BIR Ruling [DA-517-03]

December 16, 2003 BIR RULING [DA-517-03] Section 237; 046-89 Yngson and Associates Unit-B 7th Floor, Strata 2000 Building Emerald Avenue, Ortigas Center Pasig City Attention: Manuel D. Yngson, Jr . Gentlemen : This refers to your letter dated January 14, 2002 for and on behalf of your client Campbell Shillinglaw Cook, Inc. (Campbell for convenience), requesting for a legal opinion relative to the issuance of Official Receipts. It is represented that Campbell was recently awarded a project by International School Manila (ISM) for the Acoustics, Audio-Visual, Lighting & Theater Consulting Services for ISM's new campus. When ISM made its first payment in US dollars, Campbell issued an official Receipt but the word peso and the peso sign appearing in the receipt was crossed out making the appropriate entries to indicate that the payment it received was in US dollars. ISM, however, refused to accept the OR issued by Campbell and demanded that: 1) Campbell should issue a new OR with the word and figure in dollars; or 2) secure the opinion of the BIR on whether or not Campbell can make use of its present ORs as an acknowledgment for payments of ISM in dollars. Hence, this request. In reply thereto, please be informed that Section 237 of the Tax Code of 1997 provides: Section 237. Issuance of Receipts or Sales or Commercial Invoices . All persons subject to an internal revenue tax shall, for each sale or transfer of merchandise or for services rendered valued at Twenty-five pesos (P25.00) or more, issue duly registered receipts or sales or commercial invoices, prepared at least in duplicate, showing the date of transaction, quantity, unit cost and description of merchandise or nature of service: Provided, however , That in the case of sales, receipts or transfers in the amount of One hundred pesos (P100,00) or more, or regardless of amount, where the sale or transfer is made by a person liable to value-added tax to another person also liable to value-added tax or where the receipt is issued to cover payments made as rentals, commissions, compensations or fees, receipts or invoices shall be issued which shall show the name, business style, if any, and address of the purchaser, customer or client: Provided, further , That where the purchaser is a VAT-registered person, in addition to the information herein required, the invoice or receipt shall further show the Taxpayer Identification Number (TIN) of the purchaser. The original of each receipt or invoice shall be issued to the purchaser, customer or client at the time the transaction is effected, who, if engaged in business or in the exercise of profession, shall keep and preserve the same in his place of business for a period of three (3) years from the close of the taxable year in which such invoice or receipt was issued, while the duplicate shall be kept and preserved by the issuer, also in his place of business, for a like period. xxx xxx xxx As defined in Revenue Regulations 12-98, the term "receipt(s)" means a written admission or acknowledgment of the fact of payment in money or other settlement between seller and buyer of goods, debtor or creditor, or persons rendering services and client or customers. Apparently, it is not merely an evidence of sale but necessarily an evidence of payment. This is obvious from the provisions of Section 237 to the effect that the issuance of an invoice is required the moment there is already a sale or transaction of merchandise or services rendered (BIR Ruling No. 046-89, dated May 27, 1989). aSHAIC In view of all these citations, this Office is of the considered opinion that Campbell can make use of its existing Official Receipts as an acknowledgment of the payments made by ISM even by just crossing out the peso sign printed thereat and have the US$ sign overwritten. For as long as the form and contents of the OR is complete as required in Section 237 of the Tax Code of 1997, there is sufficient compliance. After all, for internal revenue tax purposes, the very essence of requiring taxpayers to issue receipts and/or invoices is to let the Revenue Officers adequately monitor the flow of income. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal & Inspection Group