9. the Honorable Monetary Board v Philippine Veterans Bank GR 189571

The Honorable Monetary Board v Philippine Veterans Bank GR 189571 (Jan 21, 2015) 1.

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The Philippine Veterans Bank, pursuant to its mandate to provide financial assistance to veterans and teachers under Republic Acts 3518 and 7169, established pension loans for bona fide veterans and beneficiaries, as well as salary loan products for teachers. As these clientele do not have security other than their continuing good health or employment, to secure their loans, the PVB devised a program by charging a premium, a higher fee known as Credit Redemption Fund (CRF) from the borrowers. Special Trust Funds were established by PVB for the loans of its clientele and in case of death of the borrower, the fees charged from him and credited to the trust funds will be used to fully pay the loan. Bangko Sentral ng Pilipinas found that PVB’s collection of the CRF violated Section 54 of Republic Act No. 8791 which prohibited banks from directly engaging in insurance business as insurer. Thus, it wrote the PVB to inform it that CRF is a form of insurance, based on opinion by the Insurance Commission and should be discontinued. PVB then stopped collecting the fees. The Monetary Board issued MB Resolution No. 1139 directing the PVB’s Trust and Investment Department to return to the borrowers all the balances of the CRF; and to preserve the records of borrowers who were deducted CRF pending resolution of ruling of the Office of the General Counsel of the BSP. The BSP denied PVB’s request for reconsideration, hence it filed a petition for declamatory relief before the RTC of Makati City. The Monetary Board moved to dismiss the petition, citing that the petition should not prosper because of the prior breach of PVB by Section 54 of RA 8791. The RTC dismissed the petition for declaratory relief, ruling that the issue of whether or not PVB violated Section 54 of Republic Act 8791 should be resolved in an ordinary civil action, not a declaratory relief. Almost year later, it filed a Motion to Admit Motion for Reconsideration, stating that it did not receive a copy of the order until September 3, 2008, which the Monetary Board opposed, alleging that per certification by the Philippine Postal Corporation, the order was served on respondent on October 17, 2007. The RTC ruling on the motion for reconsideration, reversed itself and ruled that the collection of the CRF by PVB did not constitute engaging in the issuance business as an insurer, hence not a violation of Section 54 of RA 8791. Accordingly, it declared MB Resolution No. 1189 null and void. Its motion for reconsideration denied, it filed before the Supreme Court a petition for review on certiorari to contest the RTC decision, on the issue of whether or not the petition for declaratory relief is proper.

ISSUE: Was the petition for declaratory relief proper?

HELD: Declaratory relief is an action by any person interested in a deed, will, contract or other written instrument, executive order or resolution, to determine any question of construction or validity arising from the instrument, executive order or regulation, or statute; and for a declaration of his rights and duties thereunder. The only issue that may be raised in such a petition is the question of construction or validity of provisions in an instrument or statute In CJH Development Corporation v. Bureau of Internal Revenue, the SC that in the same manner that court decisions cannot be the proper subjects of a petition for declaratory relief, decisions of quasi-judicial agencies cannot be subjects of a petition for declaratory relief for the simple reason that if a party is not agreeable to a decision either on questions of law or of fact, it may avail of the various remedies provided by the Rules of Court. In this case, the decision of the BSP Monetary Board cannot be a proper subject matter for a petition for declaratory relief. The BSP Monetary Board is a quasi-judicial agency and the MB resolution it issued was in its exercise of quasi-judicial powers or functions. o The authority of the petitioners to issue the questioned MB Resolution emanated from its powers under Section 37 of RA No. 7653 and Section 66 of RA No. 8791 to impose, at its discretion, administrative sanctions, upon any bank for violation of any banking law. o The nature of the BSP Monetary Board as a quasi-judicial agency, and the character of its determination of whether or not appropriate sanctions may be imposed upon erring banks, as an exercise of quasi-judicial function 

A quasi-judicial agency or body is an organ of government other than a court and other than a legislature, which affects the rights of private parties through either adjudication or rule making. The very definition of an administrative agency includes its being vested with quasi-judicial powers. o It recognizes the need for the active intervention of administrative agencies in matters calling for technical knowledge and speed in countless controversies, which cannot possibly be handled by regular courts.

A “quasi-judicial function” is a term which applies to the action, discretion, etc. of public administrative officers or bodies, who are required to investigate facts, or ascertain the existence of facts, hold hearings, and draw conclusions from them, as a basis for their official action and to exercise discretion of a judicial nature.

Lastly, also worth noting is the fact that the court a quo’s Order dated September 24, 2007, which dismissed respondent’s petition for declaratory relief, had long become final and executory. o To recall, said Order was duly served on and received by respondent on October 17, 2007, as evidenced by the Certification issued by the Philippine Postal Corporation. Almost a year later, however, or on October 15, 2008, respondent moved for

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reconsideration of the court a quo’s Order of dismissal, claiming it received a copy of said Order only on September 3, 2008. Thus, respondent’s self-serving claim should not have prevailed over the Certification issued by the Philippine Postal Corporation. It was error for the trial court to entertain it for the second time despite the lapse of almost a year before respondent filed its motion for reconsideration against said Order.