The Department of Budget and Management (DBM) issued Circular Letter No. 2021-12 dated November 24, 2021 to provide guidelines on the encashment of Modified Disbursement System (MDS) Checks and payment using Advice to Debit Account (ADA) for the rest of fiscal year 2021.
According to the DBM, the procedures prescribed under pertinent previously issued DBM Circulars, e.g., DBM Circular Letter (CL) No. 2020-16 dated November 27, 2020 shall continue to be complied with unless modified under this newly-issued Circular.
Under CL No. 2020-16, MDS checks issued by government agencies shall be presented by the payee to the servicing bank (LBP, DBP, PVB) not earlier than 24 hours after the date of issue.
If payments were made using the LDDAP-ADA, servicing banks shall effect direct payment by crediting the creditor/payees’ bank account, not earlier than 24 hours but not later than 48 hours after receipt of the LDDAP-ADA, chargeable against the agency’s MDS sub-account.
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Under this newly-issued Circular, the 24-hour waiting period for the encashment of MDS checks as well as the crediting of creditor/payee’s bank accounts specified in the LDDAP-ADA is lifted/suspended from December 1 to 31, 2021.
Thus, government agencies concerned have to immediately/transmit without delay the
properly accomplished Advice of Checks Issued and Cancelled (ACICs) for the MDS Checks issued or Summary of LDDAP-ADA Issued and Invalidated ADA Entries (SLIIEs) for LDDAP-ADA issued to their respective MDS-GSBs.
This means that once the ACIC has been issued to their servicing bank, government agencies shall immediately release the MDS Checks to their creditor/payees. (No need to wait for 24-hours just like what they do from January to November of the year)
On the other hand, the servicing bank shall immediately credit the account of the creditor/payee after receiving the SLIIE/LDDAP-ADA from the government agency.
Government agencies are encouraged to settle their obligations not later than December 23, 2021, as far as practicable. However, they may still pay their obligations until December 31, 2021.
Government agencies are also reminded of the validity of MDS checks issued (i.e., three months).
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