b. Closure

Closure

For banks, the Monetary Board may summarily and without need for prior hearing forbid the institution from doing business in the Philippines and designate the PDIC as receiver. The PDIC is directed to proceed with the liquidation of the closed bank.

The Monetary Board shall notify in writing, through the PDIC, the board of directors of the closed bank of its decision. (Sec. 30)¹

Note: Formerly, there was a 90-day period to determine whether the bank can still be rehabilitated.

Close Now-Hear Later Doctrine

Due process does not necessarily require prior hearing; a hearing or an opportunity to be heard may be subsequent to closure. One can just imagine the dire consequences of a prior hearing; bank runs would be the order of the day, resulting in panic and hysteria. In the process, fortunes may be wiped out and disillusionment will run the gamut of the entire banking community. (Rural Bank of Buhi, Inc. v. Court of Appeals, G.R. No. L-61689, 20 June 1988)²

The purpose is to prevent unwarranted dissipation of the bank’s assets and as a valid exercise of the police power to protect the depositors, creditors, stockholders, and the general public. (Central Bank of the Philippines v. CA, G.R. No. 72200)³