Updated: Dec 4, 2020
13 September 2017
T O : All Clearing Banks/Institutions
R E : REPLACEMENT OF CICS OM NO 17-017 DATED 01 AUGUST 2017
(RE: NON-ACCEPTANCE OF CHECKS WITH TECHNICAL DEFECTS)
1. In response to comments and suggestions of Clearing Officers of banks, we are replacing CICS OM No. 17-017 with this Operating Memo to:
a) remove “Over or Under encoding” from the list of technical defects on Checks that render them non-acceptable for clearing; and
b) add to such list, the following technical defect: “amount in words and in figures differ”.
It is to be noted that in the case of “Over or Under encoding”, the technical defect can occur only after acceptance of a Check and generation of Electronic Payment Information (EPI) by the Presenting Bank. The defect of “Over or Under encoding” or “erroneous amount” is on the EPI and not on the Check so it does not belong among those enumerated in CICS 17-017. It shall therefore be covered by another Operating Memo that we will issue.
2. As provided in our earlier issuance, a Check with one or more of the technical defects enumerated below (“Technically Defective Check”) :
2.1. No date, out of date/invalid date (i.e. Feb. 30, 2017)
2.2. Post-dated or Stale dated
2.3. No payee indicated
2.4. Payee line indicated:
2.4.1. Customer Name and Cash
2.4.2. Customer Name and/or Cash
2.4.3. Business Name or Cash
2.4.4. Business Name and/or Cash
2.5. No amount in figures
2.6. No amount in words
2.7. Amount in words and in figures differ
2.8. No signature or missing signature of the Drawer
2.9. Old Format Checks (except those stamped warehoused PDCs accepted prior to January 2017)
is not acceptable for clearing.
3. In the event a Presenting Bank transmits a Regular Clearing Item (RCI) covering a Technically Defective Check and the Drawee Bank automatically returns/dishonors the RCI for the defect/s, a penalty of ₱1,000.00 per item/day or amount of the item multiplied by the average IBCL rate for the day whichever is higher, shall be imposed on the Presenting Bank, to be collected by the Drawee Bank, in accordance with the following rules:
3.1. It shall be incumbent upon the Drawee Bank to automatically return/ dishonor an RCI covering a Technically Defective Check; otherwise, it shall lose its right to collect the
Penalty from the Presenting Bank.
3.2. The Penalty shall be collected by the Drawee Bank from the Presenting Bank via the usual Charge Slip within 5 banking days from date of the RCI transmission.
4. Please take note that since Checks with ‘amount in words and in figures differ’ are no longer acceptable and the corresponding RCI will be automatically returned if transmitted to the
Drawee Bank, it will now be listed as among those return reasons exempted from the ₱2,000.00 Service Charge (Sec 24.1 of the CICS RR). In this regard, PCHC shall update the Transaction code for Return Reason Code ‘D’ from ’14’ (as indicated in the earlier released CICS OM 17-018) to ‘24’.
5. Clearing Banks must observe due diligence when accepting Checks for deposit. Presenting Banks should not transmit RCIs covering Technically Defective Checks.
6. For your guidance and strict compliance.