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FOURTEENTH CONGRESS OF THE 
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First Regular Session 
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REPUBLIC OF THE PHILIPPINES 
) 
SENATE 
COMMImEE REPORT. NO._? 
, -. 
itted b the Committee on Banks, Financial Institutions and Currencies on 
1 9 20i7 
RE 
‘Recommending its approval in substitution of Senate Bill No. 62 
Sponsor: Sen. Angara 
: Senate No. 18 8 1, prepared by the Committee 
MR. PRESIDENT: 
The Committee on Banks, Financial Institutions and Currencies to which SBN 
62 was referred, introduced by Sen. Angara, entitled: 
”AN ACT ESTABLISHING THE CREDIT INFORMATION SYSTEM AND 
FOR OTHER PURPOSES” 
has considered the same and has the honor to report thi 
to the Senate with 
the recommendation that the attached Senate Bill No. 
, prepared by the 
Committee entitled, 
”AN ACT ESTABLISHING THE CREDIT INFORMATION SYSTEM AND 
FOR OTHER PURPOSES” 
be approved in substitution of Senate Bill No. 62 with the members of the 
Committee on Banks, Financial Institutions and Currencies as authors thereof. 
J”. 
This Committee report was approved last Congress on third reading by the 
Senate and was discussed under a bicameral conference meeting but failed to be 
enacted due to technical reasons. For all intent and purpose, attached for reference 
is the proposed Credit Information System Act as well as a narrative of the 
discussions and positions considered by the Committee in drafting this Committee 
report. 
Respectfully submitted: 
Chairman 
Committee on Banks, Financial Institutions 
and Currencies 


MEMBERS : 
CAYETANO 
RICHARD "DICK" GORDON 
EX OFFICIO MEMBERS 
ANGILINAN 


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14TH CONGRESS OF THE 
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first Regular Session 
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REPUBLIC OF THE PHILIPPINES ) 
Prepared by the Committee on Banks, Financial Institutions and Currencies in 
substitution of Senate Bill No. 62 
AN ACT 
ESTABLISHING THE CREDIT INFORMATION SYSTEM, 
AND FOR OTHER PURPOSES 
Be it enacted by the Senate and the House of Representatives of the 
SECTION 1. Title.- This Act shall be known as the "Credit Information 
Philippines in Congress assembled: 
System Act." 
SECTION 2. Declarafion of Pobcy. - 
The State recognizes the need to 
establish a comprehensive and centralized credit information system for the 
collection and dissemination of fair and accurate information relevant to, or 
arising from, credit and credit-related activities of all entities participating in the 
financial system. A credit information system will directly address the need for 
reliable credit information concerning the credit standing and track record of 
borrowers. 
The operations and services of a credit information system can be 
expected to: greatly improve the overall availability of credit especially to micro, 
small and medium-scale enterprises; provide mechanisms to make credit more 
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credit facilities. 
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financial system. 
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“Basic Credit Data” refers to positive and negative credit information 
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provided by a borrower to a submitting entity in connection with the application 
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for and availment of a credit facility. 
Any information on the borrower’s 
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creditworthiness in the possession of the submitting entity and other factual and 
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objective information related or relevant thereto in the submitting entity’s data 
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files or that of other sources of information: Provided, That in the absence of a 
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written waiver duly accomplished by the borrower, basic credit data shall exclude 
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confidential information on bank deposits and/or clients funds under Republic Act 
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No. 1405 (Law on Secrecy of Bank Deposits), Republic Act No. 6426 (The 
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Foreign Currency Deposit Act), Republic Act No. 8791 (The General Banking 
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Law of 2000) and their amendatory laws. 
cost-effective; and reduce the excessive dependence on collateral to secure 
The State shall endeavor to have credit information provided at the least 
cost to all participants and shall ensure the protection of consumer rights and the 
existence of fair competition in the industry at all times. 
