Guidelines on AP Payment and Creditor Name Changes

The circular reiterates the rule on submitting complete supporting documents for requests for the issuance of Notice of Cash Allocation (NCA) for Accounts Payable (A/P).
The circular modifies the modes of settlement/payment to external creditors/retirees.
The circular clarifies the authority delegated to agency heads to approve changes in the name of creditors and retirees/pensioners.
The circular provides rules for processing A/P requests and for correcting creditor/retiree names for payment facilitation.

The authority to approve a change in the name of creditors and retirees (including pensioners) is delegated to agency heads under Circular Letter (CL) No. 2001-14 dated July 31, 2001, and is implemented to facilitate recurring payment requests.
Name correction rules apply to corrections that refer to the same person or company.

A/P payment requests must be submitted to the DBM through the Systems and Procedures Bureau.
For SUCs, and for the Regional Offices of DPWH, DOH, DECS, and TESDA, requests must be submitted to the concerned DBM Regional Offices.
For Fund 101 requests, the OSEC-CO is excluded from the regional submission rule and submits in accordance with the applicable internal arrangement implied by the delegation scheme.
The request letter must follow this format: Department, Agency, Fund Code, Amount of Request, Internal Creditors, and External Creditors.
Requests must include the documentary requirements prescribed under CL No. 99-2, except that the Trial Balance is not required to distinguish prior years and current year obligations under the New Government Accounting System.
Only due and demandable A/Ps—those ready for payment after compliance with accounting and auditing rules and regulations—may be included in the request for issuance of NCA.

The request must include a List of Due and Demandable A/P, arranged in the order of payment priority, certified correct by the head of the accounting unit and approved by the agency head.
The request must include a Master List of A/Ps (BAF 304) as of the end of the fiscal year.
The A/Ps in BAF 304 must be arranged by year of obligation and classified into:
- Due and Demandable A/Ps;
- A/Ps covered with Advances;
- A/Ps covered with Direct Payments; and
- A/Ps covered with Prepayments and Deposits.
A diskette containing the Master List must be submitted together with the hard copy.
The request must include a Monthly Statement of Charges to A/Ps (BAF 305) of the immediately preceding month when the request is submitted, indicating only A/Ps for which payments/reversions/adjustments have been made.

External creditors are treated as contractors/suppliers/individuals who are not employees of the department or agency concerned for which payment of A/P must be made through Direct Remittance Scheme.
Payment to external creditors must be made through Direct Remittance to their Accounts under the approach under CL 99-2 and 99-11.

External creditors with one-time or small transactions—for example, below the Government Servicing Bank’s minimum maintaining balance of P1,000—are paid through MDS check instead of Direct Remittance.
External creditors are exempt from Direct Remittance when opening a current or savings account with MDS-GSBs is not feasible/difficult due to company policy.
When MDS-GSB account opening is not feasible/difficult, the agency must apply the following procedure:
- The NCA for the purpose shall be issued to the MDS-GSB of the agency.
- The MDS-GSB of the agency concerned shall forward the payment to the creditor’s preferred bank, chargeable against the NCA issued.
- Bank charges arising from the transfer are deducted from the amount credited to the creditor’s account.

Retirees may choose their preferred mode of payment: either MDS check or the Direct Payment Scheme.

Agencies must properly disclose in the List of Due and Demandable A/Ps the external creditors to be paid through MDS checks.
Name corrections are permitted to avoid circuitous action on recurring requests by facilitating claim payment.

Name correction in addition to typographical errors specifically authorized under CL 2001-14 includes corrections referring to the same person or company.
Example corrections include:
- Change in family name as a result of change in status.
- Omission of “Jr.” from the name of creditor/retiree, or omission of “Company/Incorporated” from the business name.
When the creditor’s name appearing in the List of Due and Demandable A/P is shown to be the same person/company being claimed, correction shall be made through a letter to the MDS-GSB.
The correction letter to the MDS-GSB must be signed by the agency’s authorized signatories in the MDS Check/Advice to Debit Account process.

All provisions of existing circulars that are not consistent with these guidelines are repealed and/or modified accordingly.
The guidelines take effect immediately upon adoption.