Rules on Land Transfer in the Philippines

I. Introduction

In the Philippines, the Comprehensive Agrarian Reform Program (CARP) aims to distribute agricultural lands to landless farmers to promote social justice and equity. Beneficiaries under this program receive a Certificate of Land Ownership Award (CLOA) — a title issued by the Department of Agrarian Reform (DAR) as proof of ownership of agricultural land granted under Republic Act No. 6657, otherwise known as the Comprehensive Agrarian Reform Law of 1988.

However, questions often arise regarding the convertibility of a CLOA title into a regular private title, and whether such land can be sold, transferred, or mortgaged. This article explores the legal framework governing CLOA titles, their restrictions, and the conditions under which conversion or transfer may be allowed.

II. Legal Nature of a CLOA Title

A CLOA is a transfer certificate of title issued in the name of the agrarian reform beneficiary (ARB) by the Land Registration Authority (LRA). Unlike ordinary private titles issued through purchase or inheritance, a CLOA carries specific restrictions imposed by agrarian laws.

CLOAs are issued pursuant to R.A. 6657 and related issuances such as DAR Administrative Orders (AOs). The land remains subject to the provisions of agrarian reform, particularly on non-transferability, tenurial obligations, and use limitations.

Key Characteristics:

State-Assisted Ownership: CLOA lands are originally part of a government redistribution program.
Ten-Year Prohibition: Section 27 of R.A. 6657 provides that awarded lands cannot be sold, transferred, or conveyed except through hereditary succession or to the government, the Land Bank of the Philippines (LBP), or other qualified beneficiaries within 10 years from registration.
Agricultural Use Restriction: Beneficiaries must cultivate and make the land productive; failure to do so may lead to forfeiture or cancellation of the award.

III. Rules on the Transfer or Sale of CLOA Lands

1. The Ten-Year Prohibition Rule

The ten-year restriction is counted from the date of registration of the CLOA. During this period, any sale, transfer, or encumbrance is void if not made to the government or another qualified beneficiary.

However, after the lapse of the ten-year period, the beneficiary may transfer the land, provided:

The land has been fully paid to the LBP;
The transfer is made to a Filipino citizen; and
The land continues to be used for agricultural purposes.

2. Transfer through Hereditary Succession

Even within the ten-year prohibition period, transfer through succession (inheritance) is allowed, as long as the heir is also qualified under agrarian reform laws (i.e., a farmer or tiller of the soil).

3. Voluntary Surrender to the Government

An agrarian reform beneficiary who can no longer cultivate the land may surrender it voluntarily to the DAR. The government may then reallocate the property to another qualified beneficiary.

IV. Conversion of a CLOA Title into a Regular Private Title

1. Direct Conversion Not Allowed

A CLOA title cannot be directly converted into a regular private title while the land remains covered by the CARP. This is because the land is under agrarian reform coverage, and the restrictions on alienation and use are imposed by law.

The CLOA remains annotated with restrictions stating that it is subject to agrarian reform provisions. Hence, even if the beneficiary has fully paid the land amortizations, the conversion of the title into a non-CARP title is not automatic and requires approval from DAR and other relevant agencies.

2. Land Use Conversion

If the owner wishes to use the land for non-agricultural purposes (e.g., residential, industrial, commercial), they must apply for Land Use Conversion with the DAR, following DAR Administrative Order No. 1, Series of 2002. Conversion may be allowed if:

The land is no longer economically feasible for agriculture;
It lies within a reclassified area under an approved Comprehensive Land Use Plan (CLUP);
The conversion is consistent with local development goals.

Upon approval, the land ceases to be under CARP coverage, and the owner may apply for reissuance or cancellation of the CLOA title to obtain a regular Transfer Certificate of Title (TCT).

3. Full Payment and Release from Agrarian Restrictions

If the land has been fully paid and all agrarian obligations are cleared, the DAR may issue a clearance for the cancellation of annotations relating to agrarian restrictions. Only then can the LRA issue a new title, effectively converting it into a regular private title.

V. Cancellation or Nullification of a CLOA

A CLOA may be cancelled or nullified under specific circumstances:

Fraud or misrepresentation in the acquisition of the award;
Failure to cultivate or maintain productivity of the land;
Voluntary surrender by the beneficiary;
Violation of the prohibition on sale or transfer within the restricted period.

Cancellation requires a formal administrative proceeding before the DAR Adjudication Board (DARAB), ensuring due process for all parties involved.

VI. Jurisprudence on CLOA Transfers and Conversion

Philippine jurisprudence has repeatedly emphasized the inalienability of CLOA lands during the restriction period and the need for DAR approval in any transfer or conversion.

Notable Cases:

Alita v. Court of Appeals (G.R. No. 120808, 1998): Any transfer made within the ten-year prohibition is void.
Department of Agrarian Reform v. Samson (G.R. No. 161111, 2009): Reiterated that CLOA lands cannot be converted or transferred without DAR approval.
Land Bank of the Philippines v. Court of Appeals (G.R. No. 118712, 1996): Clarified that beneficiaries must fulfill their payment obligations before full ownership can vest.

VII. Summary of Key Rules

Issue	Rule	Legal Basis
Ownership	CLOA titles are granted under CARP to qualified beneficiaries	R.A. 6657
Transfer within 10 years	Prohibited except by hereditary succession or to the government	Sec. 27, R.A. 6657
Transfer after 10 years	Allowed only after full payment and compliance with DAR regulations	DAR A.O. No. 1, s. 1998
Conversion to private title	Requires DAR approval through land use conversion or lifting of agrarian restrictions	DAR A.O. No. 1, s. 2002
Cancellation	Possible upon violation, fraud, or voluntary surrender	DAR A.O. No. 2, s. 1994

VIII. Conclusion

A CLOA title cannot automatically be converted into a regular private title. The land remains under the ambit of agrarian reform laws and subject to state regulation. Only after compliance with payment obligations, expiration of the restriction period, and approval by the DAR can a CLOA title potentially be transformed into a regular private title.

Beneficiaries and potential buyers must exercise due diligence, as unauthorized transfers of CLOA lands remain void and may result in the revocation of ownership rights. In essence, while conversion is possible under certain lawful conditions, it is not a matter of right, but one strictly regulated to uphold the social justice intent of the agrarian reform program.