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Court Denies anti-CISA TRO Request

BAGUIO CITY – The Credit Information System Act (CISA) includes co-ops, is constitutional, and was not repealed by the passage of the New Cooperative Code in February 2009.  Thus, co-operatives are subject to the CISA.
 
This was the ruling of Regional Trial Court Branch 3 Judge Emmanuel Cacho Rasing in a decision dated June 28. 
 
According to Aileen L. Amor-Bautista, Senior Vice President of the Credit Information Corporation which is tasked with implementing the CISA, on June 20, ten days before the deadline for co-ops to submit credit data to the CIC, she received a copy of the Complaint (for Declaratory Relief with prayer for preliminary injunction and TRO) filed by the Northern Luzon Cooperative Development Center (Norlucedec) against CIC.
 
Norlucedec argued that:
1. Cooperatives are autonomous and only the CDA has authority over them, thus CIC cannot compel them to submit the basic credit data of their borrowers;
2. Inclusion of cooperatives in Republic Act No. 9510 is unconstitutional and contrary to social justice;
3. Submission of basic credit data to the CIC by the cooperatives will cause damage to the latter because they do not have manpower, money, and software to submit data to the CIC.
4. Cooperatives have no other remedy available so they resorted to the regular court, as also advised by the SEC in its letter to them.
 
The hearing for the TRO was held the next day, June 21. Amor-Bautista attended the hearing for the CIC. 
 
According to Amor-Bautista, CIC’s rebuttals were: 1. CIC does not interfere in cooperatives’ lending decisions. The latter remains autonomous; 2. CDA officials support the CIC and are always present during roadshows and technical workshops of the CIC; 3. Fraudulent and bad borrowers will go to cooperatives if they will be excluded in the CIC ecosystem, to the detriment of the cooperatives; 4. It was (COOP-NATCCO Representative Gil Cua and co-op leader Rep. Pablo Garcia and his son) who sponsored the Bill for the inclusion of cooperatives in Republic Act No. 9510 so that cooperatives could be included in the Philippines' financial ecosystem; 5. Centralized credit registries are recognized globally; 6. Implied repeal of laws are frowned upon by courts and in fact, even the Office of the Government Corporate Counsel already ruled that there is no implied repeal by Republic Act No. 9520 of Republic Act No. 9510. Republic Act No. 9510 was approved unanimously in Congress, without a single nay, 7. There is no irreparable injury as consent must first be obtained prior to other lenders accessing the credit report of the borrower-member; 8. The CIC already had meetings and have been invited in the discussions with Congress (legislative) and Cabinet Secretary (executive) as head agency of the CDA, in all fora said branches of the government recognized the benefits of a central credit registry; 9. Only large and medium cooperatives are covered by the June 30, 2017 deadline; 10. Submission to CIC is not burdensome as there are almost 500 cooperatives registered with the CIC; and 11. Cooperatives own CIC stocks and occupy a CIC Board seat, occupied by the Philippine Cooperative Center.
 
Judge Rasing said during the hearing that he was not convinced to grant the TRO based on the justifications, and said NORLUCEDEC must answer the following in order to sufficiently justify that there will be an irreparable injury to cooperatives:
 
1. Is autonomy absolute even if public interest is better served such in the present case where submission to a credit registry would facilitate loan transactions?
2. If it is the law that granted authority for autonomy, why can it not deny such grant of autonomy as well?
3. Why is inclusion of cooperatives as Submitting Entity of the CIC unconstitutional? 
4. What undertakings have been made by the cooperatives in order for them to be excluded in the submission?
5. Is there a presumption of validity of laws and Circulars until declared invalid?
6. How many sectoral representatives does the cooperative sector have in Congress?
7. If the court does not grant the TRO, will cooperatives cease to exist on 1 July 2017? 
8. If cooperatives are required to submit data to the CIC, will they no longer be able to do their function as a cooperative?
9. If the CDA compels cooperatives to submit, will cooperatives comply?
10. Is this the first and only case questioning Republic Act No. 9510?
 
The Court directed the NORLUCEDEC and CIC to submit their respective Position Papers by June 27.  By June 28, the Court had issued its decision.
 
Rasing debunked the positions of the plaintiff: 1) that submitting credit data to the CIC does not infringe on co-ops’ autonomy, 2) the Act includes co-ops, 3) CISA is constitutional, 4) there is no clear legal right by Norlucedec to justify issuance of a TRO, 5) co-ops cannot be exempted from “laws designed to promote the common good such as the CISA", and 6) RA 9510, enacted in July 2008, was not repealed by RA 9520, enacted in February 2009.
 
Meanwhile in Cebu, co-op advocate and former Congressman Pablo Garcia had also filed a similar request before the Regional Trial Court.  Attorney Amor-Bautista said in an e-mail to the NATCCO Network: “The one which was filed by Cong. Pablo Garcia in RTC Cebu, according to the court staff, was set aside because Cong. Garcia has no authority to sign as a lawyer/ counsel.”
 
 

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