If a supplier sends you an invoice for items that were never delivered, do not treat it as a simple “accounting issue.” In the Philippines, an invoice can affect payment demands, VAT records, internal audit, collection letters, and even litigation. The safest approach is to dispute the invoice quickly, preserve proof that the goods were not received, ask for a corrected invoice or credit memo, and avoid signing any delivery document that looks like an admission of receipt.

This guide explains what the law generally says, what documents matter, how to respond in writing, when to withhold payment, and where to escalate the issue if the supplier refuses to correct the invoice.

What an Invoice Means — and What It Does Not Prove

An invoice is a commercial and tax document showing that the seller is charging the buyer for goods or services. It is important, but it is usually not conclusive proof that all items were actually delivered.

In a delivery dispute, the key question is often:

Did the supplier actually deliver the specific goods, in the agreed quantity, to the person or place authorized to receive them?

To answer that, courts, companies, auditors, and government agencies usually look beyond the invoice. They check purchase orders, delivery receipts, waybills, warehouse receiving reports, gate logs, photos, chat messages, emails, and the conduct of both parties.

Under the Civil Code, contracts have the force of law between the parties and must be complied with in good faith. For sales, the seller’s obligation includes delivery of the thing sold, while the buyer’s obligation is to pay the agreed price. The official text of the Civil Code provides that obligations arising from contracts must be complied with in good faith, and that a seller is bound to transfer ownership and deliver the object of the sale. (Lawphil)

So if the invoice includes items that were never delivered, the buyer generally has a basis to dispute the invoice, refuse payment for the undelivered items, demand correction, and, when appropriate, claim damages.

Your Main Legal Rights Under Philippine Law

You may demand actual delivery

If the contract requires the supplier to deliver goods, the buyer may demand performance. Article 1165 of the Civil Code states that when a determinate thing must be delivered, the creditor may compel delivery; for generic goods, the obligation may be performed at the debtor’s expense. (Lawphil)

Example:

You ordered 50 specific laptops with serial-numbered specifications. The supplier delivered only 40.
You ordered 500 sacks of cement of a stated brand and grade. The supplier invoiced 500 but delivered 420.

In both situations, the buyer should document the shortage and demand either completion of delivery or adjustment of the invoice.

You may refuse to pay for items not delivered

Article 1233 of the Civil Code says a debt is not considered paid unless the thing or service in which the obligation consists has been completely delivered or rendered. Article 1248 also generally protects a party from being forced into partial performance unless there is an express stipulation or the obligation is partly liquidated and partly unliquidated. (Lawphil)

In practical terms, if the supplier delivered only part of the goods, the buyer may usually pay only the undisputed delivered portion and formally dispute the rest.

The important word is formally. Do not just ignore the invoice. Silence can create problems later, especially if your company’s staff signed a receiving copy, your accounting team booked the invoice, or the supplier later claims you accepted the delivery without objection.

You may ask for rescission, refund, or damages in serious cases

For reciprocal obligations, Article 1191 of the Civil Code allows the injured party to choose between fulfillment and rescission, with damages in either case, when the other party fails to comply with what is incumbent upon them. (Lawphil)

This matters when the non-delivery is substantial.

Example:

A restaurant paid for imported equipment needed for opening week, but the supplier delivered only accessories and kept billing for the main machine.
A contractor relied on materials promised for a project deadline, but the supplier invoiced and failed to deliver critical items, causing penalties from the project owner.
A buyer paid in advance for goods that never arrived and the supplier stopped responding.

Depending on the facts, the buyer may demand completion, cancellation of the undelivered portion, refund of advance payments, replacement of missing items, liquidated damages if stated in the contract, or actual damages that can be proven.

You may recover money paid without legal basis

If you already paid for undelivered items, Article 22 of the Civil Code is relevant. It states that a person who acquires something at another’s expense without just or legal ground must return it. (Lawphil)

This is often the practical legal basis behind refund demands when payment was made but goods were not delivered.

First Things to Do When You Receive a Wrong Invoice

Act quickly. The longer the invoice sits undisputed, the easier it becomes for the supplier to argue that your side accepted the charge or failed to timely report the shortage.

