, August 23, 1995).

Under Section 12 of R.A. 6981, the DOJ has the power to admit witnesses into the program. Once admitted, the certification issued by the DOJ must be given full faith and credit by public prosecutors. This means that prosecutors are barred from including the admitted witness in any criminal complaint or information, and if the witness has already been charged, the prosecutor is duty-bound to move for his or her discharge. Admission also grants the witness immunity from prosecution for the related offenses, together with access to rights and benefits such as security, relocation, subsistence, and employment assistance.

This provision was challenged by petitioner Hubert Webb, who argued that only the courts, under Rule 119 of the Rules of Court, have the authority to discharge an accused as a state witness. He claimed that allowing the DOJ to decide on the admission of witnesses intrudes upon judicial prerogatives and violates the separation of powers.

The Supreme Court disagreed. It held that the prosecution of crimes is fundamentally an executive function, anchored on the constitutional duty of the executive branch to “faithfully execute the laws.” The discretion to determine whether, what, and whom to charge—including who may be used as a state witness—properly belongs to the DOJ as part of its prosecutorial power. The Court clarified that while Rule 119 empowers courts to discharge an accused once jurisdiction has been acquired, this authority is jurisdictional rather than inherent. It ensures that proceedings remain orderly, but it does not strip the DOJ of its primary role in deciding witness admissions under R.A. 6981.

The decision underscores the delicate balance between the branches of government: the executive determines who to prosecute and who to use as a state witness, while the judiciary supervises proceedings once a case is filed. By upholding the DOJ’s role, the Court strengthened the Witness Protection Program as a vital tool for combating crime. As the DOJ itself pointed out, many cases in the past had been dismissed due to witnesses refusing to testify out of fear or economic dislocation. R.A. 6981 and its interpretation in Webb directly address this challenge by protecting witnesses and ensuring their cooperation.

The Webb v. De Leon ruling affirms that the DOJ’s role in the Witness Protection Program is constitutionally sound and crucial for the administration of criminal justice. By empowering the DOJ to certify and immunize state witnesses, the law tackles one of the biggest obstacles in criminal prosecutions: the silence of those who know the truth. In a justice system often hampered by fear and intimidation, the law sends a clear message—witnesses will be protected, and their courage will not be in vain.

You may download the Supreme Court case here:

https://lawphil.net/judjuris/juri1995/aug1995/gr_121234_1995.html

Restitution Is the Law, Not a Loophole

Senator Erwin Tulfo’s recent statement during the Senate Blue Ribbon Committee hearing on the flood control mess — that sometimes you have to “bend the law” to heed the people’s cry for restitution — has drawn both applause and criticism. Justice Secretary Jesus Crispin Remulla affirmed his sentiment, but some quarters now warn that such remarks suggest moving outside the Constitution.

In my view, there is no need to bend the law at all. The law itself, through both the Constitution and the Civil Code, already mandates restitution.

Accountability in the flood control mess does not stop with public officials. Even private contractors who enriched themselves from irregular projects are bound by law to return the money. The Civil Code, through Articles 19 and 22, prohibits unjust enrichment, while the Constitution itself (Article II, Section 27) commands the State to take effective measures against graft and corruption. Restitution therefore, is not a bending of the law — it is the law itself at work.

The Civil Code reinforces this duty through two key provisions:

Article 19: “Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith.”
Article 22: “Every person who through an act of performance by another, or any other means, acquires or comes into possession of something at the expense of the latter without just or legal ground, shall return the same to him.”

Taken together, these make restitution a legal requirement. It is not a technicality, nor a concession to public clamor. It is the natural consequence of unjust enrichment.

When protesters at Luneta shouted “Ibalik ang pera ng bayan,” they were not demanding that the law be ignored or bent. They were, perhaps unknowingly, demanding that the law be faithfully enforced. The people’s voice and the law’s command align perfectly here.

This is why I believe Senator Tulfo’s passion is not at odds with the rule of law. The better framing is this: the law itself already bends toward justice. To demand restitution is not to defy legal principles but to uphold them.

