The North Cebu Economic Zone: Can Government Plan a Growth Center?

An Urban Economic Perspective on Regional Development, Investment Demand, and Spatial Planning

The proposal to establish a North Cebu Economic Zone raises a basic question in regional development: can government create a growth center by designating land for investment, or must growth emerge from underlying economic conditions?

According to a November 7, 2026 report in The Freeman, Governor Pamela Baricuatro has expressed support for the proposed zone while stressing that it should form part of a broader provincial development strategy. The proposal, advanced by Vice Governor Glenn Anthony Soco, covers Bogo City and the municipalities of Medellin, Daanbantayan, and San Remigio, with the possibility of a freeport.

The objectives are legitimate. The zone is meant to attract investment, generate employment, and extend economic opportunity beyond Metro Cebu, where development has long been concentrated. But objectives are not evidence. Before the boundaries are drawn, the province should be able to answer five questions. What makes a location attractive to investors? Which industries could realistically operate in northern Cebu? How much land would they need? What infrastructure would they require? And would the zone create new economic activity, or merely redirect investment that would otherwise have located elsewhere in Cebu?

1. Designation Is Not Development

An economic zone is a defined area in which government establishes special regulatory, fiscal, or infrastructure arrangements to attract investment. Depending on its legal form, it may offer tax incentives, customs privileges, simplified procedures, and dedicated infrastructure.

The legal form matters. Under Republic Act No. 7916, as amended, special economic zones are created by presidential proclamation upon the recommendation of the Philippine Economic Zone Authority, while freeports have generally been established by acts of Congress. A province can propose, support, and invest; it cannot by itself confer the incentives that define a special economic zone or a freeport. The institutional pathway should therefore be settled early, because it determines which incentives are actually available.

Whatever its legal basis, designation is not development. Firms do not choose locations because land has been labeled commercial or industrial. They choose them on the basis of expected revenues and costs: accessibility, labor, infrastructure, proximity to suppliers, and access to markets. A manufacturer weighs the cost of moving inputs and outputs, the reliability of power and water, the availability of skilled workers, and the distance to ports. A service enterprise weighs labor, telecommunications, and proximity to customers. Different industries have different locational requirements, and an economic zone becomes productive only when its location and institutions offer advantages sufficient to attract and keep them.

The starting point should therefore be an analysis of economic opportunities, not the allocation of land.

2. Lessons from Polambato and Medellin

Northern Cebu already offers a test of this proposition. In 2002, Proclamation No. 239 declared about 40 hectares of flatland near the Polambato port in Bogo a special economic zone under Republic Act No. 7916. A decade later, the city was still seeking locators and negotiating with neighboring landowners, and as late as 2014 the site was reported to remain under sugarcane. Bills to create a special economic zone for the fourth district of Cebu, with its principal office in Medellin, have also been filed in Congress.

The legal designation existed. The port existed. What was missing was sufficient investor demand to turn the designation into production and employment. Any new proposal for the same area should begin by asking why the earlier one did not attract that demand, and what has changed since.

The experience of neighboring Medellin, long known as Cebu’s sugar bowl, points to the deeper problem. The Bogo-Medellin Milling Company, founded in 1928 and for decades the backbone of sugar production in Medellin, Daanbantayan, San Remigio, Bogo, and Tabogon, suspended operations in 2023. Its output had fallen from about 600,000 fifty-kilogram bags of raw sugar a year at its peak in the early 2000s to 80,000 bags by 2021, and its closure reportedly left some 2,800 of Medellin’s 4,450 hectares of cane land idle. In a conversation with the author, the municipal planning and development officer described the absence of new investment since milling ended. What remains, in his account, is the land itself, held as an investment, with no other economic activity yet able to generate higher income than the one that was lost.

The observation is significant for two reasons. First, it identifies the real economic gap in northern Cebu: not a shortage of land, but the loss of an anchor industry and the absence of a successor capable of using the land more productively. Second, it describes land whose most profitable present use has disappeared while no higher use has yet become financially feasible. In such a market, landowners rationally hold rather than develop, and the land’s value rests increasingly on expectation rather than on income. A new economic zone would enter precisely this market. Unless it brings activities able to outperform what sugar once provided, its announcement is more likely to raise expectations than to raise income.

3. Why Firms Locate Where They Do

Urban economics explains why economic activity concentrates in particular places. In Order without Design: How Markets Shape Cities, Alain Bertaud describes cities as economic systems shaped by the location decisions of households and firms, responding to employment, accessibility, land prices, and transport costs. Government influences these conditions through infrastructure, regulation, and public investment, but it cannot fully determine the spatial distribution of economic activity through planning maps.

A central concept is agglomeration economies. Firms benefit from locating near other firms because proximity lowers transaction costs, deepens access to specialized labor, supports shared suppliers, and speeds the exchange of information. These advantages explain why some cities and industrial districts keep attracting investment.

Agglomeration also produces congestion, rising land costs, and other diseconomies. At some point, an alternative location becomes attractive if it offers lower operating costs without sacrificing essential accessibility and productivity. That is the economic case for new growth centers outside Metro Cebu. But congestion in Metro Cebu does not, by itself, establish that northern Cebu is the right alternative. The question is whether northern Cebu offers locational advantages sufficient to support identifiable industries.

4. Northern Cebu as an Economic Region

The proposed zone spans several local government units, but economic regions seldom follow administrative boundaries. They are organized through labor markets, supply chains, transport networks, and trade. Workers live in one municipality and work in another; agricultural products from several towns pass through a common processing and logistics network; firms depend on suppliers and customers outside any designated zone.

The proposal should therefore be assessed within the larger economic geography of Cebu. A regional assessment should map existing productive activities, employment concentrations, agricultural and industrial supply chains, tourism markets, transport infrastructure, and linkages with Metro Cebu and neighboring provinces. It should identify the industries in which northern Cebu holds a demonstrable comparative advantage. Agribusiness processing, light manufacturing, logistics, and tourism-related enterprises are plausible candidates, but each should be included only on evidence of demand, competitive costs, and viable production relationships.

Some of that evidence already exists. Since 2022, a provincial program has encouraged former cane farmers to plant yellow corn for Cebu’s feed mills. The area under the program reportedly reached about 2,107 hectares producing some 6,449 metric tons, against an estimated 426,000 metric tons consumed each year by the province’s feed industry. A gap of that size is a demand signal, tempered by the vulnerability of corn to typhoons and by uncertainty over continued public support. It is the kind of evidence, grounded in an identifiable buyer and an existing supply chain, on which a development strategy for northern Cebu should be built.

The objective is not to find activities that would physically fit within the zone. It is to determine which activities could operate there productively and competitively.

5. Reading the Proposal against the Regional Plan

The Central Visayas Regional Physical Framework Plan 2026–2050 offers a regional test for the proposal. According to its published primer, the plan adopts decentralized concentration as its principal spatial strategy: growth is to be redirected from Metro Cebu not to every locality, but to strategically located secondary and tertiary centers. Its spatial model, the Pusô Network, arranges settlements in a polycentric hierarchy linked by three connectivity axes, one of which is a North–South Cebu axis anchored on a continuous road network from Daanbantayan to Santander.

The plan also ranks settlements and assigns functional roles to clusters of local governments. In northern Cebu, the primer ranks Bogo City as a primary urban center and places it, with Borbon, Carmen, Catmon, Sogod, and Tuburan, in the North Cebu agri-industrial corridor. Daanbantayan, Medellin, and San Remigio, together with Bantayan Island, the Camotes islands, and Tabuelan, form the North Cebu tourism corridor. In the settlement hierarchy, San Remigio is a major growth center, while Daanbantayan and Medellin are minor growth centers. Of the four localities the proposed zone would cover, therefore, only Bogo is assigned an agri-industrial role; the other three are assigned to tourism. The placement of Medellin, long Cebu’s sugar bowl, in the tourism corridor rather than the agri-industrial one is itself a question the proposal and the regional plan will need to reconcile.

Three implications follow for the proposed zone.

First, the roles the regional plan assigns to northern Cebu are agri-industrial and tourism functions, not general export manufacturing or freeport trade. A zone built around those roles, such as the processing of farm output like corn for Cebu’s feed mills, agricultural logistics, and tourism-related enterprises, would be consistent with the regional plan. A zone premised on attracting footloose manufacturers or freeport activity would sit uneasily with the region’s own assignment of roles and would need stronger evidence to justify it.

Second, decentralized concentration still means concentration. The strategy channels growth into designated centers rather than spreading it thinly. In northern Cebu, it points to Bogo, the area’s primary urban center with an existing port and an already proclaimed economic zone, as the logical anchor, with the surrounding towns linked to it, rather than to four separately developed zones.

Third, the key regional projects listed in the primer include a Cebu North–South coastal road, but none is a northern port expansion, freeport, or industrial estate. The infrastructure that would make a northern zone competitive is therefore not yet among the region’s flagship commitments, and its cost must be counted in the feasibility study rather than assumed.

