Policy, constitutional protection, LGU adoption
- The IRR is governed by the constitutional policy that private property shall not be taken for public use without just compensation (Section 2, citing Section 9, Article III of the Constitution).
- The State ensures that persons whose real property is affected by national government infrastructure projects are promptly paid just compensation for the expeditious acquisition of the required right-of-way (ROW) (Section 2).
- Local Government Units (LGUs) may adopt the IRR provisions for the acquisition of ROW for local government infrastructure projects, subject to Republic Act No. 7160 (Local Government Code of 1991) (Section 2).
Coverage and key definitions
- The IRR covers acquisition of real properties needed as ROW, site, or location for national government projects undertaken by national government agencies and authorized GOCCs and state colleges/universities (Section 1).
- Implementing Agency (IA) means any department, bureau, office, commission, authority, or agency of the national government, including authorized GOCCs and state colleges or universities (Section 3).
- Right-of-Way (ROW) means a part or the entirety of a property, site, or location with defined physical boundaries used or required by a national government project (Section 3).
- National Government Projects include national government infrastructure projects and their public service facilities, engineering works, and service contracts, including projects covered by RA No. 6957 as amended by RA No. 7718, and all related activities intended for public use or purpose, including site acquisition, implementation, construction, completion, operation, maintenance, improvement, repair, and rehabilitation (Section 3).
- National Government Projects include, among others: highways; railways and mass transit; ports; airports and air navigation; power generation/transmission/distribution; radio/TV broadcasting and telecommunications; information technology infrastructure; irrigation, flood control, and drainage; water and debris retention structures and dams; water supply/sanitation/sewerage/waste management; land reclamation and dredging; industrial and tourism estates; government school buildings, hospitals, clinics, and housing; public markets and slaughterhouses; and other similar infrastructure works and services (Section 3).
Modes of ROW acquisition
- Regular modes of ROW acquisition are: donation, negotiated sale, and expropriation (Section 4).
- Other modes include: acquisition under Commonwealth Act (CA) No. 141, exchange or barter, easement of ROW, acquisition of subsurface ROW, and other modes authorized by law (Section 4).
Donation, negotiated sale procedures
Donation: The IA may explore donation of the needed portion or whole of the affected property by the property owner (Section 5).
If the owner agrees, the IA must have a deed of donation prepared immediately; it must be simple and unconditional and include clauses that (a) the donation is not made to defraud the donor’s creditors and (b) a private donor has reserved enough property for family subsistence (Section 5).
The deed must show the IA’s acceptance, indicated in the deed (Section 5).
The IA pays documentary stamp tax, transfer tax, and registration fees, while the donor pays any unpaid real property tax (Section 5).
Negotiated sale compensation price: For negotiated sale, the IA may acquire the required ROW by offering compensation equal to the sum of (a) current market value of the land, (b) replacement cost of structures and improvements, and (c) current market value of crops and trees (Section 6.1).
Price appraisal support: To determine the appropriate price offer, the IA may engage either a Government Financial Institution (GFI) or an Independent Property Appraiser (IPA) accredited by the Bangko Sentral ng Pilipinas (BSP) or a professional appraisers association recognized by BSP (Section 6.2).
The IPA is procured under RA No. 9184 (Government Procurement Reform Act) and its IRR on consulting services (Section 6.2).
Priority is given to the engagement of a GFI when applicable (Section 6.2).
The IA may use GFI/IPA appraisal reports as a base for the price offer consistent with the valuation standards (Section 6.2) and is encouraged to validate reports using in-house personnel.
Terms of Reference (TOR): The IA must prepare TOR for the GFI or IPA, including the project background and objectives, desired outputs, applicable standards/specifications, duration and timetable, and qualifications (Section 6.3).
The IA shall adopt the TOR template given in Annex A (Section 6.3).
If engaging a GFI, the IA must enter into a Memorandum of Agreement (MOA) requiring that the GFI is capable and experienced and actually conducts appraisal using its own manpower and resources; the IA pays an appropriate fee per the MOA (Section 6.4).
Replacement Cost: Replacement Cost must be based on current market prices of materials, equipment, labor, contractors’ profit and overhead, and all attendant acquisition/installation costs of a similar asset (Section 6.6).
