On 9 March 2026, the Department of Justice issued Opinion No. 16, s. 2026, answering a query from the Land Registration Authority dated 18 February 2026 on whether a Department of Agrarian Reform clearance remains a condition for registering transfers of agricultural land.
Reading Section 5 of R.A. No. 6657 (the ten-year implementation period) together with Section 7 as amended by R.A. No. 9700 (completion of acquisition and distribution by 30 June 2014), the DOJ characterized the 2014 date as a sunset clause and held that the Comprehensive Agrarian Reform Program "ceased to be effective as of 30 June 2014," that all provisions of R.A. No. 6657 "including the retention limits on land ownership" have become functus officio (of no further official authority), and that the Land Transfer Clearance required by DAR Administrative Order No. 04, s. 2021 "ceases to have any legal basis."
We support this reading by the DOJ.
CARP lands have, for the longest time, held back agricultural development in the country. They are to be considered as “dead capital."
In The Mystery of Capital (2000), Hernando de Soto defines “dead capital” as capital that cannot be mortgaged, divided, combined, or sold. It retains use value but generates no surplus value. His estimate for the Philippines was that 67 percent of rural dwellings and 57 percent of urban ones were held extralegally, and that dead capital amounted to about US$133 billion, four times the capitalization of the 216 companies then listed on the Philippine Stock Exchange.
De Soto was primarily describing untitled lands. In our opinion, CARP produced a new variant of dead capital: agricultural lands that are titled and registered, but nonetheless sterilized by the law.
Four features of CARP convert awarded land into dead capital.
First, CARP bars the beneficiary from selling, transferring, or conveying the land for ten years except by succession or to the government, the Land Bank, or another qualified beneficiary, and even afterwards the transferee must be a qualified beneficiary, which forecloses the only buyers with capital.
Second, CARP caps land ownership at five hectares plus three per child and voids any acquisition above this limit, so the land cannot be combined with adjacent parcels to benefit from economies of scale.
Third, roughly 1.37 million hectares were distributed under collective certificates of land ownership award, under which co-owners hold undivided shares in unsurveyed parcels.
Fourth, the amortization lien in favor of the Land Bank has priority over any private lender, which is why banks have historically preferred to pay the penalties under the agri-agra laws rather than lend against CLOA land.
The result is that we have a class of dead capital generated by legislation, rather than by lack of property registration as in the original thesis of Hernando de Sotto.
The Philippine Economy Towards 2050, Chapter 6 (Felipe et al., 2026) contains the latest report summarizing everything that was wrong about CARP.
The program was undermined from the start by the absence of a reliable cadastral survey, unsupervised landlord-tenant deals, administration by bureaucrats rather than tenant committees, the exemption of prawn and fish farms, a five-hectare retention plus three per child, and an unresolved ambiguity over whether its object was productivity or social justice.
Its distributional effect on farm size did not translate into yields. Agrarian reform reduced the average rice farm to 1.3 hectares yielding just over four tons, while Vietnam averages 0.5 hectares yielding six tons and Taiwan matches Vietnam. Sugar yields about 63 tons per hectare against 80 to 85 in Taiwan and the PRC. Corn yields 3.3 tons against Taiwan’s 5.3.
Felipe et al. attributes the gap to the absence of state support that accompanied the Japanese, Korean, and Taiwanese reforms (irrigation, credit, extension, marketing), and to the statutory bar on consolidation: “weaker farmers are not allowed to be taken over by better farmers, resulting in no land consolidation.” Its prescription is consolidation of coconut and other tree and high-value crops to a minimum of about 25 hectares, through cooperatives where appropriate, and a deliberate reduction of the agricultural workforce from its current share of over 20 percent (75 percent of whom are landless) so that the country can reach the turning point that its neighbors passed decades ago.