The regional plan thus supplies something the proposal currently lacks: a statement of the role northern Cebu is expected to play within the region. Consistency with the plan does not prove feasibility, because a regional plan assigns roles much as a zoning map designates land; it does not by itself create the demand to fulfil them. As the next section shows, a plan can also miss evidence that already exists. Neither the provincial proposal nor the regional plan should therefore be treated as settled: both should be tested against what northern Cebu’s economy actually does.

6. Northern Cebu’s Maritime Network: An Overlooked Dimension

Northern Cebu’s development potential must be examined beyond the proposed coastal road and other land-based infrastructure. The area already has a network of maritime gateways: Polambato in Bogo City, Hagnaya in San Remigio, Kawit in Medellin, Maya in Daanbantayan, and Carmen. These ports connect northern Cebu to its surrounding islands and to provinces outside Central Visayas.

Polambato alone shows the scale of that network. In June 2025, before the earthquake discussed below, the City Government of Bogo’s published schedule for the port listed six regular services to destinations outside the region, five of them roll-on/roll-off (Table 1).

Table 1. Regular vessel services from Polambato port, Bogo City, June 2025

DestinationProvince (region)Vessel typeScheduled departures
CawayanMasbate (Bicol)Roll-on/roll-off, two vesselsTwice daily
Mintac, CatainganMasbate (Bicol)Roll-on/roll-offDaily
MatnogSorsogon (Bicol)Roll-on/roll-offFour times a week
PalomponLeyte (Eastern Visayas)Roll-on/roll-off landing craftTwice daily
VillabaLeyte (Eastern Visayas)Launch boatDaily

Source: City Government of Bogo, Polambato Port schedule for regular vessels, June 2025.

Taken together, the schedule amounts to about 46 departures a week: some 25 to Masbate and Sorsogon in the Bicol Region, and 21 to Leyte. The Matnog service is especially significant. Matnog lies at the southern end of Luzon’s road network, so a truck that boards at Bogo can continue by road into Luzon without passing through Metro Cebu. Maya, at the northern tip of the island, has also served a roll-on/roll-off route to Calbayog in Samar since 2020.

The region’s own planning history recognizes these links. The earlier Regional Physical Framework Plan identified interregional roll-on/roll-off corridors linking Maya to Masbate, Carmen to Isabel in Leyte, and Tuburan to Escalante in Negros. The 2025 midterm update of the Regional Development Plan includes port development projects at Maya and Carmen, and the Cebu Port Authority has identified substantial rehabilitation requirements at Polambato, Hagnaya, and Kawit. Yet individual port projects are not the same as spatial integration. A port may be funded without its wider economic function, linking northern Cebu’s farms, traders, and tourism to markets in other regions, being reflected in the regional spatial strategy. The new plan’s three connectivity axes run along Cebu, across the Bohol Strait, and between Cebu and Bohol; none recognizes northern Cebu’s links to Bicol, Samar, Leyte, or Negros.

The magnitude 6.9 earthquake of September 30, 2025 tested this network. It damaged seven northern Cebu ports, among them Polambato, Hagnaya, Kawit, and Tabogon, and the Cebu Port Authority initially estimated some ₱623 million in repairs. About two-thirds of Polambato became non-operational, and Hagnaya operated under tide-dependent restrictions. Some shipping lines serving Masbate, Samar, and Bantayan temporarily moved to Maya and Kawit, whose facilities remained usable. By June 2026, the Authority had proposed ₱215 million to reconstruct Polambato and ₱150 million to repair Hagnaya, pending a geohazard assessment that could require some ports to be relocated, and warned that full restoration might not come until late 2027. The episode shows why connectivity should be assessed as a system rather than as a list of separate projects: when one gateway fails, the others determine whether the north remains connected.

The omission matters for the economic zone. Existing shipping services are revealed demand: unlike a proposed zone, they show that vehicles, cargo, and passengers already move between northern Cebu and markets outside the region. A schedule shows frequency, not volume, and the regional plan and any feasibility study should assess northern Cebu’s ports against actual passenger and freight movements, agricultural trade, tourism, logistics, and interregional access. They should also examine whether the proposed coastal road and other land transport would better connect productive hinterlands to these maritime gateways. The pattern already suggests where northern Cebu’s locational advantage may lie: not as an export-processing enclave, but as a roll-on/roll-off gateway between Cebu and the provinces of Bicol and Eastern Visayas. That role now depends on how quickly, and where, Polambato and the other damaged ports are rebuilt.

The central planning question is therefore not simply whether northern Cebu needs more roads or port facilities. It is whether the regional spatial strategy recognizes northern Cebu’s existing economic geography and its functional relationships with Masbate, Leyte, Samar, Negros, and other neighboring provinces. Economic regions extend beyond administrative boundaries. If the final plan confirms the exclusion of these interregional connections from its connectivity maps and investment priorities, that omission would warrant explanation and review.

7. Decentralization and Metro Cebu’s Congestion

A broader argument for developing northern Cebu is that it could relieve development pressure on Metro Cebu. The proposition deserves careful examination.

Urban congestion depends on the distribution of jobs and housing, transport networks, commuting behavior, and the capacity of existing infrastructure. A new economic zone does not automatically reduce it. For decentralization to change commuting patterns, the new center must generate substantial, accessible employment, supported by housing and transport. Even then, the effect depends on which industries locate there and how they relate to existing urban centers. A northern industrial zone that relies on suppliers, ports, or specialized services in Metro Cebu may add freight traffic between the two. An employment center supported by local labor, housing, and supply chains could instead strengthen northern Cebu’s economic independence.

These outcomes cannot be read from a land-use map. They require employment projections, transport-demand analysis, and an understanding of regional production relationships. The zone’s contribution to regional development should be evaluated separately from claims that it will relieve Metro Cebu’s congestion.

The same caution applies to flooding. Flood risk is governed by hydrology, land cover, drainage capacity, and exposure. Decentralization may shape future development patterns, but it is no substitute for direct flood-risk reduction.

8. Land Supply Is Not Economic Demand

A recurring error in land-use planning is to treat the availability of land as evidence of development potential. Land may be physically suitable for industry without being economically viable for it, and designating land as industrial does not establish that demand exists to occupy it.

Suppose a large area is zoned for industry on the expectation that investors will eventually arrive. The designation raises expectations and asking prices, and some owners hold their land in anticipation of appreciation. If infrastructure is inadequate, costs uncompetitive, or demand weak, the result is an inventory of designated land without corresponding activity. The planning system will have expanded the legal capacity for development without expanding the economically effective supply of land. Zoning creates development possibilities; market demand determines whether those possibilities are worth pursuing.

The announcement of a zone can also move land prices well before any development occurs. Landowners and investors capitalize expected infrastructure, investment, and regulatory advantages into present values. Rising prices after an announcement therefore do not show that the zone has generated production or employment; they may reflect expectations alone.

Holding land in such conditions is not necessarily irrational. Under uncertainty, waiting has option value. But widespread speculative holding can complicate land assembly, raise acquisition costs, and delay both public and private investment. A feasibility study should examine landownership, existing uses, acquisition costs, and market transactions, and should distinguish land-price appreciation from the creation of new economic output.

9. Public Infrastructure Must Earn Its Cost

Economic zones usually require substantial public investment in roads, utilities, drainage, telecommunications, and logistics facilities before firms can operate. Every peso spent there is a peso not spent on other infrastructure or public services. The question is therefore not only whether the zone is technically feasible, but whether its expected economic and social benefits justify the public resources it requires.

This requires distinguishing financial from economic feasibility. Financial feasibility asks whether the project can generate revenues sufficient to sustain its operations and investments. Economic feasibility asks whether it produces net benefits to society, including effects that never appear in the accounts of the zone’s operator or locators: employment, productivity, transport savings, infrastructure costs, forgone tax revenue from incentives, environmental effects, and effects on other locations.

Particular attention belongs to additionality. If an enterprise relocates from another Cebu locality solely because of incentives, the new zone records investment and jobs without any equivalent increase in provincial activity. The evaluation should distinguish new economic activity from the spatial redistribution of existing activity.

10. Environmental Capacity as an Economic Constraint

Environmental conditions should not be treated as a regulatory hurdle to clear after the development concept is fixed. They bear directly on economic feasibility. Flood exposure, geological hazards, water availability, drainage requirements, ecological sensitivity, and the conversion of agricultural land all impose costs. Some fall on developers and investors; others are shifted to surrounding communities or to future generations.

Economists call these shifted costs externalities. A project may be privately profitable while imposing environmental and infrastructure costs that its own accounts do not record. The planning question is therefore not merely whether development is legally permissible or physically possible, but whether its location and scale are justified once environmental and social costs are counted. That question carries particular weight for a zone that could reshape settlement patterns, transport networks, land conversion, and infrastructure commitments across several municipalities.

11. Which Comes First: the Master Plan or the Feasibility Study?

A master plan allocates space: industrial districts, commercial areas, transport corridors, utilities, residential areas, protected zones, and expansion areas. Each allocation rests on assumptions about the scale and character of future activity. How many firms are expected? In which industries? How many workers? How much floor space? What infrastructure demand? Without credible answers, the master plan risks allocating land to activities whose requirements have not been established.

This does not mean spatial planning must wait until every economic uncertainty is resolved. Economic analysis and spatial planning should inform each other. Preliminary spatial analysis can identify feasible sites and environmental constraints; economic analysis can then assess industry demand, infrastructure costs, and development scenarios; and those findings can guide the preparation and refinement of the plan. The result should be land-use allocations supported by economic evidence rather than by projection alone.

12. Comparing Alternative Strategies

A feasibility study should not assume that a special economic zone is the best instrument. The province could compare at least four strategies:

  • a formally designated economic zone with fiscal incentives and dedicated infrastructure;
  • industrial and logistics corridors linked to existing transport networks;
  • stronger agricultural production, processing, storage, and distribution systems; and
  • targeted investment in roads, utilities, and education that raises the productivity of existing towns without a special regulatory zone.

These strategies may be combined. The relevant question is which strategy, or combination, offers the greatest net economic benefit given Cebu’s resources, infrastructure constraints, markets, and environmental conditions. The comparison should weigh not only expected benefits but also the risks of underused infrastructure, weak investor demand, and long-term fiscal obligations. A development strategy should be chosen through comparison, not justified by its anticipated benefits alone.

Conclusion: Plan for Economic Opportunities, Not Merely for Land

Government and markets perform different but connected functions in shaping regional development. Government provides infrastructure, builds institutions, regulates land use, corrects environmental externalities, and lowers barriers to investment. Markets coordinate the location decisions of firms and households through prices, costs, and expectations. Neither works independently of the other. The task of public policy is to strengthen genuine economic advantages, not to rely on spatial designation to create demand.

The North Cebu Economic Zone offers a timely occasion to examine the province’s long-term economic geography and the case for more widely distributed development. Its aims of attracting investment, creating jobs, and expanding opportunity outside Metro Cebu deserve serious consideration. But viability cannot be established by identifying available land, drawing boundaries, or designating future industrial districts. It requires evidence of industry demand, locational competitiveness, labor-market capacity, infrastructure requirements, environmental sustainability, and net economic benefit, together with a clear distinction between growth that is genuinely additional and investment merely transferred from one locality to another. Polambato is a reminder that a proclamation can precede production by many years.

The zone itself is not the economic activity. Government can designate an economic zone, but it cannot designate economic demand into existence. Success will be measured not by the hectares allocated but by whether northern Cebu develops an economic base that sustains productive employment, strengthens regional linkages, and improves the welfare of its communities.

The central planning question should therefore be: what economic activities can northern Cebu competitively sustain, and what public interventions are needed to make them possible? Answering it should be the foundation of the proposal, not the final justification for a master plan already drawn.

References and Further Reading

  • Bertaud, A. (2018). Order without Design: How Markets Shape Cities. MIT Press.
  • Fujita, M., Krugman, P., & Venables, A. J. (1999). The Spatial Economy: Cities, Regions, and International Trade. MIT Press.
  • Glaeser, E. L. (2011). Triumph of the City. Penguin Press.
  • Marshall, A. (1890). Principles of Economics. Macmillan.
  • World Bank. (2009). World Development Report 2009: Reshaping Economic Geography. World Bank.
  • World Bank. (2017). Special Economic Zones: An Operational Review of Their Impacts. World Bank.
  • Republic Act No. 7916, The Special Economic Zone Act of 1995, as amended.
  • Proclamation No. 239 (2002), declaring a parcel of land in Barangay Polambato, Bogo, Cebu, a special economic zone.
  • The Freeman. (2012, March 26). “Bogo economic zone eyed for MEPZ expansion.” Philstar
  • The Freeman. (2014, January 30). “Capitol, Bogo partner for wharf development.” Philstar
  • The Freeman. (2026, November 7). “Pam backs north economic zone.” Philstar
  • The Freeman. (2026, November 7). “Pam backs north economic zone.” Philstar

Author’s note: This article presents an urban economic and planning analysis of the reported proposal. It is not a feasibility assessment. Conclusions on the economic viability of the North Cebu Economic Zone would require detailed industry, infrastructure, environmental, fiscal, and spatial data.

My Comments on the BNC Report: Price Is Not Necessarily Market Value

The recent Bilyonaryo News Channel (BNC) report featuring Cuervo Appraisers President Jose Maria Fernandez-Cuervo raises important concerns about the reliability of property transaction records in the Philippines, particularly the alleged understatement of selling prices in deeds of absolute sale and the absence of a comprehensive Multiple Listing Service (MLS).

These concerns are relevant to professional valuation practice. However, I believe the discussion should extend beyond the availability and accuracy of recorded selling prices to the broader economic foundations of property valuation.

First, price and market value are not necessarily the same.

Price refers to the amount asked, offered, or actually paid for a property. Market value, on the other hand, is an estimate of the amount for which a property should exchange under defined market conditions, involving knowledgeable and willing parties acting without compulsion.

Even if every deed of absolute sale accurately reflected the consideration paid, the recorded prices would not automatically represent market value. Appraisers must still examine the circumstances surrounding each transaction, including whether it was conducted at arm’s length and under normal market conditions.

Second, the absence of an MLS should not be confused with the absence of reliable valuation methodology.

An MLS primarily facilitates the sharing of property information among real estate professionals. Some systems also record completed transactions, but an MLS does not necessarily provide independently verified selling prices.

While a comprehensive MLS or verified sales database would improve market transparency, neither is an absolute prerequisite for developing a credible opinion of market value.

Third, sales transactions constitute only one source of market evidence, and the Sales Comparison Approach is only one of the recognized valuation approaches.

Professional valuation also recognizes the Income Approach and Cost Approach. The applicability of these approaches depends on the nature of the property, the valuation objective, and the quality of available evidence.

More importantly, property valuation requires an understanding of the economic factors influencing value, including supply and demand, accessibility, location, land-use regulations, highest and best use, income-generating potential, development costs, and prevailing market conditions.

These factors help explain why properties command different prices and how market participants assess their economic benefits.

Fourth, incomplete or unreliable transaction information requires broader market investigation, not simply numerical adjustments.

Adjustments to comparable sales are legitimate valuation tools when supported by market evidence. However, adjustments alone cannot establish market value, particularly when the underlying transaction information is unreliable.

Appraisers must investigate the available evidence, evaluate its relevance, examine the economic characteristics of the property, and reconcile the findings using appropriate valuation approaches.

This is where the distinction between collecting prices and undertaking professional valuation becomes particularly important.

Finally, the reported understatement of consideration in deeds of sale is a legitimate concern that deserves further empirical investigation. Even assuming that such practices are widespread, the implications for valuation should be understood within the broader framework of property market economics.

The central challenge is not merely the absence of an MLS or the reliability of recorded selling prices. It is how professional appraisers interpret available market information and translate it into a credible and defensible opinion of market value.

Property valuation is not simply the process of collecting selling prices and adjusting comparable properties. It is an economic analysis of the property, its market, and the factors influencing its exchange value.

Ultimately, price is evidence, market value is the conclusion, and valuation is the economic analysis connecting the two.

Augusto B. Agosto
Economist | Licensed Real Estate Consultant | Real Estate Appraiser

CASE NOTE #1-Easement of Right of Way

When the Valuation Premise Itself Must Be Tested

THE CHALLENGE

A property dispute involving an easement of right of way may initially appear to present a simple valuation question.

A proposed six-meter-wide right of way would affect approximately 655 square meters of a servient property while providing access to a 15,285-square-meter dominant estate. At first glance, the assignment appears straightforward: determine the value of the 655 square meters affected by the proposed easement.

But the area to be valued is itself based on assumptions that may materially affect the valuation result. Why this route? Why six meters? Would three or four meters adequately provide the required access? Are other feasible routes available? How would each alternative affect the servient and dominant estates?

The valuation problem therefore extends beyond assigning a unit value to the affected land. It requires determining the economic consequences of the proposed easement and its feasible alternatives.

THE AA+ CONSULTING APPROACH

AA+ does not begin by simply multiplying 655 square meters by a unit value. We first examine whether the assumptions defining the valuation problem should themselves be tested.

Alternative routes and widths are identified and evaluated as separate property scenarios. For each feasible configuration, the analysis considers the area burdened, the resulting effect on the use and development potential of the servient estate, and any corresponding diminution in its market value.

The analysis also examines the other side of the transaction. Access created over a relatively small portion of one property may materially affect the utility, development potential, highest and best use, marketability, and value of a much larger dominant estate. The economic effect of access must therefore be distinguished from the value of the land physically occupied by the easement.

