Introduction

In the Philippines, the Comprehensive Agrarian Reform Program (CARP), established under Republic Act No. 6657 (RA 6657), as amended by Republic Act No. 9700 (RA 9700), aims to promote social justice by redistributing agricultural lands to landless farmers and farmworkers. A key instrument under this program is the Certificate of Land Ownership Award (CLOA), which grants ownership of agricultural land to agrarian reform beneficiaries (ARBs). However, as urbanization and economic development progress, there arises a need to convert these agricultural lands to non-agricultural uses, such as residential, commercial, industrial, or institutional purposes. This process, known as land use conversion, is strictly regulated to balance agrarian reform objectives with sustainable development.

Land conversion for CLOA properties is governed primarily by the Department of Agrarian Reform (DAR), in coordination with other agencies like the Department of Agriculture (DA), Department of Environment and Natural Resources (DENR), and local government units (LGUs). The process ensures that conversions do not undermine food security, environmental protection, or the rights of ARBs. This article comprehensively explores the legal framework, requirements, procedures, restrictions, and implications of converting CLOA-awarded lands, drawing from relevant laws, administrative orders, and jurisprudence.

Legal Framework Governing Land Conversion

The primary laws and regulations include:

Republic Act No. 6657 (1988), as amended by RA 9700 (2009): The Comprehensive Agrarian Reform Law, which mandates the redistribution of lands and regulates their use. Section 65 of RA 6657, as amended, provides the basis for land conversion, allowing it only under specific conditions to prevent premature conversion of prime agricultural lands.
DAR Administrative Order No. 1, Series of 2002 (AO 1-2002): The Comprehensive Rules on Land Use Conversion, which outlines the detailed procedures, requirements, and criteria for conversion applications.
DAR Administrative Order No. 5, Series of 2011: Provides guidelines on the conversion of lands covered by CLOAs, emphasizing protections for ARBs.
Executive Order No. 45 (2001): Prescribes time periods for the issuance of housing-related certifications, clearances, and permits, which indirectly affects conversions for housing projects.
Republic Act No. 7160 (Local Government Code of 1991): Empowers LGUs to reclassify lands through zoning ordinances, but reclassification alone does not suffice for conversion; DAR approval is required for agricultural lands.
Republic Act No. 7279 (Urban Development and Housing Act of 1992): Facilitates conversions for socialized housing, with streamlined processes under certain conditions.
Joint DAR-DA-LRA-DENR Administrative Order No. 1, Series of 2012: Harmonizes guidelines for land use conversion and exemption, ensuring inter-agency coordination.

Additionally, Supreme Court decisions, such as in Chamber of Real Estate and Builders' Associations, Inc. v. Romulo (G.R. No. 160756, 2010), have clarified that DAR has primary jurisdiction over conversions, and conversions must not violate the agrarian reform program's intent.

Key Restrictions on CLOA Properties

CLOA lands are subject to stringent restrictions to preserve their agricultural purpose:

10-Year Prohibition on Transfer: Under Section 27 of RA 6657, as amended, CLOA lands cannot be sold, transferred, or conveyed except through hereditary succession, to the government, the Land Bank of the Philippines (LBP), or other qualified ARBs for 10 years from the date of award. This includes prohibitions on mortgaging or using the land as collateral.
5-Year Retention Limit: ARBs must retain ownership for at least 5 years, but conversion may be allowed earlier under exceptional circumstances, such as when the land is deemed unsuitable for agriculture.
Irrevocability of Awards: Once awarded, CLOAs are generally irrevocable, but conversions can proceed if they meet criteria, provided ARBs are compensated or relocated.
Prime Agricultural Lands: Lands classified as irrigable or irrigated under the Network of Protected Areas for Agricultural and Agro-Industrial Development (NPAAAD) or Strategic Agriculture and Fisheries Development Zones (SAFDZ) are generally non-negotiable for conversion, except in extraordinary cases like national infrastructure projects.

Violations of these restrictions can lead to cancellation of the CLOA, reversion of the land to the government, or criminal penalties under RA 6657.

Grounds for Land Conversion

Conversion is not granted arbitrarily; it must be justified based on the following grounds under AO 1-2002:

Economic Feasibility: The land is no longer economically feasible and sound for agricultural purposes, as certified by the DA.
Urban Expansion: The land is within areas identified for urban expansion in approved Comprehensive Land Use Plans (CLUPs) by LGUs.
Suitability for Non-Agricultural Use: Topographical, soil, or environmental factors make the land more suitable for residential, commercial, or industrial use.
Public Interest: Conversion serves a higher public purpose, such as infrastructure development (e.g., roads, schools, hospitals) or socialized housing.
No Adverse Impact: The conversion will not adversely affect agricultural production in the area or displace ARBs without just compensation.