An efficient credit information system will also enable financial institutions 
to reduce their over-all credit risk, contributing to a healthier and more stable 
SECTION 3. Definition of Terms. - For purposes of this Act 
“Accessing Entity” refers to any submitting entity or any other entity 
authorized by the Corporation to access basic credit data from the Corporation. 
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“Borrowef - 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. 
“BSP shall refer to the Bangko Sentral ng Pilipinas, created under 
Republic Act No. 7653 and approved on June 14,1993. 
“Corporation” refers to the Credit Information Corporation established 
under Section 5 of this Act. 
“Credit Facility” refers to any loan, credit line, guarantee or any other form 
of financial accommodation from a submitting entity: Provided, That, for purposes 
of this Act, deposits in banks shall not be considered a credit facility extended by 
the depositor in favor of the bank. 
“Credit Rating” refers to an opinion regarding the creditworthiness of a 
borrower or of an issuer of debt security, using an established and defined 
ranking system. 
“Credit Repotf” refers to a summary of consolidated and evaluated 
information on creditworthiness, credit standing, credit capacity, character and 
general reputation of a borrower. 
“Government Lending Institutions” refers to government financial 
’ institutions (GFls), government -owned-and-controlled corporations (GOCCs) 
engaged in lending activities and, such other institutions that the Monetary Board 
may deem appropriate, excluding however the Philippine Deposit Insurance 
Corporation (PDIC) and the BSP. 
“Monetary Boar$ refers to the Monetary Board of the BSP. 
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“Negative Credit Information” refers to informationldata 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. 
“Non-Accessing Entity” refers to an entity other than a Submitting Entity, 
Special Accessing Entity or Borrower that is authorized to access credit 
information from a Special Accessing Entity. 
“Outsource Entity” refers to any accredited third-party provider to whom 
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the Corporation may outsource the processing and consolidation of basic credit 
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data pertaining to a borrower or issuer of debt or convertible securities under 
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such qualifications, criteria and strict confidentiality guidelines that the 
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“Positive Credit Information” refers to informatioddata concerning the 
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credit performance of a borrower, such as but not limited to information on 
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repayments. 
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“Submitting Entity” refers to an entity which provides credit facilities such 
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as, but not limited to, banks, quasi-banks, trust entities, investment houses, 
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financing 
companies, 
cooperatives, 
non-governmental, 
micro-financing 
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organizations, credit card companies, insurance companies and Government 
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fending institutions. 
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Corporation shall prescribe and duly publish. 
“Special Accessing Entity” refers to a duly accredited private corporation 
engaged primarily in the business of providing credit reports, ratings and other 
similar credit information products and services. 
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SECTION 4. Establishment of the Credit Information System - In 
furtherance of the policy set forth in Section 2 of this Act, a credit information 
system is hereby established. 
(a) 
Banks, quasi-banks, their subsidiaries and affiliates, credit card 
companies and other entities that provide credit facilities, are required to submit 
basic credit data and updates thereon on a regular basis to the Corporation. 
(b) 
The Corporation may include other credit providers to be subject to 
compulsory participation: Provided, That all other entities qualified to be 
submitting entities may participate subject to their acceptance by the 
Corporation: 
Provided, further, That, in all cases, participation under the system 
shall be in accordance with such standards and rules that the Monetary Board 
may prescribe. 
(c) Participating submitting entities are required to regularly submit to the 
Corporation any negative and positive credit information that tends to update 
and/or correct the credit status of borrowers. The Corporation shall fix the time 
16 * interval for such submission; provided that such interval shall not be less than 
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borrowers. 
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(e) The Corporation may also access credit and other relevant information 
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from government offices, judicial and administrative tribunals, prosecutorial 
fifteen (15) working days but not more than thirty (30) working days. 
(d) The Corporation should regularly collect basic credit data of borrowers 
at least on a quarterly basis to correctlupdate the basic credit data of said 


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agencies and other related offices, as well as pension plans administered by the 
government. 
(9 Each submitting entity shall notify its borrowers of the former's 
obligation to submit basic credit data to the Corporation and the disclosure 
thereof by the Corporation, subject to the provisions of this Act and the 
implementing rules and regulations. 
(9) The Corporation is in turn authorized to release consolidated basic 
credit data on the borrower, subject to the provisions of Section 6 of this Act. 
(h) The negative information on a borrower as contained in the credit 
history files of borrowers should stay in the database of the Corporation for not 
more than five years from and after the date when the negative credit information 
was rectified through payment or liquidation of the debt, or through settlement of 
debts through compromise agreements or court decisions that exculpate the 
borrower from liability. 
(i) Special Accessing Entities must be accredited by the Corporation in 
accordance with such standards and rules as the Monetary Board may prescribe 
(j) Special accessing entities shall be entitled access to the Corporation's 
pool of consolidated credit information, subject to the provisions of Sections 6 
and 7 of this Act and related implementing rules and regulations. 
(k) Special Accessing Entities are prohibited from releasing basic credit 
data received from the Corporation or credit reports and credit ratings derived 
from the basic credit data received from the Corporation, to non-accessing 
entities unless written consent or authorization has been obtained from the 
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Borrower: Provided, however, That in case the borrower is a local government 
unit (LGU) or its subsidiary or affiliate, the special accessing entity may release 
credit information on the LGU, its subsidiary or affiliate upon request of the 
payment of reasonable fees by a constituent of the concerned LGU. 
(I) Outsource entities, which may process and consolidate basic credit 
data, are absolutely prohibited from releasing such data received from the 
Corporation other than to the Corporation. 
(m) Accessing Entities shall hold strictly confidential any credit information 
they receive from the Corporation. 
(n) The borrower has the right to know the causes of refusal of the 
application for credit facilities from a financial institution that uses basic credit 
data as basis or ground for such refusal. 
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(0) The borrower, for a reasonable fee, shall have, as a matter of right, 
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ready and immediate access to the credit information pertinent to the borrower. 
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. The Corporation shall 
investigate and verify the disputed information within five working days from 
receipt of the complaint. If its accuracy cannot be verified and cannot be proven, 
the disputed information shall be deleted. The borrower and the accessing 
entities and special accessing entities who have received such information shall 
be informed of the corresponding correction or removal within five working days. 
The Corporation should use a simplified dispute resolution process to fast track 
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the settlementhesolution of disputed credit information. Denial of these 
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indemnity. 
SECTION 5. Establishment of the Central Credit Information Corporation- 
(a) 
The Corporation shall be established as a stock corporation under 
Batas Pambansa Bldg. 68 (The Corporation Code). The primary purpose of the 
Corporation shall be 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 
the borrowers. 
(b) 
The ownership of the BSP in the Corporation shall not exceed forty 
percent (40%) and its equity investment therein is hereby authorized 
notwithstanding the prohibition under Republic Act No. 7653. 
Industry 
associations 
of 
banks, 
quasi-banks, 
other 
credit-related 
associations, 
associations of consumers and other entities as the Monetary Board may allow, 
may also subscribe and own shares in the Corporation, subject to a ten percent 
(10%) individual ceiling or such other ceiling as the Monetary Board may 
prescribe; provided that all the aforementioned qualified stockholders shall be 
offered equal equity participation in the Corporation. 
(c) 
The BSP may purchase capital notes that may be issued by the 
CorDoration as a suwlement to caDital notwithstanding the Drohibition under 


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Republic Act No. 7653, provided that the BSP owns at least 34% of the 
Corporation. 
(d) 
The Monetary Board shall prescribe additional requirements for the 
establishment of the Corporation, such as industry representation, capital 
structure, number of independent directors, and the process for nominating 
directors, and such other requirements to ensure consumer protection and free, 
fair and healthy competition in the industry. 
(e) 
The BSP Governor shall be the chairman of the board. Whenever 
the Governor is unable to attend a meeting of the board, he shall designate a 
11 ' member of the Monetary Board to act as his alternate. 
