I. Introduction

Any corporation planning to buy 5.5 hectares of agricultural land in the Philippines must navigate the rules of the Department of Agrarian Reform (DAR), along with the Constitution, agrarian reform laws, and related regulations.

In the agrarian context, the core concerns are:

Protecting agrarian reform beneficiaries (ARBs) and tenants
Preventing circumvention of the Comprehensive Agrarian Reform Program (CARP)
Enforcing landholding limits and rules on land conversions and transfers

For that reason, registries of deeds and tax authorities typically require a DAR clearance or related certification before registering any sale or transfer of agricultural land, especially when a corporate buyer is involved.

This article explains, in a Philippine legal context, the DAR-related requirements and issues when a corporation acquires 5.5 hectares of agricultural land.

(This is general legal information, not legal advice for a specific transaction.)

II. Legal Framework

1987 Constitution – National Economy and Patrimony
- Only Filipino citizens and corporations with at least 60% Filipino ownership may own private lands.
- Land is given a social function, and agrarian reform is a state policy.
For a corporate buyer, this means:
- It must be at least 60% Filipino-owned to legally own the 5.5-hectare agricultural property.
- Foreign-controlled corporations can only have more limited rights (e.g., lease, in certain cases).
Comprehensive Agrarian Reform Law (CARL) – RA 6657, as amended
- Establishes CARP/CARPER and land acquisition and distribution to farmers/ARBs.
- Imposes landholding limits, retention rights, and restrictions on transfers of agricultural land.
DAR clearance is part of ensuring the sale does not:
- Undermine the land distribution program, or
- Allow landowners/corporations to evade coverage and tenant/beneficiary rights.
DAR Rules and Administrative Orders

DAR issues implementing rules on:
- Clearances for the transfer of agricultural land
- Certificates of Exemption / Non-Coverage from CARP
- Land Use Conversion (from agricultural to non-agricultural)
- Corporate farming schemes and landholding limits
While details vary by issuance, the overarching goal is consistent: no transfer of agricultural land that violates agrarian reform law.
Interplay with Other Agencies
- Register of Deeds (ROD): generally requires DAR clearance or certification before registering a deed of sale involving agricultural land.
- Bureau of Internal Revenue (BIR): often requires proof of DAR clearance/coverage status for issuance of the electronic Certificate Authorizing Registration (eCAR).
- Local government units (LGUs): issue zoning and land use certifications, which DAR also relies on.

III. When Is DAR Clearance Required for a Sale?

As a general rule, any sale or transfer of private agricultural land after the effectivity of CARP is subject to DAR oversight, either through:

A DAR Clearance (transfer allowed), or
A relevant DAR Certification such as:
- Certificate of Land Ownership Award (CLOA)-related approvals
- Certificate of Exemption / Non-Coverage (land not covered by CARP)
- Land Use Conversion Order (if land has been or is to be converted)

For a corporate buyer of 5.5 hectares, DAR will want to verify:

CARP Coverage / Status of the Land
- Is the land already covered by CARP?
- Has it been awarded to ARBs under a CLOA/EP?
- Is it in the process of being acquired under CARP?
Retention and landholding limits
- Is the transferor/landowner still entitled to retention?
- Will the sale violate the retention limit or unjustly reduce land available for distribution?
Nature of the buyer and intended use
- Is the buyer a qualified landowner under the Constitution/agrarian laws?
- Is the corporation planning to retain the land as agricultural, or use it for non-agricultural purposes (which may require land use conversion)?

IV. Special Issues for a Corporate Buyer

A corporate buyer of 5.5 hectares of agricultural land must address several layers of scrutiny:

Nationality Requirement
- The corporation must be at least 60% Filipino-owned to acquire ownership of private land, including agricultural land.
- DAR may require:
  - SEC Certificate of Registration
  - Articles of Incorporation and By-Laws
  - Latest General Information Sheet (GIS) showing nationality of shareholders.
Agrarian Landholding Rules

While individuals have a 5-hectare retention limit, corporate ownership and farming arrangements are subject to separate agrarian rules, including:
- The corporation cannot be used to indirectly amass landholdings in violation of agrarian limits.
- DAR reviews total agricultural landholdings of the corporation and, in some cases, of controlling stockholders.
- Corporate farming arrangements with ARBs (e.g., lease, joint venture, contract growing) may require DAR approval and safeguards.
Type and Status of Land Being Acquired

The DAR requirements differ significantly depending on whether the 5.5 hectares are:
- Privately-owned agricultural land not yet covered by CARP, within the landowner’s retention area.
- Land already offered or compulsorily acquired under CARP (in which case, sale may not be allowed).
- Land already awarded to ARBs under CLOA/EP (with strict restrictions on sale and transfer, especially to corporations).
- Land previously reclassified as non-agricultural by the LGU before a cut-off date and thus exempt from CARP (then a DAR exemption certification is more appropriate).
- Land previously issued a DAR Conversion Order, meaning it is no longer considered agricultural for CARP purposes.

