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.
Real LexEcon 