Selling Land Under CARP or CLOA in the Philippines: A Comprehensive Legal Overview

The Comprehensive Agrarian Reform Program (CARP) fundamentally reshaped the Philippine agricultural sector upon its enactment through Republic Act No. 6657 (the “Comprehensive Agrarian Reform Law of 1988”), as amended primarily by Republic Act No. 9700. One of the instruments of CARP’s land distribution component is the issuance of Certificates of Land Ownership Award (CLOA). CLOAs are proof of ownership granted to agrarian reform beneficiaries (ARBs), generally farmers or farmworkers who cultivate the land.

However, CLOA land is subject to specific conditions and limitations, especially with regard to the sale, transfer, or disposition of such properties. The rules safeguarding these lands are designed to ensure that the agrarian reform objectives—improving the lives of small farmers and preventing the undue concentration of land—remain upheld.

Below is a comprehensive discussion of the legal framework, restrictions, procedures, and implications of selling land under CARP or land covered by a CLOA in the Philippines.

1. Understanding CARP and CLOA

1.1. The Comprehensive Agrarian Reform Program (CARP)

Legal Basis
- Enacted under Republic Act (R.A.) No. 6657, also known as the Comprehensive Agrarian Reform Law (CARL), signed into law on 10 June 1988.
- The law’s principal aim is the equitable distribution of agricultural lands to landless farmers and farmworkers to promote social justice and industrialization in the countryside.
Key Amendments
- R.A. No. 9700, known as the CARP Extension with Reforms (CARPER), extended the implementation period of CARP and introduced additional measures to ensure the proper distribution of remaining agricultural lands.

1.2. Certificate of Land Ownership Award (CLOA)

Definition
- A CLOA is a document issued by the Department of Agrarian Reform (DAR) to signify ownership and award of agricultural land to an agrarian reform beneficiary (ARB).
- The CLOA embodies certain conditions and restrictions intended to maintain the integrity of agrarian-reform-awarded land.
Rights and Responsibilities of CLOA Holders
- Holders of CLOAs are granted ownership subject to compliance with terms that include continuous cultivation, payment of amortizations (if applicable), and strict adherence to DAR regulations.
- CLOA lands are typically covered by a 10-year prohibition on transfers, among other obligations.

2. Legal Restrictions on Selling or Transferring CLOA Lands

2.1. Prohibition Period Under the Law

Ten-Year Prohibition (Section 27, R.A. No. 6657)
- Agrarian reform beneficiaries are generally prohibited from transferring or selling their awarded lands for a period of ten (10) years from the issuance of the CLOA.
- The logic behind this restriction is to discourage the premature sale or transfer of land that was redistributed under social justice objectives.
Exceptions
- The DAR may authorize certain exceptions on justifiable grounds (e.g., force majeure, certain hereditary successions, or other cases specified by the DAR’s regulations).

2.2. DAR Clearance Requirement

DAR as Supervisory Authority
- Any transfer (even beyond the 10-year period) is generally subject to the approval or clearance by the DAR, as stated in DAR Administrative Orders and guidelines.
- This ensures that transfers do not circumvent agrarian reform objectives.
Maintaining Agricultural Use
- If the land remains agricultural in nature, compliance with ongoing agrarian reform stipulations must be certified by the DAR.
- Conversion to non-agricultural uses typically requires DAR Conversion Clearance, which involves a separate process and is governed by DAR Administrative Orders dealing with land-use conversion.

2.3. Heirs and Succession

Transmission to Heirs
- The transfer restrictions generally do not bar legal succession in case of the death of an agrarian reform beneficiary.
- The heirs become responsible for satisfying the obligations attached to the awarded land, such as continued cultivation and repayment of amortizations to the Land Bank of the Philippines (if applicable).
Partition Among Heirs
- While legal heirs inherit the land, they must still adhere to DAR regulations on partition and usage.
- If partition or distribution among heirs is necessary, approval from DAR might be required to formalize the partition consistent with agrarian reform policies.

3. Conditions for Selling CLOA Land After the Prohibition

After the 10-year prohibition from the issuance of the CLOA:

DAR Clearance
- Even beyond the 10-year period, a DAR clearance must be obtained.
- This step ensures compliance with agrarian laws, such as the requirement that prospective buyers are themselves qualified to own agricultural land if the property remains agricultural.
Fully Paid Amortizations
- If the land was acquired by the beneficiary through the Land Bank of the Philippines, all land amortizations must be fully paid prior to any valid transfer. The DAR can verify the status of these payments.
- Failure to settle amortizations may invalidate or delay the sale.
Agrarian Reform Beneficiary Buyer Requirement (in certain circumstances)
- In some cases, if the land is still considered within the ambit of agrarian reform, the buyer must also be qualified under DAR guidelines (i.e., an existing agrarian reform beneficiary or a person who meets the qualifications to become an ARB).
Retention Limits
- Selling the land does not circumvent the constitutional and statutory retention limits on agricultural landownership (the five-hectare retention limit, etc.). The DAR ensures that the buyer’s total landholding does not exceed these legal limits.

4. Potential Consequences of Unauthorized Sale or Transfer

4.1. Nullity of Sale

A sale or transfer that violates the restrictions—such as selling before the expiry of the 10-year prohibition without DAR approval—may be declared null and void. This typically leaves both buyer and seller exposed to legal and financial complications.

