MAGALANG, Pampanga—A surge in land prices in a residential subdivision in Muntinlupa City following the construction of a publicly funded access road to a central business district (CBD) has presented the city government an opportunity to get a share of the unearned windfall gains of landowners.
But the city government has overlooked this source of revenue. The road that the city financed is aimed at easing traffic congestion, not at creating land value, according to the councilor who principally authored the ordinance on the access road.
A portion of the land value may yet be captured and reinvested to support the infrastructure’s maintenance, and even fund other projects.
Under the Local Government Code of 1991, or Republic Act (RA) No. 7160, local government units (LGUs) can get a share of the landowners’ unearned gains from an LGU-funded infrastructure—a mechanism called land value capture (LVC).
LVC is a fiscal tool that LGUs can use to fund sustainable development without relying solely on traditional debt or national tax allocations.
Special levy, user fees
Section 240 of the Local Government Code authorizes a province, city, or municipality to impose a special levy on lands that benefited from public works or projects that it funded.
The levy is up to 60% of the actual project cost and can be collected in five to 10 years.
In addition, Section 155 of RA 7160 allows the collection of user fees. A provincial, city, or municipal council can set the terms and rates for toll and other charges for the use of a public road or other infrastructure that the LGU built.
For an LGU to invoke these two legal provisions—already in effect for 35 years—opportunity and political will are required.
An opportunity has presented itself in Pleasant Village, one of the bedroom communities that sprouted in Muntinlupa, shortly after the South Superhighway (now called South Luzon Expressway, or SLEx) opened to traffic in 1970.
The highway drastically reduced travel time from Manila, Makati, Pasay and Taguig to Muntinlupa, and vice versa.
Before the SLEx was built, a bus in Lawton had to traverse Taft Avenue in Manila and Pasay, continue on to Quirino Avenue in Parañaque and Las Piñas, and then follow what is now called Alabang-Zapote Road to get to Muntinlupa. It was a circuitous trip that took hours.
Over the decades, however, a fast-growing population and a huge increase in the number of vehicles have led to severe traffic congestion in Metro Manila, including Muntinlupa, which became a highly urbanized, first-class city in 1995.
In Muntinlupa, the traffic problem was heavily felt along the old national highway as more than a dozen subdivisions to the west of SLEx, including Pleasant, have ingress and egress only at the national highway. The highway was part of the old Maharlika Highway that extended to the Bicol Region.
CARES road network
To address the traffic problem, the LGU built the City Alternative Route Entry and Exit System (CARES) at an estimated cost of ₱39 million. It was assumed that the city had paid for the right of way.
CARES opened to traffic in 2013 linking Pleasant and eight other subdivisions to the CBD—the 244-hectare Filinvest City in Barangay Alabang. Once at the CBD, commuters can access SLEx, Skyway and Alabang-Zapote Road. Alternatively, they can board buses, jeepneys, and vans at the South Station Transport Terminal to travel to other cities and provinces.
Besides having access to major roads and highways, the CBD hosts information technology and business process outsourcing firms, corporate offices, residential condominiums, retail malls, medical centers and schools.
One of the notable recent locators is PLDT. In 2025, the publicly listed telco acquired close to 5 hectares across from FEU Alabang and Research Institute for Tropical Medicine for a campus-style headquarters. The PLDT site is just some 150 meters from Pleasant.
While Pleasant once relied on a single entry and exit point in the east, CARES has added two more—in the north and in the southwest—connecting it to neighboring subdivisions. The road network has given Pleasant the distinction of being the only subdivision with direct access to the CBD in Barangay Alabang, and Barangays Bayanan and Putatan.
Faster commute, sticker fees
Travel time to the adjacent CBD from Pleasant and vice versa has been cut to less than a minute after the new road network came into service. The benefits of enhanced accessibility extended to residents of eight neighboring subdivisions and eventually to two more.
The new road network is also a boon to workers. Traffic congestion along the national road has eased, redirecting more than 6,000 motor vehicles to the CARES route.
This alternative corridor has even become the fastest route for ambulances and firetrucks responding to emergencies in Pleasant and neighboring subdivisions.
The faster commute, however, comes with a financial cost. Pleasant, other subdivisions and Filinvest Alabang Inc. charge fees for stickers to access the road network. Ironically, the city government that is tasked with maintaining the road gets nothing.
While private motorists face complex fees, government vehicles can freely use the road network.
Rise in land values
For years, land prices in Pleasant Village remained relatively stagnant due to a concrete fence preventing direct access to the adjacent CBD. After the opening of CARES and the provision of direct access, land prices rose substantially, illustrating how transport infrastructure can unlock previously suppressed locational value by converting physical proximity into functional accessibility.
Clearly, the economic benefits of the new transport infrastructure—primarily improvements in accessibility—have been transmitted or “capitalized” into the market values of adjacent properties. Consumers who value enhanced access to roads or transit stations are willing to pay a premium for nearby properties, driving prices up.