If the affected structure is damaged, replacement cost is computed based on pre-damaged condition; the replacement structure must perform the same functions and meet the same performance specifications (Section 6.6).
The IA may determine replacement cost directly using guidelines derived from DPWH standards, including preparing a basic plan and performance-type specifications describing purpose, configuration/dimensions, and major structural features (Section 6.6).
Replacement Cost is composed of Estimated Direct Cost (EDC) and Estimated Indirect Cost, calculated using the specific components and limits provided (Section 6.6).
EDC components: EDC includes (1) current market cost of materials with specified inclusions (e.g., cost at source including processing and hauling-related costs; handling/storage; and waste/loss allowance of five percent (5%)), (2) current market cost of labor including allowed salaries/wages and fringe benefits, and (3) equipment expenses including mobilization/demobilization at one percent (1%) of EDC for civil works items (Section 6.6).
Indirect cost components and limits: Indirect costs include overhead not exceeding eight percent (8%) of EDC, contingencies and miscellaneous not exceeding four percent (4.0%) of EDC, contractor’s profit margin not exceeding eight percent (8%) when EDC is more than PhP 5 million and ten percent (10%) when EDC is PhP 5 million and below, and a VAT component of five percent (5%) for government-owned property or twelve percent (12%) for privately owned property, computed on the specified base sum (Section 6.6).
Indirect cost caps: Overhead/OCM and profit caps by EDC range are specified (e.g., up to PhP 5M: OCM 12% and profit 10%; above PhP 5M to PhP 50M: OCM 9% and profit 8%; above PhP 50M to PhP 150M: OCM 7% and profit 8%; above PhP 150M: OCM 6% and profit 8%) (Section 6.6).
If the IA engages a GFI/IPA, the GFI/IPA may use valuation standards adopted by the PRBRES under PRC (Section 6.6).
Owner acceptance period: After receipt of the IA’s written offer, the property owner has thirty (30) days to decide whether to accept the offer (Section 6.7).
If the owner refuses or fails to accept, or fails/refuses to submit documents necessary for payments, the IA must immediately initiate expropriation proceedings under Section 7 (Section 6.7).
Structures/improvements without land rights (eligibility for replacement cost rules): The replacement cost provisions apply to owners of structures/improvements without legally recognized land rights who are Filipino citizens, do not own real property/housing facilities, are not professional squatters or members of squatting syndicates as defined in RA No. 7279, and do not occupy an existing government ROW (Section 6.8).
Professional squatters and squatting syndicates are defined using RA No. 7279 concepts and coverage, including persons with sufficient income who occupy without consent and persons who previously received homelots/housing units but illegally transferred/sold them, and groups engaged in profit-making squatter housing (Section 6.8).
Owners/occupants must show proof of ownership of the structures/improvements (e.g., Barangay certification) to complement the four criteria (Section 6.8).
Informal settler families classified as underprivileged and homeless citizens under RA No. 7279 and not qualified under the four criteria are entitled to relocation pursuant to RA No. 7279 in accordance with Section 14 of the IRR (Section 6.8).
Taxes and fees in negotiated sale: The IA pays for the seller/owner the Capital Gains Tax (CGT) and documentary stamp tax (DST), transfer tax, and registration fees, while the owner pays any unpaid real property tax (Section 6.9).
The IA remits the CGT to the Bureau of Internal Revenue (BIR) based on actual consideration and the CGT computation structure provided (Section 6.9), and the CGT formula governs the relationship between AC, NAC, and CGT (Section 6.9).
The CGT computation rule does not apply when the sale involves property classified as ordinary assets, which is governed by existing BIR rules (Section 6.9).
On request, the IA remits the amount of unpaid real property tax to the concerned LGU, with the amount deducted from the total negotiated price, subject to the condition that the tax remitted is not more than the negotiated price (Section 6.9).
Deed of Absolute Sale and payments: After the owner submits required title/tax documents and other documents for transfer, the parties execute a Deed of Absolute Sale; the IA must cause annotation on the Transfer Certificate of Title (Section 6.10).
For sales involving land with structures/improvements, the deed must allow the IA to demolish and remove them and must include the IA’s right to enter and implement the project (Section 6.10).
For sales of structures/improvements only, parties execute an Agreement to Demolish and Remove Improvement (ADRI) upon proof of ownership; the IA also has corresponding tax-remittance and deduction mechanics for unpaid taxes on such structures/improvements (Section 6.10).
Initial payment upon execution of Deed of Sale: The IA must pay the property owner 50% of the negotiated price of affected land and 70% of the negotiated price of affected structures/improvements/crops/trees, exclusive of unpaid taxes remitted to the LGU (Section 6.10).
If the owner owns both land and structures/improvements, the remaining 50% of land and 30% of structures/improvements/crops/trees are paid after the land is completely cleared, certified by the IA, at the specified times for wholly vs partially affected land (Section 6.10).
If the owner owns only land, the remaining 50% is paid at specified times for wholly vs partially affected land (Section 6.10).
If the owner owns only structures/improvements, the remaining 30% is paid after IA certification that the land is completely cleared, at specified times for wholly vs partially affected land (Section 6.10).
The IA must ensure faithful and prompt compliance with the payment procedures and may issue directives to implement them (Section 6.10).
CGT payment deadline: The IA pays CGT to BIR within thirty (30) days after (a) release of initial payments or (b) notarization of the deed of sale, whichever is earlier (Section 6.10).
DST payment deadline: The IA pays DST within five (5) days after the close of the month when the deed of sale is notarized (Section 6.10).
Outstanding ROW claims: The same negotiated sale price-offer basis applies to outstanding claims, except the offered amount is computed at the time of taking and includes legal interest until fully paid, subject to the transitory rule in Section 19 (Section 6.11).
Special case: untitled lands—negotiated sale: The IA compensates owners using negotiated sale procedures if the owner presents (a) a tax declaration showing open and continuous possession by the owner and predecessors for at least thirty (30) years, (b) DENR certification that the land is alienable and disposable, and (c) other documents proving ownership (Section 6.12).
If ownership fails but improvements exist, the apparent property owner may be entitled to compensation for improvements subject to Section 6.8 (Section 6.12).
Expropriation rules and court possession
Expropriation applies when acquisition is necessary for ROW/site/location for national government infrastructure, including when (a) within thirty (30) days the property owner refuses or fails to accept the negotiated sale price offer, fails/refuses to submit documents for payment, or (b) negotiation is not feasible (Section 7).
The IA must initiate expropriation by filing a verified complaint in the proper court through the Office of the Solicitor General for national agencies, the Office of the Government Corporate Counsel for GOCCs, or their deputized government/private legal counsel (Section 7).
Upon filing or any time thereafter and after due notice, the IA must immediately deposit with the court in favor of the owner the sum of:
- (1) One hundred percent (100%) of land value based on current relevant BIR zonal valuation issued not more than three (3) years prior to filing, subject to Section 7(c) (Section 7);
- (2) Replacement cost of improvements/structures at current market value as determined by the IA, a GFI, and an IPA accredited by BSP (Section 7);
- (3) Current market value of crops and trees located within the property determined by a GFI or IPA selected under Section 6 (Section 7).
After compliance with deposits, the court must immediately issue an order to take possession of the property to the IA, starting project implementation (Section 7).
If within seven (7) working days after deposit, the court has not issued a writ of possession, the IA counsel must immediately seek issuance; the court issues the writ of possession ex parte with no hearing required (Section 7).
The court releases the deposited amount to the owner upon presentation of sufficient proofs of ownership (Section 7).
If the owner cannot be found, is unknown, or is deceased where the estate is not settled, after due diligence, or where there are conflicting claims, the IA deposits the same sum to the court for the benefit of the person adjudged entitled in the same proceeding (Section 7).
Land classification and zonal valuation duty:
- In provinces/cities/municipalities/areas where there is no land classification, the city or municipal assessor must come up with required classification and corresponding real property and improvement declaration within sixty (60) days from filing of the expropriation case (Section 7).
- Where there is no zonal valuation or the existing zonal valuation has been in force for more than three (3) years, the BIR must conduct a zonal valuation within sixty (60) days from filing, based on the assessor’s classification (Section 7).
