Legal Penalties for Non-Issuance of Official Receipts in the Philippines
(A practitioner-oriented survey as of August 2025)
1. Statutory Duty to Issue Receipts
| Source | Key Provision | Essence |
|---|---|---|
| National Internal Revenue Code (NIRC), § 237 | Every seller of goods or services must issue either a Sales Invoice (goods) or an Official Receipt (services/leases) for each transaction ≥ ₱100 (≠VAT threshold). | |
| VAT rules, § 113, 114 | VAT-registered persons must issue a VAT invoice or VAT official receipt showing the taxpayer identification number (TIN), business style, amount, VAT, and “VAT registered” legend. | |
| CREATE Act (R.A. 11534) / TRAIN Law (R.A. 10963) | Modernized § 237 and § 264; introduced Phased Electronic Invoicing/Receipting System (EIS) for large taxpayers & exporters. | |
| Consumer Act (R.A. 7394), Art. 52(f) | Treats refusal to issue a receipt as a deceptive sales act. | |
| Local Government Codes & city ordinances | Business-permit conditions often incorporate § 237 NIRC; violation can ground permit suspension. | |
| Professional Regulations | PRC-licensed professionals must issue BIR-authorized Official Receipts for fees (PRC Res. No. 263-2022). |
Practical point: The duty attaches at the time of each sale, not at day-end. “Cash slip” or “charge slip” is not a legal substitute unless BIR-authorized.
2. Penal & Administrative Consequences under the NIRC
| Offense (NIRC § 264[A]) | First Violation | Subsequent Violation | Notes |
|---|---|---|---|
| (1) Failure or refusal to issue an invoice/official receipt; (2) Issuing one that lacks required data; (3) Using multiple/unregistered sets | Fine: ₱1 000 – ₱50 000 per act and Imprisonment: 2 – 4 years | Fine: ₱50 000 – ₱100 000 per act and Imprisonment: 4 – 8 years | Fines & ranges were raised by the TRAIN Law (2018) to sharpen deterrence. “Per act” means each unreceipted sale can be charged separately. |
| Aggravating variant – Sec. 264(B): Unregistered cash register, POS, or sales suppression device (“zapper”) | Fine: ₱500 000 – ₱10 000 000 and Imprisonment: 2 – 4 years | Same fine range; Imprisonment: 4 – 8 years | Common in “ghost sales” or under-ringing schemes. |
| Civil/administrative: § 115(b) | Suspension of business for at least 5 days; recommence only upon deposit of estimated tax & full compliance | BIR may padlock premises (“Operasyon Kandado”) without court order after due notice & inventory of infractions. | |
| Surcharge & interest: § 248-249 | 50 % surcharge + 12 % p.a. interest on any tax deficiency uncovered through audit triggered by non-issuance | Applies even without criminal prosecution. |
3. Penalties under Other Legal Regimes
| Regime | Penalty | Procedure |
|---|---|---|
| Consumer Act (DTI adjudication) | Fine: ₱500 – ₱300 000 and/or closure/suspension; repeat offenders may be shut for up to 1 year; possible product confiscation | Complaint-driven or motu proprio inspections by the Fair-Trade Enforcement Bureau or provincial/municipal DTI offices. |
| Local Ordinances | Typical fines ₱2 000 – ₱5 000 and/or business-permit revocation | Enforced by Business Permit & Licensing Office with barangay‐level assistance. |
| Revised Penal Code Art. 315 (Estafa) | Prision correccional (6 mos 1 day – 6 yrs) + restitution when refusal to issue a receipt is used to defraud customer or government | Requires deceit and damage; prosecuted by prosecutor’s office. |
| Anti-Red Tape Act (R.A. 9485, as amended) | For government offices & GOCCs that fail to issue official receipts for fees: Administrative liability of officers (suspension/dismissal) | Civil Service Commission or Ombudsman jurisdiction. |
4. Enforcement Mechanics
BIR Surveillance (“Oplan Kandado”)
- Cash-register “tape-reading”, covert purchases (test buys), CCTV review.
