Whether the Consignor-Companies are Required to Issue at Once the Corresponding Sales Invoices/receipts on Consignment Sales; and Whether the Above Procedures Adopted are Acceptable

June 15, 1995 BIR RULING NO. 095-95 230 000-00 095-95 La Pona Sawmill & Plywood Co., Inc. Scala Sawmill Co., Inc. Iba, Meycauayan, Bulacan Attention: Mr . Pedro O . Roldan Auditor Gentlemen : This refers to your joint letter dated February 24, 1995 stating that you are domestic corporations engaged in the manufacture of sawn lumbers and plywood of different sizes and thickness; that you deliver your products on consignment basis with a term of 60 days, which deliveries are covered by prenumbered and registered delivery receipts which are also recorded in the consignment book; that the consignees have the option or right to return the goods on or before the expiration of the 60 day period, during which time the goods still form part of the companies' inventories; that if the consignees buy the consigned goods before the end or the 60-day period, or do not return the same after the expiration of such period, the goods are automatically considered as outright sale and sales invoices are issued by the consignor-companies; that the number of the delivery receipts used in delivering the goods on consignment sales are also indicated on the face of the sales invoices issued for reference purposes; and that whenever a portion of a particular delivery is returned before the expiration of the 60-day period, the returned goods are indicated on the issued sales invoices. LexLib Under the foregoing facts, you are seeking clarification whether you, the consignor-companies, are required to issue at once the corresponding sales invoices/receipts on consignment sales; and whether the above procedures adopted by you are acceptable to this Office. In reply, please be informed that in case of sales on consignment, you are not required to issue sales invoices or receipts covering the goods delivered since there is, as yet no transfer of ownership of merchandise. You are supposed to issue sales invoices/receipts only after the goods are actually sold or after the lapse of 60 days from the date of consignment, if the goods are not returned. In short, the issuance of a delivery receipt to evidence the delivery to and receipt by the purchaser/s of the goods sold on consignment is sufficient, subject however, to the condition that the said delivery receipt is duly approved and registered with the BIR. There is no specific provisions in the Bookkeeping Regulations regarding the issuance of sales invoices or receipts in the case of sales on consignment. However, this Office approves the foregoing procedures adopted by you, there being sufficient compliance with the Bookkeeping Regulations. Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue