The assurance came as Solicitor General Alfredo Benipayo requested the anti-graft court to throw out the petition filed by the Philippine Coconut Producers Federation (Cocofed), which asked for an injunction on the government’s use of the coco levy funds, saying it was a "fraudulent diversion" of funds.
In releasing the funds, Mrs. Arroyo announced that it will be used in the government’s micro-financing program for coconut farmers to help improve their livelihood.
However, Cocofed complained last Feb. 13 that the release was a diversion of the coco levy’s earnings as this had been against the Sandiganbayan’s December 2000 ruling, which bars the disposal of the money, interest included, while the case is pending in litigation.
Without any sanction from the court, Cocofed lawyers said the diversion of the earnings of the United Coconut Planters Bank (UCPB), the Coconut Industry Investment Fund and the 14 CIIF holding companies "is a blatant contravention" of the court order since the fund and its fruits cannot be disposed of because these properties are still subjects of court litigation.
In a 43-page answer to Cocofed’s suit, the Office of the Solicitor General (OSG), however, said that "sound reason dictates" that in the course of ordinary business, seeking court approval before taking any business decision is not always necessary.
"If the officers of the corporations in custodia legis (in charge of firms under litigation) have to go to court for every corporate act, their business activities will be placed at a standstill, as it were, with deleterious effects to private commerce and national economy," the OSG pointed out.
The OSG likewise explained that contrary to Cocofed’s claim, "there will be no dissipation, wastage or reduction of the investment" of the funds, which are now deposited in UCPB and CIIF.
"The business judgment made by the UCPB, as CIIF administrator, to invest into UCPB-CIIF Finance Corp. will redound to the benefit of the farmers in the form of loans, which will be repaid to the UCPB, as such administrator, with a modest rate of return," the OSG said.
Government lawyers argued that the Supreme Court, in its December 2001 ruling, had declared the coco levy funds as "public property," although this was just an initial finding, adding the issue was imbued with public interest.
They argued that there should be no debate as to how the UCPB makes its investments, which in fact should be given "salutary effect" because these will ultimately redound to the benefit of small coconut farmers. – Delon Porcalla