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(9) 
Operations. 
The Corporation shall acquire and upgrade 
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technology, equipment and facilities in its operations to ensure its continuing 
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competence and capability to provide updated negative and positive credit 
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information; to enable the Corporation to relay credit information electronically as 
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well as in writing to those authorized to have access to the credit information 
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system; and to insure accuracy of collected, stored and disseminated credit 
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information. The Corporation shall implement a borrower's identification system 
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for the purpose of consolidating credit information 
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The directors and principal officers of the Corporation, except for 
the BSP Governor or his designated representative, shall be qualified by the ESP 
under its "fit and proper" rule for bank directors and officers. 
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SECTION 6. Confidentiality of Credit Information. - The Corporation, the 
accessing entities, the special accessing entities and duly authorized non- 
accessing entities shall hold the credit information under strict confidentiality and 
shall use the same only for the declared purpose. Outsource entities, which may 
process and consolidate basic credit data, are absolutely prohibited from 
releasing such data received from the Corporation other than to the Corporation. 
The accreditation of an accessing entity, a special accessing entity and/or 
an outsource entity which violates the confidentiality of, or which misuse, the 
credit information accessed from the Corporation, may be suspended or revoked. 
Any entity which violates this section may be barred access to the credit 
information system and penalized pursuant to Section 12 of this Act. 
The Corporation shall be authorized to release and disclose consolidated 
Basic Credit Data only to the BSP, the Accessing Entities, the Special Accessing 
Entities, the Outsource Entities and Borrowers. Basic Credit Data released to 
Accessing Entities shall be limited to those pertaining to existing Borrowers or 
Borrowers with pending credit applications. 
Credit information shall not be 
released to entities other than those enumerated under this Section except upon 
order of the court. 
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SECTION 7. Educational 
Campaign. - A 
continuing 
nationwide 
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educational campaign shall be developed and undertaken by the Corporation to 
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promote the benefits of a credit information system to the economy; to create 
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awareness on the rights of consumerslborrowers to access their credit reports 
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collected, stored and disseminated by the Corporation; to disseminate the rights 
of the borrowers to dispute any incorrectlinaccurate credit information in the 
database file of the Corporation; to familiarize consumers of the procedure in 
collecting, storing and disseminating credit information of borrowers by the 
Corporation; and to brief consumers of other related information. 
SECTION 8. Rules and Regulations. - For purposes of creating a healthy 
balance between the need for reliable credit information and safeguarding 
consumer protection, ensuring free and healthy competition in the industry, the 
Monetary Board, in coordination with existing industry stakeholders, shall issue 
the implementing rules and regulations (IRRs), which shall be submitted to the 
congressional oversight committee which shall review, revise and approve the 
same: 
(a) Restrictions on the use and transfer of credit information; 
(b) Rights of the borrowers to access their respective credit information 
and to dispute the factual accuracy of such credit information; 
(c) 
Requirements and standards for the establishment of the 
Corporation including, but not limited to, ownership, industry representation, 
independent directors and process of nomination of directors; 
(d) 
Accreditation standards for submitting and special accessing 
entities; 
(e) 
Sanctions to be imposed by the Corporation on: 
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delayed and/or erroneous reporting; 
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In addition, the Monetary Board may regulate access to the credit 
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information system as well as the fees that shall be collected by the Corporation 
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from the Accessing and Special Accessing Entities, taking into consideration the 
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policy of lowering the cost of credit, promoting fair competition, and the need of 
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SECTION 9. Congressional Oversight Committee. - There is hereby 
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created a congressional oversight committee, composed of five Members from 
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the Senate and five Members from the House of Representatives. The Members 
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from the Senate shall be appointed by the Senate President with at least two 
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Senators representing the minority. 
