By: Atty. Gregorio B. Austral, CPA
From gridlock to progress: How the ARROW Act reforms right-of-way acquisition
The long-awaited Accelerated and Reformed Right-of-Way (ARROW) Act, officially Republic Act No. 12289, has finally been enacted, instituting critical reforms aimed at streamlining the acquisition process for infrastructure projects. This landmark legislation affirms the State’s fundamental policy that private property must not be taken for public use without just compensation. The ARROW Act ensures that property owners are paid promptly, basing compensation on a nationally consistent real property valuation system to expedite the required right-of-way (ROW) for both national government infrastructure projects and private infrastructure projects for public use. The Act is broad in scope, covering projects undertaken by government-owned or -controlled corporations (GOCCs), Public-Private Partnership (PPP) projects, and essential public services provided by private entities with the delegated power of eminent domain, such as electricity distribution, water systems, airports, and seaports.
One of the most salient features of the ARROW Act lies in the refined procedures for Negotiated Sale. The implementing agency or private entity must offer compensation based on the sum of three components: the land’s market value (based on the Schedule of Market Values or SMV), the replacement cost of structures and improvements (considering depreciation), and the market value of crops and trees. Crucially, the law introduces mechanisms to facilitate the transfer of title and payment. When the property is classified as a capital asset under a negotiated sale, the implementing agency or private entity shall pay the capital gains tax, documentary stamp tax, transfer tax, and registration fees, while the property owner remains responsible only for any unpaid real property tax. Furthermore, upon execution of the deed of sale, the law mandates staggered advance payments: 50% of the negotiated price for the affected land and 70% for affected structures, improvements, crops, and trees.
Should negotiations fail, the ARROW Act provides clear and accelerated Expropriation Proceedings. To ensure quick project implementation, the law requires the implementing agency or private entity, upon filing a complaint, to immediately deposit with the court a specific sum in favor of the property owner. This required deposit includes one hundred percent (100%) of the replacement cost (taking depreciation into account) for structures and improvements, but only fifteen percent (15%) of the market value of the land and fifteen percent (15%) of the market value of crops and trees. Compliance with this immediate deposit is paramount, as the court is then mandated to issue an ex parte Order to Take Possession, known as the Writ of Possession, without needing a hearing. If the property owner contests the proffered value, the court is given a stringent timeline of sixty (60) days from the filing date to determine the just compensation.
The law also comprehensively addresses logistical hurdles that frequently delay infrastructure development. For instances where land within ancestral domains is involved, the provisions of the Indigenous Peoples’ Rights Act of 1997 (RA 8371) must apply. Furthermore, recognizing the complexity of displacement, the Act mandates the establishment and development of resettlement sites for informal settlers, in coordination with key shelter agencies and Local Government Units (LGUs). If informal settlers refuse to leave despite a Writ of Possession, the court is authorized to issue the necessary writ of demolition. The Act clarifies that just compensation related to the relocation of utilities owned by utility providers affected by a national government project shall be determined based on the guidelines of the concerned regulatory body. Significantly, the Act explicitly applies the provisions of Republic Act No. 8975, affirming the prohibition and penal sanction on the issuance of temporary restraining orders (TROs) or preliminary injunctions against these crucial infrastructure projects.
The ARROW Act, or RA 12289, serves as a powerful legislative tool designed to remove bureaucratic bottlenecks and harmonize valuation standards, ensuring that vital infrastructure projects can proceed with the necessary speed. By setting clear standards for negotiated sales, accelerating the issuance of writs of possession in expropriation cases, and incorporating provisions for dealing with utilities and informal settlers, the government aims to facilitate efficient service delivery. However, the law’s effectiveness is tied to accountability; violations of its provisions subject government officials or employees, as well as responsible officers of private entities, to appropriate administrative, civil, or criminal sanctions, reinforcing the commitment to timely and lawful project implementation.