Zonal values in Pleasant went up to ₱12,000 per square meter in 2014, from just ₱2,400 per square meter in 2007–2013. Zonal values in a subdivision without access to CARES also rose, but not as much.
The Bureau of Internal Revenue uses the zonal value for charging sellers of real estate the capital gains and documentary stamp taxes if it is higher than the selling price or the assessor’s valuation of the property.
To find out whether the new road network influenced land prices in Pleasant, a Small-N Descriptive Difference-In-Differences (DiD) method was used.
Pleasant is the treatment area while Lakeview is the comparison area, chosen because it has no access to CARES. The analysis compared average land-sale prices per square meter in 2010, three years before CARES, and 2016, three years after CARES, to examine differences in price changes between the two subdivisions.
Deeds of absolute sale (DOAS), which showed land prices, were randomly chosen in the first round. In the next two rounds, samples were purposively selected from the archives of the Assessor’s Office to capture transactions affected by the lag in registration. Outlier prices and nonmarket transactions, such as donation, extrajudicial settlements and dacion en pago, alongside multi-lot transactions were excluded.
₱476-M windfall gains
It was found that the descriptive DiD was ₱5,645 per square meter, translating to approximately ₱1.7 million in additional value between 2010 and 2016 for an average lot size of 300 square meters in Pleasant. For the whole subdivision, the aggregate capitalization was ₱476 million, representing the unearned gains of landowners. (See table.)
Both Pleasant and Lakeview saw land values going up, but Pleasant’s gains appreciated substantially more. (See charts.)
The price increases for lots in Pleasant after CARES came into service were more pronounced after 2016 in sales data collected from real estate agents and residents than the prices that sellers had declared in DOAS.
This phenomenon may be explained by sellers underdeclaring prices to minimize the payment of capital gains and documentary stamp taxes.
Market prices of vacant lots per square meter in Pleasant have progressively risen after CARES was built: 2014, ₱5,000; 2016, ₱13,000; 2017, ₱17,000; 2019, ₱20,000; and 2021, ₱25,000–₱31,000. By 2026, a lot on Mandarin Avenue, which is part of CARES, was being offered for sale at ₱70,000 per square meter.
The data indicate that the CARES road network has improved accessibility, which is associated with substantial land-value appreciation. The publicly generated value presents an opportunity for LVC.
Because the ₱39 million in infrastructure cost represents only 8.2% of private land-value gains, the potential for LVC is substantial.
The sustainability challenge is not only how to finance infrastructure, but also how to capture and reinvest a portion of the value that infrastructure creates.
Policy blind spot
The City Council, however, has not passed an ordinance to capture a share of the land-value gains. Councilor Raul Corro says CARES is viewed primarily as a traffic-management solution rather than as an infrastructure investment capable of generating land-value gains.
Corro, author of the ordinance that created CARES, adds that the City Council is careful about the imposition of new taxes because it is “a big political issue.” This represents a policy blind spot in local infrastructure planning.
Recommendations
Muntinlupa can consider a two-pronged, benefit-based approach, while treating political considerations as an implementation constraint:
• Land-value gains arising from public investment—addressed through asset-based taxation.
• Infrastructure use and wear-and-tear—addressed through consumption-based user pricing.
It can take the following steps:
1. Adopt phased special levy.
Before imposing the levy, the city should strengthen the capacity of the Assessor’s Office to undertake a comprehensive capitalization and benefit assessment covering properties affected by the CARES network.
A phased and differentiated levy could then be considered for the 11 subdivisions benefiting from CARES, with rates reflecting the relative degree and timing of benefit. The two subdivisions integrated only in 2018 should not bear liabilities for periods in which they had no physical access to the network.
2. Introduce consumption-based user charges.
The city should explore an electronic road-pricing or access-fee system that reflects actual infrastructure use.
Charges may be differentiated according to the extent of network use and benefits received. This would distribute part of the financial burden from landowners to road users while generating a recurring source of funds for infrastructure maintenance.
3. Establish a dedicated infrastructure and maintenance fund.
Revenues generated through the special levy and user charges could be earmarked for the maintenance, rehabilitation, safety, and improvement of the CARES network.
4. Institutionalize LVC in future infrastructure planning.
Finally, Muntinlupa City should incorporate land-value effects into the evaluation and financing of future transport infrastructure projects.
The broader policy lesson is that local governments should move beyond viewing transport infrastructure solely as a public expenditure. Infrastructure can also be treated as a public investment capable of creating land value, a fraction of which can potentially be captured and reinvested to support the infrastructure’s long-term sustainability.
Part of the revenue may also be used to fund other projects. CS
This report is based on a paper the author presented on Oct. 5 at the 51st Sustainable Shared Growth (KKK51) Seminar jointly organized by UP Open University’s Faculty of Management and Development Studies and SGRA PH Sekiguchi Global Research Association of Atsumi Zaidan. The KKK51 seminar piggybacked on the three-day 4th International Forum on Sustainability Science at the Pampanga State Agricultural University.