1. Compare the invoice against the contract documents

Gather and compare:

Purchase order
Quotation or proposal
Signed contract or supply agreement
Approved change orders
Supplier’s invoice
Delivery receipt
Sales invoice or VAT invoice
Packing list
Bill of lading, airway bill, waybill, or courier tracking record
Receiving report from your warehouse, store, site engineer, or admin staff
Photos or CCTV screenshots, if available

Check these details carefully:

Item to Check	Why It Matters
Item description	Suppliers sometimes invoice substitute items or bundle charges vaguely.
Quantity	The most common dispute is partial delivery billed as full delivery.
Unit price	A shortage may be hidden by a pricing or packaging change.
Delivery address	Goods may have been sent to the wrong branch, site, warehouse, or consignee.
Receiver’s name	Check if the person was authorized to receive goods.
Date and time	Helps verify gate logs, CCTV, guard logbooks, courier scans, and warehouse records.
Signature	A signature may prove receipt only if it is identifiable and authorized.
Remarks	“Received subject to checking” is very different from unconditional acceptance.

2. Verify whether someone signed a delivery receipt

A signed delivery receipt is important evidence, but it is not always the end of the matter.

Ask:

Who signed it?
Was that person authorized?
Did they count the items?
Was the delivery sealed, boxed, or palletized?
Was it marked “subject to count,” “subject to inspection,” or “partial delivery”?
Were there handwritten corrections?
Does the signature match the actual employee or guard on duty?
Does the delivery receipt identify the invoice number?

In real Philippine practice, shortages often happen because a guard, receptionist, project helper, or store staff signs a delivery receipt without checking the actual contents. If this happened, document it immediately through an internal incident report.

3. Send a written dispute notice

Send the supplier a clear written notice by email and, for higher-value disputes, by registered mail, courier, or personal delivery with receiving copy.

Include:

Invoice number and date.
Purchase order or contract reference.
Specific undelivered items and quantities.
Delivered items, if any.
Proof attached.
Request for correction, completion of delivery, credit memo, refund, or cancellation.
A deadline for response, usually 3 to 7 business days for ordinary commercial transactions.

Do not use vague language like “maybe not delivered.” Be specific.

A useful wording is:

We dispute Invoice No. ___ dated ___ to the extent that it bills us for the following items that were not delivered: ___. Based on our receiving report dated ___ and delivery documents, only ___ were received. Please issue a corrected invoice or credit memo, or complete delivery within ___ business days.

4. Do not book or claim tax credits for disputed undelivered goods without review

For VAT-registered transactions, invoicing has tax consequences. Under Republic Act No. 11976, the Ease of Paying Taxes Act, a VAT-registered person must issue a VAT invoice for every sale, barter, exchange, or lease of goods or properties and for sales or exchanges of services. The law also states required invoice information, including VAT details and purchaser information in covered transactions. (Lawphil)

For business buyers, this creates a practical risk: your accounting team may accidentally record input VAT or expenses based on an invoice for goods that your operations team never received.

Coordinate internally so that:

The invoice is marked disputed.
The undelivered items are not paid.
Input VAT treatment is reviewed by accounting or tax staff.
The supplier is asked for a corrected invoice, credit memo, or cancellation document.
Any payment made is matched only to the delivered and accepted items.

5. Preserve electronic evidence

Many supplier disputes in the Philippines are now proven through Viber, Messenger, WhatsApp, email, marketplace chats, courier tracking pages, and screenshots.

Republic Act No. 8792, the Electronic Commerce Act of 2000, recognizes electronic documents and electronic data messages in commercial transactions and provides that electronic documents may have legal effect and evidentiary value when integrity and reliability requirements are met. (Lawphil)

Preserve:

Original emails with headers
Chat threads, not just cropped screenshots
Photos with timestamps
CCTV clips
Courier tracking pages
System logs from inventory or procurement software
Digital approvals
Bank transfer confirmations
E-wallet transaction records

For serious disputes, export the conversation thread where possible and keep backup copies. Screenshots are useful, but original files and complete conversation histories are better.

What to Ask the Supplier to Do

Your requested remedy should match the problem.

Situation	Practical Demand
Invoice includes items never delivered	Corrected invoice or credit memo removing undelivered items
Partial delivery only	Completion of delivery by a fixed date or billing adjustment
Wrong items delivered	Replacement with correct items, return arrangement, and corrected invoice
Paid in advance but no delivery	Refund or immediate delivery
Supplier claims courier delivered	Proof of delivery, receiver identity, photos, tracking records, and signed waybill
Supplier billed duplicate invoice	Cancellation of duplicate invoice and written confirmation of account balance
Supplier threatens collection	Written account reconciliation and suspension of collection on disputed items

A good written demand is calm, specific, and evidence-based. Avoid insults or accusations unless you are prepared to support them. “Your invoice is fraudulent” is a serious allegation. “We dispute the invoice because the following items were not delivered” is usually safer and more effective.

Can You Withhold Payment?

Usually, yes, for the disputed undelivered portion — but be careful.

