The Regional Trial Court (RTC) Br. 3 of Baguio City denied the Temporary Restraining Order (TRO) filed against the Credit Information Corporation (CIC) by the Northern Luzon Federation of Cooperatives and Development Center (NORLU CEDEC), a cooperative federation in Baguio City. Under Republic Act No. 9510, otherwise known as the Credit Information System Act, banks, quasi-banks, their subsidiaries and affiliates, life insurance companies and other companies that provide credit facilities, including cooperatives, are required to submit the basic credit data of their members/borrowers to the CIC.

NORLU CEDEC requested the RTC to stop CIC from collecting the required basic credit data of its members by reason that first, the law and its implementation by the CIC violates cooperatives’ autonomy and independence; second, that cooperatives are not included in the list of entities that are required to submit credit data to the CIC; and that the Philippine Cooperative Code of 2008 already repealed R.A. No. 9510.
In its Order dated 28 June 2017, the RTC judge ruled that cooperatives’ submission of the basic credit data of their members did not violate the autonomy of cooperatives. Cooperatives remain autonomous, even as they submit the required credit data to the CIC, and remain free to chart and govern their own affairs. In addition, the RTC also said that there is a presumption of constitutionality in favor of the CIC because there was no clear and unequivocal breach of the 1987 Constitution. It also said that cooperatives are not exempted when it comes to the application of laws designed to promote the common good, such as the law that created the CIC. Also, the RTC stated that cooperatives are covered by CIC since cooperatives also provide credit facilities and participate in lending activities that are similar to that of banks and financing companies.

In response to the RTC’s denial of NORLUCEDEC’s petition for a TRO, Jaime P. Garchitorena, President and CEO of CIC, said, “We are pleased with the court’s denial of the TRO for several reasons. First, the cooperatives have long fought to be recognized for their rightful place in the credit ecosystem and their role of making credit available to the underserved. Their clear inclusion in the coverage of R.A. No. 9510 sets in stone the truth that as engines of economic progress, cooperatives are just as vital as banks and other larger financial institutions. Second, participation in the CIC gives cooperatives access to quality financial products and processes that help lenders lend more to more people at better terms while reducing non-performing loans and fraud. Finally, the CIC’s process itself can be considered in line with the cooperatives’ principle of strength in unity. The more financial institutions there are that comply with CIC’s mandate, the more data we’ll receive; and the more data we receive, the better our database will ultimately be beneficial for all Filipinos who will need credit from the cooperatives. We look forward to a long and fruitful partnership with all cooperatives, including the NORLU CEDEC.”

Cooperatives that are contributing to the CIC’s credit information system, can generate credit reports on their new and existing members and to help assess them to access more credit at better interest rates and longer credit terms. These credit reports are expected to significantly improve the access of the micro, small and medium enterprises (MSMEs) to lending opportunities. MSMEs comprise 99.6 percent of businesses in the Philippines and contribute more than 60 percent to the Philippine economy and employment. This sector is a priority under the present administration that seeks to bring down the level of unemployment to 5 percent by 2022 either through job creation or other livelihood opportunities, including entrepreneurship. Advancement of the MSME sector is also a priority among the Association of Southeast Nations (ASEAN).

CIC’s credit information system is currently in the beta testing phase. During this time, all financial institutions that have complied with the CIC on or before their respective deadlines will be given access to the credit information system. However, credit reports that will be generated during the beta testing phase still cannot be used for loan evaluation purposes.

CIC will officially launch its credit information system in 2018.

The CIC is also a government-owned and –controlled corporation (GOCC) whose primary mandate is to set up a comprehensive, centralized, fair and reliable credit information system in the Philippines.

From: Credit Information Corporation

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