Philippines - Land Administration and Management Project

Report No. PID8280 Project Name Philippines-Land Administration and (@) Management (LIL) Region East Asia and Pacific Region Sector Natural Resources Management Project ID PHPE66069 Borrower(s) GOVT. OF THE PHILIPPINES Implementing Agency Address DEPT. OF ENVIRONMENT AND NATURAL RESOURCES DENR Visayas Ave, Dilliman, Quezon City, 1100, the Philippines Contact Person: Ms. Mylene Albano, Executive Director Tel: 63 2 925 2328 Fax: 63 2 925 2328 Email: lamp@denr.gov.ph Environment Category B Date PID Prepared August 24, 2000 Projected Appraisal Date March 13, 2000 Projected Board Date October 17, 2000 1. Country and Sector Background An Informal Policy Note (IPN) on Land Management and Administration, prepared jointly by the Government and the Bank, highlighted the following sector issues: Weak and Inefficient Land Administration System. There are a number of issues identified in the IPN which constrain the efficiency and effectiveness of the land administration system. First, there are multiple agencies involved in land administration, with no overall institutional mechanism for resolving outstanding issues. As a result, many issues remain unresolved for a long time. Second, the major land administration laws are outdated, and some do not comply with recent land use legislation. Third, not all privately claimed alienable and disposable (A&D) land is titled. Fourth, existing land record management systems are inefficient, and there are limited inventories of land records. Fifth, a large proportion of the records has been destroyed by war, theft, fire and water damage, or simply misplaced in the frequent transfer of records. Many of the remaining records are in exceedingly fragile condition and some have been illegally altered. Sixth, there is no complete set of cadastral maps that show titled and untitled properties on A&D land, and information in the Registry of Deeds (RODs) cannot be searched by parcel or cadastral map number. Thus, the titling system does not support quality control; consequently, multiple titles, overlap and gap titles are not easily detected. Seventh, land registry is not easily accessible and high transaction costs, discourage both, registration and investment. Finally, all of these problems have eroded public confidence and trust in the titling and registration system as a whole. Under the current land administration system, it takes between six months to several years to obtain original titles and between several weeks to a few months to  register subsequent land transactions. The percentage of untitled land is high (approximately 1/3 of parcels in rural areas). Land grabbing is widely practiced among those who can afford to pay the expenses for first time registration. These inefficiencies, combined with high land taxes, have produced informal land markets, particularly in poor communities, resulting in long-term tenure insecurity and decreased government revenues from land-related taxes. Rigid and Outdated Land Management and Administration Policies. Fragmented responsibilities for land management and administration among several government agencies without appropriate mechanisms for coordination have resulted in ineffective land management and administration. A key issue in land policy has been the land classification system, which is rigid and unresponsive to the evolving needs of agricultural and urban development; furthermore, it has not been effective in promoting sound management of natural resources. Several agrarian, urban, community development, and protected land programs have been imposed on this fairly static land classification system by different government agencies in recent years, leading to problems with overlapping mandates and multiple land management and administrative processes. This has added to the difficulty of changing the classification system, to respond to the emerging needs for economic growth and poverty reduction.Multiple and Inconsistent Land Valuation Systems Used in Various Government Agencies. In the different government agencies, several systems and methodologies for the valuation of real properties operate, and are utilized for different purposes, including real property taxation, and compensation for land, acquired for public investment and for valuation under the Comprehensive Agrarian Reform Program (CARP). The multiplicity of systems and methods has often produced doubtful valuations whose contestation in court has, at times, caused long delays in the implementation of government programs. Doubtful and contested land valuations have also had an adverse impact on the efficiency of land markets and land administration. Below market valuation of land prevents the efficient allocation of lands to their best use and leads to a relatively low tax burden which encourages land speculation and undermines the generation of significant revenues from land ownership. The absence of national standards and methods of valuation in accordance with international standards and practice provide a loophole to the overvaluation of real property and underestimation of a property-related lending risk. This undermines the integrity of financial transactions and the stability of the financial system.Inefficient Land Markets. An inefficient and ineffective land administration system combined with fragmentation of responsibilities of land management and administration