Revision to RMO No. 63-94 Clarifying the Procedure on the Receipt, Processing, Control, Transmittal and Collection of Returned/Dishonored Checks Received Through Accredited Agent Banks (AABS) under the Jurisdiction of Computerized and Non-computerized Revenue District Offices (RDOs) (Formerly NPCS) as well as Large Taxpayers Service (LTS) and Large Taxpayer District Offices (LTDOs)

October 16, 2001 REVENUE MEMORANDUM ORDER NO. 25-01 SUBJECT : Revision to RMO No. 63-94 Clarifying the Procedure on the Receipt, Processing, Control, Transmittal and Collection of Returned/Dishonored Checks Received Through Accredited Agent Banks (AABS) under the Jurisdiction of Computerized and Non-computerized Revenue District Offices (RDOs) (Formerly NPCS) as well as Large Taxpayers Service (LTS) and Large Taxpayer District Offices (LTDOs) TO : All Revenue Officials and Others Concerned I. Objective: This Order is issued to revise the existing procedures in receiving, processing, monitoring and collecting returned/dishonored checks received through AABs under the computerized and non-computerized RDOs (formerly NPCS) as well as the LTS and the LTDO. II. Policies: 1. Dishonored checks received by the AABs, whether under a computerized or non-computerized RDO, shall be submitted to the RDO having jurisdiction over the receiving AAB Branch and to LTS/LTDO as the case may be. 2. Penalties shall be imposed on the AABs for receiving checks which were dishonored due to the following: a. accommodation check b. stale check c. post-dated check d. unsigned check e. out-of-town check 3. Checks which were dishonored due to "Account Closed" shall be forwarded to the Legal Division of the Regional Office or to the Legal Service of the National Office (for large taxpayer and excise taxpayer) for filing of a court case against the taxpayer for violation of Batas Pambansa (B.P.) Blg. 22 (Anti-Bouncing Check Law). The corresponding tax return, payment form or docket should be forwarded to the collection group for collection enforcement. caCSDT 4. Dishonored check cases shall not be the subject of any compromise settlement. 5. The Chief, Collection Section of the RDO shall be responsible for safekeeping the original dishonored check submitted by the AAB branch as well as the sending of collection letter and the execution of the appropriate summary remedies. 6. The AABs servicing the large taxpayers under LTS shall submit the dishonored checks received by them to the Large Taxpayer Collection and Enforcement Division (LTCED) of LTS or to the LFDO, whichever office has jurisdiction over the taxpayer. 7. The same procedure prescribed for the computerized RDO shall be followed for dishonored checks under LTS. LTCED / LTDO will serve as the RDO, LTS as the Regional Office - Collection Division, the Legal Service as Regional Office - Legal Division and the ISOS Data Center as the Regional Data Center. III. Procedures: A. Bank-Branch For Bank Branch servicing large taxpayers (LTS/LTDO): 1. Prepare BIR Form No. 12.58 Report of Returned / Dishonored Checks (See Annex "A") in four (4) copies to be distributed as follows: Original - Revenue Accounting Division (RAD), BIR, N.O. Duplicate - Bureau of Treasury (BTR) Triplicate - Bank Branch servicing LTS or LTDO file copy Quadruplicate - LTCED/LTDO 2. Submit all four (4) copies of BIR Form No. 12.58, together with the original check/s, and have then acknowledged by the LTCED or LTDO; furnish the LTCED/LTDO with the quadruplicate copy of the report; 3. Prepare the Consolidated Report of Daily Collection (CRDC) and submit it, to RAD together with the original copy of the BIR Form 12.58; and 4. Prepare Debit Advice for the dishonored check and submit it to BTR together with the duplicate copy of the BIR Form 12.58. DcCIAa For Bank Branch servicing regular taxpayers: 1. Prepare BIR Form No. 12.58 - Report of Returned / Dishonored Checks (See Annex "A") in five (5) copies to be distributed as follows: Original - Revenue Accounting Division (RAD), BIR, N.O. Duplicate - Bureau of Treasury (BTR) Triplicate - Bank Head Office Quadruplicate - RDO Quintuplicate - Bank