AA+ does not determine which route or width the law ultimately requires. That determination belongs to the appropriate legal decision-maker. Our role is to transform the property and economic issues embedded in the dispute into independently supportable valuation evidence.

In Litigation Valuation & Consulting,  sometimes the difficult valuation question is not “What is the value?” but “What exactly should be valued, and why?”

Consulting identifies the valuation problem. Valuation measures its economic consequences. Expert evidence brings that analysis into the adjudicative process.

AA+ APPRAISAL & CONSULTANCY, INC.
Litigation Valuation & Consulting
When Property Value Becomes the Dispute

How Advanced Is “Advanced”? Rethinking Appraisal Education in an Age of Masterclasses

The real estate profession is seeing a growing number of seminars, workshops, mentoring programs, “advanced appraisal” courses, and “masterclasses.” That’s generally a positive development — a profession can’t stay static. Markets change, laws evolve, valuation techniques develop, technology advances, and artificial intelligence is starting to change how information is gathered and analyzed.

But the proliferation of terms like “Advanced Appraisal,” “Masterclass,” “Expert Training,” and “Become an Appraisal Expert” raises a fair question: how advanced is “advanced,” and what should professional appraisal education actually produce?

The issue isn’t whether these seminars are useful — many practical programs are genuinely valuable, particularly for newly licensed appraisers bridging the gap between classroom knowledge and actual practice. The more important issue is whether advanced, masterclass, and expert have become marketing labels detached from any real standard of competence.

That question becomes sharper when viewed against the framework of the Real Estate Service Act of the Philippines (RESA), Republic Act No. 9646. RESA didn’t conceive of real estate appraisal as simply learning how to calculate property values. It established real estate service as a regulated profession requiring technical competence, professional responsibility, ethical standards, education, licensure, and continuing development — and the PRC framework has since moved further toward structured career progression and specialization, with a growing emphasis on learning outcomes and professional competencies.

That gives us a useful foundation for asking what basic, intermediate, and advanced appraisal education should really mean.

Appraisal Is More Than Valuation Technique

The common impression of appraisal education centers, understandably, on valuation methodology: learn the Sales Comparison Approach, the Cost Approach, the Income Approach, depreciation, capitalization, adjustments, reconciliation, and report writing. All of that is necessary. But RESA itself points toward a broader conception of professional competence — real estate-service regulation covers not just technical valuation but professional standards, ethics, education, and continuing development. The PRC’s current real estate-service framework includes accreditation of lecturers for training and CPD, and Career Progression and Specialization programs, part of a broader PRC initiative toward structured pathways aligned with professional competency levels.

For an appraiser, this matters because property value can’t be separated from property rights. Before asking “how much is the property worth,” the appraiser must first ask: what property, property interest, rights, restrictions, and obligations are actually being valued? That necessarily pulls real estate law into appraisal education. And once professional judgment enters the picture, ethics becomes inseparable from both law and valuation.

Appraisal education, then, should develop three interconnected dimensions:

  • Technical — how should the property be valued?
  • Legal — what property rights and restrictions are being valued?
  • Ethical — how should the professional exercise that judgment?

These should build progressively from basic to advanced education.

Basic: Know and Understand

Basic appraisal education establishes the professional foundation. At this level, the learner should understand market value, highest and best use, property rights, the three approaches to value, comparable properties, depreciation, capitalization, adjustments, and reconciliation — the essential what is questions.

But RESA-oriented education can’t stop at valuation concepts. The beginning appraiser also needs fundamental real estate law: ownership and other property rights, titles and land registration, co-ownership, easements, leases, mortgages, contracts, land-use controls, taxation, and other legal conditions affecting real property. The point isn’t to turn the appraiser into a lawyer — it’s to build enough legal literacy to recognize that the physical property and the legal interest are not the same thing.

A person may physically possess land without holding full ownership rights. A titled property may carry an easement. A 10,000-square-meter parcel may have restrictions on what can actually be developed. A property may be subject to a lease, a mortgage, a co-ownership arrangement, a zoning restriction, or some other encumbrance. One of the first lessons of professional appraisal education, then, should be:

The physical property tells us what exists. The law helps determine what rights exist. The market tells us what those rights are worth.

Basic education must also introduce professional ethics — independence, objectivity, impartiality, confidentiality, competence, disclosure, and avoiding misleading representations. Most importantly: the appraiser’s assignment is to develop an independent opinion of value, not to produce the value the client wants. So basic education, in the end, asks three things: what are the appraisal principles, what are the relevant legal principles, and what are my professional obligations?

Intermediate: Apply Competently and Ethically

Intermediate education moves from knowing to doing. This is where practical training becomes especially valuable — the appraiser learns to inspect property, gather and verify market information, conduct market analysis, determine highest and best use, select comparables, derive adjustments, estimate costs and depreciation, analyze income, derive capitalization rates, reconcile value indications, and prepare the appraisal report. “What is the Sales Comparison Approach?” becomes “how do I actually apply it?”

Legal education has to make the same shift, from memorizing rules to recognizing their valuation consequences. Knowing what an easement is, in the abstract, is one thing. Inspecting a property and discovering its only access appears to pass through another person’s land is another. Now the questions get concrete: Is the access legally established? What property right should the appraisal assume? Does the access condition affect marketability or highest and best use? Are properties with established road access truly comparable? Should legal advice or additional documentation be obtained? The appraiser isn’t deciding the legal dispute — the appraiser is recognizing that the legal condition affects the valuation problem. That recognition is itself intermediate professional competence.

Ethics has to make the same move, from theory to practice. At the basic level, the appraiser learns the ethical principles. At the intermediate level, the appraiser has to apply them under pressure. A client says, “We need at least ₱50 million for the bank.” A broker supplies only comparables that support higher values. An owner asks the appraiser to disregard an unfavorable transaction. The appraiser uncovers a legal restriction that materially affects development potential. Or the appraiser is offered an assignment involving a property type outside their competence. The question is no longer “what does the Code of Ethics say?” — it’s “what should I actually do?” That’s why ethics shouldn’t be confined to a separate lecture tacked onto the end of a program. It needs to be embedded in the appraisal exercises themselves.

Advanced: Judge Independently and Defend Responsibly

Advanced education should begin exactly where the answer stops being obvious.

The question is no longer how do I make an adjustment — it becomes should an adjustment be made at all, how much, and what market evidence supports it? It’s no longer how do I apply the Income Approach — it’s should the Income Approach even be relied on for this property, what assumptions reflect actual market behavior, and what happens when the evidence conflicts?

Legal knowledge has to grow more sophisticated too. Take a property affected by a transmission-line easement. At the basic level, the participant understands what an easement is. At the intermediate level, they learn to identify the affected area and investigate the relevant rights and restrictions. At the advanced level, the questions multiply: What property rights have actually been affected? What uses remain permissible? Has highest and best use changed? Is the diminution confined to the easement area, or has the remainder also been affected? Does actual market evidence demonstrate that effect, and how do you separate it from other differences between the subject and its comparables?

At this level, technical valuation, real estate law, market evidence, and professional judgment all converge — and there’s often no textbook percentage that provides the answer. That’s precisely what makes the assignment advanced.

Advanced Education Shouldn’t Give Away the Judgment

Consider a typical classroom exercise: comparable price ₱20,000/sqm, location adjustment 10%, size adjustment 5%, time adjustment 3%. The participant runs the numbers and arrives at an answer. That’s useful training, but it mainly teaches application — in actual practice, nobody hands the appraiser the correct adjustment. The real professional questions are: should there be an adjustment, how much, and where’s the evidence?

Advanced education should therefore put participants in front of imperfect, incomplete, and conflicting information on purpose. Let them discover that an asking price can’t be verified. Let a supposed comparable ultimately prove inappropriate. Let a legal description conflict with actual site conditions. Let zoning permit several possible uses. Let the three approaches produce materially different indications, with the client quietly preferring one of them. Then ask: what should the appraiser do, and why? That’s what actually develops professional judgment.

Real Estate Law Should Be Taught as a Valuation Variable

This may be where appraisal education under RESA can become much stronger. Real estate law shouldn’t just be a collection of provisions memorized for the licensure exam — its professional relevance runs much deeper. The legal environment shapes a chain that runs straight through to value:

property rights → permitted uses → highest and best use → marketability → risk → methodology → value

Take a landlocked parcel. Knowing the Civil Code provisions on easements is foundational knowledge. But advanced education should push further: What happens to value when access is disputed? What assumption should the appraiser make? How should the uncertainty be disclosed? What comparables are appropriate? Does the legal uncertainty change highest and best use? And when should the appraiser seek an actual legal opinion rather than draw their own legal conclusion? The same questions apply to co-ownership, usufruct, leasehold interests, expropriation, partial takings, zoning restrictions, title annotations, condominium rights, and other legal conditions.

