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, vs. PHILIPPINE VETERANS BANK

Doctrine: 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. The ever increasing variety of powers and functions given to administrative agencies
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.

FACTS:

Respondent established a pension loan product for bona fide veterans or their surviving spouses, as well as salary loan product for
teachers and low-salaried employees pursuant to its mandate under Republic Act (RA) Nos. 3518 (AN ACT CREATING THE
PHILIPPINE VETERANS' BANK, AND FOR OTHER PURPOSES) and 7169 (AN ACT TO REHABILITATE THE
PHILIPPINE VETERANS BANK CREATED UNDER REPUBLIC ACT NO. 3518, PROVIDING THE MECHANISMS
THEREFOR, AND FOR OTHER PURPOSES) to provide financial assistance to veterans and teachers.

As its clientele usually do not have real estate or security to cover their pension or salary loan, respondent devised a program by
charging a premium in the form of a higher fee known as Credit Redemption Fund (CRF) from said borrowers. Resultantly, Special
Trust Funds were established by respondent for the pension loans.

An examination was conducted by the Supervision and Examination Department (SED) II of the Bangko Sentral ng Pilipinas (BSP).
It found that respondent’s collection of premiums from the proceeds of various salary and pension loans of borrowers to guarantee
payment of outstanding loans violated Section 54 of RA No. 8791 (GENERAL BANKING ACT) which states that banks shall not
directly engage in insurance business as insurer.

The BSP notified respondent about the Insurance Commission’s opinion that the CRF is a form of insurance. Thus, respondent was
requested to discontinue the collection of said fees.

Petitioners issued a Monetary Board (MB) Resolution directing respondent’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 CRFs from their loan proceeds.
However, the same was denied. The RTC allowed respondent's motion for reconsideration and required petitioners to file their
answer. The RTC of Makati City granted respondent's petition for declaratory relief

ISSUE: Whether or not the petition for declaratory relief is proper.

HELD:

NO. 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 view of the foregoing, the decision of the BSP Monetary Board cannot be a proper subject matter for a petition for
declaratory relief since it was issued by the BSP Monetary Board in the exercise of its quasi-judicial powers or functions.

Declaratory relief is defined as 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.

Undoubtedly, the BSP Monetary Board is a quasi-judicial agency exercising quasi-judicial powers or functions. The BSP Monetary
Board is an independent central monetary authority and a body corporate with fiscal and administrative autonomy, mandated to
provide policy directions in the areas of money, banking, and credit. It has the power to issue subpoena, to sue for contempt those
refusing to obey the subpoena without justifiable reason, to administer oaths and compel presentation of books, records and others,
needed in its examination, to impose fines and other sanctions and to issue cease and desist order. Section 37 of Republic Act No.
7653, in particular, explicitly provides that the BSP Monetary Board shall exercise its discretion in determining whether
administrative sanctions should be imposed on banks and quasi-banks, which necessarily implies that the BSP Monetary Board
must conduct some form of investigation or hearing regarding the same.