Branch 2. Submit all five (5) copies of BIR Form No. 12.58, together with the original check/s, and have them acknowledged by the RDO having jurisdiction over the Bank Branch concerned; famish the RDO with the quadruplicate copy of the report; and 3. Submit duly acknowledged original, duplicate and triplicate copies of BIR Form 12.58 to the Bank Head Office (H.O.); file quintuplicate copy of the report. B. Bank Head Office of AABs servicing regular taxpayers 1. Receive duly acknowledged copies of BIR Form 12.58; 2. Deduct from total remittances the amount of dishonored checks reported by the branches and duly acknowledged by the RDO; 3. Attach copies of duly acknowledged BIR Form No. 12.58 to the Consolidated Report of Daily Collection (CRDC) as follows: Original - attached to BIR N.O. copy of CRDC Duplicate - attached to BTR copy of CRDC Triplicate - H.O. file copy 4. Submit CRDC with attached copy of BIR Form NO. 12.58 duly acknowledged by the RDO to BIR N.O. Revenue Accounting Division and to BTR. C. Revenue Accounting Division (RAD) 1. Receive CRDC, together with attached copy/ies of duly acknowledged BIR Form 12.58 from Bank H.O. for regular taxpayer or from bank branch servicing LTS/LTDO for large taxpayers; prepare a listing of all dishonored checks received and deducted from the bank's remittances for recording to the Bureau's books accounts; 2. Receive the Monthly List of Dishonored Checks Received submitted by the RDOs; compare dishonored checks as appearing in BIR Form 12.58 attached to the CRDC against the Monthly List of Dishonored Checks Received from the RDOs; 3. Receive Monthly List of Dishonored Checks Redeemed from the RDOs. Record redemption of dishonored checks in the Bureau's books of accounts; and 4. Compute the corresponding penalties based on the Monthly List of Dishonored Checks Received submitted by the RDOs pursuant to Revenue Regulations 15-94; Demand from the Bank H.O. the corresponding penalties. STIcaE D. Computerized Revenue District Office Collection Section: 1. a) Receive copies of BIR Form No. 12.58 together with the original dishonored check/s; b) Check the correctness and completeness of all items in the report against the original check/s; c) Fill out completely the acknowledgment portion and have it signed by the Revenue District Officer; d) Return the four (4) copies of the report [three (3) copies, if bank branch is servicing large taxpayer] to the Bank Branch representative; e) Retain the fourth (4th) copy of the report; 2. Enter encode dishonored check data into ITS (CBR) under RDO based encoding (CBR Dishonored Check Add Screen); 3. Print Notice of Dishonor; 4. Assign to Case Officer (Note: a case is automatically created through Case Monitoring System (CMS)); and 5. a) Send Notice of Dishonor to taxpayer; and b) Forward the dishonored checks of "Account Closed/Insufficient Fund Account" cases to the Legal Division, through the Collection Division of the Regional Office; 6. a) Compute the corresponding penalties for late payment, if the taxpayer responds and agrees to redeem the dishonored check; and b) Issue a payment form in three (3) copies specifying that only cash or cahier's/manager's check shall be accepted to redeem the dishonored checks; aTAEHc 7. Issue a Collection Letter (Annex "C") based on recomputed collectible amount to the taxpayer advising him/her of the dishonored check if the taxpayer fails to respond to the Notice; 8. Issue Warrant of Distraint, Levy and/or Garnishment/Notice of Tax Lien against the taxpayer, if necessary, 9. Forward to Legal Division through the Collection Division of the Regional Office the dishonored check, if legal action is necessary; 10. Prepare report of action taken / progress report using the case notes facility of CMS. (Note: The Collection Head should monitor the progress or action taken on dishonored check cases assigned to a case officer); 11. a) Print and submit to RAD a Monthly List of Dishonored Checks Received within fifteen (I 5) days of the following month; and b) Attach to the "Monthly List of Dishonored Check/s", xerox copy/ies of the dishonored check/s, if