The Members from the House of 
(i) The submitting entities for non-submission of reports and for 
(ii) Accessing entities, special accessing entities, outsource entities 
and duly authorized non-accessing entities, for breaches of the confidentiality of, 
misuse of, the credit information obtained from the credit information system; and 
(iii) Violations of other applicable rules and regulations: Provided, 
That these sanctions shall be in the form of applicable administrative penalties 
under Section 37 of Republic Act No. 7653; and 
(9 Suspension or cancellation of the rights of any Accessing entity or 
Special Accessing Entity to access Credit Information from the Corporation 
Provided, That the Monetary Board may issue subsequent regulations consistent 
with the IRR as approved by the Congressional Oversight Committee. 
the Corporation to employ state-of-the-art technology. 
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Representatives shall be appointed by the Speaker with at least two Members 
representing the minority. 
After the Oversight Committee will have approved the implementing rules 
and regulations, it shall thereafter become functus officio, and therefore cease to 
exist; provided that the Congress may revive the Congressional Oversight 
Committee in case of a need for any major revisionls in the implementing rules 
and regulations. 
SECTION 10. 
Indemnity in Favor of the Corporation, its Officers and 
Employees. - Unless the Corporation or any of its officers and employees is 
found liable for any willful violation of this Act, bad faith, malice and/or gross 
negligence, the Submitting Entities, Accessing Entities, Special Accessing 
Entities, Outsource Entities and duly authorized non-accessing entities shall hold 
the Corporation, its officers and employees harmless to the fullest extent 
permitted by law and shall indemnify them for any and all liabilities, losses, 
claims, demands, damages, deficiencies, costs and expenses of whatsoever kind 
and nature that may arise in connection with: 
(i) the performance of their functions, or 
(ii) any and all breaches of their covenants, obligations, duties and 
responsibilities, representation or warranties under this Act, or in connection with 
Credit Information which was obtained and/or disseminated under the Credit 
Information System 
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SECTION 11. 
Exemption from Liability. - A Submitting Entity, an 
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Accessing Entity, a Special Accessing Entity, an Outsource Entity, the 
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Corporation and their respective officers and employees shall not be criminally 
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liable nor civilly liable for acts done by them under Section 4 of this Act, unless 
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there is a clear showing of bad faith, malice or gross negligence as determined 
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by the court. Neither shall they be administratively liable for the same acts, 
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unless there is a clear showing of bad faith, malice or gross negligence as 
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determined by the Monetary Board. 
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Penalties. - Any person who willfully violates any of 
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the provisions of this Act or the rules and regulations promulgated by the 
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Monetary Board under authority thereof shall, upon conviction, suffer a fine of not 
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(Pl,OOO,OOO.OO) or imprisonment of not less than one year nor more than five 
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years, or both, at the discretion of the court. 
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SECTION 12. 
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SECTION 13. 
inviolable Nature of the Secrecy of Bank Deposits 
and/or Client funds. - Pursuant to Republic Act No. 1405 (Law on Secrecy of 
Bank Deposits), Republic Act No. 6426 (The Foreign Currency Deposit Act), 
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Republic Act No. 8791 (The General Banking Law of 2000), Republic Act No. 
9160 (Anti-Money Laundering Law) and their amendatory laws, nothing in this 
Act shall impair the secrecy of bank deposits and/or client funds 
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8 an annual report to Congress on the status of the implementation of this Act. 
SECTION. 14. 
Annual Report. - The Monetary Board, shall submit 
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SECTION 15. Separability Clause. - Should any provision of this Act or 
the application thereof to any person or circumstance be held invalid, the other 
provisions or sections of this Act shall not be affected thereby. 
SECTION 16. 
Repealing Clause. - This Act repeals Presidential 
Decree No. 1941 in its entirety. All laws, decrees, executive orders, rules and 
regulations or parts thereof which are inconsistent with this Act are hereby 
repealed, amended or modified accordingly. 
SECTION. 17. 
