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
Copyright 1994-2012 CD Technologies Asia, Inc. Taxation 2011 1
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. cdrep

Very truly yours,

LIWAYWAY VINZONS-CHATO
Commissioner of Internal Revenue

Copyright 1994-2012 CD Technologies Asia, Inc. Taxation 2011 2