A.   Definition of Terms

1.   Lost check – A check is considered lost under  the following circumstances:

1.   If it is misplaced, waylaid or inadvertenly/negaligently left behind by the payee or holder-in-due course, or by the custodian/career thereof, and after diligent search cannot be found or located.

2.   If it was lost due to fire, perils of travel, flood or typhoon or other causes due to force majeure and after diligent search cannot be found or recovered.

3.   It was lost by theft or robbery

4.   Stale check – when it is outstanding for over six (6) months from date of issuance.

5.   Mutilated check – when it is torn, defaced with erasures affecting the genuineness of any material information contained therein.

6.   Fraudulently encashed check – when payment is made by a bank to a person other than the payee or holder-in-due-course.

7.   Payee  – Refers to the person, natural or juridical, in whose name the check was issued.

8.   Holder-in-due-course – The holder of the check who has taken the instrument under the following conditions:

8.1   It is complete and regular on its face;

8.2   He became the holder of the check before it was overdue, and without notice that it has been previously dishonoured, if such was the fact; and

8.3   He took it in good faith nad for value.

B. Responsibilities

1.   The DECS Regional Office shall:

1.1    process/issue the stop payment order (SPO) to servicing bank;

1.2 process the request for replacement of lost, mutilated, stale or fraudulently encashed check;

b.   Affidavit that the check was fraudulently enchased.

2.   The Servicing banks, namely, the Land bank of the Philippines (LBP), Philippines National Bank (PNB), and Development Bank of the Philippines (DBP), shall:

2.1   see to it that checks with Stop Payment Order (SPO) shall not be  honored;

2.2   Submit status report on the checks covered by SPO to the Regional office as soon as possible;

2.3   Issue Credit Advise to the Regional Office for the replacement of fraudulently encashed checks.

C.General Guidelines

1.   The Regional Office will approve the request for replacement of lost checks upon completion of the following requirements;

1.1   Submition of the Affidavit of Loss by the payee or holden-in-due-course;

1.2   Filling of SPO by the Regional Office concerned with corresponding bank;

1.3   Receipt of Status Report from the corresponding banks advising of the hold/stop payment of the said lost checks and such checks are still outstanding;

1.4   Receipt of credit advice from the corresponding bank with regard to lost checks that have been fraudulently encashed.

2. A stale and/or obsolete check shall be replaced with a new one provided the original check is presented/ surrendered for cancellation.

3. Request for found to cover replacement of stale, lost and mutilated checks in prior years shall be sent by t5hfe Regional Chief Accountant to the department of Budget and Management.

4. The payee or holder-in-due-course of the lost check should file the SPO with the Regional Offices concerned.

5. SPO must include the following information:

5.1 Current Account Number

5.2 Serial Number of Check

5.3 Issuing Agency

5.4 Name, Division, Station, Region and Employee Number of the payee

5.5 Date of Issue of the check

5.6 Amount of the check

6.   In case of checks lost by the Payroll Services Division during processing time, PSD will file the corresponding SPO to the bank concerned and make the necessary replacement.

7.   In cases of claims for reimbursement of fraudulently encashed checks, the regional office shall prepare/file the request at the servicing bank together with the following documents:

7.1 Check

7.2 Affidavit

8. In case of check recovered by beneficiary, the Regional Office shall also be responsible for issuing the lift order payment to all servicing banks.

9. For information and guidance.

under the following subjects: