Making pesos and sense of land in the Philippines
A prior blog put forth the idea of getting rid of the current land use and titling laws and replacing them with new laws properly attuned to the digital age. The idea is to free up the economic value of land that is properly zoned and titled:
- Make land easy to buy and sell
- Get rid of informal titles
- End family squabbles
- Get the proper taxes levied and collected (add revenue)
- Perfect land as security for loans
- Economic benefits of credit to leverage income forward
- Reduce inefficiency of title processing (cut costs)
- End corruption
After discussion, the project seems to have three major initiatives that fit together to assure a quality program:
- National Land Use Act to provide the “strategic” or policy framework
- Digital titling and record keeping to commoditize land
- National ID to anchor record-keeping and reduce corruption
The following follow-up information has been gathered on each of the component parts.
National Land Use Act
A National Land Use bill was completed in late 2011 and certified as urgent by President Aquino in early 2013 [Aquino certifies National Land Use Act as urgent; Rappler]. However, objections to the bill killed it, the opposition mainly coming from real estate developers who object to declaring lands (agricultural) off limits for residential and commercial development. These objections were registered in Senate action to amend the bill which was approved on second reading. The form of the objections was a request “for further study” put forth by senators Enrile and Marcos. The bill was dropped from any further consideration.
- Here is the draft bill (pdf file): AN ACT INSTITUTING A NATIONAL LAND USE POLICY, PROVIDING THE IMPLEMENTING MECHANISMS THEREFOR, AND FOR OTHER PURPOSES. Lets just call it SB3091.
- If you prefer easier reading, here is a policy brief on it: Breaking New Ground: Enacting a National Land Use Policy
- Here is House Speaker Belmonte’s appeal for senatorial action; he lists the advantages of the bill: House Speaker urges Senate to act on National Land Land Use Act
- Here are the kinds of arguments (represented by Senator Marcos) that shot it down: The UP Forum Roundtable Discussion: The National Land Use Act
- Here is the record of the Senate discussion (Feb 5, 2013) which resulted in ending any further consideration: Senate Journal: Reconsideration of the Approval of Senate Bill No. 3091 on Second Reading See page 1739ff.
It is clear that real estate developers oppose this bill. They are a powerful force in Philippine politics, funding campaigns and advocating for their cause. Their primary objection seems to be the blocking of further development in agricultural zones.
Land use today is managed by The Housing and Land Use Regulatory Board (HLURB). Here are some instructional pages from HLURB’s web site:
- Laws and Issuances on Policies (assorted regulations and guidelines.) It is a collection of rules covering everything from condominiums to cemeteries. The page mainly stands as a reference source for LGUs and developers who are working on specific land uses.
- Laws and Issuances on Land Use Planning. Three documents are referenced here, orders or memoranda issued by President Ramos. That was a long time ago when global warming was but an idea and the population was considerably less than today.
- Seven booklets for Local Government Units (LGUs) are available at the web page for LGUs. Here is the planning publication: Guidebook Volume I: The Planning Process. The document is very orderly and thorough. Exhausting, actually, and the main flaw is that all initiatives are left to the LGUs with no direct oversight or audit or quality control on follow-through work. So land use and preservation across the nation is very undisciplined.
I have two different reactions to the HLURB materials: (1) land use is impossibly complex and unmanageable; walk away, and (2) a fully integrated national law is needed, and a part of that law ought to be the power to fine, sanction or remove LGU officials who do not follow regulations. That suggests an audit function is needed. Proposed SB3091 does this (Sec 61ff).
The Philippines is now embarked on a digital titling program under the Land Registration Authority (LRA). The LRA is subordinate to the Department of Justice, an alignment that suggests its origination had to do with protecting people’s interests and not generating economic value from land. It would be better to assign the function to the Office of the President, where it can reside, like the Securities and Exchange Commission, a body active in developing Philippine financial infrastructure, resources and well-being.
The first initiative to move to electronic titling began in 2009 as an adjunct to the nation’s E-Commerce Law passed in 2004.
- Here are the LRA’s Implementing Guidelines from 2009 (pdf file).
- Here is the current program and benefits, as described by IL & FS Technologies Limited, the service vendor providing the digital platform (dated around 2011, I believe):
- Here’s a 2012 incident during the Corona Trial when properties owned by the Chief Justice could not be accurately searched because there is no “search by name” functionality: What’s with the LRA database?; Rappler
- This 2014 article reports a requested inquiry by Rep. Al Francis C. Bichara due to possible corrupt and fraudulent usage of the electronic platform: House leader seeks inquiry into erroneous land titles issued by the Land Registration Authority (LRA). The report indicates the LRA can’t keep pace with “microfilming” requirements, and a non-tech observer is inclined to wonder why microfilming is even used in this digital age.