The goal isn’t to turn appraisers into lawyers — quite the opposite. Advanced education should teach the appraiser to recognize the moment when “this issue affects value, but resolving the underlying legal question exceeds my professional role or competence.” Knowing when another professional’s expertise is required is itself a sign of professional maturity.

Advanced Ethical Problems Often Look Like Technical Problems

As valuation gets more sophisticated, ethical problems get less obvious — because they can disguise themselves as ordinary technical decisions.

Suppose three plausible methodologies produce three different results: Method A at ₱42 million, Method B at ₱48 million, Method C at ₱55 million. The client needs ₱55 million for financing. Method C might not be mathematically wrong. The real question is whether it was selected because it best reflects the property and market, or because it produces the client’s desired result. The same problem shows up in comparable selection — an appraiser with ten relevant transactions might choose only the five that support the highest values. The resulting adjustment grid can be mathematically perfect and still be professionally compromised.

An appraisal can be technically correct in calculation but ethically defective in judgment. That’s exactly why the higher the claimed level of professional education, the more ethics needs to be integrated into actual valuation decisions rather than treated as a separate topic.

Confidence Is Not Competence

Many training programs promise participants greater professional confidence, and confidence is genuinely useful — a professional should be able to explain their work assuredly. But education needs to draw a clear line: confidence is not the same as competence, and neither is a substitute for evidence.

An appraiser can confidently defend a 20% adjustment — the question remains where the 20% came from. An appraiser can confidently testify a property is worth ₱50 million — the question remains what reliable evidence supports that figure. The educational goal shouldn’t be “defend with confidence.” It should be “develop an appraisal that can be defended.” Confidence is personal. Defensibility is evidentiary.

AI Makes This Progression Even More Important

Artificial intelligence changes what we should expect from professional appraisal education. AI can increasingly retrieve, organize, calculate, summarize, analyze, and draft. Those are useful capabilities, and they’ll keep improving. But the higher professional functions — verifying, interpreting, questioning, selecting, reconciling, judging, staying independent, and defending — remain squarely human.

AI may calculate an adjustment; the appraiser determines whether it’s warranted. AI may identify statistically similar properties; the appraiser determines whether they’re genuinely comparable. AI may execute a valuation method correctly; the appraiser determines whether the method is appropriate. AI may summarize a law; the professional still has to determine whether it actually applies to this property interest and assignment, or whether real legal advice is needed. And AI may produce exactly the value a client wants; the ethical appraiser still has to determine whether the evidence actually supports it.

AI can assist professional judgment. It cannot assume professional responsibility. As AI makes calculation easier, appraisal education should move upward toward judgment — not downward toward more calculation.

RESA, CPD, and Career Progression

This discussion is especially timely because Philippine professional regulation is itself moving toward a more structured concept of professional progression. The PRC’s current Career Progression and Specialization Program framework emphasizes structured training, competency assessment, professional portfolios, learning pathways, quality assurance, and alignment with the Philippine Qualifications Framework, with Real Estate Service among the professions participating in this work. The PRC has also recently emphasized an outcomes-based, learner-centered approach to professional development — recognizing workplace learning, professional experience, research, training, certifications, and other validated learning, not merely seminar attendance.

That’s an important shift. It suggests professional development should increasingly ask not “how many hours did you attend?” but “what professional competence did you actually acquire or demonstrate?” That distinction matters most when programs reach for terms like advanced, specialization, expert, or masterclass. The PRC’s real estate-service regulatory materials themselves already distinguish accreditation relating to CPD versus Career Progression and Specialization programs, and even provide separate declarations for “competent” versus “expert” speakers or lecturers. The terminology, in other words, is already meant to carry substance.

A Three-Level Framework for Appraisal Education Under RESA

A clearer professional progression might look like this:

LevelTechnicalLegalEthical
BasicUnderstand appraisal principlesUnderstand fundamental property rights and real estate lawsKnow professional duties and boundaries
IntermediateCompetently apply valuation methodsIdentify how legal conditions affect the appraisalApply standards objectively in actual practice
AdvancedResolve complex valuation problems and defend methodologyIntegrate complex legal conditions while recognizing when legal expertise is requiredExercise independent judgment under ambiguity, pressure, and conflicting interests

Reduced to three statements: basic is knowing and understanding; intermediate is applying competently and ethically; advanced is judging independently and defending responsibly. And running across the entire progression: ethics is not another level — ethics governs every level.

Then What Should “Masterclass” Mean?

There’s nothing wrong with a practical workshop teaching property inspection, market-data gathering, comparable analysis, valuation, report writing, and presentation — that can be extremely valuable. But those activities largely describe the normal professional appraisal process. If “masterclass” is going to mean something beyond marketing, mastery has to require more than being shown how that process works. Mastery should be demonstrated.

Give the appraiser a genuinely difficult assignment. Provide incomplete and conflicting evidence. Introduce uncertain legal conditions. Skip the predetermined adjustments. Allow competing methodologies. Add client pressure or an ethical dilemma. Require the appraiser to determine highest and best use, identify the rights being valued, investigate the legal conditions, select and verify market evidence, reject unreliable information, choose an appropriate methodology, develop the adjustments, reconcile conflicting indications, recognize the limits of their own competence, and produce an independent opinion of value. Then put that conclusion in front of competent professionals and ask: why this highest and best use, why these comparables, why this adjustment, why this methodology, what legal condition affects your conclusion, what evidence contradicts you, and what are the limitations of your analysis?

And finally, the question no formula can answer: would your conclusion remain the same if your client wanted a different number?

That last question tests something no valuation exercise can measure directly — professional independence.

Better Professionals, Not Merely Better Certificates

None of this is an argument against the proliferation of appraisal seminars — more professional education should be encouraged. Nor should basic and intermediate courses be treated as inferior; a well-designed practical intermediate course can be far more valuable to a newly licensed appraiser than a superficially “advanced” seminar. The real concern is the proliferation of labels — advanced, expert, masterclass — without a corresponding standard for the knowledge, competence, judgment, ethics, and demonstrated capability those labels are supposed to represent.

RESA gives us a broader vision of the real estate professional, and current PRC initiatives toward career progression, specialization, competency assessment, and outcomes-based development reinforce that direction. Perhaps the better question when evaluating any appraisal program isn’t “is this an advanced seminar?” but: what will the appraiser be able to do after this program that they couldn’t competently and independently do before?

If the program builds understanding of appraisal principles, property law, and ethical obligations, that’s good basic education. If it builds the ability to inspect, investigate, analyze, apply valuation methodologies, recognize legal implications, and prepare a professional report, that’s good intermediate education. If it builds the ability to independently resolve complex valuation problems, analyze uncertain legal conditions, evaluate conflicting evidence, select and defend appropriate methodologies, resist client pressure, recognize the limits of professional competence, and defend an independent opinion of value — then it earns the name advanced education. And mastery should mean demonstrating that capability consistently, not merely attending a course that carries the label.

Ultimately, professional appraisal education under RESA should develop more than people who know how to calculate property values. It should develop real estate professionals.

Knowledge tells the appraiser what can be done. Law defines the rights and limitations within which it can be done. Competence enables the appraiser to do it properly. Judgment determines what should be done. Ethics determines what must — or must not — be done.

That is the difference between learning appraisal techniques and becoming a professional appraiser.

AI in Real Estate Appraisal:Does AI Change the Rule?

Artificial intelligence is moving into the real estate appraisal profession fast. At seminars, conferences, and professional discussions, appraisers are increasingly being encouraged to bring ChatGPT and other AI tools into their work.

There’s nothing wrong with that on its own. Used well, AI can be a genuinely useful tool for appraisers.

The trouble starts when AI is pitched as something you can simply ask to determine a property’s value — sometimes without even inspecting the property. That proposition deserves closer scrutiny.

AI Does Not “Know” Property Value

Ask an AI system for a property’s value and it will often produce an estimate readily — one that can look remarkably precise.

But where did that number come from?

Market value isn’t information AI inherently possesses. A credible opinion of value has to be supported by relevant market evidence, and AI is only as useful as the information it has to draw on.

This matters most in markets where reliable transaction data is thin. Where actual selling prices, property characteristics, transaction dates, and similar information are publicly available and systematically recorded, automated valuation systems have a lot to work with. Where that information is fragmented, privately held, hard to verify, or simply unavailable, the picture changes completely.

Online listings may be abundant, but an asking price is not a transaction price. A property listed at ₱20 million may eventually sell for ₱16 million. Another may never sell at all. A transaction may involve unusual financing, related parties, package deals, distress, or other conditions that never make it into the listing.

An AI system that doesn’t know any of this can still produce a confident-sounding estimate. That’s exactly where the danger lies.

Precision Is Not the Same as Reliability

Suppose an AI system concludes that a parcel of land is worth ₱18,437 per square meter. The figure looks scientific because it’s precise.

But suppose the data behind it consists mostly of asking prices, duplicated listings, outdated postings, mislocated properties, and transactions whose actual consideration was never verified.

