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CPBRD POLICY B RIEF

CONGRESSIONAL POLICY AND BUDGET RESEARCH DEPARTMENT
MAY 2011 NO. 2011-4

ADDRESSING POLICY GAPS IN THE LAND ADMINISTRATION SYSTEM*

In most developing countries, land is not only a notable means of generating a livelihood but often the key instrument for investing, accumulating, and transferring wealth between generations. Thus, the institutional and legal framework in which access to land is regulated, property rights are defined, and ownership conflicts are resolved, have broad implications in the countrys pursuit for growth and poverty reduction.1 Typically, an efficient land market allows the optimal use of land, and well-defined property rights will help overcome credit market imperfections. However, the Philippine land market has not been efficiently functioning (e.g. problems on fake titles and boundary disputes among others). At present, the Philippine land administration system is handled by multiple agencies and governed by multiple laws resulting to different standards for land valuation, overlapping land titling processes and so many opportunities for graft and corruption. Inefficiencies in the system is due to outdated land legislation and administrative processes which further lead to high cost of doing business involving real estate properties. Defining Land administration system The United Nations-Economic Commission for Europe defines land administration as: the process of determining, recording and disseminating information about the ownership, value, and use of land when implementing land management policies. It is considered to include land registration, cadastral surveying and mapping, fiscal, legal and multi-purpose cadastres and land information systems.2 Moreover, Dale and MacLaughlin3 further define land administration as the process of regulating land and property development and the use and conservation of land, the gathering of revenues from the land through sales, leasing, and taxation, and the resolving of conflicts concerning the ownership and use of land.

* Prepared by Ma. Leni Lebrilla of the Special Projects Service in consultation with Director Novel Bangsal and CPBRD OIC Director-General Romulo Emmanuel Miral, Jr. The views, opinions and interpretations in this report do not necessarily reflect the views of the House of Representatives as an institution or its individual Members.

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Simply put, land administration system is the way in which the rules of land tenure are applied and made operational. Land administration, whether formal or informal, comprises an extensive range of systems and processes to administer, namely:4

Land Rights: the allocation of rights in land, the delimitation of boundaries of parcels for which the rights are allocated, the transfer from one party to another through sale, lease, loan, gift or inheritance, and the adjudication of doubts and disputes regarding rights and parcel boundaries; Land-use Regulation: land-use planning and enforcement and the adjudication of all land use conflicts; and Land Valuation and Taxation: the gathering of revenues through forms of land valuation and taxation, and the adjudication of land valuation and taxation disputes.

Gaps in the land administration system The existing land administration system in the Philippines can be summarized in two words: multiple and complex. The whole system is governed by multiple laws, regulations, processes and standards, and is managed by multiple institutions with limited collaboration.

Legal and regulatory framework

An inventory of the laws relevant to public land disposition and land registration revealed the existence of more than 60 laws.5 Of this number, the following are the more important measures that define the process of land registration and titling:6

Commonwealth Act 141 (Public Land Act of 1936) serves as the foundation of subsequent laws on public land. Act 496 (Land Registration Act 1902) as supplemented by PD 1529 (property Registration Decree). Both provide for the registration of lands claimed as private property, requiring all patents, certificates, deed and conveyance issued by the Bureau of Land to be registered at the Registry of Deeds. Act 2259 (Cadastral Act) provides for the cadastral survey and institution of compulsory and mass judicial proceedings for the settlement and adjudication of claims to all kinds of land. Section 194 of Act 3344 (Administrative Code) provides for a system of recording instruments or deeds relating to real estate not registered under Act 496 or under the Spanish Mortgage Law.