If the invoice contains both delivered and undelivered items, the safer commercial approach is often to:

Pay the undisputed delivered items, if payment is already due.
Withhold only the disputed amount.
State clearly that payment is made without prejudice to the dispute over the undelivered items.
Request a statement of account reflecting the corrected balance.

This helps prevent the supplier from claiming that you are the one in default for the entire invoice.

However, check the contract. Some supply agreements have clauses on:

Payment upon invoice regardless of inspection
Deemed acceptance after a number of days
Shortage claims period
Delivery completion milestones
Retention amounts
Set-off rights
Dispute notice requirements
Interest or penalties for delayed payment

If your contract says shortages must be reported within 48 hours or 7 days, comply with that period as much as possible. If the period already passed, still report the shortage, but explain when and how it was discovered.

When Barangay Conciliation Is Required

For disputes between individuals, barangay conciliation may be required before filing a court case if the parties actually reside in the same city or municipality and no exception applies. The Supreme Court’s Circular No. 14-93 explains that prior barangay conciliation under the Katarungang Pambarangay system is generally a pre-condition before filing a complaint, but it also lists exceptions, including complaints by or against corporations, partnerships, or juridical entities. (Lawphil)

This distinction is important.

Parties Involved	Barangay Conciliation Usually Required?
Individual buyer vs individual seller in same city/municipality	Often yes, unless an exception applies
Corporation vs supplier corporation	No, because juridical entities are excluded
Sole proprietor vs individual supplier	Depends on the actual parties and residence
Buyer abroad vs Philippine supplier	Usually not practical; court, DTI, or contract remedies may be more relevant
Consumer complaint against business establishment	DTI process may be more appropriate for consumer issues

If barangay conciliation applies and you skip it, the court case may be challenged as premature.

If You Are a Consumer: DTI May Help

If you bought the goods as a consumer — not for resale, manufacturing, or business procurement — the Consumer Act of the Philippines may apply.

Republic Act No. 7394 protects consumers against deceptive, unfair, and unconscionable sales acts. Article 50 treats a sales act as deceptive when a seller or supplier uses concealment, false representation, or fraudulent manipulation that induces a consumer transaction. (Lawphil)

For consumer complaints, the Department of Trade and Industry handles mediation and, when needed, adjudication. The DTI’s Fair Trade Enforcement Bureau states that consumer complaints may be submitted through the DTI Consumer CARe portal, email, or in person, and that adjudication may follow if mediation fails. (Fair Trade Enforcement Bureau)

DTI is especially relevant for:

Online seller non-delivery
Appliances or gadgets paid but not delivered
Furniture or home items invoiced but missing
Store purchases with incomplete delivery
Refund refusal after non-delivery
Misleading sales representations

For business-to-business procurement, DTI consumer remedies may not apply in the same way. The matter is usually handled through contract enforcement, collection dispute, arbitration if agreed, or court action.

If the Supplier Still Refuses to Correct the Invoice

Option 1: Send a formal demand letter

A demand letter is often the most practical next step. It should:

Identify the parties.
State the transaction history.
Attach or list evidence.
State the exact amount disputed.
Demand a specific remedy.
Give a reasonable deadline.
Reserve rights to claim damages, costs, and legal interest if appropriate.

Under Article 1169 of the Civil Code, a party obliged to deliver or do something generally incurs delay from judicial or extrajudicial demand, unless demand is unnecessary under the law or circumstances. (Lawphil)

This is one reason written demand matters: it creates a clear record of when the supplier was required to fix the problem.

Option 2: Reconcile accounts in writing

For ongoing suppliers, ask for a reconciliation meeting and confirm the result in minutes or email.

A practical reconciliation table may look like this:

Invoice No.	Supplier Billed	Buyer Received	Disputed Amount	Agreed Action
SI-1001	100 units	80 units	20 units	Credit memo or completion delivery
SI-1002	50 units	50 units	None	Payable
SI-1003	30 units	0 units	30 units	Cancel invoice

This simple table can prevent months of confusion.

