IRR of RA 10752 on Right-of-Way Acquisition

Coverage and declaration of policy

The IRR cover the acquisition of real properties needed as right-of-way (ROW), site, or location for national government projects.
The IRR apply to projects undertaken by any department, bureau, office, commission, authority, or agency of the national government, including any government-owned or controlled corporation and state college or university authorized by law or its charter to undertake national government projects.
The IRR are governed by the constitutional policy that private property shall not be taken for public use without just compensation, reiterated in Section 2 of Republic Act No. 10752.
The State must ensure that persons whose property is affected by national government infrastructure projects are promptly paid just compensation for the expeditious acquisition of the required ROW.
Local Government Units may adopt the IRR for acquisition of ROW for local government infrastructure projects, subject to Republic Act No. 7160 (Local Government Code of 1991).

Key definitions and covered projects

“Act” means Republic Act No. 10752 (the “Right-of-Way Act”).
“Implementing Agency (IA)” means any national government department, bureau, office, commission, authority, or agency (including GOCCs and state colleges/universities) authorized by law or charter to undertake national government projects.
“National Government Projects” include national government infrastructure projects and their public service facilities, engineering works, and service contracts, including projects undertaken by GOCCs.
National Government Projects include all projects covered by RA No. 6957, as amended by RA No. 7718 (the “Build-Operate-and-Transfer Law”), and other related laws involving private sector participation, including activities intended for public use or purpose such as:
- site acquisition, supply and/or installation of equipment and materials, implementation, construction, completion, operation, maintenance, improvement, repair, and rehabilitation.
“Replacement Cost” means the cost necessary to replace the affected structure or improvement with a similar asset based on current market prices.
“Right-of-Way or 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.
Covered ROW-related national infrastructure works include, among others:
- Highways (expressways, roads, bridges, interchanges, overpasses, tunnels, viaducts, and related facilities),
- Railways and mass transit facilities,
- Port infrastructure (piers, wharves, quays, storage handling, ferry services),
- Airports and air navigation facilities,
- Power generation, transmission and distribution facilities,
- Radio/television broadcasting and telecommunications infrastructure,
- Information technology infrastructure,
- Irrigation, flood control and drainage systems,
- Water and debris retention structures and dams,
- Water supply, sanitation, sewerage and waste management facilities,
- Land reclamation, dredging and development,
- Industrial and tourism estates,
- Government school buildings, hospitals, clinics and other buildings and housing projects,
- Public markets and slaughterhouses, and
- Other similar or related infrastructure works and services.

Modes of acquiring property (ROW)

The regular modes of ROW acquisition are Donation, Negotiated Sale, and Expropriation.
Other authorized modes include:
- Acquisition of Properties under Commonwealth Act (CA) No. 141,
- Exchange or Barter,
- Easement of Right-of-Way,
- Acquisition of Subsurface Right-of-Way, and
- Other modes authorized by law.

