Official Receipt (OR) Requirements for Installment Land Purchases in the Philippines
A comprehensive legal and tax guide (May 2025)
1. Why “official receipts” matter
For an installment buyer, the OR is the only universally accepted proof that a particular installment was paid:
| Purpose | What the OR proves |
|---|---|
| Contractual | Compliance with the payment schedule in the Contract to Sell (CTS) or Deed of Conditional Sale. |
| Statutory rights | Counting of “paid monthly installments” that unlock the protections of the Maceda Law (R.A. 6552) or P.D. 957. |
| Tax compliance | Output VAT (if any), creditable withholding tax, and the seller’s income recognition are all tied to the amount in an OR or Sales Invoice. |
| Registry & title transfer | The Registry of Deeds accepts ORs as evidence of full payment when the Deed of Absolute Sale is eventually presented for registration. |
| Dispute resolution | In HLURB/DHSUD, BIR, or court proceedings, photocopies of ORs are the first documents asked for. |
Failure to demand or issue ORs harms both parties: the buyer loses statutory protections and evidence, while the seller faces BIR penalties and even criminal liability.
2. Legal sources that mandate the issuance of ORs
| Law / Regulation | Key provisions on receipts |
|---|---|
| National Internal Revenue Code (NIRC) of 1997 as amended, §237 & §264 | Every person subject to an internal-revenue tax who receives payment must issue a duly registered official receipt or sales invoice. Non-issuance is punishable by a fine of ₱1,000 – ₱50,000 per act plus imprisonment of 2 – 4 years. |
| R.A. 6552 (Maceda Law), §3(b), §4 | The seller “shall furnish” the buyer with receipts for every installment and a statement of account at least once every six months. |
| P.D. 957 (Subdivision & Condominium Buyers’ Protective Decree), §20 | Developers must give buyers receipts for any payment and post a schedule of payments in the project site office. |
| BIR Revenue Regs. 18-2012 & 10-2015 | Distinguish Sales Invoice (sale of goods/property, including real property) from Official Receipt (sale of services). For land developers, either document is acceptable if it carries all mandatory particulars and is BIR-registered. |
| Revenue Regulations 9-2021 & 8-2022 (EIS rollout) | Large Taxpayers must issue electronic ORs or e-Invoices through the E-Invoicing System; mandatory for real-estate developers that hit the ₱3 billion annual sales trigger. |
| Civil Code, Arts. 1475, 1478, 1592 | Recognise the validity of an installment sale and the buyer’s right to proof of payment (ORs satisfy the evidentiary requirement under the Rules of Court). |
3. Official Receipt vs. Sales Invoice in real-property sales
| Scenario | BIR-accepted document | When issued |
|---|---|---|
| Seller is a real-estate dealer or VAT-registered (subject to 12 % VAT) | Sales Invoice (SI) • “VAT-Sales Invoice” printed on face | Upon collection of every installment, because VAT is recognized on an accrual-basis only when cash is collected. |
| Seller is not VAT-registered (subject to 6 % CGT) | Official Receipt or Collection Receipt | Upon collection of each installment. |
| Sale of residential lot/dwelling ≤ ₱3,199,200 (VAT-exempt threshold for 2025) | Collection Receipt (still BIR-registered) | Same as above. |
Tip for mixed projects: A developer that sells both VAT-able and VAT-exempt units normally keeps two sets of BIR-authorized serial ranges—one for VAT SI/OR and another for non-VAT ORs.
4. Step-by-step compliance for sellers
- Register with the BIR (Form 1905) the series of ORs/SIs, or enrol in the E-Invoicing System if covered.
- Acquire an Authority to Print (ATP); have the forms printed by a BIR-accredited printer.
- Display the “Ask for Receipt” notice at the sales office and in project sites.
- Issue the OR/SI immediately upon receiving each installment.
- Log the numbers in the BIR-registered books of accounts (Manual, CAS, or Loose-Leaf).
- File VAT returns and summary lists (if VAT-registered) on the basis of collections supported by ORs/SIs.
- Retain hard copies/electronic backups for 10 years (Sec. 235, NIRC).
