What – one may ask is credit information system that is being contemplated in the so-called Credit Information System Act (CISA) that was signed into law by then President Gloria Macapagal-Arroyo on October 31, 2008 (Republic Act No. 9510).

With the recent promulgation of the Supreme Court decision on the Ileana Dr. Macalinao (Petitioner) vs. Bank of the Philippine Islands (Respondent) case (dealing with credit card interest charges and other fees), people are talking about the relevance of the CISA law to the case. Otherwise stated, people are asking if the implementation of the CISA law has something to do with the high interest charges on credit card transactions.

First, let me share some salient features of the CISA Law (Republic Act No. 9510) as applied to credit card transactions:-

• A Corporation which shall be chaired by the SEC Chairman shall be known as the Credit Information Corporation (CIC) is created under the CISA law. The primary purpose of CIC is 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 information on credit history and financial condition of borrower. The CIC is mandated to develop and undertake a continuing nationwide educational campaign;
• The authorized capital stock of the Corporation shall be Five hundred million pesos (P500,000,000.00) which shall be divided into common and preferred shares with the latter shares being non-voting. The national government shall own and hold sixty percent (60%) of the common shares for a period not to exceed five (5) years from the date of commencement of operations of CIC while the balance of forty percent (40%) shall be owned by and held by qualified investors which shall be limited to industry associations of banks, quasi-banks and other credit-related associations including associations of consumers;
• Borrower refers to a natural or juridical person, including any local government unit (LGU), its subsidiaries and affiliates that applies for and/or avails of a Credit Facility.
The borrower has the right to know the causes of refusal of the application for credit facilities or services from a financial institution that uses basic credit data as basis or ground for such refusal;
In case of erroneous, incomplete or misleading credit information, the subject borrower shall have the right to dispute the erroneous, incomplete, outdated or misleading credit information before the Corporation.
• Accessing Entity refers to any submitting entity or any other entity authorized by the Corporation to access basic credit data from the Corporation;
• Submitting Entity refers to an entity which provides credit facilities such as, but not limited to, banks, quasi-banks, trust entities, investment houses, financing companies, cooperatives, non-governmental, micro-financing organizations, credit card companies, insurance companies and Government lending institutions;
• All submitting entities which provide credit facilities are required to submit basic credit data and updates to the Credit Information Corporation (CIC) on a regular basis. The CIC shall fix the time interval from submission shall not be less than fifteen (15) working days but not more than thirty (30) workings days;
• Basic credit data refers to positive and negative credit information provided by a borrower to a submitting entity in connection with the application for and availment of a credit facility and any information on the borrower’s creditworthiness in the possession of the submitting entity and other factual and objective information related or relevant thereto in the submitting entity’s data files or that of other sources of information. Provided, That in the absence of a written waiver duly accomplished by the borrower, basic credit data shall exclude confidential information on bank deposits and/or clients funds under Republic Act No. 1405 (Law on Secrecy of Bank Deposits), Republic Act No. 6426 (The Foreign Currency Deposit Act), Republic Act No. 8791 (The General Banking Law of 2000) and their amendatory laws.
Basic credit data shall be limited or confined in form and content to an objective and factual information and shall exclude any subjective information or opinion;
Basic credit data about a borrower shall be limited to credit information existing on the date of the enactment of the CISA Law and thereafter;
• CIC shall likewise regularly collect basic credit data of borrowers at least in a quarterly basis to correct/update the basic credit data of such borrower. CIC may access credit and other relevant information from government offices, judicial and administrative tribunals, prosecutorial agencies and other related offices as well as pension plans administered by the government;
• The CIC cannot release basic credit data to anybody. The proposed law limits CIC’s authority to release and disclose consolidated basic credit data only to the Accessing Entities, the Special Accessing Entities, the Outsource Entities and Borrowers – except upon order of the court. Basic credit data released to Accessing Entities shall be limited to those pertaining to existing Borrowers or Borrowers with pending credit applications;
• Positive Credit Information refers to information/data concerning the credit performance of a borrower, such as but not limited to information on timely repayments or non-delinquency;
• Negative credit information refers to information/data concerning the poor credit performance of borrowers, such as but not limited to defaults on loans, adverse court judgments relating to debts and reports on bankruptcy, insolvency, petitions or orders on suspension of payments and corporate rehabilitation.

The negative credit information about a borrower as contained in his credit history files is stored in the data base file of the Credit Information Corporation for not more than three (3) years from and after the date when the negative credit information was rectified through payment of liquidation of the debt or by settlement of debts through compromise agreements or court decisions that exculpate the borrower from liability.

There is nothing in the CISA law that authorizes CIC to regulate interest rates that are charged on credit card transactions. Neither is there any provision in the CISA law that amends or revokes the Usury Law. Finally, the CISA law does not compel credit card companies and other submitting entities (entities that provide credit facilities) to insert specific provisions on their Agreement/Contract with credit cardholders/users.

Basically, the CISA law protects borrowers like credit cardholders/users (those that applies for and/or avails of credit facilities) by having provisions in the law providing for the so-called positive and negative credit information.

Before the CISA law, a credit cardholder/user who had settled a debt for more than three (3) years ago will still have in his credit history file this record of debt although paid already. Not anymore.

(TO BE CONCLUDED NEXT WEEK)