Effectivity Clause. - This Act shall take effect fifteen 
(15) days following its publication in the Official Gazette or in two national 
newspapers of general circulation 
Approved, 
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COMMITTEE ON BANKS, FINANCIAL INSTITUTIONS AND CURRENCIES 
SUMMARY OF PROCEEDINGS 
I. BACKGROUND 
The absence of a centralized credit information system is a deterrent to 
the development of our financial system. It makes borrowing costly and 
inaccessible to small borrowers, and exposes the financial institutions to 
excessive and unnecessary risk. 
The establishment of a centralized credit information system will improve 
the availability of credit especially to small yet responsible borrowers, as their 
good track record in paying their obligations will be made known to the financial 
institutions. Currently, the absence of reliable credit information makes financial 
institutions hesitant in granting credit to small borrowers, leaving the latter at the 
mercy of loan sharks. 
Good and efficient credit information will lower the cost of financing. Since 
the cost of gathering credit information will be lower, the amount to be passed 
on to borrowers will likewise be minimized. Thus, banks will no longer charge 
high interests to known responsible borrowers as the credit risk will be lower. 
Excessive dependence on physical collateral to secure credit facilities will 
be minimized. 
At present, due to lack of complete and credible credit 
information in assessing the creditworthiness of prospective borrowers, the 
system relies a lot on collateral to be able to extend credit. This further hampers 
access to financing on the part of small borrowers. 
From the regulatory perspective, a centralized credit information system 
will contribute to a healthier and more stable financial system because the 
lending institutions would be able to have access to accurate and reliable credit 
information which will enable them to make sound credit decisions. Moreover, 
this will encourage responsible borrowing attitude as debtors will know that a 
negative credit record will be perpetuated. 
To emphasize the importance of the establishment of a centralized credit 
information system, it may be useful to note that the World Bank, in its reports, 
cited that the existence of a good credit information system reduces the 
information asymmetry between the borrowers and lenders, thereby lowering the 
credit risk and improving portfolio quality. Also, it will allow lenders to more 
accurately evaluate risks, thereby increases the availability of credit. 
The aforementioned benefits of a centralized credit information system 
prompted the Committee on Banks, Financial Institutions and Currencies to 
immediately act on the financial measure entitled "AN ACT ESTABLISHING A 
CREDIT INFORMATION SYSTEM, AND FOR OTHER PURPOSES" 


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11. COMMITEE ACTION 
A. The Committee on Banks, Financial Institutions and Currencies (the 
"Committee") conducted two (2) public hearings on the proposed bill on 
November 9 and 26, 2004 in the 13th Congress and one (1) hearing during 
the 14th Congress, October 2, 2007. 
B. The discussions in the hearings, as well as the comments and suggestions 
in the position papers submitted to the Committee in the 13'h Congress, 
were made an integral part of and were taken into consideration, in the 
drafting of the Substitute Bill. 
111. FINDINGS 
A. On the structure of the Credit Information System 
The Credit Information System will have the following structure: 
- ,.,,, 
Subscribers 
', 
,' 
Le 
. 
. . , . . , , , , . , , '  
\ 
b 
Raw Credit Informationi'''...-.--., 
..,...I """ 
.- 
credit ~
~
,
,
~
~
~
/
~
~
~
d
i
~
 
Ratina i/ 
Banksand Other CreditPmviders 
,.-.... -~ ~- 
2/ Private Credit Rating Agencies and Credit 
Borrowers' Own Data 
At the center of the Credit Information System is the Central Credit 
Information Corporation (the "Corporation"). It will be an entity organized 
under the Corporation Code of the Philippines of which the Bangko Sentral 
ng Pilipinas (the ''BSp") will be a major shareholder. There may be other 
investors such as credit-related industry associations. 
There are two primary sources of credit information in the 
proposed Credit Information System - the borrowers and other 
transactors/customers. The information will be coursed through three 
types of entities - (1) the banks and government lending institutions, (2) 
other entities that provide credit such as cooperatives, micro-finance 
institutions and other similar institutions (Other submitting entities); and 
(3) Other sources of useful credit information such as utility companies. 