Donation and negotiated sale rules

Under Donation, the IA may explore donation by the property owner (private or government) of the needed portion or whole affected property (lots with or without improvements).
If the owner agrees, a deed of donation must be prepared immediately that is simple and unconditional and includes clauses that:
- the donation is made not to defraud the donor’s creditors, and
- if the donor is a private individual, the donor has reserved enough property for the family’s subsistence, sustenance, and support if necessary.
The IA must accept the donation, indicated in the deed; the IA pays documentary stamp tax, transfer tax, and registration fees, while the donor pays any unpaid real property tax.
Under Negotiated Sale, the IA may acquire the required ROW by offering compensation price consisting of:
- current market value of the land,
- replacement cost of structures and improvements, and
- current market value of crops and trees.
For negotiated sale price determination, the IA may engage either:
- a Government Financial Institution (GFI) with adequate experience selected through a competitive process, or
- an Independent Property Appraiser (IPA) accredited by the BSP or by a professional association of appraisers recognized by BSP.
IPAs are procured under RA No. 9184 and its IRR on consulting services; lists of IPAs are provided by BSP and the professional association upon request.
The BSP and the recognized professional association are not accountable for acts of IPAs included in their lists.
The IA must prepare Terms of Reference (TOR) for the GFI/IPA, containing at least:
- project background and appraisal objectives,
- desired outputs and level of detail (land value, replacement cost, and/or crop/tree values),
- standards/specifications to be observed (including applicable standards under the IRR),
- duration and timetable, and
- qualifications of the appraiser.
If a GFI is engaged, the IA must execute a Memorandum of Agreement (MOA), requiring that:
- the GFI is capable and has adequate experience,
- the GFI performs appraisal by administration using its own in-house manpower and resources, and
- the IA pays an appropriate fee under the MOA.
Replacement cost of structures/improvements is based on current market prices of:
- materials, equipment, labor, contractor’s profit and overhead, and all attendant costs for installing a similar asset.
If the affected structure has been damaged, replacement cost must be based on the pre-damaged condition; the replacement structure must perform the same functions and meet performance specifications as the original.
If the IA directly determines replacement cost, it must:
- prepare a basic plan and performance-type specifications for replacement, generally considering original condition; and
- compute replacement cost as Estimated Direct Cost (EDC) plus Estimated Indirect Cost.
EDC components include:
- current market cost of materials (including haul roads, royalties, local taxes, handling, storage, and allowance for waste/losses at five percent (5%) of materials requirement),
- current market cost of labor (within limits authorized by DOLE) including fringe benefits (vacation and sick leaves, Workmen’s Compensation, SSS, allowances, 13th month pay, bonuses, etc.), and
- equipment expenses (equipment rental based on ACEL rental rates, and mobilization/demobilization at one percent (1%) of the EDC of civil works items).
Estimated Indirect Cost includes:
- Overhead Expenses 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%) of EDC for projects with EDC more than PhP 5 million, and ten percent (10%) for projects with EDC of PhP 5 million and below, and
- VAT in accordance with law: five percent (5%) if the property is owned by a government agency, or twelve percent (12%) if owned by a private party, applied to the sum of EDC, Overhead, Contingencies/Miscellaneous, and Profit.
Indirect costs are limited as follows (limits in percent of EDC):
- for up to PhP 5M: OCM 12%, profit 10%,
- for above PhP 5M to PhP 50M: OCM 9%, profit 8%,
- for above PhP 50M to PhP 150M: OCM 7%, profit 8%,
- for above PhP 150M: OCM 6%, profit 8%.
The IA uses the replacement cost/valuation rules consistent with GFI/IPA appraisal standards where an appraiser is engaged; the IA may request DPWH assistance for replacement cost determination.
The property owner must decide within thirty (30) days from receipt of the written offer to accept or refuse the negotiated price.
If the property owner refuses or fails to accept, or fails/refuses to submit required documents for payment, the IA must immediately initiate expropriation proceedings under the IRR expropriation rules.