- Surveillance order precedes a 48-hour Notice of Violation; failure to explain leads to padlocking.
Run After Tax Evaders (RATE) Program
- High-value or habitual cases elevated to DOJ for criminal information in regular courts.
Coordination with DTI & LGUs
- Joint inspection teams during “Consumer Welfare Month” and Christmas season.
Electronic Invoicing Roll-out
- Mandatory since July 1 2022 for 100 large taxpayers; penalties mirror § 264 but computed per electronic transaction log.
- By 2025, phased expansion covers top 20 000 taxpayers; BIR can suspend API access for non-compliant platforms, effectively halting sales.
5. Illustrative Jurisprudence
| Case | G.R. No. | Ruling & Take-Away |
|---|---|---|
| People v. Nitafan (CA, 2021) | CA-G.R. CR-HC 12456 | Conviction under § 264 upheld; each unreceipted sale during a 3-day BIR surveillance counted as a distinct offense. |
| Reyes v. People (SC 2nd Div., 2018) | 223566 | Supreme Court affirmed that actual payment is not required; mere refusal to issue a receipt upon demand consummates the offense. |
| JR Hauling Corp. v. Commissioner (CTA En Banc, 2024) | EB 2550 | Padlocking under § 115 sustained; taxpayer’s plea that VAT returns were current did not cure receipt violations. |
(Older Court of Tax Appeals and CA decisions remain persuasive even if unpublished in SCRA; check latest CTA “Kandado” cases for penalty computation nuances.)
6. Interaction with Tax Assessments
- Audit Trigger – Non-issuance findings usually spark a Benchmarking-type assessment comparing purchases vs. declared sales.
- Presumptive computation – BIR may project undeclared income using percentage of unreceipted sales formula upheld in Steel Age v. CIR (CTA Case No. 10008, 2020).
- Compromise possibility – While criminal actions under § 264 are generally non-compromisable once filed, administrative penalties and surcharges may be settled under § 204 prior to DOJ filing.
7. Compliance & Defense Strategies
Proactive measures
- Register books & “Ask for Receipt” notice (§ 237 last ¶).
- Adopt BIR-accredited CAS/POS; enroll in EIS if covered.
- Conduct monthly self-audit of “tape vs. Z-read” vs. filed returns.
When cited
- Respond within 48 hours to Notice of Violation; attach duplicate receipts as proof.
- Seek delisting from Kandado via RMO 7-2015 procedures (pay est. deficiency + 25 % surcharge + 20 % int.).
Litigation defenses
- Challenge identity of the cashier and chain of custody of surveillance docs.
- Invoke good-faith exemption if relying on BIR ruling or force majeure (e.g., system outage) – see People v. E-Shop Corp., CA-G.R. CR-HC 13330 (2022).
8. Emerging Trends (2025-onward)
- Full e-receipt coverage is slated for all VAT taxpayers by 2027 via draft Revenue Regulations.
- Real-time API “cut-off” sanction will replace physical padlocks for online sellers.
- Congress bills (e.g., HB 9805) propose raising § 264 fines to per-day rather than per-act basis for large chain stores.
- Integration of BIR & DTI enforcement databases under the Unified Trade Enforcement System (UTES) is piloted in Metro Manila.
Conclusion
Failure to issue official receipts in the Philippines is not a mere paperwork lapse; it is a multi-layered offense attracting criminal, civil, and administrative sanctions that can shutter a business and imprison its officers. With the pivot to electronic invoicing and data-driven surveillance, the margin for error is shrinking. Businesses—whether brick-and-mortar sari-sari stores or cloud-based service platforms—must treat the humble Official Receipt as a frontline compliance shield.
Practical takeaway: Build an internal “receipt culture”: automated issuance, daily reconciliation, and clear accountability for every sale. A single missing receipt can now cost not only taxes and penalties but also hard jail time.