Manuel L. Manaligod, Jr. | Juan Paulo M. Santos
Nearly a decade after the Philippines’ first right-of-way (“ROW”) law was passed, President Ferdinand Marcos, Jr., on 12 September 2025, signed into law Republic Act No. (“RA”) 12289, otherwise known as the Accelerated and Reformed Right-of-Way (ARROW) Act (“ARROW Act”). This amends RA 10752, otherwise known as The Right-of-Way Act (“ROWA”) that was enacted on 07 March 2016. This measure was intended to accelerate the development of infrastructure projects nationwide by addressing the long-standing issues in ROW acquisition, particularly the delays usually caused by issues surrounding ROW, including valuation disputes and the gaps in coverage under the previous law.
The ARROW Act was published on 19 September 2025 and will take effect fifteen (15) days after the date of its publication or on 04 October 2025.
We shall cover some salient features of the ARROW Act.
The ARROW Act applies to all ROW transactions, except those which, as of the effectivity of the ARROW Act, are already subject of a written agreement on the agreed amount of compensation due the private owner.
The ARROW Act expanded the scope of ROW acquisition to include not only national projects of government agencies but also private entities providing public services. The type of public service contemplated includes electricity distribution, electricity transmission, telecommunications, airports and seaports, by companies that have been granted the right to exercise the power of eminent domain. A distinction has to be made between private entities that are granted legislative franchises mandated to exercise eminent domain, and those that are merely granted administrative franchises. Those with the latter type of authority, not having been mandated by Congress, do not, in themselves, automatically have the authority to expropriate.
The ARROW Act also incorporated procedures for subsurface rights acquisition at shallower depths. Instead of 50 meters from the surface, an implementing agency or private entity may now enter and use the subsurface or subterranean portion if such entry and use are made more than forty (40) meters from the surface. An even shallower depth is allowed, i.e., eighteen (18) meters, for government priority infrastructure projects. The ARROW Act does not define what qualifies as a “government priority infrastructure project”, although further guidance may be provided once its Implementing Rules and Regulations (“IRR”) are issued. Alternatively, the term may refer to the Infrastructure Flagship Projects (IFPs), which are identified and regularly updated by the Department of Economy, Planning, and Development (formerly, the National Economic and Development Authority).
The adjustment of the subsurface threshold is grounded in both legal and policy considerations. The 50-meter limit proved impractical, as many critical projects (subways, tunnels, etc.) could not be reasonably constructed at such depth without greater cost and technical difficulty. The adjusted subsurface threshold is hoped to be a more workable standard thereby removing an artificial barrier that had long delayed project implementation.
The ARROW Act now also addresses the confusion with respect to ROW acquisition in ancestral domains by explicitly deferring to the provisions of RA 8371, otherwise known as The Indigenous Peoples’ Rights Act of 1997.
Importantly, the ARROW Act amended the valuation process in the ROWA for both negotiated sales and in expropriation proceedings.
Negotiated sales under the ROWA previously created inconsistencies as a result of the valuation process often being outsourced to government financial institutions or accredited independent property appraisers. With the recent passage of RA 12001, otherwise known as the Real Property Valuation and Assessment Reform Act, the ARROW Act now primarily defers to such law in valuing the property rights to be acquired, with fallback to the Bureau of Internal Revenue zonal (“BIR”) valuation of the land and the assessed value of the improvements should there be an absence of the approved schedule of market values (“SMV”).
For expropriation proceedings, the ARROW Act reduced the upfront burden on implementing agencies or authorized private entities by changing the composition of the amount required to be deposited to the proper court upon the filing of the complaint. Under Section 7 of the ARROW Act, the deposit shall be the amount equivalent to the sum of:
- Fifteen percent (15%) of the market value of the land;
- One hundred percent (100%) of the replacement cost, taking into consideration depreciation of the improvements, including machinery considered as immovable under Article 415 of the Civil Code, and structures; and
- Fifteen percent (15%) of the market value of crops and trees located within the property.
The said amounts shall be based on the approved SMV under RA 12001 and, in the absence thereof, to the BIR zonal valuation of the land and the assessed value of the improvements.
In the case of a negotiated sale, the implementing agency or private entity shall, on behalf of the seller, shoulder the capital gains tax, documentary stamp tax, transfer tax, and registration fees required for the transfer of title to the Republic of the Philippines, while the property owner remains responsible for any unpaid real property taxes. In contrast, for expropriation proceedings, the capital gains tax and any unpaid real property taxes continue to be borne by the property owner.
Deferral to RA 12001 with respect to real property valuation shall hopefully prevent the usual delays that impair the valuation process and create a uniform and standardized system, i.e., the SMV. As it requires local government units to prepare and regularly update the SMV for real properties within their respective jurisdictions, it serves as a transparent, objective and up-to-date basis for real property valuation, reducing reliance on varying appraisals that the ROWA previously allowed.
With respect to untitled lands to be acquired, prior to executing a deed of absolute sale with the implementing agency or the private entity, the possessor of the property is required to submit additional documents necessary to transfer the title to the Republic of the Philippines, which costs shall be reimbursed to the possessor upon sufficient proof.
The ARROW Act, in amending Section 10 of the ROWA, also explicitly covered, in determining the adequate amount of appropriations for ROW acquisitions, entitlements necessary to allow affected persons to return to their respective way of life prior to the implementation of the project such as, but not limited to:
- Transportation costs;
- Subsistence allowance or inconvenience allowance;
- Resettlement assistance or rental subsidy;
- Business income loss; and
- Skills training.
For Public-Private Partnership projects, however, appropriations for the acquisition of ROW shall be in accordance with RA 11966, otherwise known as the Public-Private Partnership (PPP) Code of the Philippines (“PPP Code”) and its IRR. In this regard, the PPP Code provides that government undertakings in the form of ROW and other ROW-related undertakings, including support in ROW acquisition, shall not be considered as a financial government undertaking that will be sourced and funded under the General Appropriations Act. Rather, the Private Proponent shall advance the actual cost of the ROW and other ROW-related undertakings.
In order to provide key information with respect to pending ROW acquisitions, the implementing agency or private entity is now also required to publish, through their respective websites, essential information thereon, including but not limited to, the status of ROW claims and the status of expropriation cases, subject to RA 10173, otherwise known as The Data Privacy Act of 2012.
The IRR of the ARROW Act is expected to be prepared within sixty (60) days from the law’s approval or on or before 11 November 2025.
In summary, while the ROWA established the foundation for expediting ROW acquisition, the ARROW Act significantly broadened its coverage, institutionalized uniform valuation, and embedded stronger safeguards. These changes directly targeted the inefficiencies and disputes that hampered infrastructure projects, ensuring both faster implementation and fairer treatment of property owners and stakeholders.