Given the complex legal structure, the Philippine case is considered unique because the land titling process is done judicially and administratively (Table 1). In stark contrast, land registration in Thailand, Malaysia, Indonesia, Cambodia and Laos are done through administrative processes only. The Land Registration Act and the Cadastral Act both fall under the Torrens system of titling process and the proceedings in both Acts are judicial in character.7 2

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The Torrens System was formulated to assure landowners covered by original Certificate of Title or Transfer Certificate of Title (TCT) issued by the Registry of Deeds that the land title will be absolute, indefeasible and imprescriptible. The Torrens system in the Philippines which is based on American model is particularly contentious because it requires intervention of the courts in the title registration process. Interestingly, most countries in the Asian region have managed to implement an overarching land law, often referred to as Land Code while the Philippines still implements multiple decrees that often overlap. The percentage share of documented lands in the Philippines is 66% compared to Thailand (80+%) and Vietnam (90%). Table 1. Regional Institutional and Legislative Comparisons
Country Institution/s Legal Framework (date of latest amendments) Land Code (2001) Registration Process Administrative Administrative % of Land Parcels Registered 80+

Thailand

Department of Lands Ministry of Lands and Cooperative Development National Land Agency Ministry of Land Management, Urban Planning and Construction National Land Management Authority, incorporating Department of Lands Ministry of Natural Resources and Environment Department of Justice Department of Environment and Natural Resources Department of Agrarian Reform

Malaysia

National Land Code (2002)

--

Indonesia

Basic Agrarian Law (1998)

Administrative Administrative

42

Cambodia

Land Law (2001)

37

Administrative Land Law (2003) 35

Laos

Vietnam

Land Law (2003)

Administrative

90

Philippines

Overlapping and inconsistent Acts and Decrees

Judicial and Administrative

66

Source: Burns, Anthony and Dalrymple, Kate, Land Administration Core Comparisons, Australia, May 2007; Keith Clifford Bell, January 2007.

Obtaining a formal title in the country through voluntary judicial proceedings has not encouraged a culture of registration. 7 This can be attributed to tedious number of steps involved and the delays due to an overloaded court system and the inability of the courts to allocate sufficient time to land titling matters. Survey of Regional Courts indicates that 15% of all cases handled by the courts is related to land registration issues.8 Moreover, the requirement for judicial determination is not confined to original registration. It includes matters such as reconstitution of lost original titles, replacement of lost duplicate titles, and removal of notifications on administratively reconstituted titles and correction of 3

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errors (including minor clerical errors) on titles.9 In these requirements, the Philippines made a major departure from the original aim of the Torrens system which was to provide a simple, inexpensive administrative process. Voluntary judicial proceedings and administrative proceedings can operate in parallel. This means that a claimant may choose which process to use to formalize a title. But each process involves different agencies and sadly, the coordination between and among the said agencies has been problematic. In most cases, competing claims from different proceedings can lead to more friction in the land market.10

Institutional arrangements

A number of government agencies have varied interests in land use planning, land administration, land development and/or land management (Table 2). Registration alone is undertaken in 162 registries of deeds with a registry in each municipality, city and province.11 The multiple laws12 that mostly define institutional arrangements are complex, overlapping, and in some cases, inconsistent. Multiplicity of laws governing various aspects of land development and their enforcement is vested in a number of National Government Agencies and offices as provided in their respective charters.13 Each agency therefore, is guided by its own requirements and standards of operation in carrying out its respective mandate, for instance, on how to classify agricultural lands within its legal jurisdiction. Examples of agencies with overlapping functions abound. The Administrative Code of 1987 states that DENR shall serve as the sole agency responsible for the surveying of lands. However, the same Code specifies that the Bureau of Land Development under DAR shall develop and prescribe procedures and techniques for land surveys in accordance with approved standards. Moreover, Section 46 of the Indigenous Peoples Rights Act (IPRA) 1987 provides that the Ancestral Domains Office within the National Commission for Indigenous Peoples (NCIP) shall be responsible for the identification, delineation, and recognition of ancestral lands/domains.14 Implications of an inefficient system There are no provisions for harmonization among these related laws and coordination among agencies that implement these laws. As such, the performance of government agencies undertaking land administration functions such as surveys, mapping, classification, titling and disposition and registration are hampered by the structure and operation of the land administration system, which further result to other problems such as:15

