January 25, 1999

DAR OPINION NO. 04-99

MEMORANDUM

TO              :      CARLITO T. AÑONUEVO
                          Assistant Secretary
                          Support Services Office

SUBJECT    :     Administrative Order No. 4511, Series of 1998

This refers to your Memorandum dated 12 January 1999 requesting for opinion/comments regarding the amendment of Administrative Order No. 75, Series of 1993 by Administrative Order No. 4511, Series of 1998, both issued by Malacañang.

As observed, A.O. No. 4511 seeks to abolish the Executive Committee of the Bagong Kilusang Kabuhayan sa Kaunlaran (BKKK)/National Livelihood Support Fund (NLSF) and directing the Land Bank of the Philippines to transfer to the People's Credit and Finance Corporation (PCFC), by way of a trust fund, all funds, properties, equipment and records of the BKKK Secretariat and BKKK Capital Fund/National Livelihood Support Fund.

We understand that during the administration of Secretary Ernesto Garilao, a Memorandum of Agreement which formalized a joint program known as the "DAR-NLSF Livelihood Credit Assistance Program for the ARCs" was signed by and between him and LBP President and NLSF Executive Committee Chairperson Jesli A. Lapus, placing in the program fund a total amount of 211 million pesos which are intended for credit assistance to the ARBs in the' Agrarian Reform Communities (ARCs) pursuant to A.O. No. 75, Series of 1993 as amended, implementing Section 37 of RA. No. 6657.

Section 37 of R.A. 6657 provides that the BKKK Secretariat shall be transferred and attached to the LBP, for its supervision including all its applicable and existing funds, personnel, properties, equipment and records. Likewise, Section 64 of the same Act provides that the Land Bank of the Philippines shall be the financial intermediary for the CARP, and shall insure that the social justice objectives of the CARP shall enjoy a preference among its priorities (Emphasis supplied). On the other hand, Administrative Order No. 4511, Series of 1998 in its final whereas clause states that the objectives and programs of BKKK/NLSF and PCFC are similar . . . (emphasis supplied).

From the aforecited provisions of law, it is explicit that the transfer of the functions of the BKKK to the PCFC pursuant to A.O. No. 4511 will not necessarily divert or rechannel the aforementioned P211 million DAR-NLSF program fund for other non-agrarian poverty alleviation purposes. The statement in the dispositive portion of A.O. No. 4511 (no. 3 thereof) that the trust fund shall be used exclusively for microfinance services for the poor perforce includes and contemplates, likewise, livelihood credit assistance for the ARBs who definitely belong to the category of the poor in our society.

In view of all the aforegoing, we believe that the P211 million program fund for the ARCs subject of an earlier Memorandum of Agreement (MOA) between the DAR and LBP/NLSF shall still remain and subsist. To construe and have it otherwise might constitute a violation of the non-impairment of contracts clause under our Constitution and would be tantamount to that of rendering as nugatory the social justice objectives of CARP and the preferential regard to ARBs as mandated under Sections 2 and 64 of R.A No. 6657.

We hope to have enlightened you on the matter.

(SGD.) DANILO T. LARA

Undersecretary for Legal Affairs, and Policy and Planning