My take is simple: restitution is not just a moral duty, nor is it merely a populist cry. It is a constitutional and legal obligation. There is no conflict between the will of the people and the rule of law on this issue. Both demand the same thing: that what was wrongfully taken from the Filipino people must be returned.

We live in abnormal times when asking to return stolen money is treated as if it were illegal.

Why Title Annotations and Encumbrances Matter in Property Appraisal

“In valuation, the fine print on the title can be as valuable—or as dangerous—as the land itself.“

In real estate appraisal, numbers alone do not tell the whole story. A property’s legal status—particularly the annotations and encumbrances appearing on its title or tax declaration—can drastically alter its worth. While some may view these legal markings as mere notarial footnotes, a seasoned property appraiser understands that such entries are crucial to determining the property’s true value, marketability, and risk profile. One of the most important but sometimes overlooked aspects of valuation is the presence of annotations and encumbrances on the property’s Transfer Certificate of Title (TCT), Original Certificate of Title (OCT), or Tax Declaration. These annotations—whether involving tax delinquency, pending litigation, or other restrictions—can drastically alter a property’s value, marketability, and highest and best use (HBU). For the professional appraiser, understanding and correctly interpreting these legal markings is essential, not optional.

Why Appraisers Must Pay Attention

There are several compelling reasons why a diligent appraiser must care about annotations and encumbrances.

First, these legal burdens directly affect market value—the core product of any appraisal. Buyers in the open market are generally unwilling to pay full price for a property encumbered by unresolved claims, legal disputes, or forfeiture risks. Appraisers must therefore consider how each annotation may cause potential buyers to either walk away or demand a discount.

Second, legal risk translates to value risk. Annotations such as a lis pendens, adverse claim, or a writ of attachment signal potential issues with ownership, possession, or future usability. Even if a property looks physically sound, a legal cloud on its title will make it less attractive and inherently riskier. Prudent appraisers account for this by adjusting their valuation assumptions, often applying a discount or issuing a qualified opinion.

Third, these annotations frequently affect the property’s highest and best use (HBU)—a foundational concept in valuation. If a property is subject to restrictive covenants, reversionary clauses, or foreshore lease limitations, its legal permissibility for development or other productive use may be severely constrained. The appraiser must therefore revise the HBU analysis and its associated value estimate accordingly.

Fourth, annotations impair a property’s marketability. For instance, a property that has been auctioned off for tax delinquency but is still within the redemption period cannot be sold with confidence. Similarly, if a property was inherited but the title transfer is not yet perfected, there may be co-heir disputes or administrative delays. In both cases, the property may be legally transferable only in theory, but not in practice—at least not without cost or time delays.

Fifth, annotations affect the property’s loanable value or equity value. Banks and other financial institutions are wary of lending against titles that carry risks. For example, a property mortgaged beyond its current market value or encumbered with a lien from unpaid taxes may only be eligible for partial financing, or worse, may be rejected altogether as loan collateral. This has direct implications for the appraiser’s task in estimating not just market value, but the net realizable or mortgageable value.

Finally, ignoring these factors may violate the appraiser’s professional and legal responsibilities. Under the Real Estate Service Act (RA 9646), the appraiser is required to exercise due diligence and report all material conditions that affect the value of the property. International Valuation Standards (IVS) and the Uniform Standards of Professional Appraisal Practice (USPAP) similarly require full disclosure and the proper interpretation of legal burdens. Failing to do so may expose the appraiser to liability, loss of license, or reputational damage.

Understanding the Specific Impact of Common Annotations

To make these risks and responsibilities more concrete, let’s examine how common annotations and encumbrances impact valuation:

A Notice of Tax Delinquency or Forfeiture carries a negative impact on value and significantly impairs marketability due to the risk of government seizure. When a Certificate of Sale appears on the title—typically following a tax auction—the buyer only has conditional ownership until the redemption period lapses. This also warrants a discounted valuation and caution in reporting.