No amount of sophistication in the calculation can make up for weak evidence underneath it. Worth remembering:

Precision of output is not reliability of value.

A sophisticated algorithm run on unreliable information just produces a sophisticated-looking but unreliable conclusion. Garbage in, garbage out didn’t go away because AI showed up.

ChatGPT Is Not an Automated Valuation Model

This distinction gets missed constantly.

ChatGPT and similar generative AI tools are general-purpose systems, built to understand, organize, analyze, and generate information. An Automated Valuation Model (AVM), by contrast, is purpose-built to estimate property values using defined property databases, transaction data, statistical techniques, and valuation models.

They are not the same thing.

Even a well-designed AVM has limits — its reliability depends heavily on the quantity, quality, recency, and representativeness of its underlying data. If a specialized valuation model struggles when market information is inadequate, there’s even more reason for caution when a general-purpose AI system is asked to value a specific property without being handed sufficient, reliable evidence to work from.

AI can process information. It cannot manufacture reliable market evidence where none exists.

Can AI Replace Property Inspection?

An equally concerning idea is that AI has made physical inspection unnecessary.

There may be legitimate cases for desktop or limited-scope valuation, depending on the applicable standards, the purpose of the assignment, the evidence available, and the agreed scope of work. But that’s a very different claim from saying AI removes the need for inspection altogether.

Consider what an appraiser actually finds on-site that no database captures reliably:

  • actual road access and road width
  • topography and elevation
  • physical condition of improvements
  • neighborhood influences
  • encroachments, easements, and rights-of-way
  • flooding or drainage conditions
  • transmission lines and other infrastructure
  • actual frontage
  • surrounding land uses
  • quality of views
  • occupancy
  • inconsistencies between documents and actual conditions
  • other physical characteristics affecting utility and marketability

A database may show a property fronting a road. Inspection may reveal the “access” is a narrow passage shared with several other lots. A map may show a regular, developable parcel. Inspection may reveal severe topographical limitations. Records may describe a residential improvement in good condition. Inspection may reveal serious deterioration.

AI cannot analyze a property characteristic it was never given. Technology doesn’t eliminate the need to actually understand the property being valued.

AI Cannot Cure Inadequate Appraisal Evidence

This may be the single most important idea in the whole discussion: AI cannot cure inadequate appraisal evidence.

Technology can process evidence faster. It can surface relationships within that evidence. It can organize thousands of data points at once. What it cannot do is turn unreliable information into reliable market evidence just by running it through a model.

The difference plays out like this:

  • AI + poor data + no verification + no appropriate inspection → a potentially misleading estimate
  • AI + reliable data + professional verification → genuinely useful analytical assistance
  • AI + reliable data + appropriate inspection + sound methodology + professional judgment → powerful appraisal support

The difference isn’t the sophistication of the AI. It’s the quality of the appraisal process around it.

Can AI Apply the Correct Valuation Method?

Even with sufficient data, another question remains: can AI determine the appropriate method for valuing a given property?

AI can certainly run the calculations. Given verified comparable sales, transaction dates, property characteristics, and defensible adjustments, it can assist with the Sales Comparison Approach — computing unit values, applying adjustments, analyzing ranges, testing alternative assumptions. Given reliable rents, vacancy rates, operating expenses, capitalization rates, and growth assumptions, it can run the Income Approach, including capitalization and discounted cash-flow analysis. Given reliable land values, construction costs, depreciation, and obsolescence data, it can assist with the Cost Approach.

But performing a method correctly is not the same as selecting the right method. That distinction is fundamental.

A Correct Calculation Can Still Produce the Wrong Appraisal

Take a beachfront resort property. An AI system might pull nearby land listings, calculate price per square meter, apply mathematical adjustments, and produce an indicated value — flawlessly.

But what if buyers of comparable resort properties actually base their decisions on income-generating capacity, development potential, tourism demand, or redevelopment opportunity, not raw land comparables? The math can be correct while the underlying methodology is entirely wrong for the asset.

The same trap applies to hotels, industrial properties, special-purpose properties, leasehold interests, partial takings, landlocked parcels, properties burdened by transmission-line easements, environmentally constrained sites, and properties with significant redevelopment potential.

AI can calculate almost anything. The professional question is whether that’s what should have been calculated in the first place. A correct calculation using the wrong valuation method is still a wrong appraisal.

Highest and Best Use Comes Before the Method

There’s a deeper layer still. Before an appraiser even selects a valuation approach, they must determine the property’s highest and best use.

A vacant parcel might physically resemble the residential lots around it. But its zoning, accessibility, location, development trends, physical characteristics, and market demand may point to an entirely different use. Get the highest and best use wrong, and everything downstream can be technically sophisticated and still conceptually wrong.

The proper sequence looks like this:

  1. Identify the property and property rights
  2. Define the appraisal assignment and valuation date
  3. Inspect and investigate as appropriate
  4. Analyze physical, legal, economic, and market characteristics
  5. Determine highest and best use
  6. Select the appropriate valuation approach and method
  7. Apply relevant, verified market evidence
  8. Reconcile the value indications
  9. Form the opinion of value

AI can assist at nearly every one of these stages. But if the whole process starts and ends with a single prompt — “What is the value of this property?” — most of the essential valuation questions never actually get answered.

AI May Spot Similarity — The Appraiser Determines Comparability

Comparable-property analysis is a good illustration of where AI genuinely helps and where it can’t take over.

Given enough reliable data, AI can screen hundreds or thousands of properties and flag those that look statistically similar to the subject. That’s valuable. But statistical similarity is not the same as appraisal comparability.

Two properties can have nearly identical lot areas and sit a short distance apart, yet differ substantially because one has better road access, wider frontage, superior topography, a better view, flood exposure, a transmission-line easement, development restrictions, stronger commercial exposure, or a different highest and best use altogether.

AI may identify statistical similarity; the appraiser determines comparability. Selecting comparables isn’t a search for similar numbers — it requires understanding which characteristics actually drive buyer and seller behavior in that specific market.

Where AI Can Truly Help

None of this means appraisers should reject AI. Quite the opposite — they should learn to use it well.

AI can help organize large datasets, screen potential comparables, analyze market trends, review documents, summarize regulations, flag inconsistencies, run statistical analyses, prepare sensitivity tests, work through income and expense figures, check calculations, and sharpen the clarity and consistency of appraisal reports. It can cut the time spent on repetitive work dramatically.

It’s also an effective quality-control tool — spotting inconsistencies between sections of a report, stress-testing assumptions, checking math, comparing scenarios, and flagging items that need further investigation.

Used well, AI frees the appraiser to spend more time where professional expertise actually matters most: verification, interpretation, highest and best use, methodology, comparability, reconciliation, and judgment. The right relationship looks like this:

AI assists → the appraiser verifies → the appraiser analyzes → the appraiser judges → the appraiser takes responsibility.

The Appraiser Still Signs the Report

This point shouldn’t get lost in the enthusiasm.

If an appraisal contains an unsupported adjustment, an inappropriate comparable, a wrong assumption, the wrong valuation method, or a flawed conclusion, the appraiser cannot fall back on “the AI generated it.” The professional who adopts the analysis and signs the report remains accountable for the opinion of value.

Artificial intelligence does not assume professional accountability. The appraiser does.

The Wrong Question About AI and Appraisal

The debate shouldn’t really be whether AI can produce a property value. Of course it can — a calculator can produce a number, a spreadsheet can produce a number, a regression model can produce a number, an AVM can produce a number, and so can ChatGPT.

The question that actually matters is: can the appraiser demonstrate that the resulting opinion of value is supported by sufficient, relevant, verified market evidence, appropriate methodology, and sound professional judgment?

That’s what separates a numerical estimate from a defensible professional appraisal.

AI Will Change Appraisal — Not Its Foundations

AI is going to reshape this profession. Data gathering will get faster. Market databases will get more sophisticated. Comparable searches will become increasingly automated. Statistical analysis will become accessible to far more practitioners. Report preparation and quality control will get dramatically more efficient. All of that is worth welcoming.

But the fundamentals of valuation don’t move. The appraiser still has to understand the property. Still has to understand the market. The evidence still has to be relevant, and the data still has to be verified. Highest and best use still has to be analyzed. The methodology still has to be appropriate. The conclusion still has to make economic sense. And someone still has to exercise professional judgment and take responsibility for the resulting opinion.

So the better message to appraisers isn’t “use AI to determine property value.” It’s this: use AI to strengthen the appraisal process, but never let it substitute for the evidence, verification, appropriate inspection, methodology, market analysis, and professional judgment an opinion of value actually depends on.

The future of appraisal isn’t AI versus the appraiser. It belongs to the appraiser who knows how to use AI effectively — and just as importantly, knows its limits and when its output shouldn’t be trusted.

Because the challenge in appraisal has never really been producing a number. It’s being able to explain and defend why that number represents value.

