1. What is a CLOA?

A Certificate of Land Ownership Award (CLOA) is the title issued to agrarian reform beneficiaries (ARBs) under the Comprehensive Agrarian Reform Program (CARP), mainly under Republic Act No. 6657 (as amended by RA 9700).

Key points about a CLOA:

It is a form of ownership, but with statutory limitations.
These limitations are written on the face of the CLOA title and annotated on the Torrens title.
The beneficiary is usually a landless farmer-tiller, or in some cases, a farmer’s cooperative or association.

Think of CLOA ownership as full ownership wrapped in conditions: the farmer is owner, but cannot treat the land as a fully free commercial asset in the same way as privately acquired land.

2. Core Legal Basis

The main legal sources governing CLOA transfers are:

1987 Constitution, Art. XIII (Agrarian Reform)
RA 6657 (Comprehensive Agrarian Reform Law), as amended by RA 9700 – Especially Section 27 – Transferability of Awarded Lands – Section 22 – Qualified Beneficiaries – Section 73 – Prohibited Acts
DAR administrative issuances (administrative orders, circulars, memoranda) which implement Section 27 and related provisions.

Even without memorizing every DAR issuance, Section 27 RA 6657 is the heart of the question:

Who may receive transfers of agrarian reform lands, and under what conditions?

3. General Rule on Transfer of CLOA Lands

Short answer:

Within the 10-year prohibition period: A CLOA beneficiary cannot legally sell, transfer, or convey the land to a corporation, or to any person who is not a qualified beneficiary.
Even after the 10-year period: The law still does not allow transfer to ordinary corporations; transfer remains limited to:
- Heirs (through hereditary succession), or
- The Government, Land Bank of the Philippines (LBP), or
- Other qualified agrarian reform beneficiaries.

So, as a rule, a corporation cannot be the direct buyer/transferee of a CLOA-awarded land.

Let’s unpack why.

4. The 10-Year Prohibition: What It Really Means

Under Sec. 27 RA 6657, from the date of registration of the CLOA title:

The beneficiary cannot:
- Sell
- Transfer
- Convey
- Assign
- Lease (in abusive arrangements) Except in allowed cases (see below).
This prohibition lasts at least 10 years.

Allowed transfers during the 10-year period:

Hereditary succession – if the beneficiary dies, the land passes to his/her heirs.
Transfer to the Government or LBP, e.g., via:
- Voluntary offer to sell (VOS)
- Compulsory acquisition
Transfer to another qualified beneficiary with DAR approval (e.g., in certain cases of reallocation, cancellation, or substitution).

Not allowed during the 10-year period:

Sale to a corporation
Sale to a non-farmer investor
Any scheme that effectively dispossesses the farmer (e.g., “sale” disguised as long-term lease or pacto de retro)

Even if both parties freely consent, the sale is still contrary to law.

5. What Happens After the 10-Year Period?

Many people mistakenly think:

“After 10 years, the ARB can sell freely to anyone, including corporations.”

That is not correct.

After the 10-year period, Section 27 still restricts to whom the land may be transferred. The common reading of the law is:

Transfers may only be made:
- By hereditary succession; or
- To the Government, LBP, or
- To other qualified beneficiaries.

Who are “qualified beneficiaries”? Under Sec. 22 RA 6657, they are:

Landless farmers and regular farmworkers
Seasonal and other farmworkers
Actual tillers of the land, etc. usually natural persons, not corporations.

So even after the 10 years, the law does not convert the land into ordinary private land that may be sold to any buyer. The agrarian character of the land remains, and so do the beneficiary-based restrictions.

6. Can a Corporation Ever Be a CLOA Transferee?

6.1. Ordinary Business Corporation

An ordinary domestic stock corporation whose purpose is profit and which is not itself a farmers’ cooperative or agrarian reform entity is not a qualified beneficiary under Sec. 22.

Therefore:

It cannot directly be the buyer of CLOA land.
A deed of sale from a CLOA farmer to such corporation is generally:
- Void or voidable for being contrary to law and public policy, and
- Subject to DAR action, possible cancellation, and reallocation.

Even if the corporation somehow forces registration and gets its name on the title, that title is vulnerable to cancellation in agrarian law proceedings because the transfer violates the statutory restrictions.

6.2. Farmers’ Cooperatives / Associations

The law recognizes cooperatives or associations of farmers as possible agrarian reform beneficiaries. These are juridical persons, but their membership and purpose are aligned with agrarian reform.

A legitimate agrarian reform cooperative may be recognized as a collective beneficiary.
However, this is not the same as:
- An existing CLOA farmer individually selling to a “cooperative” that is just a corporate wrapper of an investor.

DAR and the courts will look at substance over form:

Is it truly a farmers’ cooperative, or only a vehicle to consolidate land in the hands of non-ARB investors?

If it’s the latter, the transaction can be declared invalid.

7. CLOA as Ownership with a Built-In Condition

CLOA ownership is not absolute; it is subject to a resolutory condition:

If the beneficiary violates agrarian laws (such as by illegally selling the land), the Government may:
- Cancel the CLOA
- Reallocate the land to another qualified beneficiary
- Possibly impose criminal and administrative liability under Sec. 73 RA 6657.