Payment mechanics, CGT/DST, and special owners

Under negotiated sale, the IA pays taxes/fees for the seller/owner: Capital Gains Tax (CGT) and documentary stamp tax (DST), transfer tax, and registration fees, while the owner pays unpaid real property tax.
CGT is paid by the IA to the Bureau of Internal Revenue (BIR) based on actual consideration stated in the deed of sale using the formula:
- AC = NAC + CGT
- NAC = AC net of CGT,
- CGT = x% of AC, hence NAC = (100% − x%)AC / 100% and AC = NAC/(100% − x%).
CGT computation does not apply to the sale of property classified as ordinary assets; such sales follow existing BIR rules.
Upon the property owner’s request, the IA may remit to the concerned LGU the amount corresponding to any unpaid real property tax, subject to deduction from the total negotiated price, provided the remittance amount is not more than the negotiated price.
A Deed of Absolute Sale must be executed after the property owner submits title and tax documents necessary for transfer to the Republic, including Transfer Certificate of Title, Tax Declaration, Real Property Tax Certificate or Clearance (from the LGU Treasurer), and other necessary documents.
The IA must annotate the Deed of Absolute Sale on the Transfer Certificate of Title.
For sales involving land with structures/improvements, the deed must include stipulations allowing the IA to demolish and remove them and to enter immediately to implement the project.
For sales involving structures/improvements only, an Agreement to Demolish and Remove Improvement (ADRI) is executed after proof of ownership is submitted; the IA similarly remits unpaid taxes on such structures/improvements subject to deduction from negotiated price.
After execution of the Deed of Sale, the IA pays the property owner:
- 50% of the negotiated price of the affected land (exclusive of unpaid taxes remitted to the LGU), and
- 70% of the negotiated price of affected structures, improvements, crops, and trees (exclusive of unpaid taxes remitted to the LGU).
Where the owner owns both land and structures/improvements, the IA must pay remaining amounts:
- the remaining 50% of land and the remaining 30% of structures/improvements/crops/trees when the land is already completely cleared, certified by the IA, at:
  - title transfer to the Republic if the land is wholly affected, or
  - annotation of the deed on the title if the land is partially affected.
Where the owner owns only the land, the remaining 50% of the land is paid at:
- title transfer if wholly affected, or
- annotation if partially affected.
Where the owner owns only the structures/improvements, the remaining 30% of structures/improvements/crops/trees is paid immediately after certification that the land is completely cleared, at:
- title transfer if wholly affected, or
- annotation if partially affected.
The IA must ensure faithful and prompt compliance with the payment procedures and may issue necessary orders/directives to enforce them.
The IA must pay CGT to the BIR within thirty (30) days after (a) release of initial payments under the payment schedule or (b) notarization of the deed of sale, whichever is earlier.
The IA must pay DST within five (5) days after the close of the month when the deed of sale is notarized.
For outstanding ROW payments, the same negotiated sale compensation rule applies, but the amount offered is the price at the time of taking of the property, including legal interest until fully paid, subject to the IRR transitory provision.

Expropriation proceedings and possession

When ROW acquisition through expropriation is necessary, the IA must initiate expropriation by filing a verified complaint before the proper court when:
- the owner refuses or fails to accept the negotiated sale price offer within thirty (30) days, or fails/refuses to submit documents necessary for payment, or
- negotiation is not feasible.
The IA initiates expropriation through the Office of the Solicitor General for national agencies, the Office of the Government Corporate Counsel for government-owned and controlled corporations, or their deputized government or private legal counsel.
Upon filing of the complaint or at any time thereafter (after due notice), the IA must immediately deposit to the court, in favor of the owner, the sum equivalent to:
- (1) 100% of the land value based on the current relevant zonal valuation of the BIR issued not more than three (3) years prior to filing, subject to Section 7(c),
- (2) replacement cost at current market value of improvements/structures determined by:
  - the IA,
  - a GFI, and
  - an IPA accredited by the BSP,
- (3) current market value of crops and trees determined by a GFI or BSP-accredited IPA.
After compliance with the deposit requirements, the court must immediately issue an order to take possession of the property to the IA, enabling project implementation.
If within seven (7) working days after deposit the court has not issued the writ of possession, IA counsel must seek issuance of the writ; the court must issue the writ ex parte with no hearing required.
The court releases the deposited amount to the owner upon presentation of sufficient proof of ownership.
If the owner cannot be found, is unknown, or is deceased where the estate is unsettled after due diligence, or 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.
The IA may take possession and start implementation upon receipt of the writ of possession.
If the owner contests the proffered value, the court determines just compensation within sixty (60) days from filing.
After the decision becomes final and executory, the IA pays the owner the difference between amounts already paid and just compensation.
For transfer taxes and fees in expropriation, the IA pays DST, transfer taxes under RA No. 7160, and registration fees, while the owner pays CGT, any unpaid real property tax, and all other applicable taxes.
The owner pays CGT to the BIR within thirty (30) days after the expropriation judgment becomes final and executory; the IA pays DST within five (5) days after close of the month when the judgment becomes final and executory.
In areas with no land classification, the city or municipal assessor must, within sixty (60) days from filing of the expropriation case, come up with land classification and corresponding declaration of real property and improvement.
Where there is no zonal valuation, or the current zonal valuation has been in force for more than three (3) years, the BIR must, within sixty (60) days from filing, conduct zonal valuation based on the land classification done by the assessor.
In urgent government infrastructure situations, if there is no land classification or no 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 for valuation.

