Banks will refuse to accept checks with erasures or corrections on it – even countersigned – starting next year.
The Philippine Clearing House Corp. (PCHC) has issued guidelines on the non-acceptance of checks with erasure, alteration, or deficiency in response to the “clamor” and its member banks’ requests to have clear rules on altered checks.
The new rule, signed by PCHC president and CEO Emmanuel E. Barcena last August 24, will take effect on January 4, 2016.
Based on the memo order, banks will no longer accept checks bearing erasures or alterations on any information on date, name of payee, amount in figures, amount in words, signatures, account name and number and check number.
Banks will also refuse any checks that does not include required information, except for amount payable in words if issued as manager’s or cashier’s checks, or demand drafts using a check writer.
“Any check (with the specified erasures or alterations) will no longer be eligible or acceptable for clearing, except post-dated checks (PDCs),” said Barcena in the memo.
In the meantime, warehouse checks and PDCs should be stamped accordingly to be eligible.
“In the event the issuer of the PDC complains about any visible alteration of the check that is unauthorized, the presenting bank of the PDC (will be) immediately held accountable by the damage caused by the unauthorized alternation,” said Barcena.
“It is understood that any alternation or erasure on a check which is not visible does not excuse the presenting bank from liability for loss or damage attributable to the alteration,” he added.
The added security measure has been discussed with the Bangko Sentral ng Pilipinas (BSP) upon the main urging of the Bank Security Management Association.
PCHC approved the guidelines from the final recommendation of a technical working group that includes all banking associations led by the Bankers Association of the Philippines.
The “no erasures” rule is one of the security proposal included in the check truncation system (CTS) and check image clearing system (CICS) that will be implemented by the PCHC – part of the process that will shorten check clearing from three days to just one.
“The industry (has talked about it) as an added security measure,” said BSP assistant governor Johnny Noe E. Ravalo.