Basic Information from BSP Circular No. 61 Series of 1995 entitled "Consolidated Rules and Regulations on Currency Notes and Coins"
CLEAN NOTE POLICY
To effect an expeditious withdrawal from circulation of unfit Philippine currency notes classified under Section 15, Chapter V of Circular No. 61, banks and their branches shall observe the following guidelines and procedures when making cash deposits with the Cash Department or any of the Regional Offices/Branches of BSP:
a. Banks shall classify their cash deposits into two types: (1) clean or fit notes and (2) dirty or unfit notes in accordance with the “Currency Guide for Bank Tellers, Money Counters and Cash Custodians” prepared by the Cash Department of the BSP. The notes thus classified shall be further sorted by series and denomination.
b. Banks shall provide securely sealed bags or containers separately for the clean or fit notes and for the dirty or unfit notes accompanied by a deposit slip for each type/category. The deposit slip for the unfit currency notes shall be clearly labeled as “unfit.”
c. To facilitate handling of deposits, banks’ deposits shall be packed in sealed bags or containers in standard quantity of twenty (20) full bundles per denomination (each bundle containing 1,000 notes in ten (10) equal straps, each strap containing 100 notes).
d. Provincial branches of banks may make direct deposits of currency notes, duly identified and sorted, with the nearest Bangko Sentral Regional Office/Branch. In areas where there are no Bangko Sentral Regional Office/Branch, provincial branches of banks shall arrange with their respective Head Offices the shipment of their unfit or dirty notes for deposit with the Cash Department of BSP in Manila. Cost of shipment and other related expenses to be incurred shall be solely for the account of the bank concerned.
REPLACEMENT AND REDEMPTION OF LEGAL TENDER PHILIPPINE CURRENCY NOTES AND COINS CONSIDERED MUTILATED OR UNFIT FOR CIRCULATION
Section 56 of Republic Act No. 7653, or the New Central Bank Act, provides that: “The Bangko Sentral shall withdraw from circulation and shall demonetize all notes and coins which for any reason whatsoever are unfit for circulation and shall replace them by adequate notes and coins. Provided, however, that the Bangko Sentral shall not replace notes and coins the identification of which is impossible, coins which show signs of filing, clipping or perforation, and notes which have lost more than two-fifths (2/5) of their surface or all of the signatures inscribed thereon. Notes and coins in such mutilated condition shall be withdrawn from circulation and demonetized without compensation to the bearer.”
A currency note shall be considered unfit for circulation when:
a. It contains heavy creases which break the fiber of the paper and indicate that disintegration has begun. Provided, however, that mere creasing or wrinkling which has not broken nor weakened the note does not render the note unfit for circulation; or
b. It is badly soiled/contaminated and/or with writings even if it has proper life or sizing; or
c. It presents a limp or rag-like appearance.
A currency note shall be considered mutilated when:
a. Torn parts of banknotes are joined together with adhesive tape in a manner which tries to preserve as nearly as possible the original design and size of the note; or
b. The original size of the note has been reduced/lost through wear and tear or has been otherwise torn, damaged, defaced or perforated through action of insects, chemicals or other causes; or
c. It is scorched or burned to such an extent that although recognizable as such, it has become frail and brittle as to render further handling thereof impossible without disintegration or breaking; or
d. It is split edgewise; or
e. It has lost all the signatures inscribed thereon.
A currency coin shall be considered unfit for circulation when:
a. It is bent or twisted out of shape or defaced, but its genuineness and/or denomination can still be readily and clearly determined/identified; or
b. It has been considerably reduced in weight by natural abrasion/wear and tear.
A currency coin shall be considered mutilated when:
a. It shows signs of filing, clipping or perforation; or
b. It shows signs of having been burned or has been so defaced, that its genuineness and/or denomination cannot be readily and clearly identified.
Currency notes and coins considered unfit for circulation shall not be re-circulated, but may be presented for exchange to or deposited with any bank.
Currency notes and coins considered mutilated shall not be re-circulated nor deposited/exchanged, but may be presented or forwarded, for determination of their redemption/exchange value to:
a. The Cash Department
Bangko Sentral ng Pilipinas
Security Plant Complex, East Avenue,
Diliman, Quezon City
b. The nearest Bangko Sentral Regional Office/Branch