CA 141 acquisition, exchange/barter, easement, subsurface ROW

For lands granted through CA No. 141 (dated 07 November 1936), the IA must:
- use other modes in the IRR if the landowner is not the original patent holder and previous acquisition was not through a gratuitous title; or
- follow CA No. 141 provisions for acquisition of ROW on patent lands if the landowner is the original patent holder or acquisition from the original patent holder was through a gratuitous title.
Under CA No. 141 (as amended by PD No. 635 dated 07 January 1975), a ROW strip not exceeding 60 meters in width is reserved for public use with damages to improvements only.
If government exercises the right to use the CA No. 141 reserved ROW strip, the owner must execute a quit claim; the IA takes possession without compensation for the land but pays the cost of damages for improvements equivalent to replacement cost under Section 6.6.
If the owner refuses or is unable to execute the quit claim, officials responsible for project implementation are authorized to take possession of the portion subject of the lien as the need arises and upon due notice.
PD No. 1381 authorizes temporary use of the reserved ROW strip for Resident/Project Engineers’ temporary buildings; possession reverts to title holders after project completion and no longer needed use.
Financial assistance to owners is extended in accordance with Executive Order No. 1035 (series of 1985).
Exchange or Barter: a property owner may request exchanging his needed property for an old abandoned government road or other government property near the project.
The IA may favorably consider exchange/barter on conditions that:
- exchange is on a value-for-value basis (equivalent market value or price),
- if the government property was originally donated, donation must be verified to ensure no condition prohibits disposition to other private persons; if originally acquired through sale, the previous owner has first priority to re-acquire if required by law or contract/deed,
- owners abutting the abandoned road/other property are not deprived of access (egress/ingress) to the new highway, and
- parties are subject to applicable CGT and DST under BIR rules and regulations.
Easement of ROW may be used when the required portion is minimal such that surveying/segregation costs are far more than the value of the required portion, if the property owner agrees.
Under the easement mode, a ROW easement agreement is executed whereby the owner grants the IA right to use the affected portion while retaining ownership.
The IA pays the owner:
- the value of the portion based on existing BIR declared zonal valuation, and
- replacement cost of improvements/structures under Section 6.6.
Entry by the IA under easement is effected upon full payment of the portion value.
All ROW easement agreements must be registered with the Register of Deeds within ten (10) days from execution; the Register of Deeds must annotate within seven (7) days from receipt.
Subsurface ROW acquisition: when infrastructure must be installed on subsurface/subterranean portions of private and government-owned lands owned, occupied, or leased by other persons, government entry/use is permitted if entry/use is made more than fifty (50) meters from the surface.
The IA must consult and notify affected property owners for subsurface ROW acquisition.
If the national project involves underground works within a depth of fifty (50) meters from the surface, the IA may acquire in the order:
- negotiate a perpetual easement of ROW for subterranean portions required, then
- offer to acquire the affected portion of land and affected structures/improvements/crops/trees in accordance with the Act.
To assist pricing, the IA may engage a GFI or IPA using the negotiated sale procedure; the easement price for the perpetual easement is twenty percent (20%) of the market price of the land.
The IA follows the other negotiated sale rules for subsurface easement acquisition.

