Wednesday, August 15, 2007

How reliable is our land title system?


Even as we agree with Mr. Chan that it makes no sense for us to maintain the prohibition for aliens to own land here, our bigger problem is our land titling system. The system is broken… terribly broken. And because it is broken, bad elements of society have taken advantage of it.

The Philippine Star

Some months ago, Carlos Chan, a Filipino-Chinese taipan in China, invited me, Tony Lopez of BizNews Asia and Lito Gagni of Business Mirror to lunch. We were wondering what he wanted to talk to us about. As it turned out, Mr. Chan was tirelessly promoting the Philippines as an investment opportunity in China. And he always faced the problem of our constitutional prohibition for aliens to own land here.

Apparently, being able to own land is an important business consideration for would-be investors from China. We told Mr. Chan that there is no going around this provision other than cha cha or as they are doing now, the condominium concept. It is also possible for PEZA, Subic or Clark to offer long term leases that would be as good as owning land. This should be alright for Chinese investors because after all, no one privately owns land in China. They only get use of the land for a period of time.

Even as we agree with Mr. Chan that it makes no sense for us to maintain the prohibition for aliens to own land here, our bigger problem is our land titling system. The system is broken… terribly broken. And because it is broken, bad elements of society have taken advantage of it.

Between the criminal syndicates and their cohorts within government’s land titling bureaucracy, one can never be sure if the land title one is being presented is genuine. Or even if it is genuine now, one cannot discount the possibility that someone will be able to get title to one’s property through a perfectly orchestrated fraud that is also all legal.

One case that must be worrying land owners everywhere is the case of an old family estate that had held vast tracks of land in Metro Manila since the 1920s. The family had been dutifully paying real estate taxes for decades when all of a sudden they woke up one fine morning to find out someone else is not only claiming the property but already has title to it. Worse, the judicial system apparently upheld the new claimant.

The reliability of our land titling system is one important consideration that investors would consider before putting in large sums of risk capital in this country. Even if foreign investors can’t own the property, they at least want to make sure that the local owner with whom they are signing a long term lease is protected by our system of land registration.

It does not help that local registers of deeds do not keep original copies of titles in fire proof vaults. Many of us had that horrifying experience of having to go through the bureaucracy and the judicial system to revalidate our titles after the Quezon City Hall fire during the time of former Mayor Jun Simon. With the recent Muntinlupa town hall fire, a new set of victims will go through the same horrors.

Actually, even government is also victimized by the lack of system. There is this report that the City Hall of Naga as well as other government agencies are now being ejected because the heirs of the man who donated the property to government is now claiming the property back. Apparently, the donation has not been perfected with the land actually titled in the name of the local government unit. I understand that DepEd is also facing the same problems with the sites of many of our public schools, where the heirs are claiming the donated school sites back. This is a shameful mess.

Sen. Edgardo Angara is now proposing to reform the country’s “messy and costly” land titling and administration system that, Sen. Angara warned, has grievously harmed the national economy and left 60 percent of all real-estate properties without legal titles. Angara’s solution is the creation of a new government agency to undertake “all land administration and titling matters, with a mandate to put in place the administrative and structural reforms needed to solve the mess in the country’s land titling work.”

I am usually cynical about putting hope in administrative changes but I must admit that perhaps Angara is right in proposing the Land Administration Reform Act (LARA) of 2007, as the first step in clearing up our land titling mess. But if this agency will be managed the way the current agencies are being managed, then it will be an exercise in futility.

According to Angara, the bureaucratic overlap in land administration and titling not only failed to issue legal titles to 60 percent of real-estate properties in the country, but has been identified as the main cause of the proliferation of fake land titles and inaccurate and incomplete land records. “A monstrous overlap from too many agencies involved in land administration and registration, has been dragging down the real-estate sector,” he said.

Angara also pointed out a World Bank report that found out a Philippine land title, at $2,000, is one of the costliest in the world. The processing period is also one of the longest in the world, Angara said.

The mess also frustrated government efforts to craft an equitable real property valuation and taxation system. Angara correctly pointed out that the drag of the messy land administration and titling system on the national economy has resulted in the real-estate taxes forgone in the year 2000 alone at $132.9 million. Real-estate revenues have been on the decline since 1995. “These lost earnings and opportunities could have gone to vital government programs,” he added.

The proposed LARA, Angara said, shall carry out surveying, mapping, charting, classification and disposition of all alienable lands and patrimonial lands. It shall also issue titles and take charge of land resource information and management. Angara argued that no reform and streamlining can take place in the current land titling and administration work unless a single agency with a powerful mandate is created.

I agree with the sentiments of Sen. Angara. But I still think that unless the bureaucracy appointed to carry out the mandate is honest, competent and supported with the proper logistics, even this new agency will fail to reform our land registration system. And that’s bad news for our economy and our society.

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