V. DAR Clearance: Typical Documentary Requirements

Exact requirements may vary by DAR administrative issuance and local DAR office practice, but for a corporate buyer of 5.5 hectares, the general categories are:

A. From the Landowner (Seller)

Title and Tax Documents
- Certified true copy of the Transfer Certificate of Title (TCT) / Original Certificate of Title (OCT).
- Latest tax declaration(s) for the property.
- Real property tax clearance from the LGU.
Landholding and CARP-Related Information
- Sworn statement of the landowner’s aggregate landholdings (agricultural lands owned nationwide).
- Certification from the Municipal/City Agrarian Reform Officer (MARO) or Provincial Agrarian Reform Office (PARO) on:
  - Whether the land is covered by CARP or subject to acquisition/distribution.
  - Presence of tenants or ARBs.
  - Status of any Notice of Coverage or proceedings.
Tenancy and Occupant Information
- List of occupants, tenants, workers, or ARBs on the land, if any.
- Affidavit explaining absence of tenants/ARBs, if vacant.
- Documents showing disturbance compensation or settlement, if any tenants are affected.

B. From the Corporate Buyer

Corporate Legal Personality and Nationality
- SEC Certificate of Registration.
- Articles of Incorporation and By-Laws.
- Latest GIS showing shareholders and nationalities, satisfying the 60–40 Filipino-foreign rule (or greater Filipino share).
Authority to Purchase
- Board Resolution authorizing:
  - The acquisition of the specific property (5.5 hectares, with TCT number); and
  - The designated signatory to execute documents.
Declaration of Landholdings

Depending on DAR practice and the type of corporation:
- Sworn statement of the corporation’s existing agricultural landholdings nationwide.
- For agribusiness corporations, DAR may inquire whether the acquisition would put the corporation beyond permissible landholdings or create an agrarian reform circumvention scheme.
Intended Use of the Land
- If the land will remain agricultural, a statement of planned agricultural use (e.g., crops, livestock).
- If intended for non-agricultural use (e.g., subdivision, industrial park), the buyer may instead or additionally need:
  - A land use conversion order from DAR; and
  - LGU certifications on zoning and land use.

C. LGU and Other Certifications

Zoning and land use certification from the City/Municipal Planning Office showing that the land is classified as agricultural or otherwise.
Vicinity map and survey plan (approved lot plan) showing the exact area, boundaries, and location.

VI. Process Flow for Securing DAR Clearance

Although details can vary by province, a typical process for a corporate purchase of 5.5 hectares looks like this:

Preliminary Verification
- The parties (or their counsel/broker) should check with the local MARO/PARO on the property’s CARP status.
- Clarify whether the land is:
  - Already covered or in the pipeline for acquisition;
  - Within the landowner’s retention;
  - Previously exempted or converted.
Filing of Application

The landowner (and/or buyer, depending on DAR rules) files an application for DAR clearance or related certification with the DAR Provincial Office, attaching all required documents.
Ocular Inspection and Investigation
- DAR field personnel conduct an ocular inspection of the land.
- They verify:
  - Land use (actually devoted to agriculture or not).
  - Presence of tenants, ARBs, or occupants.
  - Accuracy of declared area and boundaries.
Posting of Notices / Consultations
- Notices may be posted at the barangay hall and property area to inform interested parties (e.g., tenants, ARBs) of the proposed transfer.
- DAR may interview tenants or occupants, if any, about their rights and claims.
Evaluation and Recommendation
- MARO / PARO prepares a report and recommendation based on:
  - CARP coverage status;
  - Tenancy situation;
  - Landholding and retention issues of the landowner;
  - Compliance of both parties with agrarian laws and regulations.
Issuance or Denial of DAR Clearance
- If DAR finds the transfer not contrary to CARP and agrarian rules, a DAR Clearance or corresponding certification is issued.
- If DAR finds:
  - The land is already subject to CARP acquisition;
  - The sale would prejudice tenants/ARBs or violate retention limits; or
  - The corporation is not qualified (e.g., foreign-controlled),
  DAR may deny the clearance or require restructuring of the transaction (e.g., through allowed agribusiness/ARBs schemes, conversion, or other compliance steps).
Use of DAR Clearance in Registration and Tax Proceedings
- The DAR Clearance (or exemption/conversion certificate) is then submitted to:
  - BIR for issuance of the eCAR; and
  - Register of Deeds for registration of the Deed of Sale and issuance of a new TCT in the name of the corporation.

