G.R. No. 189571 January 21, 2015
THE HONORABLE MONETARY BOARD and GAIL U. FULE, Director, Supervision and Examination Department II, and BANGKO SENTRAL NG PILIPINAS, Petitioners, vs. PHILIPPINE VETERANS BANK, Respondent.

FACTS

Respondent Philippine Veterans Bank established a pension loan product for veterans and a salary loan product for teachers and low-salaried employees. As these borrowers often lacked real estate security, the bank charged a higher fee known as a Credit Redemption Fund (CRF). The fees were credited to Special Trust Funds managed by the bank’s Trust and Investment Department, with the bank as beneficiary, to pay the outstanding obligations of borrowers in case of death. An examination by the Bangko Sentral ng Pilipinas (BSP) found that this collection of premiums violated Section 54 of Republic Act No. 8791 (the General Banking Law of 2000), which prohibits a bank from directly engaging in insurance business as an insurer. The BSP, citing an opinion from the Insurance Commission that the CRF was a form of insurance, directed the bank to discontinue the collection, which the bank did on February 24, 2004. Subsequently, the Monetary Board issued Resolution No. 1139, directing the bank to return all CRF balances to the borrowers. The bank’s request for reconsideration was denied. The bank then filed a Petition for Declaratory Relief with the Regional Trial Court (RTC) of Makati City. The RTC initially dismissed the petition, ruling that the bank had violated the law and that an ordinary civil action was the proper remedy. However, upon the bank’s motion for reconsideration (which it filed almost a year later, claiming late receipt of the dismissal order), the RTC reversed itself, granted the petition, and declared that the bank was not directly engaged in insurance business and that the Monetary Board Resolution was null and void. Petitioners appealed this decision.

ISSUE

Whether or not the petition for declaratory relief filed by respondent Philippine Veterans Bank is proper.

RULING

No, the petition for declaratory relief is not proper. The Supreme Court ruled that a petition for declaratory relief is governed by Section 1, Rule 63 of the Rules of Court, which allows such an action to determine any question of construction or validity arising from a statute, executive order, regulation, or ordinance before a breach or violation thereof. The Court held that the decision of the BSP Monetary Board (MB Resolution No. 1139) cannot be a proper subject of a petition for declaratory relief because it was issued by the Monetary Board in the exercise of its quasi-judicial powers. The Court cited its ruling in CJH Development Corporation v. Bureau of Internal Revenue, stating that decisions of quasi-judicial agencies cannot be subjects of a petition for declaratory relief, as aggrieved parties must avail themselves of the remedies provided by the Rules of Court. The authority of the Monetary Board to issue the resolution stemmed from its powers under Section 37 of Republic Act No. 7653 (The New Central Bank Act) and Section 66 of Republic Act No. 8791 to impose administrative sanctions for violations of banking laws. The Court, referencing United Coconut Planters Bank v. E. Ganzon, Inc., affirmed that the BSP Monetary Board is a quasi-judicial agency, and its determination of whether to impose sanctions on erring banks is an exercise of a quasi-judicial function. Therefore, the RTC should not have taken cognizance of the petition for declaratory relief.