reason for dishonor is one of the following: b.1 accommodation check b.2 post-dated check b.3 stale check b.4 unsigned check b.5 out-of- town check b.6 account closed b.7 insufficient fund account b.8 all other reasons 12. Print and submit to RAD a Monthly List of Dishonored Checks Redeemed (BIR Form 12.6 1), within fifteen (15) days of the following month; 13. Print and submit to the Assistant Commissioner (ACIR), Collection Service, copy furnished the Regional Director, a Monthly Status Report of Dishonored Check Received; and 14. Receive monthly progress report of dishonored check cases filed in court by the Legal Division. ATSIED E. Non-Computerized Revenue District Office Collection Section 1. a) Receive copies of BIR Form No. 12.58 together with the original dishonored check/s from the AAB branch; b) Check the correctness and completeness of all items in the report against the original check/s; c) Fill out completely the acknowledgment portion and have it signed by the Revenue District Officer; d) Return the four (4) copies of the report to the Bank Branch representative; and e) Retain the fifth (5th) copy of the report; 2. Submit a xerox copy of BIR Form 12.58 to the Collection Division of Regional Office for the recording of the receivable; 3. Forward BIR Form 12.58, together with the original Dishonored-Check/s, if reason for dishonor is due to "Account Closed/Insufficient Fund Account", to the Collection Division of Regional Office; 4. Prepare Notice of Dishonor (Annex "B"); 5. Send Notice of Dishonor to taxpayer; 6. a) Compute the corresponding penalties for late payment, if the taxpayer responds and agrees to redeem the dishonored check; and b) Issue a payment form in three (3) copies specifying that only cash or cashier's/manager's check shall be accepted to redeem the dishonored check/s; 7. Issue a Collection Letter (Annex "C") based on recomputed collectible amount to the taxpayer advising him/her of the dishonored check, if the taxpayer fails to respond to the Notice; 8. Issue Warrant of Distraint, Levy and/or Garnishment/Notice of Tax Lien against the taxpayer, if necessary; 9. Forward to Legal Division through the Collection Division of the Regional Office the dishonored check, if legal action is necessary; 10. a) Prepare and submit to RAD a Monthly List of Dishonored Checks Received (Annex "D") within fifteen (15) days of the following month; b) Attach to the Monthly List of Dishonored Checks xerox copy/ies of the dishonored check/s, if reason for dishonor is one of the following: b.1 accommodation check b.2 post-dated check b.3 stale check b.4 unsigned check b.5 out-of- town check b.6 account closed b.7 insufficient fund account b.8 all other reasons 11. Prepare and submit to RAD a Monthly List of Dishonored Checks Redeemed/BIR Form 12.61 (See Annex "E") within fifteen (I 5) days of the following month; AHCcET 12. Prepare and submit to ACIR, Collection Service, copy furnished the Regional Director, a Monthly Status Report on Dishonored Check Received using Annex F; and 13. Receive monthly progress report on dishonored check cases filed in court by the Legal Division. F. Regional Office Collection Division 1. Receive copy of BIR Form 12.58 from the non-computerized RDOs for encoding to Excel Form and submit in diskette form encoded data to the Revenue Data Center; 2. Forward to the Legal Division BIR Form 12.58, together with the original cheek/s dishonored due to "Account Closed/Insufficient Fund Account" for filing of a case in court against the taxpayer; 3. Receive from the RDOs Monthly Status Report on Dishonored Checks Received (Annex "F"); Monitor status of dishonored check cases; and 4. Receive monthly progress report on dishonored check cases filed in court from the Legal Division; Monitor status of dishonored check cases filed in court Legal Division. G. Revenue Data Center (RDC) 1. Receive from the Collection Division dishonored check data in diskette form; 2. Upload dishonored check data into ITS; and 3. Generate reports necessary for dishonored check cases (printing of reports will be done at the RDO). However, for non-computerized