Appraisal standards, ecological requirements, and relocation

Negotiated sale market value standards include:
- land classification and use based on the latest approved land use plan and/or zoning ordinance,
- development cost based on assessor/GFI/IPA records for similar lands,
- value declared by owners based on latest tax declarations or sworn statements,
- current selling price of similar lands based on Register of Deeds records of deeds of sale,
- reasonable disturbance compensation for removal/demolition and value of improvements considering replacement cost at current market prices,
- size/shape/location, tax declaration, and zonal valuation based on deeds of sale, tax declarations, and BIR zonal valuation for comparable properties,
- land price manifested in ocular findings and evidence, and
- facts/events allowing affected owners sufficient funds to acquire similarly situated lands and rehabilitate early.
The increase in value of affected property brought about by the government project itself is not considered in determining purchase price.
The IA must ensure TOR for GFIs and IPAs includes applicable standards for market value determination.
Ecological and environmental concerns must be considered in ROW acquisition for national government infrastructure projects, including environmental laws, land use ordinances, and pertinent provisions of RA No. 7160.
For feasibility study/detailed engineering design of projects (except PPP projects), the IA must secure an Environmental Compliance Certificate (ECC) or Certificate of Non-Coverage (CNC) from DENR in accordance with PD No. 1586 and its IRR.
For ancestral domain, additional requirements under RA No. 8371 and its IRR must be complied with.
The IA must prepare a Preliminary Land Acquisition Plan and Resettlement Action Plan (LAPRAP) or an Indigenous People’s Action Plan, as applicable, forming part of the Environmental Impact Assessment (EIA).
For PPP projects under RA No. 6957 (as amended), its IRR, and other pertinent laws govern ECC/CNC requirements.
Relocation of informal settlers is conducted by HUDCC and NHA, in coordination with LGUs and IAs, through establishment/development of resettlement sites and provision of adequate basic services and community facilities, pursuant to RA No. 7279.
When expropriated land is occupied by informal settlers who do not demolish after the court issues writ of possession, the court must issue a writ of demolition to dismantle structures within the property, and the IA must observe the RA No. 7279 procedures.
After project approval, the IA must notify HUDCC of proposed projects requiring ROW that may displace informal settlers.

Informal settlers: cut-off and eligibility payments

The government establishes resettlement sites for informal settlers anticipated to be removed from ROW or site areas for future infrastructure projects.
A two-year restriction applies to developments within defined ROW:
- after approval by the head of the IA concerned 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 development/construction or issue permits contrary to approved project plans/purposes unless explicitly authorized for justifiable reasons.
The date of notice of taking is the date of the IA letter to landowners after approval of LAPRAP as part of detailed engineering design, informing intent to acquire lands for ROW.
After issuance of notice of taking, new structures or improvements to existing structures on land covered by the notice are not compensated.
The “cut-off date” is the first day of the census undertaken as part of LAPRAP preparation after both project approval and detailed engineering design; informal settlers with structures built after the cut-off date are not eligible for compensation.

Documents, manuals, and sanctions

The IA must submit relevant documents indicating survey limits for lands acquired for ROW to the concerned LGU for development planning, taxation, and other purposes.
Each IA must prepare and implement its own “Manual of Procedures for ROW Acquisition” consistent with the Act and this IRR, customized to the IA’s systems, and used by property owners and field/central offices as operational guidance.
The IA Manual must provide rules, standard documents, and template forms, and it must guide GFIs and IPAs in determining price offers and compensation packages.
The IA Manual must include faithful and prompt compliance with the prescribed negotiated-sale payment procedures under Section 6.10.
Violation of any provision of RA No. 10752 subjects the concerned government official or employee to appropriate administrative, civil, and/or criminal sanctions, including suspension and/or dismissal from government service and forfeiture of benefits.

Transitory clause and repeal

The IRR apply to all ROW transactions except ongoing transactions that, as of the effectivity of the Act, have already reached a written agreement as to price between the IA and the property owner.
RA No. 8974 is repealed.
All other laws, decrees, orders, rules, and regulations, or parts inconsistent with the Act, are repealed or amended accordingly.