Option 3: File a small claims case for refund or money claim

If the dispute is for payment or reimbursement of money and the claim does not exceed ₱1,000,000, small claims may be available in first-level courts. Supreme Court materials on small claims state that small claims are money claims of ₱1,000,000 or less, and the Rules on Expedited Procedures in First Level Courts cover small claims within that threshold. (Office of the Court Administrator)

Small claims are commonly used for:

Refund of advance payment
Collection of overpayment
Reimbursement for undelivered goods
Enforcement of a settlement agreement
Money claims from contracts of sale

In small claims, lawyers generally do not appear on behalf of parties at the hearing unless the lawyer is a party. Supreme Court small claims materials state that attorney appearance is not allowed, except when the attorney is the plaintiff or defendant. (Supreme Court of the Philippines)

Practical documents usually needed include:

Verified Statement of Claim
Certification Against Forum Shopping, if required by the form
Contract, PO, invoice, delivery receipt, and demand letter
Proof of payment
Proof of non-delivery or shortage
Barangay Certificate to File Action, if applicable
Authority or board secretary’s certificate, if filing for a company
Special Power of Attorney, if appearing through an authorized representative

Option 4: File an ordinary civil case or arbitration

If the claim exceeds the small claims threshold, involves complex damages, requires injunction, or includes complicated contract issues, an ordinary civil action may be necessary.

Check the contract for:

Arbitration clause
Venue clause
Governing law
Escalation procedure
Notice addresses
Limitation of liability
Liquidated damages
Attorney’s fees clause
Interest clause

Many commercial supply agreements require disputes to go through negotiation or arbitration before court filing. Ignoring that clause can delay the case.

Is This Estafa or Just Breach of Contract?

Not every non-delivery is a crime. Many supplier disputes are civil cases: delay, breach of contract, inventory error, logistics problem, or accounting mistake.

Estafa under Article 315 of the Revised Penal Code generally requires fraud or deceit causing damage. Philippine Supreme Court decisions repeatedly emphasize that the fraud or false pretense must usually exist before or at the same time the offended party parts with money or property, not merely after a contract becomes unpaid or unperformed. (Lawphil)

A criminal complaint may become more realistic when there is evidence that the supplier never intended to deliver from the beginning, such as:

Fake company identity
Fake inventory claims
Fake courier tracking
Forged delivery receipts
Repeated use of the same scheme on multiple buyers
Immediate disappearance after payment
Use of fictitious names or addresses
Fabricated proof of delivery

But if the supplier is a real business, delivered some items, and the issue is a shortage or disputed account balance, the matter is often treated first as a civil or commercial dispute.

Common Real-Life Scenarios

The guard signed the delivery receipt, but the warehouse says items are missing

This is common. The issue becomes whether the guard was authorized to receive and whether the goods were actually counted.

Best response:

Get the guard logbook entry.
Ask for CCTV footage.
Prepare a receiving discrepancy report.
Send the supplier a written notice immediately.
Check whether the delivery receipt says “received in good order” or “subject to checking.”

The supplier says the items were delivered to your employee

Ask for proof. The supplier should identify the receiver, date, time, location, vehicle, waybill, and signed delivery document.

If the named employee denies receipt, get a written statement and compare signatures. If there appears to be forgery, preserve the original document and avoid writing over it.

The invoice was sent before delivery

Some suppliers issue invoices before delivery for processing, especially for credit-approved accounts or prepayment arrangements. That is not automatically illegal, but it must be consistent with the contract and tax rules.

The buyer should not treat a pre-delivery invoice as proof of receipt. Mark it as pending delivery or subject to completion.

The supplier delivered substitute items

If the contract requires specific items, the buyer generally cannot be forced to accept different goods against their will. Article 1244 of the Civil Code states that a debtor of a thing cannot compel the creditor to receive a different one, even if it is of the same value or more valuable. (Lawphil)

Document the substitution and reject or accept it in writing. If you accept substitute items without reservation, the supplier may later argue that you waived the original specification.

The buyer is abroad and the supplier is in the Philippines

Foreign buyers and overseas Filipinos often manage Philippine transactions remotely. The biggest problem is proof.

Practical steps:

Use written purchase orders and email approvals.
Require photo and video proof before and during delivery.
Assign an authorized local representative in writing.
Require the representative to inspect and sign with remarks.
Keep courier tracking and delivery confirmation.
If a Philippine case requires a notarized Special Power of Attorney or affidavit executed abroad, check whether apostille or consular authentication is needed. DFA apostille services are handled through the official DFA Apostille system. (Apostille Services)

The supplier threatens to blacklist or sue you for non-payment

Respond in writing. State that you are not refusing to pay legitimate obligations; you are disputing specific undelivered items.

Attach a reconciliation and offer to pay the undisputed amount. This makes your position look reasonable and reduces the risk that the supplier can portray you as simply refusing to pay.

