ANNEX 1

CHECKLESS PAYMENT SYSTEM OF THE BSP DESCRIPTION:

The BSP Checkless Payment System replaces the physical checks in effecting disbursements of the Bangko Sentral ng Pilipinas (BSP). The process involves direct credits to the bank accounts of payees through the reserve deposit of maintained by such banks with BSP under Sections 94 and 102 of the New Central Bank Act (RA 7653). OBJECTIVES: The system aims to achieve the following objectives: 1. 2. Comply with the mandate of the E-Commerce Law of the Philippines. Reduce the administrative cost related to check issuance by eliminating the following processes: a) Eliminate the check preparation process and the attendant administrative process of
signing and logging at all points in the check issuance process.

b) Off-load senior executives of the time involved in the signing of checks. c) Eliminate labor intensive process of tracking checks from issuance up to
cancellation and re-issuance in the case of checks get stale prior to encashment.

3. 4.

Allow payees immediate access to the funds, i.e., on the same date that the credit is effected to the reserve deposit of the payees bank. Discontinue the check issuance functions of the following operating departments for transactions traditionally covered by checks: a) Cash Departments payment of redemption of mutilated currencies. b) Withdrawal of reserve deposit balances of rural banks (RB), thrift banks (TB) and
other demand deposit accounts requiring prior clearance of the Department of Rural Banks (DRB) and the Department of Thrift Banks and Non-Bank Financial Intermediaries (DTBNBFI). The proceeds of such withdrawal transactions are credited to the designated depository banks of the RBs and TBs.

c) DRBs payment to Rural Bankers Association of the Philippines (RBAP) of dues

for the account of a rural bank. COVERAGE:

The system will cover payments to banks and NBQBs, suppliers, contractors, hospitals, professionals and other non-employee claims. BSP personnel-related disbursements traditionally paid by checks shall be credited directly to the payroll accounts or special deposit accounts to be designated by the employees concerned irrespective of amount.

PROCEDURES A. Except for disbursements to be directly credited to payroll accounts, the payee shall be required to accomplish an Authority to Credit (Document No. 1) form showing the following: 1. Name of designated depository bank and the branch where the payees account is maintained; 2. Account type and number, if more than one account is maintained to ensure proper posting. B. The Authority to Credit form shall be submitted duly accomplished at the following points:

Type of Transaction

When Authority to Credit is Issued

Procurement of goods and services Upon issuance of notice of award through public bidding and sealed quotation Procurement of goods and services Upon placement of order through telephone canvas and not payable through imprest fund Accredited hospitals with charge Upon accreditation arrangements for BSP hospitalization Services of professionals, other than Upon hire or engagement of services regular consultants with charge and in the case of medical arrangements with BSP professionals, upon issuance of physicians certificate Contractual utilities obligations including Upon signing of contract or similar document evidencing the contract of services

C. Disbursements shall be covered by a Voucher Register which shall serve as the medium for review, certification as to correctness and approval for the disbursement (Note: The approval of the disbursement presumes that the approval for payment has been made by the authorized official pursuant to budget administration guidelines). D. The Acknowledgment Advice (Document No. 2) addressed to individual payees shall be issued to serve two purposes:
09/06/01 1:59 PM Page 2 of 3

1. As evidence of credit to the payees bank demand deposit account with BSP; and, 2. As acknowledgment receipt of the advice when signed by payee or his representative. E. The Credit Advice (Document No 3) shall be issued to individual banks showing the proceeds of payments to the creditors and suppliers of BSP. This form is sent to banks daily together with the demand deposit account transaction abstract

09/06/01 1:59 PM

Page 3 of 3