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The information would be collected through the Corporation, and 
the Corporation could process this information and distribute it through 
the "accessing entities", who are likewise the primary providers of credit 
information (i.e. banks). Credit information may likewise be provided to 
special accessing entities, which include the private credit bureaus and 
private credit rating agencies. These entities can source information from 
the Corporation and may use the information for creating credit reports 
and ratings and may add whatever value to the report as required by their 
customers. 
The Credit Information System will cover all borrowers. Thus, it will 
cover both natural and juridical persons. A borrower identification system 
will be established to facilitate the consolidation of credit information on a 
borrower. It will gather both positive and negative information. 
The borrowers would have the right to know the credit information 
about them and shall be able to dispute inaccurate information. There are 
also safeguards to be imposed against breach of confidentiality and 
misuse of borrower information. 
The Monetary Board shall have the oversight power over the 
operation of the Credit Information System and shall promulgate the 
implementing rules and regulations (IRR) 
B. On protection against inaccurate and disparaging information 
Discussion 
In a centralized credit information system, inaccurate and 
disparaging credit information regarding a person will practically destroy 
him financially. There should be safeguards embedded in the system to 
protect the borrowers.' Although a borrower has a right to rectify wrong 
credit information, the damage may have been done already before he 
can have the chance to correct the inaccuracy. 
In the original scheme contemplated by the bill, the basic 
safeguard is the right of a borrower to know the information about him so 
that he will be able to protect himself. Moreover, the Monetary Board, 
through the IRR, will prescribe administrative sanctions on accessing 
entities and other parties who breached the confidentiality of, or misuse, 
the data. The sanctions contemplated could be in the nature of fines 
and/or denial of access to the system.2 
Committee Consensus 
The rights of the Borrower to access Credit Information about him 
and to have inaccurate information corrected accordingly will be clearly 
provided in the law. Unreasonable denial of these rights will entitle the 
Borrower to indemnity. 
- 
~ 
' Senator Edgardo I. Angara, Chairman. 
' Assistant Governor Nestor Espenilla, BSP. 


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In order to avoid undue delegation of legislative powers, the nature 
and the maximum amount of the administrative sanctions should be 
incorporated in the law itself, and not only in the IRR. Penal sanctions 
should likewise be imposed upon erring parties. 
In the implementation of the law, it is suggested that the 
borrowers be educated to monitor their credit information and to properly 
dispute or question inaccuracies therein. 
C. On government ownership 
Discussion 
The proposed bill provides that the Corporation will be owned by the 
government, through the BSP, to the extent of 40%. This will avert the 
possibility that the Corporation will be construed as a government-owned 
and controlled corporation ("GOCC"). 
However, some 
resource persons proposed the creation of the 
Corporation as a GOCC in order to ensure the funding thereof. Does this 
mean that all of the employees coming from the private sector shall 
become government employees as well? If so, this may be a problem 
since the Board will be composed mostly of persons from the private 
sector, who might be hesitant to accept the nomination in view of the fact 
that they will then be subjected to severe restrictions being imposed upon 
public officials. 
The BSP clarified that the Corporation should be a purely private 
corporation. Thus its directors and employees will not be considered Civil 
Service  employee^.^ The purpose of making the Corporation a private 
corporation is to strike a balance between the credibility and integrity that 
the BSP ownership in the Corporation would add and the necessity of 
giving the 
sufficient flexibility to conduct its operation in an efficient 
manner. 
The SEC suggested that instead of an implicit authority for the BSP 
to establish a subsidiary, it should be only categorically authorized to 
invest in the proposed entity.5 
Committee Consensus 
The Corporation will not be majority-owned by the BSP, However, 
BSP shall maintain a substantial part of the Corporation's ownership. The 
law shall provide that BSP may own up to 40% of the Corporation in order 
to erase doubts of it being a private corporation. 
Former Prime Minister Virata, President of the Bankers Association of the Philippines. 
Assistant Governor Juan de ZuRiga, Bangko Sentral ng Pilipinas. 