5. Buyer protections anchored on ORs
| Protection | Trigger | Role of the OR |
|---|---|---|
| Grace periods & refunds under the Maceda Law | At least 2 yrs of installments paid | ORs prove the exact count of monthly payments to determine refund entitlement. |
| 30-day grace period per year of payments | Default in payment | OR dates show when the default occurred and when grace period ends. |
| Cancellation & refund under P.D. 957 | For subdivision/condo buyers | HLURB/DHSUD demands copies of all ORs attached to the complaint-affidavit. |
| Judicial consignation (depositing future payments in court/BSP) | When seller refuses to accept payment | Court will require prior ORs to verify payment history. |
6. Jurisprudence worth noting
| Case | G.R. No. | Key takeaway |
|---|---|---|
| Spouses Abellera v. Spouses Dionaldo | 217 SCRA 11 (1993) | ORs issued by the seller are the “best evidence” of payments; failure to issue ORs is construed against the seller in reconveyance suits. |
| HLURB v. Spouses Malate | CA-G.R. SP 109238 (2012) | Dismissal of buyer’s complaint was reversed because the seller could not refute ORs presented by buyer. |
| People v. Go | G.R. 183664 (2010) | Non-issuance of ORs is per se a criminal offense under §264, NIRC, whether or not tax is actually evaded. |
7. Penalties for not issuing ORs
| Agency | Violation | Sanction |
|---|---|---|
| BIR | §264, Non-issuance of OR/SI | Fine ₱1 k – ₱50 k per receipt + 2-4 yrs imprisonment; closure via Oplan Kandado. |
| HLURB / DHSUD | P.D. 957, §20 | Suspension or revocation of developer’s license to sell; administrative fines up to ₱50 k per individual buyer. |
| DTI (for non-developer sellers advertising land) | Consumer Act, Art. 50 (deceptive acts) | Cease-and-desist and fines up to ₱300 k. |
8. Practical pointers & best practices
For buyers
- Insist that “Official Receipt” (or VAT Sales Invoice) is printed on the document, with BIR Permit No. and TIN.
- Refuse provisional “Acknowledgment Receipts” longer than five (5) days—BIR allows provisional receipts only until the OR/SI is printed.
- Keep both the original and a scanned copy; store digitally in multiple locations.
- Cross-check the serial number sequence; missing numbers may hint at unregistered forms.
For sellers / developers
- Train cashiers to issue ORs real-time—penalties attach per omission, not per complaint.
- E-Invoicing: If you cross the ₱3 Billion sales mark, prepare your API integration before BIR enforcement (hard deadline: 1 July 2025 for developers).
- Indicate the installment number and running balance on the face of each OR to cut back on buyer queries and HLURB notices.
- Coordinate with your tax team: OR dates determine when output VAT and withholding taxes are due. Misalignment generates penalties that cascade into cash-flow issues.
9. Frequently asked questions
Is a Sales Invoice acceptable in lieu of an OR? Yes—for the sale of real property, BIR regards a VAT Sales Invoice as the correct document; however, the Maceda Law’s wording (“receipt”) is satisfied whether the seller uses an OR or SI as long as it is BIR-registered.
Do individual (non-dealer) sellers need ORs? Yes. Even a once-in-a-lifetime seller of his personal land who collects installments is still a “person subject to an internal-revenue tax” under §237, NIRC and must secure an ATP or E-OR facility.
Can a digital PDF serve as an OR? Only if (a) the seller is enrolled in the EIS and (b) the document bears the generated QR-code / hash code. Purely self-generated PDFs without BIR approval are non-compliant.
What if the seller refuses to issue ORs? The buyer may:
- File a written demand citing §237, NIRC;
- Complain with BIR’s Run After Fake Transactions (RAFT) team;
- Bring an action before HLURB/DHSUD (for subdivision/condo projects);
- Withhold further payments and consign them in court (Civil Code Art. 1256).
10. Conclusion
In Philippine installment land sales, the humble Official Receipt is the linchpin that ties together tax compliance, consumer protection, contractual performance, and eventual transfer of title. Sellers who fail to issue ORs expose themselves to stiff BIR sanctions, HLURB license suspensions, and even criminal liability. Buyers who neglect to collect ORs risk losing the powerful safety nets of the Maceda Law and P.D. 957.
Bottom line: Issue it, ask for it, keep it. The entire legal architecture of Philippine real-estate installment sales presumes that an Official Receipt or VAT Sales Invoice is dutifully generated for every peso collected.
Disclaimer: This article is for educational purposes and does not constitute legal advice. For specific situations, consult a Philippine lawyer or tax professional.