Improving Property RightsLand Titles and Tax Records Meet in Cebu

Ateneo Center for Economic Research and Development

with support from United States Agency for International Development

and The Asia Foundation

June 2008

Presentation Outline

• Project Team

• Land administration in the Philippines

• Possible Models

• Project Objective, Description and Status

• Moving Forward

Project Team

• Ateneo Center for Economic Research and Development• Gamaliel Pascual, investment banker; RoSS

conceptualization and execution• Victor Limlingan, professor and stock broker• Atty. Erwin Tiamson, former LMB and LAMP Director• Engr. Bienvenido Cruz, Head of Surveys - LMB• DBP Data Center Inc.

– Bank – GOCC -- IT contractor

Property Rights and Economic Development

• Property rights as an “institutional driver or hindrance” of a country’s economic development

• Land represents the major asset holding and marker of wealth in the Philippines

• Major commercial transactions are premised on or rely on titled property

• Uncertainty over property ownership of & finality of legal decisions creates significant costs to the ability to do business or attract investments

• Robustness of land rights is directly correlated to economic development and per capita income

ATENEO CENTER FOR ECONOMIC RESEARCH AND DEVELOPMENT

Land Administration 1

• Two Historical Accounting Methods– Spanish Era

• All land can be privatized unless reserved by the State

• The Deeds System (Who Owns What)

– American Era• Regalian doctrine - All land is owned by the State

unless otherwise disposed of• Torrens System (What is Owned by Whom?)• American administration confirmed Spanish deeds

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Actors in the Titling Process

DENR

LRA / Register of Deeds

Licensed Geodetic EngineerSubdivision of titles

Approval of surveysCadastral Map

Land Administration 2

• Distributed workflows between DENR and LRA with weak control points

• The map and the title do not have to match nor coordinate– Map maker: DENR Land Management Bureau

• Classification of parcel• Disposition

– Title Registry: Land Registration Authority and Register of Deeds

• Origination and Transfers• The technical description does not locate the property

graphically

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Land Administration 3

• All have text-based records

• No graphical representation or reference

• No one knows– if there are overlapping titles– if the property is in the middle of the ocean or

part of EDSA or overlaps with another

Land Administration 4

• Systemic Introduction of Errors – Three Survey Standards

• Government Limitations– Salary Standardization– Lack of Budget– Inability to Absorb IT into Business Processes– Continuous degradation of record keeping

and controls

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ATENEO CENTER FOR ECONOMIC RESEARCH AND DEVELOPMENT

The Goal• Improve title search and verification and bankability• Key: Link the map and the title• Other Solutions

– Land Administration Reform Act: institutionalist approach• Integrate LRA, RoD and LMB

– LARES: database approach• BOT to establish database of all titles

• Who owns data? Who goes to jail?

• Why JPEG?

• Still no link to a map

• Data is held hostage, a permanent franchise

Ateneo Project

• “Virtual approach”– Connect the digital PDF title with a “tax map”

• Strategy– Policy analysis and recommendations

Establish a working prototype– Prepare a financially sustainable national roll-

out strategy

Model 1: Government Securities

BES• Book entry (name certificates)• Persistence of multiple/fake

certificates• Warehouse receipts• 300 persons to manage and

perform reconciliation• Metro Manila marketplace• 30 day recertification process

RoSS• Name on registry• 100% scripless• 5 persons to manage the

operations • Nationwide participation• Real-time registration• More than one trillion pesos

in dematerialized form

ATENEO CENTER FOR ECONOMIC RESEARCH AND DEVELOPMENT

Financial assets in paper form totally transformed into electronic form and accepted by banks, insurance companies, and retail

Model 2: ATM Networks

• Paper and electronic records happily exist

• Paper currency has not been eliminated but people are just as happy to view ATM bank balance as definitive proof of one’s savings or wealth

• Everyone is secure in the knowledge that money is not being duplicated just because ATMs were introduced

ATENEO CENTER FOR ECONOMIC RESEARCH AND DEVELOPMENT

Project Partners

• Tripartite MoA – Ateneo– Registry of Deeds of City of Cebu (national)– Government of the City of Cebu (local)

• Use a common base map for metro Cebu parcels and titles

Cebu City LGU

• “Early adopter” of GIS• Main effort to use GIS

initiated in 1992 under USAID project for Urban Shelter Program

• Real Property Tax Information System and Business Permits

Cebu City GIS• The value of graphical representation

– Out of 76,000 parcels enrolled• 25,000 parcels had no tax declaration• 22,000 had duplicate tax declarations• 18,000 tax declarations could not be connected to a parcel

– Discrepancies were to be resolved by the city assessor– City assessor was taken to court

• Digital Map– Approximations; more than good enough for fiscal purposes

• Impact– Increased revenue generation by almost 300% in the first year– Sued own City Assessor for changes to Tax Declarations as

detected through the RPTIS– One of the first Galing Pook Awardees

Cebu City GIS

• Orthographic map– Initiated for actual land use mapping– Then for projects and requests monitoring

• Now over 200 layers• Other applications:

– Monitoring of Dengue Cases– eBlotter– Inventory of business establishments– Maintenance of Parcel files

Cebu City Register of Deeds

• Paper-based and typewriter

• Limited budget; mostly personnel

• Systematic Degradation of Checks and Balances

• Salary Standardization

• Manual handling of 200k + titles

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Tax Map + Title + Tax Payment = Increased Certainty

CITY OF CEBU CITY OF CEBU REGISTER OF DEEDS

Search Index: Owner / Lot

No. / Parcel No

Real Estate Tax Payments Database

Scanned Images Database

Banks and other subscribers:Online Search & Retrieval

Philippine E-commerce FundamentalsPhilippine E-commerce Fundamentals

• Enabling Law (RA 8279)Enabling Law (RA 8279)• Implementing Rules and RegulationsImplementing Rules and Regulations• Supreme Court Rules on Electronic EvidenceSupreme Court Rules on Electronic Evidence

SC Rules of Evidence

RA 8279 Signing

Drafting RA 8279

ATENEO CENTER FOR ECONOMIC RESEARCH AND DEVELOPMENT

Project Activities

Outcome: RoD to certifying the contents of the databaseCompliant with Ecommerce Law and SC Rules of Electronic Evidence

OTC certified true copies of titles = downloaded authenticated scanned copies

• Scan entire Register of Deeds vault

• Developed methodology to match title to Cebu “tax map” parcels

• Developed search and query application

A NEW VERIFICATION MODEL

Challenges and Opportunities

• Government Has No Budget

• Must Be Auditable by the BSP if Banks Will Rely on the Information

• Establishment of a Clearinghouse Entity

• Users can trace trail of “tax payments” and titles backwards

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Spatial Information Delivers Reduces Risk

ATENEO CENTER FOR ECONOMIC RESEARCH AND DEVELOPMENT

Next Steps

• Develop Text and Spatial Search Engine• Regulatory Support

– Presentation to BSP and IC

• Structure a Portal Business Structure (Global Development Alliance) for national roll-out– Banks and Insurance Cos.– Ateneo– USAID and TAF

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Portal Business Structure• Real Property Information Portal

– Sustained by subscription fees– Ownership not settled

• Banks– Lower risks– Faster verification– Multiple tax payments may be disputed properly– Able to trace title and tax payment history

• BSP and IC– New verification system gives better quality collateral– Policy Analysis: Determine if new risk assessment

model is warranted for certified online verification

Portal Business Structure 2

• Local Governments– Higher revenue and notification of division of

property

• Register of Deeds– RoD has no budget nor 24/7 capability– Fees support IT Maintenance– Fees support continuing HR training

Spatial Information Is A New Verification Asset

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Textual Info on Tax

Payments

Textual Info on TitlesHopefully they coincide

Spatial Information Is A New Verification Asset (Overlapping Titles)

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Spatial Information Is A New Verification Asset (Multiple Tax Payments)

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Potential Impact

• Model for inter-agency collaboration

• Reduction in “Doing Business Indicators” for property rights– GIS revamps permitting process (ie. Business

location, zoning, environmental clearance, land use, etc.)

• Model for introducing IT into government business processes on a sustainable and expansionist basis

Issues Moving Forward

• Current portal only provides information

• A “Reconciliation Roadmap”– Only when we can reconcile discrepancies

and inaccuracies can we claim that property rights have been secured…

• Beyond Property Rights– Tax Payments will follow when businesses

shift their preference to online verification

Thank you