4.2. Reversion or Forfeiture

The DAR or the government can initiate legal steps to revert or forfeit the land if it is proven that an illegal transfer occurred. The property may be awarded to other qualified beneficiaries if the original grantee and transferee did not follow the regulations.

4.3. Administrative and Criminal Liabilities

Depending on the circumstances, parties found to violate the CARP provisions and related administrative orders could face:

Administrative penalties, such as fines and disqualification from further agrarian reform privileges.
Criminal sanctions, in more extreme cases of fraud or false representations, though most disputes remain in the realm of administrative enforcement.

5. Key DAR Rules and Administrative Issuances

Several Department of Agrarian Reform Administrative Orders (DAR AOs) and memoranda provide more specific guidelines on selling or transferring land covered by CARP. Among the notable ones are:

DAR Administrative Order No. 1, Series of 1989 – Implementation rules for RA 6657 (original CARL guidelines).
DAR Administrative Order No. 7, Series of 2011 – Revises rules and procedures governing land-use conversion.
DAR Memorandum Circulars – Provide clarifications on issues surrounding CLOAs, transfers, and amortization requirements.

It is always prudent to check the most recent DAR issuances, as the department periodically updates procedures to address contemporary agrarian issues.

6. Practical Considerations for Selling or Transferring CLOA Land

Engage with the DAR Early
- Whether you are an owner or potential buyer, consulting the DAR early in the process is crucial to ensure that the contemplated sale is lawful and feasible.
Check Land Title and CLOA Annotations
- Verify the annotations on the CLOA and consult the registry of deeds. The annotations can indicate any existing liens, encumbrances, mortgages, or restrictions that might affect the transfer.
Complete Obligations and Documentary Requirements
- Ensure land amortizations are up to date.
- Obtain a DAR Certification or clearance confirming the property’s agrarian status, retention limits, and compliance with the 10-year prohibition, if applicable.
Consider the Buyer’s Qualifications
- If the land remains within the scope of agrarian reform, the transferee might need to be an agrarian reform beneficiary or at least someone who does not exceed landholding ceilings.
Prepare for a Longer Process
- Compared to ordinary private land transactions, CARP-covered land transfers can take more time due to extra layers of review by DAR and possibly other agencies (e.g., Land Bank for amortizations, DENR for land classification, etc.).

7. Frequently Asked Questions (FAQs)

Can a CLOA holder sell the land after 10 years without restrictions?
- Generally, CLOA holders can sell after 10 years but they are still required to secure DAR clearance and ensure all amortizations are settled. Some DAR rules also require that the buyer is qualified under agrarian laws if the property remains agricultural.
What happens if the CLOA holder dies before the 10-year period ends?
- The land can be transmitted to legal heirs. The land remains under agrarian reform restrictions, and the heirs take on the responsibilities as new beneficiaries.
Is it possible to mortgage CLOA land during the 10-year prohibition?
- As a rule, DAR approval is required even for encumbrances (mortgages) during the prohibition period. Moreover, some lending institutions are reluctant to accept land that carries such encumbrances unless DAR has expressly authorized the transaction.
Is DAR clearance needed for donating or gifting CLOA land?
- Yes. A donation or any other mode of transfer generally needs DAR clearance to ensure compliance with agrarian reform regulations.
What if the land has already been converted to non-agricultural use?
- If the DAR authorized a land-use conversion, the restrictions for agrarian reform beneficiaries might change. However, conversion is a separate process requiring DAR approval, and the land must have been legally converted before the sale to avoid potential nullity.

8. Conclusion

Selling or transferring land awarded under the Comprehensive Agrarian Reform Program (CARP)—evidenced by a Certificate of Land Ownership Award (CLOA)—involves more stringent legal safeguards compared to ordinary private land transactions. The primary intention of these restrictions is to preserve the social justice aims of agrarian reform: to empower farmers with secure land tenure and prevent land re-concentration.

Key takeaways for any party interested in selling, buying, or otherwise dealing with CLOA land:

Observe the 10-Year Prohibition
- A CLOA holder is barred from transferring land for ten years from the date of award, barring specific DAR-sanctioned exceptions.
Secure DAR Clearance or Approval
- Even after the 10-year ban, DAR oversight continues, mandating clearance or approval to confirm that all agrarian conditions have been complied with.
Ensure Payment of Amortizations and Other Obligations
- The Land Bank and DAR must confirm that no outstanding obligations remain on the land.
Avoid Null and Void Transactions
- A sale made in violation of DAR rules will likely be declared void, leading to possible forfeiture or reversion of the land and accompanying legal liabilities.
Consult Legal and Government Authorities
- Due diligence, involving the DAR, Land Bank (if applicable), and legal counsel well-versed in agrarian law, is indispensable for a valid and binding transaction.

Ultimately, while the law does permit selling CLOA lands under certain conditions, the sale must strictly align with the policies and procedures set by the Department of Agrarian Reform and the provisions of R.A. No. 6657, as amended. Keeping informed of these regulations not only ensures compliance but also safeguards all parties’ interests in the transaction.Selling Land Under CARP or CLOA in the Philippines: A Comprehensive Legal Overview