VII. Special Focus: CARP-Awarded Lands and Corporate Buyers

A key legal trap arises when the 5.5 hectares are already awarded to ARBs under a CLOA or similar titles:

10-Year Prohibition and Beyond
- Land awarded under CARP usually cannot be sold, transferred, or conveyed within a certain period (commonly 10 years from award), except to the government or by hereditary succession.
- Even after the period, transfers are often restricted to qualified beneficiaries and still require DAR approval.
Prohibition on Direct Corporate Acquisition
- Corporations generally cannot directly buy CLOA-awarded lands from ARBs in a way that undermines agrarian reform.
- Allowed schemes typically involve:
  - Joint ventures;
  - Lease arrangements;
  - Production, marketing, or management contracts
  …and require DAR supervision and approval, ensuring ARBs retain substantive benefits and control.

If the land being acquired is CLOA land, a straight sale and transfer to a corporate buyer will very likely face DAR denial, and the parties must explore allowed agribusiness arrangements instead.

VIII. Land Use Conversion vs. DAR Clearance

“DAR clearance” for transfer must be distinguished from land use conversion:

DAR Clearance for Transfer
- Focus: whether a sale/transfer of agricultural land is allowed vis-à-vis CARP and agrarian rules.
- Used to: permit registration of the deed and issuance of title to the buyer.
Land Use Conversion
- Focus: whether agricultural land can be converted to non-agricultural uses (residential, commercial, industrial, etc.).
- Requires:
  - Proof of LGU reclassification/zoning;
  - Compliance with agrarian and environmental requirements;
  - Separate conversion proceedings and DAR Conversion Order.

For a corporate buyer of 5.5 hectares:

If the land will remain agricultural, DAR clearance alone may be sufficient.
If the land is intended to be developed into a subdivision, industrial facility, etc., a conversion order may be separately required, and DAR will scrutinize both the transfer and the intended change in land use.

IX. Practical Considerations and Common Issues

Why 5.5 Hectares Matters
- The size suggests the land is more than a tiny agricultural holding and might impact CARP coverage and retention.
- DAR will be careful to ensure the transfer doesn’t:
  - Allow a landowner to sidestep land distribution obligations;
  - Aggregate land in corporate hands beyond social justice goals.
Timeline and Due Diligence
- DAR-related processes can take significant time.
- Parties should build DAR clearance steps into their transaction timeline, not as an afterthought.
- It is wise to conduct legal and agrarian due diligence before signing a definitive sale.
Contract Drafting
- Agreements for the sale of agricultural land often include:
  - Conditions precedent requiring DAR clearance (and/or conversion, exemption).
  - Clauses on what happens if DAR denies the application.
  - Warranties on title, tenancy, and CARP status.
Professional Assistance
- Because DAR rules can be technical and fact-specific, parties often engage:
  - Agrarian law practitioners;
  - Surveyors and geodetic engineers;
  - Local DAR field personnel (for consultation and verification).

X. Conclusion

For a corporate buyer of 5.5 hectares of agricultural land in the Philippines, DAR clearance is not just a bureaucratic step—it is a legal safeguard ensuring that:

The land is properly outside or compliant with CARP coverage;
Tenants and agrarian reform beneficiaries are not unlawfully displaced;
Constitutional rules on landownership and corporate participation are respected;
Transfers and land use changes do not undermine social justice and agrarian reform policies.

A successful transaction will typically involve:

Early verification of land status with DAR;
Preparation of complete and accurate documentary requirements from both seller and corporate buyer;
Compliance with nationality, landholding, and land use rules; and
Integration of DAR clearance (and, if needed, land use conversion) into the overall transaction structure and timeline.

Given the stakes—title validity, regulatory sanctions, and potential nullity of the sale—corporate buyers and landowners are well advised to seek tailored legal guidance before proceeding with the acquisition of agricultural land.