and inconsistent and outdated land policies have resulted in inefficient land markets. In the urban land market, there is unmet demand for housing, commercial and industrial land because urban land supply is far short of demand. In addition, difficulties surrounding the conversion of agricultural lands to non-agricultural use, whether for housing, commercial or industrial purposes, have constricted the supply of urban land. This shortage of urban land has led to rising urban land prices that have made it unaffordable for the majority of the population. The high cost of urban land has driven many people to establish informal settlements on public and private lands. The Comprehensive Agrarian Reform Program (CARP), which is achieving some success in promoting social equity through the transfer of lands to landless farmers has, nonetheless, had an adverse effect on formal rural land markets. The CARP law has restrictions on the buying and selling of agricultural land under the program. In -2 -  addition, many untitled privately claimed alienable and disposable (A&D) lands exist outside the formal rural land market. This phenomenon, and the CARP law restrictions, are the main causes of stagnation in the formal rural land market. Government Strategy. The Government Strategy on land administration and management, which was approved by the National Economic and Development Authority (NEDA) Board sets out the Government direction for improving the security of land tenure, improving service delivery of land administration, eliminating fake and multiple titles, and promoting an efficient land market. The Strategy outlines the steps the Government plans to achieve the desired objectives. The Strategy recognizes the long-term nature of this program and highlights a focussed approach on the first step, undertaken in a 3-year project (this project) to study and test alternative techniques with regards to policy, institutional and technical methods and make recommendations to the Government for decisions and actions before the initiation of the long-term program. The commitment of the Government to implement this Strategy was shown by the fast approval by the Investment Coordination Committee (ICC) Board of the proposed project. Further, the President of the Republic of the Philippines established the Inter-agency Coordinating Committee (IACC) by Executive Order No. 129 to prepare and coordinate the implementation of the Land Administration and Management Program. The IACC is chaired by the Department of Environment and Natural Resources (DENR), co-chaired by the Department of Justice (DoJ) and includes the membership of 13 departments and agencies directly involved in the land administration and management. The IACC reports directly to the President of the Republic of the Philippines. 2. Objectives The Land Administration and Management Program (LAM Program)The LAM Program is a long-term commitment (could be 15-20 year program) by the Government of the Philippines. The overall goal of the program is to alleviate poverty and enhance economic growth by improving the security of land tenure and fostering efficient land markets in rural and urban areas, through the development of an efficient system of land titling and administration, which is based on clear, transparent, coherent and consistent policies and laws, and is supported by an appropriate institutional structure.The long-term program would achieve:A clear, transparent, coherent and consistent set of land administration policies and laws;Accelerated programs that would formally recognize the rights of eligible land holders and facilitate the recording of these rights in a strengthened land administration system;An efficient land administration system operating throughout the Philippines in accordance with government policy, and responsive to the needs of the people, supported by a sustainable financing mechanism;An effective and transparent land valuation system, in line with internationally accepted standards, that serves the needs of all levels of government and the private sector; andA well functioning land market operating in both urban and rural areas.The Land Administration and Management Project (LAM Project)The project would be a first step towards the implementation of a long-term land administration and management program. The development objectives of the project is to assess the viability of the Land Administration and Management Program and to formalize the institutional arrangements needed to support its development, by testing alternative approaches to accelerated programs designed to improve the protection of rights to land, eliminate fake titles, and introduce a framework for an equitable systems - 3 -  of land valuation. . This would be done through: (i) policy studies, analysis, and key decisions and actions of the Government of the Philippines (GOP); (ii) prototypes to test and implement interim institutional arrangements and adjusted processes of work flow to develop an efficient land titling and administration system in the prototype areas; (iii) evaluation of the prototypes; and (iv) drafting of legal instruments to formalize the institutional arrangements. 