If they do so, Gov. Hilario Davide III can expect a legal battle.
Pablo Garcia, former congressman and Cebu governor, said the Cebu Provincial Board cannot revoke its 1987 Memorandum of Agreement (MOA) with the CFI Community Cooperative Inc. without the coop’s consent because the agreement is bilateral.
“If they do that, they’ll have to go to court,” Garcia told reporters yesterday.
He and his wife retired judge Esperanza Garcia, who is the chairman and founder of the multi-awarded coop, pointed out the benefits that coop members enjoy, including most of the Capitol’s 1,500 employees who belong to it.
Low interest of 1 percent a month for loans and the payment of annual dividends is the biggest draw, on top of a P300,000 bereavement benefit for the family of a member who dies.
The coop holds office in its own 10-story building in the Capitol compound, and has one of the most prosperous portfolios of coops nationwide with P6.1 billion in total assets as of 2012 and over 78,000 members around the country.
Under the 1987 MOA, signed during the term of governor Osmundo Rama, the credit coop is assured of prompt payment of all employee loans because the province authorized to “permit the credit cooperative to pay the salary and COLA due to every employee subject to reimbursement by the provincial government. In this system, the member-borrower employee will now collect his salary from the said cooperative and no longer with the paymaster of the Capitol.”
UNDER REVIEW
Governor Davide yesterday said he favors a review of the MOA, which is being discussed in the provincial legislature, because the coop has “monopolized providing salary loans to employees.”
“That is very hard especially for the employees. They have a hard time paying their loans with high interest. I heard that others even ‘sell’ their ATM cards. That’s very unfortunate,” Davide said.
Because of this, he said employees cannot fully use their various incentives given throughout the year.
“I have yet to see Atty. (Orvi) Ortega’s recommendations. Of course, we have long heard that CFI monopolized the loans of employees here. As for my part, I am interested to review that,” he said.
In a separate interview, Pablo Garcia denied that the coop was enjoying special treatment from the Capitol with the direct release of the employees payroll to the coop to settle any salary loans.
He said it was the responsibility of the employer to remit loan payments to the coop under section 58 of Republic Act 9520 contained in the Philippine Cooperative Code .
“We are following the law. Violation of that provision is a criminal offense,” he said.
He said other lending firms and coops also operate in the Capitol such as the City Savings Loan Association and Central Visayas Agriculture Cooperative.
REVOKE
Last Monday, the PB during its regular session, discussed the possibility of revoking the MOA and allowing other coops to tie up with the provincial government.
Ortega, the provincial legal officer, gave his opinion that the MOA as a bilateral agreement ”can be reformed, rescinded and terminated by either of the parties” by having the PB issue another resolution terminating the MOA and notifying the coop.
“The downside,” he cautioned, “is that majority of the Province of Cebu employees are members of the CFI. It might affect their financial situations especially that it is of common knowledge that many of them have been relying on the CFI for their financial needs.”
The MOA was signed in Oct. 8, 1987 based on a resolution of the PB authorizing then Governor Osmundo Rama.
The goal was to provide better credit facilties to Capitol employees to put an end to “immoral money-lending activities of the so-called loan sharks in the Capitol who extend loans to provincial employees with exorbitant and unconscionable interest charges.”
P1 MILLION DONATION
Retired judge Esperanza Garcia, who was interviewed yesterday in her office at the CFI building, said the coop donates P1 million each year to the province as part of its social responsibility and cooperation to the national government’s Public-Private Partnership (PPP) program.
She said it has maintained a low interest rate with payment based on a diminishing balance for loans. The interest comes out to 12.1 percent a year or about 1 percent a month, which is much lower than other commercial lending firms, she said.
At the end of the year, coop members receive a cash dividend through patronage refunds.
Scrapping the MOA would mean Capitol employees who belong to the coop would have to voluntarily pay for their loans every month instead of having it deducted automatically from their payroll.
Another one who spoke in defense of the coop during yesterday’s interview was Ramon Dumayac, who wears two hats as a member of the CFI coop board of directors and the assistant provincial accountant.
“A lot of Capitol employees including me have sent their children to school with the help of CFI through our school loan. People pile up in our processing area during enrollment. For employees, there’s no problem,” he said.
He said members have a P60,000 benefit for healthcare and hospitalization needs.
“The benefits that they receive from CFI are even bigger than what Capitol gives,” he added.
Governor Davide said “We will wait for the action of the board. But there is a need to look into that.”
Vice Gov. Agnes Magpale said the PB is still looking into the matter and hasn’t decided on a final action.
“We had questions about this many weeks ago about the status of CFI, especially about the payrolls directly sent to the CFI coop. We wanted a clarification. That’s why we asked Annie (provincial secretary Anecita Pasaylo) to dig information because we can’t answer questions posed to us,” Magpale said.
“It does not mean that because we reviewed it, it would immediately mean that we will change it. That’s not the purpose. We just asked them for the terms of the MOA.”
CFI was established in 1970 by Garcia, who was a clerk of court at the Court of First Instance, with Justice Franscisco Tantuico to assist CFI employees to get out of financial problems with loan sharks. It started with 29 members and a capital of P200.