From Cost to Value: Where Engineering Ends and Appraisal Begins

Understanding the Roles of Engineers and Appraisers in Machinery, Equipment, and Renewable Energy Valuation

The valuation of renewable-energy assets presents an opportunity to revisit a long-standing perception in Philippine valuation practice: that machinery and equipment valuation — and even the Cost Approach in general — is primarily the domain of engineers.

There is an understandable historical basis for this view. Engineers possess the technical expertise to understand buildings, machinery, industrial plants, power-generating equipment, and other specialized assets. They can determine specifications, capacity, physical condition, useful life, construction or replacement requirements, and engineering costs.

But an important distinction must be made: knowing the asset and determining its cost are not necessarily the same as determining its value. This distinction becomes particularly clear when we consider the valuation of a renewable-energy facility such as a wind farm or other assets.

Continue reading “From Cost to Value: Where Engineering Ends and Appraisal Begins”

Beyond the Hotel: Complex Hospitality Valuation in Rehabilitation Proceedings

Open hotel appraisal report showing property overview and financial metrics

One of the privileges of professional practice is the opportunity to work on assignments that challenge not only technical competence but also one’s understanding of economics, law, and property rights.

Our team had the opportunity to undertake two major hospitality valuation assignments in support of corporate rehabilitation proceedings. While confidentiality prevents disclosure of the parties, the engagements involved substantial hospitality assets in Zambales and Tagaytay. They required the application of appraisal principles beyond conventional real estate valuation.

One assignment involved a hospitality development consisting of two five-storey hotel buildings, together with a clubhouse, basement parking, swimming pool, landscaped amenities, function facilities, and more than one hundred individually titled accommodation and commercial units. The complexity of the property required careful analysis of both the physical assets and the legal interests represented by numerous condominium titles.

The second assignment involved another large-scale hospitality village developed on approximately four hectares of land. The property consisted of three multi-storey villa buildings with a combined gross floor area approaching 16,000 square meters, complemented by recreational facilities including a clubhouse, swimming pool, tennis court, landscaped parking areas, and other resort amenities. Unlike the first assignment, however, the underlying land was held under a long-term government lease, requiring the valuation to distinguish between the leasehold interest over the land and the ownership of the buildings and improvements.

These engagements reinforced an important realization.

In complex litigation and rehabilitation proceedings, valuation is no longer about estimating what a property could sell for. It is about understanding what legal rights exist, what economic opportunities those rights create, and how those rights influence value.

Two hotels may appear similar in terms of buildings, rooms, and operations. Yet they may have materially different market values because the underlying property rights differ.

This is precisely why our consulting practice has continued to develop what we refer to as the Evidence-Based Valuation Framework.

Rather than beginning solely with comparable sales, the framework first identifies the property rights involved before systematically examining physical, legal, planning, economic, and market evidence. The final opinion of value is therefore not simply an estimate—it is the conclusion supported by a comprehensive body of evidence.

Assignments such as these demonstrate the expanding role of modern valuation practice. Today’s appraiser is expected not only to measure value but also to explain the legal and economic foundations upon which that value rests. This is particularly important in rehabilitation proceedings, where valuation evidence assists the court, creditors, rehabilitation receivers, and other stakeholders in making informed decisions regarding financially distressed assets.

For us, every engagement is an opportunity to demonstrate that valuation is more than determining a number.

It is the disciplined application of economics, property law, planning, and market evidence to arrive at an opinion that is credible, transparent, and capable of withstanding professional and judicial scrutiny.

The future of valuation lies not merely in producing credible numbers, but in presenting credible evidence.

Evidence-Based Valuation: Reconciling Property, Planning, Economic, and Market Evidence

On June 18, 2026, I had the privilege of speaking before the members of the Philippine Real Estate Service Practitioners, Inc. (PhilRES) – Mandaue City Chapter during its 6th General Membership Meeting held at Mandani Bay, Mandaue City. My presentation focused on a subject that has occupied much of my professional work in recent years: Evidence-Based Valuation (EBV) for Litigation, Expropriation, and Just Compensation.

For decades, real estate valuation has relied heavily on the Sales Comparison Approach. Comparable sales remain an important source of market evidence and continue to be one of the most widely accepted methods of determining value. However, in many assignments—particularly expropriation cases, litigation matters, infrastructure projects, and complex property disputes—the question often arises: Is market evidence alone sufficient to explain value?

The traditional appraisal process frequently emphasizes numerical adjustments derived from comparable transactions. While mathematically sound, such an approach may not fully capture the broader factors that influence value. Infrastructure investments, zoning regulations, land use policies, economic growth, scarcity, accessibility, environmental conditions, and development potential all contribute to the creation of value long before they are reflected in actual market transactions.

This observation led to the development of a framework I refer to as Evidence-Based Valuation (EBV).

The central premise of EBV is straightforward: value conclusions should not rely solely on comparable sales but should be supported by the reconciliation of multiple forms of evidence. These include:

Property Evidence – the physical characteristics of the property such as location, area, shape, topography, accessibility, improvements, and development potential.

Planning Evidence – land use plans, zoning classifications, infrastructure projects, government policies, and regulatory controls that influence future utility and development.

Economic Evidence – demand and supply conditions, growth trends, scarcity, investment activity, income potential, and broader economic drivers.

Market Evidence – comparable sales, listings, market transactions, and investor behavior.

These forms of evidence are not independent of one another. Rather, they interact to influence the highest and best use of a property, which ultimately forms the basis of value.

The concept is equally relevant in both ordinary valuation assignments and special-purpose engagements. Evidence-Based Valuation strengthens the foundation of value conclusions by integrating multiple forms of evidence beyond comparable sales alone. Even in ordinary market valuations, appraisers are expected to provide conclusions that are not only supported by comparable sales but also grounded in a thorough understanding of the property’s characteristics, planning context, and economic environment. Courts are often asked to determine compensation that is fair not only to the government but also to the property owner. In such situations, the challenge is not merely selecting a comparable sale but reconciling all available evidence to arrive at a value conclusion that is credible, transparent, and defensible.

Evidence-Based Valuation does not seek to replace established valuation approaches. Instead, it seeks to strengthen them by expanding the evidentiary foundation upon which value conclusions are formed. Comparable sales remain important, but they should be viewed as one component of a broader evidentiary framework rather than the sole determinant of value.

As valuation professionals, we are increasingly called upon to explain not only what a property is worth, but also why it is worth that amount. This requires a deeper examination of the factors that create, sustain, and influence value.

The EBV framework remains a continuing work in progress. Future developments will explore its application to litigation valuation, water rights valuation, infrastructure projects, feasibility studies, market analysis, and just compensation determinations. The objective is not to create complexity for its own sake, but to improve transparency, strengthen professional judgment, and provide decision-makers with more defensible valuation conclusions.

Ultimately, valuation is not merely a mathematical exercise. It is the process of evaluating evidence, reconciling competing perspectives, and arriving at a reasoned conclusion. In that sense, evidence is not an alternative to valuation—it is the foundation upon which valuation rests.

Value is created before it is measured.

Expropriation and Just Compensation: Between Individual Rights and Social Function

Expropriation is often discussed as a procedural mechanism through which the government acquires private property for roads, bridges, transmission lines, airports, flood control systems, and other public infrastructure. Yet beneath its procedural framework lies one of the deepest constitutional tensions in democratic governance — the tension between the rights of the individual and the demands of the collective.

At the center of every expropriation case is a constitutional balancing process. On one side stands the individual property owner invoking the protection of the Bill of Rights. On the other side stands the State acting in the name of public welfare, infrastructure development, and societal necessity. Eminent domain exists precisely because constitutional democracy recognizes both interests as legitimate.

The Constitution protects private property because ownership is deeply tied to liberty, security, livelihood, and human dignity. Land is not merely a commodity or economic asset. For many families, property represents inheritance, identity, social stability, and intergenerational survival. The taking of property therefore affects more than physical land; it interferes with constitutionally protected expectations and rights.

This is why Article III, Section 9 of the Constitution declares that private property shall not be taken for public use without just compensation. The provision reflects the recognition that while the State may possess sovereign authority to compel the transfer of property for public purposes, such power is never absolute. The Constitution restrains governmental authority by imposing safeguards grounded on fairness and due process.

At the same time, society itself possesses collective needs that cannot be ignored. Modern civilization depends upon infrastructure and public systems that require land. Roads, railways, ports, schools, hospitals, power lines, flood control projects, water systems, and transportation corridors cannot materialize without space. Urbanization, economic development, environmental protection, and disaster resilience increasingly require coordinated public intervention over land use and spatial development.

Without the power of eminent domain, public infrastructure could easily become hostage to fragmented ownership or strategic refusal to sell. Collective welfare would become difficult, if not impossible, to achieve.

Thus, expropriation emerges as a constitutional compromise between private ownership and public necessity. The State may compel the taking of private property for public use, but society cannot impose the burden of public development upon a single owner without compensation. Just compensation therefore becomes the constitutional bridge between collective benefit and private sacrifice.