3. Rationale for Bank's Involvement The Bank financed several land titling and administration projects in East Asia region. Almost all of these projects are co-financed by AusAID. The Experience in these projects as well as other Bank supported projects in other parts of the world shows that the issues of land management and administration are often complex, politically charged, requiring high and sustained commitment to address institutional and policy reform. The Bank will facilitate the exchange of experiences among those countries, provide policy and technical advise on the different aspects of the program, facilitate the coordination between the different agencies, and provide funds to undertake the implementation of the program. 4. Description 1. Land Policy Component (US$ 0.50 million). The component would study and make recommendations on key policy areas of land administration, including: (i) land development process; (ii) land registration finance and fee structure; (iii) real property valuation framework; (iv) forest boundary demarcation and operational procedures policy study; (v) fragmented land laws and regulations framework; and (vi) institutional arrangements for land administration.2. Prototype Projects (US$ 4.5 million). The component would have two prototype projects: Land Titling and Administration prototype and Record Management prototype. The Land Titling and Administration prototype (US$ 3.25 million) will be implemented in six municipalities in Leyte province and will focus on accelerating the issuance of land titles using the existing administrative and judicial proceedings, enhancing service delivery of land registration, and improving coordination between DENR and DAR in the implementation of CARP operations. The land record prototype (US$ 1.35 Million) will be implemented in Quezon City and will focus on record verification and reconstitution, creation of cadastral map base in the ROD, elimination of fake and duplicate titles (in the prototype area), and linkage to the LRA-sponsored computerization project, Build, Own and Operate (BOO) and other government land related comnputerization projects. 3. Institutional Development (US$ 5.0 million). The component would provide support to the Project Management Office and the two Project Implementation Offices of the two prototype projects. This component will include: technical assistance (TA), training and overseas study tours, monitoring and evaluation including two rounds of social assessment and one development impact study, and the purchase of furniture, office equipment, and vehicles. The Australian Agency for International Development (AusAID) would finance (subject to AusAIDs management approval) the TA, international training and overseas study tours. 4. Phase II preparation (US$ 0.3 million). The component would include the design of the long-term program of the Land Administration and Management including one round of social assessment. 5. Financing -4-  Total ( US$m) GOVERNMENT 1.36 IBRD 4.74 AUSTRALIAN AGENCY FOR INTERNATIONAL DEVELOPMENT 4.2 Total Project Cost 10.3 6. Implementation The successful implementation of the Project would require the coordinated inputs from several key agencies particularly the Land Management Bureau (LMB) and the Land Management Service (LMS) in DENR, the Land Registration Authority (LRA) and the Registries of Deeds (RODs) in DOJ, the Department of Agrarian Reform (DAR) and their offices in the field, and the Bureau of Local Government Finance (BLGF) and the Bureau of Internal Revenue (BIR) of the Department of Finance (DOF). The framework to support this coordinated effort has already started, with the formation of an Inter-Agency Coordinating Committee (IACC) and a Technical Working Group (TWG). DENR has played a key role in promoting the Program, and therefore, would be the lead agency for the preparation and implementation of the project. DENR would collaborate closely with other key agencies like the LRA/DOJ, DAR, and BLGF/DOF during project implementation. Similarly, the role and active support of the courts would have to be elicited given their critical importance in the entire land administration process.For this project, DENR will take the lead in project implementation under the overall guidance of the IACC. The lead agency of the long-term program will be determined during this project as part of the institutional arrangement study. The Project Management Office (PMO) would be headed by an Executive Director (who is already appointed) and two Deputy Directors, one from the Land Management Bureau (LMB) of DENR, the other from LRA. The PMO would be staffed by contracted and detailed qualified staff from the three main agencies, DENR, LRA, DAR. The PMO Executive Director will report to the Inter-Agency Coordination Committee (IACC) for policy and technical guidance and to DENR for administrative and financial matters. There will be two Prototype Implementation Offices (PIOs) to be responsible for the actual implementation of the two prototype projects. The PIO of the Land Titling and Administration Prototype (PI01) will be located in Palo Municipality of Leyte province. The PI01 would be headed by a senior DENR official and staffed by detailed and contracted qualified staff from ROD, LMS, and Municipal Agrarian Reform Offices (MARO). The PIO for the Land Records prototype (PI02) will be located in Quezon City Register of Deeds and be headed by a senior LRA official. PI02 will be staffed by detailed and contracted qualified staff from DENR-NCR (National Capital Region), ROD, and the LGU. The two PIOs will report to the PMO for both technical and administrative matters. In addition, a