Case Summary (G.R. No. 189571)
BSP Examination and Insurance Violation Finding
An April 2002 BSP examination concluded that the CRF operated as insurance in violation of Section 54 of RA 8791, which bars banks from directly engaging in insurance business. The BSP, citing an Insurance Commission opinion, directed PVB in March 2003 to cease CRF collections.
Discontinuance of CRF and Monetary Board Resolution
PVB complied on February 24, 2004. Subsequently, on September 16, 2005, the BSP Monetary Board issued Resolution No. 1139 ordering PVB to refund CRF balances totaling ₱144,713,224.54 and to preserve borrower records pending legal resolution. PVB’s request for reconsideration was denied on December 5, 2006.
RTC Declaratory Relief Proceeding and Initial Dismissal
PVB filed a petition for declaratory relief in the Makati RTC. The BSP moved to dismiss, citing PVB’s breach of Section 54. On September 24, 2007, the RTC dismissed the petition, ruling that PVB had engaged in prohibited insurance activity and that ordinary civil remedies, not declaratory relief, were appropriate.
RTC Reconsideration and Declaratory Relief Granted
PVB’s belated motion for reconsideration—filed almost a year later—was admitted despite BSP evidence of timely service. On June 15, 2009, the RTC reversed its dismissal and declared that PVB’s CRF was not insurance, rendering Monetary Board Resolution No. 1139 null and void. BSP’s motion for reconsideration was denied on August 25, 2009.
Issue on Proper Subject of Declaratory Relief
The Supreme Court identified the central issue as whether a decision of the BSP Monetary Board, a quasi-judicial body, may be challenged via declaratory relief. Rule 63 of the Rules of Court limits such relief to questions of construction or validity of statutes, written instruments, executive orders, resolutions, or regulations—not decisions of quasi-judicial agencies.
Quasi-Judicial Nature of the BSP Monetary Board
Under Section 37 of RA 7653 and Section 66 of RA 8791, the Monetary Board may investigate, hear evidence, and impose administrative sanctions on banks. These powers, including subpoena, contempt, fines, suspension, and license revocation, establish its quasi-judicial character. Consequently, its resolutions cannot be subjects of declaratory relief.
Finality of the RTC’s First Order of Dismissal
The Court noted that the RTC’s September 24, 2007 Order became final and ex
...continue readingCase Syllabus (G.R. No. 189571)
Facts
- Philippine Veterans Bank (“respondent”) was created under RA 3518 and rehabilitated under RA 7169 to extend pension loans to bona fide veterans or surviving spouses and salary loans to teachers and low-salaried employees.
- Lacking traditional collateral, the bank imposed a higher fee called the Credit Redemption Fund (CRF) as a form of premium, credited to special trust funds managed by its Trust and Investment Department.
- The trust funds were designed to pay off the borrower’s outstanding obligation in the event of death, with the bank as beneficiary.
BSP Examination and Directives
- On April 30, 2002, the BSP’s Supervision and Examination Department II examined respondent and concluded that the CRF scheme constituted unauthorized insurance under Section 54 of RA 8791 (General Banking Law of 2000).
- In March 2003, the BSP conveyed the Insurance Commission’s opinion that the CRF was insurance, directing respondent to discontinue its collection.
- Respondent ceased CRF collections on February 24, 2004.
Monetary Board Resolution No. 1139
- On September 16, 2005, the BSP Monetary Board issued MB Resolution No. 1139:
- Directed respondent’s Trust and Investment Department to return CRF balances amounting to ₱144,713,224.54 as of August 31, 2004.
- Ordered preservation of borrower records pending BSP Office of General Counsel review.
- Respondent’s petition for reconsideration was denied on December 5, 2006.
Proceedings in the Regional Trial Court
- Respondent filed a Pe