SEC position paper dated 22 November 2004. 


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On the nature of the law 
The question raised is: Although the Corporation will be incorporated 
under the Corporation Code, it likewise has already provided for the 
ownership structure of the Corporation. It is therefore unclear whether the 
bill calls for the establishment of a system or is a charter of the Corporation. 
Committee consensus 
The proposed law is not a charter of the Corporation. It should 
only enable the incorporation of a single Corporation. What the law should 
establish is a centralized credit information system and the Corporation is 
but one component of the system. 
D. On the BSP supervision over the operations and activities of accessing 
entities 
Discussion 
The Bill provides that the operations and activities of accessing 
entities, broadens the supervisory powers of the BSP since the term 
"accessing entity" include entities other than the institutions currently 
being supervised by the BSP.6 
The purpose of allowing the BSP certain supervision over the 
accessing entities is to ensure quality and accuracy of the inf~rmation.~ 
Committee Consensus 
The law should not extend BSP's supervisory power to other 
accessing entities. Instead, the Corporation may impose sanctions on 
erring entities. The Corporation may likewise suspend or cancel an entity's 
right of access to the Credit Information System on certain grounds. The 
Monetary Board shall set forth in the IRR the guidelines for the 
Corporation's exercise of its authority. 
As the Corporation's major shareholder, the BSP can exercise 
influence within the board and ensure that the quality and accuracy of the 
information are being maintained. 
E. On the effect on the Bank Secrecy Law 
Discussions 
A question was raised whether the proposed law will be an 
exception to the Bank Secrecy Law.8 The BSP explained that the law will 
not permit the Corporation unlimited access to deposit accounts. The 
information that will be gathered on deposits will be purely voluntary on 
the part of the borrowers who disclose their information to the lending 
institutions. 
Commissioner Joselia Poblador, Securities and Exchange Commission. 
' Assistant Governor Nestor Espenilla, BSP. 
* Atty Francis Lim, President of the Philippine Stock Exchange. 


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Committee Consensus 
The non-inclusion from the coverage of "credit information" of 
confidential information on bank deposits and/or client funds under the 
Bank Secrecy Law, Foreign Currency Deposit Act and the General Banking 
Act should be explicitly provided in the law to avoid confusion. 
F. On the participation requirement 
For banks, which are the major sources of credit information, it is 
envisioned that their participation in the system will be mandatory. The 
experience of private credit bureaus would show that where participation 
is merely voluntary, the system would not work. Some banks, for business 
reasons, would not want to volunteer information on their valued clients. 
Thus, it is necessary for banks to be mandatory providers of information 
on all  borrower^.^ 
Committee Consensus 
Banks should not be singled out as there are other rich sources of 
credit information. Thus, subsidiaries and affiliates of banks should 
likewise be required to provide information. Moreover, the Monetary Board 
shall have the authority to designate other institutions to be mandatory 
providers of information. 
Other financial institutions will be required only on a reciprocity 
basis - that is, if they contribute information, they will also be able to 
benefit from the information pool. Thus, once an institution joins the 
system, it will be required, as a matter of duty, to supply information. 
, 
G. On the confidentiality of credit information 
Discussion 
There was a proposal to allow the general public to access credit 
information, subject to the rules of confidentiality and other conditions. 
This information would be useful when conducting due diligence in 
negotiating mergers and acquisitions of companies." 
The BSP reiterated that access is limited only to certain entities - 
accessing entities, outsource entities and special accessing entities. 
However, the special accessing entities can actually provide information to 
third parties, with the consent of the party concerned. 
Committee Consensus 
Credit information should not be made readily available to the 
general public. However, if the subject of the credit information authorizes 
access, a special accessing entity may provide such information to other 
parties. 
' 
Assistant Governor Nestor Espenilla, BSP. 
lo Atty. Manuel Yngson, 3r. Founding Chairman and President of Corporate Rehabilitation and 
Insolvency Practitioners Association of the Philippines (CRIPAP)