Multiple standards for mapping and land surveys. There are too many maps
with overlapping territorial boundaries conducted by NAMRIA, DENR and IPRA. While the DENR was the sole agency responsible for classifying land as per Commonwealth Act 141, the IPRA of 1987 gave NCIP a similar function with respect to ancestral lands, which significantly encompasses unclassified forest lands.16 Both the DENR regional land management offices and Land Registration Authority conduct verification and approval of subdivision or consolidation surveys for titling purposes, which results in two different sets of parcel maps in different reference systems, and these are not interlinked. 4

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Table 2. Key Duplication/Overlap Between Agencies

Duplication/Overlap Primary classification of public land as Arable and Disposable land

Agencies Involved DENR/NAMRIA NCIP

Source of Duplication/Overlap Conflict between responsibilities for land classification as determined by EO 292 of July 1987 (instituting the Administrative Code), and Indigenous Peoples Rights Act (IPRA) 1987. Administrative Code provides authority to both DENR and DAR to undertake land surveys. IPRA 1987 gives NCIP responsibility for the identification, delineation, and recognition of ancestral lands/domains. Property Registration Decree (PD 1529 of June 1978, As amended) permits either LMB or LRA to approve such plans. Two titling processes (administrative, judicial), both mandated by law. Legislation authorizing different forms of ownership rights in land, by administrative process.

Undertaking of land surveys for titling purposes

DENR (LMB); DAR Potentially NCIP

Approval of subdivision surveys for titling purposes (for land already titled) Awarding of original private rights in Arable and Disposable land

LMB; LRA DENR (Patents); DAR (CLOAs); Courts (court decrees); NCIP (CADTs)

Maintenance of independent, uncorrelated versions of cadastral maps/records

DENR (LMB); LRA

A consequence of two agencies involved in two titling processes. The practice is neither explicitly mandated nor necessitated by law.

Compilation of land maps and information

Multiple agencies

A reflection of differing agency needs for land information but some unnecessary overlap occurs. Different valuation methods mandated by different property taxation laws.

Land valuation and related mapping for tax purposes

BIR; LGUs

Source: LAMP-DENR, Institutional Arrangement Policy Study, July 2002. Please note the following abbreviation: BIR (Bureau of Internal Revenue), CADT (Certificate of Ancestral Domain Title), CLOA (Certificate of Land Ownership Awards); DAR (Department of Agrarian Reform), DENR (Department of Environment and Natural Resources); LMB (Land Management Bureau); LRA (Land Registration Authority); NCIP (National Commission of Indigenous People); and NAMRIA (National Mapping and Resources Information Authority).

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Multiple forms for title certificates. There is confusion over the status and relative
merits of various rights in land, e.g, CLOAs, patents, original Certificates of Title, Certificate of Ancestral Land Title, and other decrees. For example, a patent is widely regarded as a lesser title than a Certificate of Title issued on a judicial decree. Courts have not respected the indefeasibility of registered patents to the same degree as other titles, while some banks will not lend as much money on them.17

Multiple standards for land valuation. There are multiple systems/methodologies

and laws/regulations used by government agencies for land valuation. The systems are used for different purposes including real property taxation, compensation for land acquired for public investment, and for land valuation under the CARP. Valuations are often doubtful, incorrect, and influenced by local politics.18

Multiple taxes on land ownership and transfers. Responsibility for taxes on real property is shared between the national and local governments with local governments collecting taxes on the value of land and both levels taxing land transfers. The Bureau of Internal Revenue (BIR) collects four (4) major taxes that are related to land transfers: capital gains tax, estate tax, donors tax, and documentary stamp tax. It also collects income tax on real property, professionals and others participating in land markets as a business, value-added tax on certain real property sales, and minor amount in certificate fees.
The high tax rates in relation to registration of lands transfers discourage formal transactions (including registration of land transfers) due to high cost; provide incentives and opportunities for inappropriate practices, encourage sellers and buyers to seek non-formal ways of transacting; and put pressure on the land valuation system to reduce property assessment and accompanying taxes.