A Lis Pendens indicates that the property is subject to ongoing litigation. Its presence severely impairs marketability and imposes legal uncertainty, which in turn reduces value. An Adverse Claim similarly signals a third-party interest in the property that contradicts the titleholder’s claim. While not always litigated, it still creates hesitation for buyers and lenders, pulling values downward.

A Levy or Writ of Attachment represents a judicial restriction. Courts attach the property to secure a possible judgment, and while the property is not yet seized, its transferability is legally curtailed. This justifies a risk adjustment in the valuation.

If the title carries a Foreshore Lease or a Department of Environment and Natural Resources (DENR) annotation, it usually means that the property is within the public domain (such as coastal or reclaimed land). Ownership is limited to leasehold rights, not fee simple. This not only reduces the appraised value to the leasehold interest but also conditions its use based on government regulation.

An Affidavit of Loss or Reconstitution of title temporarily affects the property’s marketability, especially if the reconstitution process is incomplete. Although this may only have a neutral to slightly negative impact on value, it still warrants disclosure and may be included as a limiting condition in the report.

A Real Estate Mortgage (REM), if current and performing, generally has a neutral impact on market value, assuming the appraisal is for market purposes and not equity extraction. However, the appraiser must still distinguish between total market value and the equity portion when applicable.

An Easement or Servitude, such as a right of way or drainage restriction, slightly reduces the value and may condition the property’s utility. If the easement affects buildable area or accessibility, this becomes a material consideration.

Reversion clauses or restrictive covenants are more serious. These limit future development, prohibit certain uses, or allow the property to revert to a former owner under certain conditions. As these significantly constrain HBU and market flexibility, they usually result in a negative value adjustment.

Lastly, annotations involving Deeds of Donation, Inheritance, or Partition may suggest that the property was recently transferred or is part of a co-ownership arrangement. If the legal transfer is incomplete or the estate is unsettled, the title remains in flux. This affects both value and marketability, particularly if there is a risk of future claims or if the sale requires consent from multiple parties.

In real estate valuation, legal clarity is just as important as physical condition. Title annotations and encumbrances represent real risks, limitations, and burdens that influence the value of a property. Whether through discounted sales, delayed transactions, restricted use, or diminished loanability, these legal notations affect how market participants perceive and engage with real estate assets.

The professional appraiser must go beyond mere physical inspection and apply legal awareness, risk sensitivity, and valuation expertise to provide credible, well-supported opinions of value. Every annotation tells a story—of ownership, encumbrance, or uncertainty—and the appraiser must read, interpret, and reflect that story in the appraisal report.

Property Identification: The Sacred Foundation of Real Estate Appraisal

In the meticulous world of real estate appraisal, one principle stands above all others: you cannot value what you cannot identify correctly. Whether working on a condominium in Makati, a farmland in Bukidnon, or a contested estate in Cebu, the first and most sacred duty of any appraiser is to accurately and defensibly identify the subject property. This is not just a technical requirement—it is the foundation of credibility, legality, and fairness in valuation. A mistake in property identification is not a small error. It invalidates every step that follows: the market comparison, highest and best use analysis, risk assessment, and final value estimate. Simply put, wrong property means wrong valuation.

Property identification involves several components. It means correctly determining the legal identity of the land—via Transfer Certificate of Title (TCT), technical description, and lot number. It also means identifying the actual physical location and ensuring it matches the documents, zoning classification, and any physical improvements or encumbrances. Every valuation method—whether it’s the market approach, cost approach, or income approach—relies on this first step. If you appraise the wrong lot, all your calculations, assumptions, and conclusions become legally and factually meaningless.

This is why misidentification carries not only technical consequences but also legal and ethical ones. A wrong appraisal can lead to court rejection of the report, denial of loans by banks, and even legal liability for misleading courts or clients. Under Article 19 of the Civil Code of the Philippines, professionals have a duty to act with justice, give everyone their due, and observe honesty and good faith. The Philippine Valuation Standards likewise emphasize that appraisers must exercise due diligence and care—beginning with accurate property identification.