In many ways, just compensation reflects a principle of distributive justice. If society benefits collectively from a public project, then society — acting through the State — must fairly compensate the individual whose property was sacrificed for that collective benefit. The owner may not necessarily prevent a lawful taking for public use, but the owner possesses the constitutional right to receive the full and fair equivalent of the property taken.

This explains why the Supreme Court consistently emphasizes that the determination of just compensation is a judicial function. Courts serve as constitutional arbiters between governmental power and individual rights. The judiciary ensures that compensation is not dictated solely by political convenience, administrative valuation schedules, or institutional interests. Judicial review prevents the possibility that the coercive power of the State overwhelms constitutional fairness.

The valuation process itself therefore acquires constitutional significance. In expropriation, appraisal is no longer merely technical or commercial. Market value becomes part of constitutional justice. An undervalued appraisal effectively forces the landowner to subsidize public infrastructure unfairly. Conversely, an excessive valuation burdens public resources and ultimately affects society as a whole. The objective is constitutional equilibrium — fairness both to the owner and to the public.

This constitutional balancing also explains the critical role of commissioners under Rule 67 of the Rules of Court. Commissioners are not representatives of the expropriating agency nor advocates for the landowner. They are auxiliaries of the court tasked to assist in the fair and impartial determination of just compensation. Their role carries constitutional implications because they participate directly in balancing individual rights against collective societal interests.

For this reason, the Rules require commissioners to be competent and disinterested. Independence is essential because once valuation becomes driven by institutional loyalty, political pressure, or predetermined outcomes, the constitutional integrity of the expropriation process begins to erode.

The tension between individual rights and collective welfare has become even more complex in contemporary society. Today, expropriation increasingly intersects with climate adaptation, environmental protection, renewable energy, urban redevelopment, mass transportation, disaster mitigation, and sustainability planning. Governments now justify takings not only for traditional infrastructure, but also for broader societal objectives involving environmental resilience and long-term public survival.

As collective interests expand, however, constitutional protections remain indispensable. The challenge of modern governance is not simply to accelerate development, but to ensure that development remains constitutionally just.

This evolving landscape also transforms the nature of property law itself. Expropriation can no longer be understood solely as a procedural remedy or land acquisition mechanism. It now exists at the intersection of constitutional law, valuation, urban planning, economics, environmental governance, and infrastructure policy.

The future property lawyer, appraiser, and land governance specialist must therefore understand not only ownership doctrines and legal procedures, but also how land functions within broader economic, environmental, and societal systems. Questions involving just compensation increasingly require appreciation of market behavior, zoning, infrastructure externalities, environmental regulation, and public policy.

Ultimately, expropriation reflects one of the most profound realities of constitutional democracy: ownership is protected, but ownership is not absolute. Property carries both private rights and social obligations. The State may compel individual sacrifice for the collective good, but the Constitution insists that such sacrifice must never occur without fairness, due process, and just compensation.

That enduring balance between individual rights and collective welfare remains the true constitutional essence of eminent domain.

Brief History of Individual and Collective Rights

The history of political and constitutional philosophy reveals a continuing tension between collective authority and individual liberty. In the ancient and medieval world, collective order, political community, and social hierarchy largely dominated over individual autonomy. The individual was viewed primarily as part of the larger social or political body.

From this collective order eventually emerged the philosophy of individual rights during the Enlightenment. Thinkers such as Locke and other liberal philosophers asserted that human beings possess inherent natural rights — life, liberty, and property — which the State must respect rather than create. This intellectual movement eventually gave rise to liberal constitutionalism and the modern Bill of Rights, where the protection of the individual against arbitrary governmental power became central.

However, the rise of industrialization, economic inequality, labor exploitation, and other societal problems exposed the limitations of purely individualistic systems. As a result, constitutional thought gradually evolved once again toward social rights and collective welfare. Modern constitutions increasingly recognized labor rights, social justice, environmental protection, public welfare, and the social function of property.

Today, modern constitutionalism attempts to balance both traditions. Contemporary constitutions protect individual rights and liberties while simultaneously recognizing legitimate collective interests necessary for social order, development, and public welfare. Thus, modern constitutional law is ultimately an ongoing effort to reconcile individual freedom with the demands of society as a whole.

Monterrazas and the Tragedy of the Commons

Why System Thinking Requires Stricter Development Standards

Recent public discussions have reflected different perspectives on the Monterrazas development in Cebu City, including system-level explanations, precautionary considerations, and calls for regulatory review. These illustrate the complexity of decision-making in such contexts.

At first glance, the issue may appear as a familiar tension between development and environmental protection. However, it may be more accurately understood through a different lens.

From an economic perspective, what this situation reflects is a form of the Tragedy of the Commons.

The concern lies in understanding how multiple developments interact within a shared system, and how each contributes to cumulative impacts over time.

Cebu’s upland areas perform essential ecological functions. They absorb rainfall, regulate runoff, and contribute to the stability of downstream communities. These functions do not operate within the boundaries of individual properties. They extend across space, linking different parts of the city through continuous hydrological processes.

In this context, the question of whether a particular development lies within or outside a defined watershed boundary, while relevant in technical terms, does not fully resolve the issue. Environmental systems do not operate as isolated compartments. Their behavior reflects interaction rather than separation.

The scale of that interaction is often difficult to grasp in abstract terms.

Evidence from watersheds within Metro Cebu further clarifies how this system operates—and how development must be understood within it.

Studies of the Mananga watershed show that land-use and land-cover changes—particularly in upstream areas—affect infiltration, surface runoff, and the movement of water across the system. As vegetation is reduced or land is altered, less water is absorbed and more becomes surface flow.

A similar pattern is observed in the Butuanon River watershed. The river originates in upland areas of Cebu City and flows through increasingly urbanized zones before reaching the coast. Upstream areas are already characterized by agricultural and altered land uses, while downstream sections are densely developed. This configuration illustrates how water accumulates as it moves across elevations, shaped by both upstream conditions and downstream constraints.

Altogether, these cases point to a consistent principle:

The watershed is the system within which individual projects must be considered, as runoff is generated across the entire catchment while its behavior is shaped by land-use conditions across different elevations.

This framing is critical. It does not assign causation to any single location. Rather, it defines the proper unit of analysis.

A project is not evaluated in isolation, but in relation to the system it enters—where each intervention contributes to cumulative pressures and must therefore be assessed with reference to the system’s capacity.

It is often observed that flooding in Cebu is multi-causal. Infrastructure limitations, watershed conditions, land-use changes, and rainfall patterns all contribute. This observation is correct.

However, its implication must be properly understood.

If multi-causality is interpreted to mean that no single development can be meaningfully evaluated, then responsibility becomes diffused. Multiple factors contribute, yet accountability becomes less clearly defined.

But the correct implication is the opposite.

If risk is systemic, then evaluation must also be systemic—and correspondingly more rigorous.

The system is not an excuse—it is the basis for stricter evaluation.

This requires a shift in how development decisions are made.

The relevant question is not whether a particular project can be shown to cause a specific flooding event. Rather, it is whether the addition of that project contributes, in combination with others, to increasing pressure on a system that may already be approaching its limits.

The concern lies in the combined effects within a shared system, and in how each individual project contributes to those cumulative impacts.

This leads to a central question:

What is the capacity of the system?

How many developments are already present within a given environmental zone?
To what extent has land use already been altered?
At what point does additional development begin to significantly affect the system’s ability to absorb rainfall and regulate runoff?

Without a clear understanding of these limits, development decisions are made incrementally, without reference to cumulative thresholds.

The Monterrazas issue, therefore, should be viewed in terms of how development decisions are made when each additional project contributes to a system with finite capacity.

In such a context, compliance at the project level is no longer sufficient. Each additional intervention must be evaluated in relation to the condition of the system as a whole.

This has significant implications for urban development.

First, evaluation must move beyond individual projects toward system-level analysis.

Second, development must be aligned with capacity. Growth is no longer simply a matter of feasibility or compliance, but of whether the system can sustain additional pressure.

Third, planning must shift from reactive to anticipatory. Addressing impacts only after they occur is both inefficient and costly.

Fourth, institutional coordination must ensure that decisions reflect a consistent understanding of cumulative risk.

The Monterrazas issue is not resolved by determining whether it falls within a particular boundary, nor by isolating it from broader conditions.

It must be understood as part of a system where effects accumulate, capacity is finite, and each development contributes to increasing pressure on that system.

It shows that outcomes in shared systems are shaped not only by individual decisions, but by how those decisions accumulate—and whether they are governed by a clear understanding of limits.

Ultimately, the question is not whether a particular project should proceed or not.

It is whether each project is evaluated in light of the system it enters—and whether that system can sustain the additional burden it brings.

Because in such systems, urban development is no longer simply about what can be built.

It is about how each development contributes to a shared environment—and whether the whole remains within its capacity to endure.