BIR Ruling No. 047-80

October 27, 1980 BIR RULING NO. 047-80 020-b 020-80 47-80 Philnor Consultants and Planners, Inc. 6th Floor, ADC Building 6805 Ayala Avenue Makati, Metro Manila Gentlemen: This refers to your letter dated July 23, 1980 requesting a ruling on the tax liability of the joint venture partnership of Philnor Consultants and Planners, Inc. (Philnor), DCCD Engineering Corporation (DCCD) and Resource Combines, Inc. (RCI) and of each of the aforenamed consulting firms under the following facts and circumstances: It is represented that the joint venture of Philnor, DCCD and RCI is formed for the purpose of rendering management and consultancy services in connection with the procurement, construction, implementation and operation of the Northern Palawan Fisheries Development Project (NPFDP), an ADB-financed project of the Government of the Philippines (GOP), which is represented by the Philippine Fish Marketing Authority (PFMA) of the Ministry of Natural Resources; that in order to carry out the project, the Government, represented by the PFMA, will engage a qualified local consulting firm, such as the aforenamed firms, to assist the PFMA in implementation and initial operation of the project; that in its management service, the joint venture shall, among others, monitor and provide general supervision in the construction delivery and installation activities in the project; and that the project consists of three (3) parts, namely: Part A concerns municipal fisheries and involves primarily the provision of marine engines and fishing equipment to small-scale fishermen. Part B concerns commercial fisheries and includes the provision of fishing vessels and other offshore fishing facilities to be based at two sites in the Project Area, namely, Coron and Culion and onshore facilities, at the same two sites. Part C concerns both municipal and commercial fisheries and provides for fish landing facilities, including jetties and fuel and freshwater storage and distribution systems, again to be located at Coron and Culion. In reply, I have the honor to inform you as follows: 1. Under the foregoing facts, the joint venture is a contractor. As such contractor, it is subject to the P100.00 fixed tax prescribed under Section 192(1) of the Tax Code, as amended, and its gross receipts derived from its management and consultancy services is subject to the 3% contractor's tax imposed by Section 205 of the same Code. 2. The joint venture in the instant case is formed to undertake management and consultancy services and not for the principal purpose of undertaking "construction projects" which joint venture would have been excluded from the term "corporation" under Sec. 20(b) of the Tax Code. Such being the case, said joint venture partnership of Philnor, DCCD and RCI is subject to the corporate income tax. 3. The individual partners to the joint venture, are liable for the payment of the corporate income tax on the profits distributed to them by the joint venture. cdll Very truly yours, ROMULO M. VILLA Acting Commissioner