For CLOA properties specifically, conversion is allowed only if the ARB consents or if the land is part of a larger development project with ARB benefits.

Requirements for Conversion Application

Applicants—typically landowners, developers, or ARBs—must submit a comprehensive application to the DAR. Key requirements include:

Documentary Requirements

Application Form: Duly accomplished and notarized DAR-prescribed form.
Proof of Ownership: Certified true copy of the CLOA, annotated to reflect any encumbrances.
Project Feasibility Study: Detailing the proposed non-agricultural use, economic viability, environmental impact, and benefits to the community.
Certifications:
- From the DA: Certifying the land is not irrigable/irrigated or not covered by NPAAAD/SAFDZ.
- From the DENR: Environmental Compliance Certificate (ECC) or Certificate of Non-Coverage.
- From the LGU: Zoning certification or reclassification ordinance.
- From the Housing and Land Use Regulatory Board (HLURB, now DHSUD): Locational clearance for housing projects.
- From the LBP: Clearance if the land is under mortgage or amortization.
Socio-Economic Study: Assessing impact on ARBs, including relocation plans and compensation.
Public Notice: Proof of posting notices in conspicuous places and publication in a newspaper of general circulation.
Affidavit of Non-Tenancy: If applicable, confirming no tenants or leaseholders will be displaced without compensation.
Payment of Fees: Application fee (P2,000 to P10,000 depending on area), inspection fee, and disturbance compensation fund (DCF) contribution.

For areas exceeding 5 hectares, an Environmental Impact Assessment (EIA) is mandatory.

Eligibility Criteria

The applicant must be the registered owner or authorized representative.
For CLOA holders, the 10-year prohibition must have lapsed, or an exemption must be granted (e.g., for government projects).
ARBs must be fully paid for their amortization to LBP before conversion.

Procedure for Land Conversion

The conversion process is multi-staged and can take 6 months to 2 years, depending on complexity:

Filing of Application: Submit to the DAR Provincial Agrarian Reform Office (PARO) or Regional Office.
Initial Review: DAR checks completeness within 5 days; if incomplete, applicant is notified.
Payment and Posting: Pay fees and post public notices for 15 days.
Field Investigation: DAR conducts on-site inspection, interviews ARBs and stakeholders, and verifies certifications (30-60 days).
Evaluation and Recommendation: The Provincial Agrarian Reform Adjudicator (PARAD) or Regional Director reviews and recommends approval/denial.
Decision by DAR Secretary: For areas up to 5 hectares, the Regional Director decides; above 5 hectares, the DAR Secretary approves. Decisions must be issued within 30 days of recommendation.
Appeal: Denied applications can be appealed to the Office of the President.
Post-Approval: Issuance of Conversion Order, payment of DCF (equivalent to 3 times the land's value for ARBs' benefit), and registration with the Registry of Deeds.

For priority projects (e.g., tourism, energy), streamlined processes under AO 1-2002 apply, reducing timelines.

Disturbance Compensation and ARB Protections

A critical aspect is protecting ARBs:

Compensation: ARBs are entitled to disturbance compensation, computed as the higher of: (a) 3 times the average gross harvest value over the last 3 years, or (b) value per tax declaration plus 10%.
Relocation: If displaced, ARBs must be provided alternative lands or livelihood support.
Equity Participation: In large-scale developments, ARBs may opt for equity shares instead of cash.

Failure to provide compensation can void the conversion.

Exemptions from Conversion

Certain lands are exempt from conversion requirements:

Lands already reclassified before June 15, 1988 (effectivity of CARP).
Government-owned lands for public use.
Lands under Presidential Proclamation for specific non-agricultural purposes.

However, for CLOA lands, exemptions are rare and require DAR clearance.

Penalties for Illegal Conversion

Unauthorized conversion is punishable under Section 73 of RA 6657, as amended:

Imprisonment of 1-6 years and/or fine of P50,000-P200,000.
Cancellation of CLOA and reversion to the state.
Administrative sanctions for officials involved.

Cases like DAR v. Sutton (G.R. No. 162070, 2005) underscore that conversions without DAR approval are void.

Challenges and Reforms

Common challenges include bureaucratic delays, corruption allegations, and conflicts between development and agrarian goals. Recent reforms under RA 9700 extended CARP until 2014, but issues persist with large haciendas. The DAR's online application system aims to expedite processes.

In conclusion, converting CLOA properties requires meticulous compliance with legal safeguards to uphold agrarian reform while accommodating growth. Stakeholders should consult legal experts or DAR offices for case-specific advice, as regulations may evolve through new administrative orders or laws.