- For urgent and important completion where there is no classification or zonal valuation or the zonal valuation has been in force for more than three (3) years, the IA uses BIR zonal value and land classification of similar lands in adjacent vicinity as valuation basis (Section 7).
Once the IA receives the writ of possession issued by the court, the IA may take possession and start implementation (Section 7).
Just compensation determination and final payment: If the owner contests the proffered value, the court determines just compensation within sixty (60) days from filing; once the decision becomes final and executory, the IA pays the owner the difference between deposited/provisional amounts already paid and the just compensation as determined (Section 7).
Taxes and fees in expropriation: The IA pays DST, transfer taxes under RA No. 7160, and registration fees; the owner pays CGT, unpaid real property tax, and all other applicable taxes under law (Section 7).
CGT/DST deadlines after final judgment: The owner pays CGT to BIR within thirty (30) days after judgment becomes final and executory; the IA pays DST within five (5) days after the close of the month when the judgment becomes final and executory (Section 7).
CA 141 acquisitions, exchange/barter, easement
For lands granted through CA No. 141 (Public Land Act) and amendments, the IA follows enumerated acquisition modes if the landowner is not the original patent holder and prior acquisition was not through a gratuitous title; otherwise, the IA follows CA 141 provisions for ROW on patent lands (Section 8).
Under CA No. 141 (as implemented here), the government reserves a ROW strip not exceeding 20 meters for public use with damages to improvements only; PD No. 635 dated 07 January 1975 increases the reserved ROW strip width to not exceeding 60 meters (Section 8).
If the government exercises use of the reserved ROW strip within CA 141-acquired land, the owner must execute a quit claim; the IA takes possession of the ROW portion without compensation for land, but pays damages for improvements equivalent to replacement cost under Section 6.6 (Section 8).
If the owner refuses or is unable to issue a quit claim, authorized government officials may immediately take possession of the lien/ROW portion as need arises and upon due notice, without prejudice to resort to appropriate proceedings for immediate possession (Section 8).
PD No. 1381 allows use of reserved ROW strip for temporary buildings for Resident/Project Engineers during infrastructure project prosecution; after completion and non-need, possession reverts to title holders (Section 8).
The IA extends financial assistance consistent with Executive Order No. 1035, series of 1985 (Section 8).
Exchange or barter: The owner may request exchanging his property needed for ROW for an old abandoned government road or other government property near the project; the IA may favorably consider it on a value-for-value basis and subject to conditions (Section 9).
The exchange must be equivalent in market value or price (Section 9).
If the government property was originally donated, verification is required to ensure no condition prohibits disposal to other private persons; if originally acquired through sale, the prior owner has first priority to re-acquire if required by law or by the sale contract/deed (Section 9).
Abutting owners must not be deprived of access (egress/ingress) to the new highway if any (Section 9).
Parties remain subject to applicable CGT and DST under BIR rules (Section 9).
Easement of ROW: If the portion needed is minimal such that surveying/segregation costs exceed the value of the portion, the IA may use easement mode under the Civil Code if the property owner agrees (Section 10).
An easement agreement gives the IA the right to use the affected portion as ROW while the owner retains ownership (Section 10).
The IA pays the owner (a) the value of the portion based on existing BIR zonal valuation and (b) replacement cost of improvements/structures under Section 6.6 (Section 10).
Entry by the IA is allowed upon full payment of the value of the property (Section 10).
The IA may engage an IPA to determine the easement amount to be paid (Section 10).
Easement mode may also be used in government agency-to-agency transactions, including transactions involving GOCCs (Section 10).
The IA must register all ROW easement agreements with the Register of Deeds within ten (10) days from execution; the Register of Deeds must annotate the titles within seven (7) days from receipt (Section 10).
Subsurface ROW, assessment standards, environment
Subsurface ROW entry/use: The government or authorized representatives are not prevented from entry/use of privately and government-owned lands by surface owners/occupants for subsurface infrastructure works (e.g., subways, tunnels, underpasses, waterways, floodways, utility facilities) if the entry/use is made more than fifty (50) meters from the surface (Section 11).
The IA must consult and notify affected property owners of subsurface ROW acquisitions needed for the project (Section 11).
If underground works involve a depth within fifty (50) meters from the surface, the IA may proceed in order: (a) negotiate a perpetual easement of ROW for subterranean portions; and (b) offer to acquire the affected portion of land including structures/improvements/crops/trees under Act/IRR procedures (Section 11).
The IA may engage a GFI or IPA to assist in determining price offers; the easement price for the perpetual easement is twenty percent (20%) of the market price of the land (Section 11).
The IA follows the negotiated sale rules in Section 6 for subsurface acquisitions (Section 11).
Standards for assessment in negotiated sale: Market value determination must consider classification/use suited to latest approved land use plan and zoning ordinance; development cost; owner-declared value in latest tax declarations/sworn statements; current selling price of similar lands based on latest deeds of sale; reasonable disturbance compensation tied to replacement cost; size/shape/location and zonal valuation; land price manifested in ocular findings/evidence; and facts/events enabling owners to acquire similarly situated lands to rehabilitate themselves early (Section 12).
The increase in value of the affected property caused by the government project itself must not be considered in purchase price determination (Section 12).
The TOR used for GFIs and IPAs must include applicable standards under Section 12 (Section 12).
Ecological and environmental concerns: In ROW acquisition for national government infrastructure projects, the IA must take into account ecological and environmental impacts and consider environmental laws, land use ordinances, and applicable provisions of RA No. 7160 (Section 13).
For feasibility study/detailed engineering design of projects (except PPP projects), the IA must secure from DENR an Environmental Compliance Certificate (ECC) or Certificate of Non-Coverage (CNC) under PD No. 1586 and its IRR (Section 13).
For ancestral domain cases, additional requirements under RA No. 8371 and its IRR must be complied with (Section 13).
The IA must prepare a Preliminary Land Acquisition Plan and Resettlement Action Plan (LAPRAP) or Indigenous People’s Action Plan, as applicable, as part of the Environmental Impact Assessment (EIA) (Section 13).
For PPP projects under RA No. 6957 (as amended) and its IRR and other applicable laws, ECC/CNC requirements are governed by those PPP rules (Section 13).
Relocation, appropriations, development restrictions
Informal settlers are handled through resettlement sites established and developed by the government through HUDCC and NHA, in coordination with LGUs and IAs, including adequate basic services and community facilities, pursuant to RA No. 7279 (Section 14).
When expropriated land is occupied by informal settlers who cannot or will not demolish structures despite the writ of possession, the court issues a necessary writ of demolition to dismantle structures, observing the procedures in Sections 28 and 29 of RA No. 7279 (Section 14).
After project approval by the appropriate agency, the IA must notify HUDCC of the proposed project that may require ROW acquisition displacing informal settlers (Section 14).
Appropriations: The government provides adequate appropriations allowing concerned IAs to acquire required ROW in advance of project implementation (Section 15).
Appropriations cover ROW-related costs including parcellary surveys and appraisal; compensation for project-affected land/structures/improvements including relocation/replacement of compensable utilities, crops, and trees; resettlement project development and implementation costs; and IA related expenses including CGT (for negotiated sale), DST, transfer tax, registration fees for title transfer, and ECC application costs (Section 15).
For PPP projects, the IA may require the project proponent to (a) advance ROW funds reimbursed later by the IA (except for unsolicited proposals) or (b) finance ROW cost for the government recovered partly or fully by tolls/fees/tariffs from users (Section 15).
For budgeting projects without benchmark prices, ROW costs may be based on BIR zonal values times a factor not exceeding two (2) (Section 15).
For projects that are pre-feasibility/feasibility only, replacement cost budget/appropriations may use benchmark unit costs derived from DPWH industry standards and accepted by DPWH (Section 15).
For projects with detailed engineering design, replacement cost budget/appropriations must be based on detailed estimates including bill of materials/quantities following DPWH standards and procedures (Section 15).
Developments within ROW: After approval by the Head of the IA of an infrastructure project with funding authorized in the General Appropriations Act and with defined ROW, no National Government Agency or LGU may, within two years from date of notice of taking, allow any development/construction or issue permits contrary to approved plans and purposes unless explicitly authorized by