Banks and Financial Institutions Not Exempt from Issuance of Official Receipts for Payments Made by Clients

January 12, 1999 BIR RULING NO. 003-99 238-000-00-003-99 Davao Press Club c/o Philippine News Agency (Davao Bureau) UMBN Broadcast Center Ponciano Reyes Street Davao City Attention: Mr . Ben P . Diansay President Gentlemen : This refers to your letter dated May 28, 1997 requesting for an opinion or clarification on whether banks and financial institutions are exempt from issuing official receipts for payments made by the clients. You stated that a "concerned citizen" sought your assistance regarding the predicament he was in; that this concerned citizen was able to avail of the financing plan of one of the banks in Davao City to purchase a motor vehicle with a maturity period of four (4) years; that for the first year in 1995, the bank issued the corresponding official receipt for every monthly amortization paid; and that in 1996, said bank stopped issuing official receipts but instead required the client to deposit the payments in the financier's account for which he was given a copy of the deposit slips in place of the corresponding receipts. In reply, please be informed that Section 238 of the Tax Code, as amended provides, to wit: SEC. 238. 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 P25.00 or more, issue receipts or sales or commercial invoices, prepared at least in duplicate, showing the date of transactions, quantity, unit cost and description of merchandise or nature of service; Provided, That in the case of sales, receipts or transfers in the amount of P100.00 or more, or regardless of amount, where the sale or transfer is made by persons subject to value-added tax to other persons also subject to value-added tax; or where the receipt is issued to cover payment 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. The original of each receipt or invoice shall be issued to the purchaser, 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. The Commissioner may, in meritorious cases, exempt any person subject to an internal revenue tax from compliance with the provisions of this section. (As amended by E.O. 27) cdlex Based on the foregoing, banks and financial institutions are not exempt from the issuance of official receipts for payments made by their clients. Very truly yours, (SGD.) BEETHOVEN L. RUALO Commissioner of Internal Revenue