local advisory committee will be established in the locality of the two prototype areas to monitor the implementation of the prototype projects and provide advice to the PIOs. The local advisory committee will be headed by the chief executive of the local government in the prototype area and will include representatives from regional and local government agencies, NGOs and POs. While the PMO will coordinate the Studies' component, the line agencies will be responsible for the substance of the studies, thus serving in a counterpart capacity. The counterpart for the Property Valuation Study and Finance and Fee Structure Study will be DOF (with active participation of BLGF/BIR); Land Development Process Study is NEDA; Institutional Structure for Land Administration will be the Department of Budget and Management - 5 -  (DBM), Fragmented Land Laws and Regulations Study will be DOJ; and Demarcation of Forest Boundaries Policy and Operational Procedures Study will be DENR . The lead agency will make available at least two senior staff to work with the study team during the entire study period.To clarify the roles and responsibilities of the IACC, PMO, PIOs and the Local Advisory Committee, the PMO will prepare Memoranda of Agreements (MOAs) at the central and local levels, to provide a framework for agreements among the different agencies. these will be prepared and signed prior to Bank approval. The detailed design of the two prototypes spells out the detailed implementation arrangements for the prototype activities. 7. Sustainability The project will help the government to assess the viability of the Land Administration and Management Program and to formalize the institutional arrangements needed to support its development, by testing alternative approaches to accelerated programs designed to improve the protection of rights to land, eliminate fake titles, and introduce a framework for an equitable systems of land valuation. Sustainability of the achievements under this project will entirely depend on the success of the government to achieve the project objectives and the political commitment to build on the achievements to expand the program to cover the whole country. 8. Lessons learned from past operations in the country/sector The Bank has an active portfolio in the Philippines. Though, this is the first project supporting the reform of land administration and management system. The recent CPPR review mission agreed with the government to a readiness for implementation filter. This project is design incorporating this filter. The World Bank experience with supporting land titling and administration worldwide has been mixed, with success primarily recorded in Thailand projects with less success recorded in most of other projects. A new generations have been supported since the 90s with main focus on policy and institutional reform. While there is currently no formal review of the success of these projects, first experience shows positive experiences. The Bank/AusAID relations in the financing of the East Asian land administration projects (Thailand, Laos, Indonesia and now the Philippines) is very strong. 9. Program of Targeted Intervention (PTI) N 10. Environment Aspects (including any public consultation) Issues The impact of the proposed project on the environment would be neutral in the short and medium term. Experience in the Bank-supported land administration projects in Thailand and the Brazilian North East Region Land Tenure Improvement Project indicates no significant impact on the environment. In the long term though, transparent and efficient land administration systems and coherent and transparent land management policies would have a positive impact on the environment in a number of aspects. Improved land security provides incentives to invest in improved long-term land use (e.g. soil conservation in rural areas, and investment in environmental infrastructure such as kitchen and bathrooms in urban areas). Project outputs including spatial data such as aerial photographs and cadastral maps would be useful inputs into environmental management. As this project is supported by a LIL and has a short-term duration of 3 years, no separate environmental assessment report has been prepared. All disclosure - 6-  requirements have been met. The project would support a study to develop a national policy and operational procedures for demarcation of forest boundaries taking into account the legal rights of forest occupants, and the indigenous peoples and their access to forest resources are protected. Under this project, there are no indigenous peoples affected and therefore, OD 4.30 is not applied. The policy and operational procedures will be reviewed during the preparation of the follow-up project, and if found satisfactory to the Bank, the follow-up project could support the actual demarcation of forest boundaries. 11. Contact Point: Task Manager Wael Zakout The World Bank 1818 H Street, NW Washington D.C. 20433 Telephone: (202) 473 3537 Fax: (202) 477 2733 12. For information on other project related documents contact: The InfoShop The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 458-5454 Fax: (202) 522-1500 Web: http:// www.worldbank.org/infoshop Note: This is information on an evolving project. Certain components may not be necessarily included in the final project. This PID processed by the InfoShop during the week ending August 25, 2000 - 7 -