Land-Use Conversion under the Department of Agrarian Reform:
A Complete Philippine Legal Guide
1 | Why Land-Use Conversion Matters
Land-use conversion is the statutory “off-ramp” that lets an owner, developer, or agrarian-reform beneficiary legally shift agricultural land to non-agricultural purposes—housing, industry, commerce, tourism, infrastructure, or institutional uses—without violating the Constitution’s mandate to protect the nation’s food-producing base. Because most agricultural land is either covered by, or susceptible to, the Comprehensive Agrarian Reform Program (CARP), conversion sits at the intersection of property law, agrarian-reform policy, land-use planning, and local government authority.
2 | Core Legal Foundations
| Source | Key Provision(s) |
|---|---|
| 1987 Constitution | Art. XII § 1 (state ownership of natural resources), Art. XII § 6 (distribution of agricultural lands), Art. XIII § 4 (agrarian reform). |
| Republic Act No. 6657 (CARL, 1988) | § 65—authority of the DAR to approve conversion of agricultural lands after the lapse of the five-year retention period. |
| Republic Act No. 9700 (CARPER, 2009) | Amends § 65; tightens criteria, requires “just compensation,” mandates social-impact measures. |
| Local Government Code (RA 7160) | § 20—local sanggunian may “reclassify” up to a percentage of agricultural land, but reclassification ≠ conversion; DAR approval is still needed for lands already distributed or still coverable by CARP. |
| Executive Order No. 129-A (1987) | Vests in the DAR quasi-judicial powers, including land-use conversion. |
| DAR Administrative Orders | AO 01-2002 (comprehensive rules), AO 03-2008 (streamlined procedures), AO 01-2019 (cap on prime irrigated lands), plus periodic clarificatory memoranda. |
| New Agrarian Emancipation Act (RA 11953, 2023) | Condones outstanding amortizations but does not alter conversion rules; it matters because condoned CLOAs remain subject to conversion restrictions. |
3 | Key Concepts Distilled
| Term | Meaning | Common Pitfalls |
|---|---|---|
| Conversion | Post-CARP process before the DAR where agricultural land is authorized for non-agricultural use. | Confusing it with local “reclassification” or HLURB (now DHSUD) zoning approvals. |
| Reclassification | LGU act that changes the zoning category in the land-use plan; it does not by itself allow development of CARP-covered land. | Skipping DAR entirely after getting an LGU ordinance. |
| Retention Period | Five (5) years from the award/registration of the emancipation patent or CLOA during which the land must stay agricultural. | Filing prematurely; applications are automatically dismissed. |
| Prime Agricultural & Irrigated Lands | Non-negotiable class reserved for agro-production; conversion generally disallowed except for “mandatory” government projects. | Assuming any land can be bought out of prime classification with fees. |
| Performance Bond | Surety imposed by DAR to guarantee that the project breaks ground within one year and is completed within five; forfeited if timelines slip. | Treating the bond as a fee (it is refundable upon compliance). |
4 | Who May Apply
- Landowners on record (TCT/OCT, EP, CLOA).
- Developer-vendees or lessees with DAR-endorsed contracts (authority to transact is scrutinized).
- Agrarian-reform beneficiaries (ARBs), but only through an agribusiness venture agreement (AVA) or collective petition approved by DAR.
5 | Documentary Requirements (2025 edition)
| Cluster | Typical Contents |
|---|---|
| Proof of ownership/authority | Certified TCT/OCT or CLOA/EP; annotated if mortgaged; sworn consent of all co-owners. |
| Land-use & zoning | Approved barangay, municipal, and provincial land-use maps; HLURB/DHSUD zoning certificate; LGU reclassification ordinance; DENR land classification if alienable/disposable. |
| Site technicals | Vicinity map (1:10,000), lot plan & metes-and-bounds, topographic/soil survey, BSWM certification (prime, non-prime, or irrigability). |
| Project dossier | Feasibility study, development plan & timetable, ECC/Certificate of Non-Coverage from DENR-EMB, traffic & drainage impact studies (for large estates). |
| Social safeguards | Barangay resolution, proof of consultation, sworn undertaking to pay disturbance compensation to actual tillers, resettlement plan if displacing ARBs or farmworker residents. |
| Fiscal compliance | Latest real-property tax clearance, Land Bank valuation if still subject to CARP acquisition, computation of conversion fee (DAR uses zonal/fair market values, 2 %-15 % bracket). |
6 | Step-by-Step Process
- Filing at the DAR Provincial Office or Central Receiving Unit.
- Pre-Evaluation (10 working days) – completeness check; deficient applications returned once.
- Posting & Notification (15 calendar days) – notices at barangay hall, municipal bulletin, and on-site; publication for large (>5 ha) tracts.
- Field Investigation & Ocular Inspection – joint DAR, DENR, DA, LGU, and, if irrigated, NIA.
- Municipal Agrarian Reform Committee (MARC) Hearing – verifies social acceptability; minutes form part of the record.
- Regional Evaluation Committee (REC) recommendation – majority vote; minority opinion elevated if dissents arise.
- Decision by the Secretary (or delegated Undersecretary) – 30 working-day reglementary period; decision is quasi-judicial (appealable to the Office of the President, then CA under Rule 43).
- Registration & Posting of Order – once final, annotate on title/CLOA; applicant posts DAR-issued signage at site within 15 days.
- Monitoring & Bond Forfeiture – DAR’s Compliance Monitoring Division inspects annually; failure to commence or finish triggers bond draw-down, cancellation, and possible criminal action under § 73 (CARL).