RDO, printing of reports will be done at the RDC. H. Legal Division Regional Office 1. Receive from the Collection Division copy/ies of the Dishonored Check Report (BIR Form 12.58), together with the original check/s; 2. File a case in court against the taxpayer for violation of B.P. Blg. 22 (Anti-Bouncing Check Law); and 3. Prepare and submit to the ACIR, Collection Service, copy furnished the RDO and the Regional Office a monthly progress report on dishonored check cases filed in court (See Annex "G"). aDHScI I. Collection Service 1. Receive from the RDOs Monthly Status Report on Dishonored Checks Received; 2. Receive from the Legal Group Monthly Status Report on Dishonored Check (Annex "G") cases filed in court; and 3. Monitor progress of resolution / redemption of dishonored checks received by the RDOs and the Legal Division of the Regional Offices. J. Information System Development Service 1. Develop program for the upload of dishonored check-data into ITS IV. Repealing Clause The provisions of existing order and other issuances inconsistent herewith are hereby revoked or amended accordingly. V. Effectivity This order takes effect immediately. (SGD.) RENE G. BAEZ Commissioner of Internal Revenue ANNEX A REPORT OF RETURNED/DISHONORED CHECKS ANNEX B NOTICE OF DISHONOR Date: _____________ ________________ ________________ ________________ Sir/Madam: You are hereby notified that (Drawee Bank/Check No.) __________ dated _________________ in the amount of ___________________ issued by you as payment of (Tax Paid) ________________ was dishonored for the reason _______________. In view thereof, any proof of payment covered by said check has been cancelled and your liability still exists as if you have never tendered payment or remittance. Please settle this account, plus the surcharge, interest and penalties incident to late payment, with this office, (Address) ____________________ within five (5) days from receipt hereof. Only cash or cashier's/manager's check shall be accepted as settlement of your said liability. Very truly yours, _____________________ Commissioner By: _____________________ Revenue District Officer ANNEX C COLLECTION LETTER Date: _____________ ________________ ________________ ________________ Sir/Madam: This refers to your (Drawee Bank/Check No.) ______________ dated _________________ in the amount of _______________________________ which was the subject of our Notice of Dishonor dated ______________. Since the tax liability covered by the said check remains unsettled inspite of our previous notice, we are giving you this last opportunity to settle your account, computed hereunder, within fifteen (15) days from receipt of this advice, otherwise, this office will enforce collection through administrative summary remedies without further notice and a court case will be filed in violation of the Anti-BouncingCheckLaw. Amount per Check P____________ ____ Surcharge _____________ ____ Interest From ______ To ______ _____________ Compromise for late payment _____________ Total Amount Due ============= Very truly yours, _____________________ Commissioner By: _____________________ Revenue District Officer ANNEX D MONTHLY LIST OF DISHONORED CHECKS RECEIVED ANNEX E MONTHLY LIST OF DISHONORED CHECKS REDEEMED ANNEX F REVENUE REGION NO. XX-XXXXXXXXXXX REVENUE DISTRICT NO. XXX-XXXXXXXXXXXXXX MONTHLY STATUS REPORT ON DISHONORED CHECKS RECEIVED For the month of xxxxxxxxxx No. of D/C Total Amount Cases Involved A. Previous Report's outstanding balance _________ ___________ B. Dishonored Checks received this month _________ ___________ C. Dishonored Checks Redeemed/Resolved this month _________ ___________ D. Dishonored Checks forwarded to the Legal Division this month _________ ___________ E. Total Outstanding Dishonored Checks for the month _________ ___________ E.1. Aging of Outstanding dishonored checks for the month No. of days outstanding 1-15 days 16-31 days 31-60 days over 60 days __________ ____________ ___________ ___________ Submitted by: _____________________ Revenue District Officer ANNEX G MONTHLY STATUS REPORT ON DISHONORED CHECKS RECEIVED