Evidence Checklist

Evidence	Why It Helps
Purchase order or contract	Proves what was ordered and on what terms
Supplier quotation	Shows agreed description, quantity, price, and delivery terms
Invoice	Shows what the supplier billed
Delivery receipt	Shows what the supplier claims was delivered
Receiving report	Shows what your side actually received
Photos or videos	Useful for sealed boxes, damaged goods, or partial delivery
CCTV or gate logs	Confirms whether delivery occurred at the alleged time
Courier or logistics tracking	Helps prove route, delivery attempt, and receiver
Emails and chats	Show admissions, follow-ups, promised delivery dates, or corrections
Inventory records	Show the goods never entered stock
Payment proof	Needed for refund, overpayment, or small claims
Demand letter	Shows formal dispute and start of delay
Credit memo or corrected invoice	Best document to close the accounting issue

Practical Timeline

Time From Discovery	Recommended Action
Same day	Hold payment, notify procurement/accounting, preserve documents
Within 24–48 hours	Verify delivery records, identify receiver, check warehouse count
Within 3 business days	Send written dispute notice with invoice details and missing items
Within 7–10 business days	Demand corrected invoice, credit memo, delivery completion, or refund
After failed discussion	Send formal demand letter
If consumer transaction	File DTI complaint or proceed through DTI mediation
If money claim up to ₱1,000,000	Consider small claims after demand and required pre-filing steps
If high-value or complex contract	Review venue, arbitration, damages, and court options

Frequently Asked Questions

Can I ignore an invoice for items that were never delivered?

It is better not to ignore it. Send a written dispute notice identifying the invoice number, the missing items, and your evidence. Silence may later be used to argue that you accepted the billing or failed to object within a reasonable time.

Is an invoice enough proof that the supplier delivered the goods?

Usually, no. An invoice proves billing, but actual delivery is commonly proven through delivery receipts, receiving reports, waybills, warehouse records, signatures, photos, and related communications.

What if my staff signed the delivery receipt by mistake?

Immediately investigate and document what happened. Get a written explanation, check CCTV or gate logs, and send the supplier a written notice that the signature does not reflect actual complete receipt. The sooner you object, the better.

Can I refuse to pay the whole invoice if only some items were missing?

Often, the more reasonable approach is to pay the undisputed delivered portion and withhold only the disputed amount. State in writing that payment is without prejudice to your dispute over the undelivered items.

Should I ask for a credit memo or a corrected invoice?

Yes. For accounting and tax purposes, a written correction is important. Ask the supplier to issue a corrected invoice, credit memo, cancellation document, or other proper adjustment document that clearly references the original invoice.

Can I file a DTI complaint for non-delivery?

If you are a consumer and the transaction involves consumer goods or services, DTI may be appropriate. DTI handles consumer complaints through mediation and possible adjudication if mediation fails. For business-to-business procurement, the remedy is usually contractual, civil, arbitral, or small claims depending on the amount and facts.

Is non-delivery automatically estafa?

No. Non-delivery is often a civil breach of contract. Estafa may be considered when there is evidence of deceit from the beginning, such as fake identity, fake inventory, forged documents, or a scheme to induce payment with no intention to deliver.

What if I already paid the invoice?

Demand refund, completion of delivery, or replacement. If the supplier refuses, preserve proof of payment and non-delivery, send a formal demand letter, and consider DTI, small claims, arbitration, or civil action depending on the transaction.

How long do I have to sue?

The period depends on the legal basis, written contract, oral agreement, invoice terms, and applicable law. Written contract claims generally have a longer prescriptive period than oral arrangements, but do not wait. Delay weakens evidence and may create arguments of waiver, acceptance, or laches.

Are screenshots of chats accepted as evidence?

They can be useful, especially under the Electronic Commerce Act and the Rules on Electronic Evidence, but preserve the original conversation when possible. Keep full threads, timestamps, sender details, attachments, and backup copies. Cropped screenshots are easier to challenge.

Key Takeaways

An invoice is important, but it does not automatically prove actual delivery.
Under Philippine contract and sales law, a supplier generally must deliver what was agreed before demanding payment for those items.
Dispute the invoice in writing as soon as possible, with item numbers, quantities, dates, and supporting documents.
Do not sign clean delivery receipts unless the goods were actually received and checked.
Pay only the undisputed amount if partial delivery occurred, and clearly reserve your rights over the disputed items.
Ask for a corrected invoice, credit memo, refund, or completion of delivery.
For consumer transactions, DTI mediation and adjudication may help.
For money claims of ₱1,000,000 or less, small claims may be available.
Non-delivery is usually a civil dispute, but deliberate false billing, forged delivery proof, or fake supplier schemes may raise criminal issues.
Good records — purchase orders, delivery receipts, receiving reports, photos, emails, chats, and demand letters — usually decide the outcome.