- The LRA web site has various resources of interest that can be accessed from the agency’s home and subordinate pages. Here are a few suggested readings:
- New Services (including e-Title) and Upcoming Services (including the Lot Location mapping service). When you click through on these service, you don’t get much information. Discovery of the status and problems may be difficult. Certainly the IDEA is right. It is consistent with our principle of getting more value out of land by making it a commodity.
- Online Tracking, a capability to follow titles through the pipeline of approval. This requires a live case in order to enter the system . . . by number. Again, the idea is right. The execution? Hard to say.
The advantage of a National ID is ease of linking data to an authoritative person, thus speeding transactions, allowing systems to talk to one another, and protecting against fraud.
The main fear is that government would become “Big Brother”, possessing so much information that individuals would become faceless pawns without rights of privacy.
Contributor Karl Garcia has observed that the voters ID database would be an excellent starting point, as that database contains bio-metrics that permit authoritative identification (electronic fingerprinting, for example).
This is an aspect of the project that I would defer to another interested party to define the bones and put some meat on the issues surrounding a National ID. Two questions that arise:
- Does the Voters Registration data set match that ordinarily found in established National ID programs?
- If not, does it contain the flexibility to add descriptors?
I leave the National ID issue to others to wrestle with.
Digital titling is perplexing. Clearly there is an understanding of the value of digital titling, but that titling is being carried out within the framework of the existing rats nest of laws and cultural mores (informal titles), with no great push to bring order to land ownership. The implementation of the project to transfer to digital titling seems to be struggling and haphazard. Not comprehensive. I’d put this on the table of the incoming administration to do a “policy and quality audit” of the digital land titling project and determine how better to move forward to put some order, discipline and efficiency to land ownership.
The most likely area where we could do more work here is in the land use arena. It would be helpful if interested Society of Honor members reviewed SB3091 to assess its value, much as we did with the BBL. What are the strengths and vulnerabilities? Where does it seem make good strides toward order and preservation, and where does it fall short?
It appears the House is able to pass legislation, but not the Senate. The challenge therefore is how to resolve the concerns of real estate developers. Furthermore, following are the Senate committees that would seem to have an interest in Land Use legislation. The chairpersons would have to see the proposed legislation as forward-looking and protective of their interests.
- Agrarian Reform: Sen. Gregorio B. Honasan II
- Agriculture and Food: Sen. Cynthia Villar
- Climate Change: Sen. Loren B. Legarda
- Economic Affairs: Sen. Joseph Victor G. Ejercito
- Environment and Natural Resources: Sen. Francis “Chiz” G. Escudero
- Local Government: Sen. Ferdinand R. Marcos, Jr.
- Science and Technology: Sen. Ralph G. Recto
- Urban Planning, Housing and Resettlement: Sen. Joseph Victor G. Ejercito
What we would want to do, I think, is figure out how to speak to senators so that they can speak with their constituents who have objection to the National Land Use Act. This involves two steps:
- Finding out what, exactly, the objections are.
- Providing senators with a “value formula” that would be built into laws to help assure there are no penalties paid by businesses when the National Land Use Law is implemented.
This concept is very rough in my head and I don’t know if something similar has been articulated or employed elsewhere. That investigation is yet to come.
I assume the main sticking point on the NLUA is the drawing of lines that preserve agricultural (or forestry lands) lands.
- Fixing agriculture lands penalizes farmers who might want to sell land for higher valued use, like commercial or residential properties. If they are forced into agricultural values forever, they lose big.
- Fixing agricultural lands penalizes developers because they are forced to buy high-priced urban properties. So their cost/revenue equation gets dinged. And, potentially, their profits.
The solution I think would be found in identifying a way to calculate “social rights” that attach to property. Social rights are like air rights, a value other than the property itself. In our case, they would be a calculation of the difference between fixed and unfixed valuations. For example, in agricultural zones, they would be the difference between agricultural use value and residential or commercial use value. Within urban zones, they would be the difference between “old use” and “new use” values. The National Government would agree to subsidize the difference so that specific persons or businesses don’t have to carry the weight of the Nation’s social well-being. Only one upgrade would be allowed for any property. Thereafter, the property would be valued at the higher (agricultural) or lower (urban) rate, and this would be reflected in the title history.
Citizens would pick up the subsidy, paid for in taxes. The benefit they receive is preservation of their food source (agricultural land) or upgrading or higher valued use of properties (urban).
This requires a lot more thinking, and I will pursue that as the next step of this project. But somehow, the discussion with land developers has to get down to valuations. That is, money.
All and any inputs are welcome in this open-sourced exploration.