Questioning the law on credit info sharing

Some 100 cooperative leaders of big co-ops all over the country gathered in Cebu City last July 6, 2016 to take part in discussions related to the crafting of a roadmap for the co-op sector. The move was in line with President Duterte’s Executive Order No. 1, which placed the regulatory body Cooperative Development Authority directly under the Office of the President through Cabinet Secretary Leoncio Evasco.

I thought it would be just another fraternal event with CDA chairman Orlan Ravanera, but my expectation was way off the mark. With former Congressman Pablo “Noy Pabling” Garcia airing his comments on RA 9510, also known as the Credit Information System Act (CISA), co-op leaders were all ears as the former Cebu governor and Deputy House Speaker punched holes in the law.

Noy Pabling succeeded the late Judge Esperanza “Mam Inday” Garcia in taking charge of two of the country’s biggest co-op enterprises – the Cebu CFI Community Cooperative and Climbs Insurance. He is also acknowledged as one of the founding fathers of the modern cooperative movement, having helped enact RA 9520 aka the Cooperative Code of 2008. At 91 years old, he should be taking a vacation but I’m glad he is still at it, crossing swords with sectors out to undermine the co-op movement.

A background on RA 9510 can be found on the Natcco federation website which says the law was signed by president Gloria Arroyo in July 2008. It is important to note the said law preceded RA 9520 or the Cooperative Code of 2008 which was signed into law in 2009. I will lift from the text which is relevant to co-ops.

“The CISA requires lending institutions like co-ops and banks to be part of the Credit Information System which allows financial institutions to access a database of borrower information to bolster the credibility and viability of small yet responsible borrowers.”
Under the law, the Credit Information Corporation (CIC) is the entity tasked to implement the CISA. CIC is mandated “to receive and consolidate basic credit data, to act as a central registry or central repository of credit information and to provide access to reliable, standardized credit history and financial condition of borrowers.”

As a stock corporation, CIC dominates the business with 60% of the shares while 40% of common shares is owned by qualified investors like banks and, yes, cooperatives. I heard the apex body of cooperatives, the Philippine Cooperative Center, has plunked millions in CIC and has a seat in the board of directors. Other government agencies involved in the implementation of CISA include the Department of Finance, Department of Trade and Industry, Insurance Commission and the Cooperative Development Authority.

As CIC chief executive officer, Jaime Garchitorena is leading a nationwide campaign to orient cooperatives on the supposed benefits as well as mechanics in complying with the law. The info drive was launched in Cebu about two months ago in a five-star hotel with CDA as co-convenor.

Cooperatives have no quarrel with the benefits of credit information sharing because it is closely tied with delinquency issues that no cooperative business is spared of. But it is in the compliance of CISA that makes the sector, at least those who are not part of the business of CIC, take a hard look because the task involves preparation of individual members’ credit data and periodic updating to be submitted within the deadline set by CIC.

If large size cooperatives cannot submit credit data to CIC by October 2016, they will be slapped with a P30,000 a day fine. Pardon me but this situation looks like CIC is in the business of making money out of non-compliance by submitting entities, in which case, the harder it is for co-ops to comply, the better for the business. CISA created a business that co-ops can do without. What kind of business is this that puts to risk the co-ops of the land?

Tyabaw man gani ang mga co-ops sa multa nga P100 matag adlaw kun mapakyas pagsumiter og mga gikinahanglang datos ngadto sa CDA, P30,000 matag adlaw pa ba kaha?

When I posted the video clip of Noy Pabling’s take on the CISA, Cebu Newscoop manager Evelyn Sarsale immediately “liked” my post because I think she dreads the challenge of the CISA — more work for the co-op staff on top of existing ones. The media co-op has a little over one thousand members and after attending the CIC workshop on credit data preparation, Eve Sarsale knows the work at hand is no joke. And what is there to gain? I will quote Noy Pabling Garcia, “Co-ops have nothing to gain and everything to lose”.

I have friends in the local cooperative movement who are backing CISA obviously because they have an interest in the business of CIC. We live in a democracy and they are entitled to their own opinion.

However, after Noy Pabling assailed the validity of CISA and expressed his intention to file a civil action for declaratory relief on the said law, I find their strong support for the CISA rather unseemly. What if the Supreme Court rules in favor of CFI Cooperative? According to Garcia, a favorable ruling would mean CISA will be declared unconstitutional and CIC will be abolished.

On the other hand, CDA should also rethink its role in the ongoing info drive sponsored by CIC. The agency cannot lend itself to the campaign of a business which, to quote Noy Pabling, “is bad and dangerous to the growth and viability of co-ops”.

Co-ops exist based on 7 principles, one of which is autonomy and independence. Garcia insists that because CIC is a stock corporation and therefore a private entity; it cannot force itself on the sector. CIC is under the jurisdiction of the Securities and Exchange Commission, while co-ops fall under the mantle of CDA. Garcia actually issued a mouthful during the July 06 forum but I cannot enumerate them all in one article. By way of summing up his comments, he told the assembly that the main hurdle to CISA is the co-op bible itself, RA 9520.

I think he meant that co-op leaders cannot support CISA without being unfaithful to their own members in particular and the movement in general.