The disposition of large agricultural landholdings in the Philippines is a process heavily regulated by a complex intersection of agrarian reform laws, civil codes, and administrative issuances. Unlike residential or commercial real estate, the sale of agricultural land is subject to strict state oversight aimed at social justice and food security.
1. Mandatory Clearances and the DAR Role
The Department of Agrarian Reform (DAR) is the primary regulatory body for agricultural land transfers. Under Republic Act No. 6657 (Comprehensive Agrarian Reform Law or CARL), any sale or transfer of agricultural land requires a DAR Clearance.
- DAR Clearance to Transfer: This document certifies that the land is not covered by the agrarian reform program or that the sale complies with existing regulations.
- Affidavit of Aggregate Landholding: Both the buyer and the seller must execute affidavits declaring their total agricultural landholdings. This is to ensure neither party exceeds the ownership limits set by law.
2. Ownership Limits and Retention Rights
The Philippine Constitution and CARL impose strict "Land Ceiling" rules to prevent the reconcentration of land.
- Retention Limit: Original landowners are generally allowed to retain a maximum of five (5) hectares of agricultural land.
- Ownership Limit for Buyers: No individual may own more than five (5) hectares of agricultural land in total. If a buyer already owns four hectares, they can only legally purchase one additional hectare.
- Corporations: Under current law, private corporations cannot acquire alienable lands of the public domain; they may only lease them. For private agricultural lands, corporate ownership is subject to the same five-hectare limit per individual shareholder's equivalent interest in many jurisdictions.
3. The 10-Year Prohibitory Period
Lands awarded to Farmer-Beneficiaries through the Comprehensive Agrarian Reform Program (CARP)—evidenced by a Certificate of Land Ownership Award (CLOA) or an Emancipation Patent (EP)—cannot be sold, transferred, or conveyed for a period of ten (10) years from the date of registration.
- Exceptions: Transfer may be allowed through hereditary succession, or back to the government/Land Bank of the Philippines.
- Post-10 Year Sales: Even after the 10-year period, the transfer still requires DAR approval to ensure the buyer is a qualified agriculturist.
4. Right of First Refusal and Tenant Protection
If the agricultural land is occupied by legal tenants or leaseholders, the Code of Agrarian Reforms (R.A. 3844) grants them specific protections:
- Right of Pre-emption: The tenant has the priority right to buy the land under reasonable terms and conditions if the owner decides to sell.
- Right of Redemption: If the land was sold to a third party without the tenant’s knowledge, the tenant may redeem the property within a specific period (usually 180 days from notice).
5. Land Use Conversion vs. Sale
Selling "Large Parcels" often implies a change in use (e.g., for subdivision or industrial development). However, a sale does not automatically allow for a change in land use.
- Conversion Order: If the buyer intends to use the land for non-agricultural purposes, they must apply for a Land Use Conversion from the DAR.
- Illegal Conversion: Selling agricultural land for development without a conversion order is a criminal offense under Philippine law.
6. Documentary Requirements for Registration
To successfully register a sale with the Registry of Deeds (ROD) and obtain a new Transfer Certificate of Title (TCT), the following are typically required:
| Document | Purpose |
|---|---|
| Deed of Absolute Sale | The legal instrument of transfer, notarized. |
| CARP/DAR Clearance | Proof that the sale does not violate agrarian laws. |
| CAR (Certificate Authorizing Registration) | Issued by the BIR after payment of Capital Gains Tax and Documentary Stamp Tax. |
| Tax Clearance | Proof that Real Property Taxes (RPT) are paid up to date. |
| Affidavits of Aggregate Landholding | Sworn statements regarding existing land ownership. |
7. Tax Obligations
The transfer of agricultural land triggers several tax liabilities:
- Capital Gains Tax (CGT): 6% of the gross selling price or the zonal value, whichever is higher.
- Documentary Stamp Tax (DST): 1.5% of the selling price or zonal value.
- Transfer Tax: Usually 0.5% to 0.75% (varies by province/city).
- Registration Fees: Paid to the Registry of Deeds for the issuance of the new title.