Common prohibited acts include:

Selling or transferring awarded land in violation of the law
Using intermediaries (“dummies”) so that non-qualified persons end up controlling the land
Circumventing the retention limit and landholding restrictions

8. “Aryendo” and Leaseback Schemes with Corporations

In practice, many CLOA holders enter into:

Long-term leases
“Rent” arrangements (“aryendo”)
Leaseback schemes, where the farmer “leases” the land back to the former landowner or a corporation.

These may be disguised transfers of control, even if the title still bears the name of the ARB.

Key points:

DAR and jurisprudence treat substance, not the label.
If a lease is:
- Too long,
- Grossly disadvantageous to the farmer,
- Clearly meant to transfer effective control to a corporation,
it can be voided or regulated as a circumvention of Sec. 27.
There are agribusiness venture agreements (AVAs) recognized by policy, but these must:
- Be DAR-approved
- Have clear safeguards for the farmer-beneficiaries
- Maintain their ownership and effective rights, not convert them into mere nominal owners.

So, a corporation that wants to “use” CLOA land effectively has very limited lawful options, and they are heavily regulated.

9. What About Land Use Conversion and Corporations?

Sometimes the argument is:

“We will just convert the land from agricultural to industrial/commercial, then we can buy it as a corporation.”

Important distinctions:

Land use conversion (Sec. 65 RA 6657) changes the land use classification (e.g., from agricultural to residential/industrial/commercial) with DAR approval.
Conversion does NOT automatically cure an illegal transfer.
- If the sale to a corporation was already void, conversion later does not retroactively legitimize that sale.
DAR generally does not allow conversion if:
- It undermines agrarian reform,
- It dispossesses beneficiaries without proper process and safeguards.

In short: conversion is not a shortcut to buy CLOA lands into corporate ownership.

10. Modes of Lawful Transfer of CLOA Lands

Let’s summarize the legally recognized modes:

Hereditary Succession
- If the ARB dies, the land passes to their heirs.
- Heirs need not all be “qualified farmers,” but agrarian law and DAR guidelines still regulate distributions and subsequent transfers.
Transfer to Government / LBP
- Via processes like:
  - Voluntary offer to sell (VOS)
  - Compulsory acquisition
- Land may then be re-awarded to other qualified beneficiaries.
Substitution / Reallocation to Another Qualified ARB
- In cases where:
  - The original beneficiary is disqualified,
  - Voluntarily surrenders rights (with DAR approval),
  - Or other valid reasons under DAR rules.
- Transfer is to another qualified farmer-beneficiary, not to a corporation.
Collective CLOAs and Co-ownership / Cooperatives
- Some CLOAs are issued collectively to a group or to a cooperative.
- Internal arrangements within the group or cooperative are possible but still bound by agrarian laws and DAR regulations.

Note: None of the above include “sale to a non-agrarian corporation” as a lawful mode.

11. Consequences of Illegal Transfers to Corporations

If a CLOA holder sells or conveys the land to a corporation in violation of the law:

Civil / Property Consequences
- The deed of sale may be void for being contrary to law and public policy.
- The corporation’s title, if any, can be subject to cancellation by DAR and/or the courts.
- The land may be reallocated to other beneficiaries.
Administrative Consequences
- The ARB may be disqualified.
- DAR may cancel the CLOA and remove the beneficiary.
- Government agencies may impose other sanctions according to rules.
Criminal Consequences
- Under Sec. 73 RA 6657, certain acts relating to illegal transfers, use of dummies, and circumventions can incur criminal liability.

For corporations, this means that “buying” CLOA land is not just risky; it is often legally indefensible.

12. Corporate Participation in Agrarian Land Without Ownership

If a corporation wants to participate in agricultural production without violating agrarian laws, typical lawful avenues (subject to strict rules) include:

Contract-growing arrangements
Joint venture agreements with cooperatives or ARBs
DAR-approved agribusiness venture agreements (AVAs)

In all these, the ownership of the land remains with the ARBs, and the corporation merely:

Shares in production,
Provides capital / technology / market access,
Operates within the framework of agrarian justice, not against it.

The key legal principle:

Ownership stays with the beneficiaries. Corporations may only come in as regulated partners, not as replacing owners.

13. Key Takeaways

Can a CLOA land be sold or transferred to a corporation?
- Generally, NO.
- Neither within the 10-year prohibitory period nor afterwards, because the law limits transferees to heirs, the Government/LBP, and qualified beneficiaries, who are typically natural person farmers, not corporations.
What if the parties sign anyway?
- The transaction is legally defective (often void or voidable), vulnerable to DAR cancellation and possible criminal/administrative sanctions.
Are there any exceptions?
- Only in the sense that farmer cooperatives or organizations may be recognized as beneficiaries; but ordinary profit-driven corporations are not.
- Corporate involvement is allowed mainly through regulated agribusiness ventures or contracts, not through outright ownership of CLOA lands.
Does land use conversion allow corporate acquisition?
- Conversion changes land use, not the legality of past illegal transfers.
- It does not give a blanket license for corporations to buy up CLOA lands.

14. Practical Note / Disclaimer

Agrarian reform law is complex and very fact-specific.
DAR issuances and jurisprudence further refine how these rules apply in real-world situations like co-ownership, separation of spouses, corporate dummies, and AVAs.
Anyone dealing with CLOA land—whether farmer, heir, or potential investor—should:
- Consult a lawyer familiar with agrarian reform, and
- Coordinate with the Department of Agrarian Reform (DAR) before entering into any transaction.

This discussion gives a comprehensive overview, but it is general information, not a substitute for formal legal advice on a specific case.