Some of the most common pitfalls in this process include relying solely on the owner’s verbal claim without matching it against documentary evidence, misplotting technical descriptions, failing to check for easements or encroachments, and confusing adjacent lots with similar features. These errors are preventable with a disciplined and documented approach. A responsible appraiser will cross-check TCT data with the tax map and zoning ordinance, conduct field validation through site visits, use geotagged photos or drones, and even consult barangay officials or boundary markers when in doubt.

The risks of inaccuracy are very real. Imagine an appraiser tasked to value Lot 6 but instead inspects and reports on Lot 5. If Lot 5 is under threat of expropriation or prone to flooding, while Lot 6 is not, the valuation will be drastically wrong. In judicial proceedings, such a mistake may result in an unjust award of compensation or legal challenge. In lending, it may lead to defective collateralization. The appraiser’s name—and the integrity of the profession—are on the line.

I always emphasize that property identification is not just a preliminary step—it is the moral compass of professional practice. It sets the tone for the accuracy, fairness, and trustworthiness of the entire report. Real estate is a high-stakes industry. The margin for error is slim, and the cost of error is great. That is why we say: Property identification is sacred. Wrong property is wrong valuation. Always.

How an Expert Witness Prepares for Trial

“An expert witness is expected to assist the court in understanding technical evidence by providing independent, objective, and reasoned opinions based on established expertise.” — Tortona v. Gregorio, G.R. No. 202612, Jan. 17, 2018

Appearing in court as an expert witness is a serious responsibility. It demands more than just professional qualifications—it requires thorough preparation, clarity in communication, and strict adherence to both legal and ethical standards. Whether in the field of real estate appraisal, engineering, accounting, or any technical discipline, the effectiveness of an expert witness lies in how well they understand their role and how clearly they can assist the court.

The preparation begins with a full understanding of the case. The expert must study the pleadings, judicial affidavits, motions, and any relevant reports to grasp the context of the legal dispute. This understanding helps frame the opinion the expert will give. Once the scope of the engagement is clear, the expert proceeds to draft and finalize their report. The report must be factual, supported by data, and rooted in accepted professional standards—such as the Philippine Valuation Standards for appraisers or the relevant codes of ethics and methodology in other professions. This report, along with the judicial affidavit required by the Rules of Court, becomes the backbone of the expert’s courtroom presentation.

Communication with counsel is vital. The lawyer and the expert must align on what issues the expert will testify to, what documents and evidence will be referred to, and how the expert can best support the legal theory of the case without overstepping their bounds. A good lawyer will also simulate a mock direct and cross-examination to help the expert anticipate difficult or technical questions, and practice answering in a way that is truthful, clear, and calm.

On the day of the trial, the expert must come prepared. This means dressing professionally, arriving early, and bringing all necessary materials—copies of the report, affidavits, supporting documentation, and visual aids such as charts or maps. During testimony, the expert is first qualified by the court. Once recognized as an expert in their field, they proceed to give their opinion under oath, guided by the direct examination of counsel. The expert must maintain composure during cross-examination, avoid defensive behavior, and be honest if they don’t know the answer to a question. Judges value precision and honesty over attempts to impress or advocate for one party.

Ultimately, the credibility of an expert witness rests not only on credentials but on the ability to explain complex matters in a straightforward and impartial manner. A well-prepared expert supports the truth-seeking function of the court. By grounding their opinion in verifiable data and presenting it clearly, the expert becomes a bridge between technical knowledge and legal judgment. Preparation, professionalism, and integrity are the foundation of any expert testimony that truly helps the court reach a just and informed decision.

Serving as an expert witness requires more than just subject matter expertise. It demands professionalism, preparation, and precision. Whether you’re a real estate appraiser, economist, forensic analyst, or valuation consultant, the courtroom is your stage to translate complex findings into reliable, understandable truth.

With proper preparation, your testimony can become the turning point in delivering justice.