7 | Substantive Tests Applied by DAR
| Test | Practical Translation |
|---|---|
| Agricultural Viability Test | Will conversion significantly reduce the country’s or locality’s food security? DAR leans on BSWM/NIA data. |
| Socio-Economic Benefit Test | Does the proposed use yield greater socio-economic value (employment, housing, revenue) than continued farming? |
| Environmental Sustainability Test | ECC, flood/fault-line hazard, biodiversity impact. |
| Land Distribution Equity Test | Is the land still needed to satisfy landless farmers in the area? DAR consults its land balance data. |
8 | Special Rules, Exemptions & Fast-Tracks
- Infrastructure flagship projects certified by NEDA Board or the President need only DAR “inspection” (no REC hearing).
- Ecozones (RA 7916): PEZA endorsement triggers accelerated 45-day processing.
- Tourism Enterprise Zones (RA 9593): TIEZA certification plus LGU reclassification shortens local posting to 10 days.
- Renewable-energy sites (RA 9513): DENR + DOE endorsements, but prime irrigated land is still non-convertible.
- Idle / abandoned lands (verified by MARO + aerial imagery) – exemption pathway instead of conversion, if the land was genuinely never cultivated by ARBs.
9 | Fees & Bonds (Illustrative Schedule)
| Land Value Bracket (per m²) | Conversion Fee |
|---|---|
| ≤ ₱100 | 2 % of zonal value |
| ₱101 – ₱500 | 3 % |
| ₱501 – ₱1,000 | 8 % |
| ₱1,001 – ₱3,000 | 10 % |
| > ₱3,000 | 15 % |
Performance bond: 2 % of the total capital outlay (minimum ₱100,000; maximum ₱5 million). Refundable upon 100 % completion within five (5) years.
10 | Penalties for Illegal Conversion
| Act | Sanction |
|---|---|
| Tilling stoppage or premature site works before approval | ₱50,000 – ₱250,000 administrative fine; cease-and-desist order. |
| Failure to develop within schedule | Partial bond forfeiture; incremental for each year of delay (20 % first year, 40 % second, full on third). |
| False statements or forged documents | Cancellation of approval; blacklisting; criminal prosecution for estafa or falsification. |
| Conversion of awarded CLOA land within 5-year retention | Cancellation of title, re-award to qualified ARBs, criminal liability under § 73(b) (up to 12 years imprisonment). |
11 | Notable Supreme Court Jurisprudence
| Case | G.R. No. | Ratio |
|---|---|---|
| Province of Camarines Sur v. CA (1992) | 104346 | LGU reclassification cannot override the DAR’s conversion power. |
| Filinvest Development Corp. v. DAR (2000) | 138206 | DAR may annul a prior conversion if conditions were breached. |
| Co v. Pagdanganan (2005) | 131586 | Tenant disturbance compensation is jurisdictional; absence voids the approval. |
| National Power Corp. v. Heirs of Malicod (2018) | 231411 | Government expropriation for transmission lines still needs DAR exemption, not conversion, if the land is CARP-covered. |
12 | Recent Policy Shifts (2023–2025)
- DAR AO 02-2023: Pilot e-conversion portal; digital submission of GIS shapefiles; targets a 60-day decision window by 2026.
- Joint DAR-DA-DENR Circular 01-2024: Single “prime land” registry to end conflicting certifications.
- Pending Senate Bill 2281: Seeks to centralize conversion at the One-Stop Shop for Strategic Investments (OSSI)—debate centers on protecting agrarian-reform gains versus easing the “build, build, build” pipeline.
13 | Practice Pointers for Applicants
- Sequence your approvals: secure local reclassification first, then file for conversion; the DAR dismisses applications that lack the LGU ordinance number.
- Front-load social acceptability: barangay and ARB consultation minutes are not pro-forma—opposition letters delay the process via clarificatory hearings.
- Align with national plans: cite the National Physical Framework Plan or regional development plans to pass the socio-economic benefit test.
- Prime-irrigated caution: commissioning a Bureau of Soils study to show actual non-irrigability pays dividends; anecdotal claims seldom win.
- Track your deadlines: set internal project milestones at 70 % of DAR’s timetable to avoid bond forfeiture.
14 | Conversion vs. Alternative Legal Routes
| Objective | Possible Route | Caveats |
|---|---|---|
| Keep land agricultural but subdivide and sell | Voluntary Land Transfer (VLT/VOS) to ARBs | No non-agri uses allowed; DAR still supervises. |
| Establish agri-tourism park | Land-use reclassification + agribusiness venture agreement | Tourism support facilities must stay ancillary; ECOPAR guidelines apply. |
| Build public school or road | Exemption (government use) | Requires DAR exemption order; Bureau of Treasury pays landowner directly. |
| Operate solar-farm on idle agrarian land | DA “Solar Para sa Magsasaka” lease + DAR consent | Rental ceiling under AO 05-2017; no loss of ARB status. |
15 | Conclusion
The DAR land-use conversion regime is deliberately rigorous because every approval permanently removes agricultural parcels from the country’s already shrinking food-producing estate. Conversion therefore demands a finely balanced, highly documented demonstration that the public-interest gains of the proposed non-agricultural use outweigh the social costs of foregone farm production and the disruption to agrarian-reform beneficiaries. Success hinges on mastering both the letter of the rules and the policy spirit behind them—planning documents that integrate local zoning, national development blueprints, ecological safeguards, and equitable stakeholder benefits are rewarded with faster approvals and smoother implementation. Conversely, shortcutting any of these dimensions risks costly delays, forfeitures, and even criminal exposure.
In sum, if you intend to repurpose agricultural land in the Philippines, begin with a full appreciation of CARP’s primacy, follow the DAR’s procedural minute-book, and embed genuine social accountability into every page of your project study; only then does land-use conversion become not a bureaucratic obstacle but a legitimate development pathway.
Prepared as of 1 June 2025. This article synthesizes statutory texts, administrative issuances, and jurisprudence up to that date.