Current reform efforts There have been long-standing efforts to streamline the countrys land administrative approach. Since the 8th Congress, the Land Administration Reform Act (LARA) and related measures have been filed and refiled without much legislative success. Under the 15th Congress, House Bill Nos. 44 (Rufus B. Rodriguez and Maximo B. Rodriguez, Jr.), 408 (Juan Edgardo M. Angara), 826 (Diosdado M. Arroyo and Gloria M. Arroyo), 2970 (Salvador H. Escudero III), and 2620 (Ignacio T. Arroyo) are geared to institutionalize reforms in land administration in order to optimize and rationalize their contribution to the national goals. Specifically, the LARA proposes to create the Land Administration Authority (LAA) and place it under the Office of the President. The LAA will serve as the primary government agency responsible for land administration and public land management. It will be the sole agency that will prepare, issue, and register all land titles. Further, LARA creates the Land Adjudication Board (LAB) which will serve as a quasi-judicial body of LAA. The LAB will exercise exclusive original jurisdiction over all matters involving the implementation of laws, rules and regulations on land administration and public land management. Finally, LARA proposes to integrate with LAA the following offices: DENRs Land Management Bureau, Land Management Services, and Comprehensive Agrarian Reform Program National Secretariat and its field offices, the Land Registration Authority and Register of Deeds. 6

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Endnotes
Novel Bangsal and Ma. Leni Lebrilla , Land Administration System: Functional and Efficiency Implications, Policy Advisory No. 2008-5, Congressional Planning and Budget Department, House of Representatives, 2008. 2 Daniel Steudler, Abbas Rajabifard, and Ian P. Williamson, Evaluation of Land Administration Systems, available at www.geom.unimelb.edu.au/research/SDI_research/publications/files/SteudlerEtal2004.pdf, accessed: 3 March 2011. 3 P. Dale and JD MacLaughlin,, Land Administration Systems, Oxford University, 1999. 4 http://www.fao.org/DOCREP/005/Y4307E/y4307e05.htm download on March 2, 2011. 5 Novel Bangsal and Ma. Leni Lebrilla, Land Administration System: Functional and Efficiency Implications, Policy Advisory No. 2008-5, Congressional Planning and Budget Department, House of Representatives, 2008. 6 Ibid. 7 LAMP-DENR, Land Laws and Regulations Policy Study, Department of Environment and Natural Resources,2002 8 Ibid. 9 Novel Bangsal, and Ma. Leni Lebrilla , Ibid. 10 Ibid. 11 Ibid. 12 Anne-Marie Brits, Chris Grant, and Tony Burns, Comparative Study of Land Administration Systems, Regional Workshops on Land Policy Issues, Asia Program, 4-6 June 2002. 13 The legal framework for the institutional arrangements for land administration comprises three main elements: (1) the Administrative Code; (2) various laws and Executive decrees which include provisions determining the powers of specific agencies and/or the functions or activities they administer, and (3) other legislation applicable to land-related agencies that regulate way in which they are funded and managed, e.g, R.A. No.6656 (LAMP-DENR, Institutional Arrangement Policy Study, Department of Environment and Natural Resources, July 2002). 14 LAMP-DENR, The Land Development Process Study, Department of Environment and Natural Resources, November 2004. 15 LAMP-DENR, Institutional Arrangement Policy Study, Department of Environment and Natural Resources, July 2002. 16 Novel Bangsal and Ma. Leni Lebrilla, Land Administration System: Functional and Efficiency Implications, Policy Advisory No. 2008-5, Congressional Planning and Budget Department, House of Representatives, 2008. 17 Ibid. 18 Ibid. 19 Ibid.
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