December 13, 1982

BIR RULING NO. 307-82

321-00 000-00 307-82

Engineering Equipment, Inc. and

F.F. Mañacop Construction Co., Inc.
Joint Venture
86 West Avenue, Quezon City
Attention: Atty. Antonio C . Ravelo
Vice-President for Administration
and Finance Project Principal, FFMCCI

Gentlemen :

This refers to your letters dated December 21, 1981 and January 12,
1982 requesting that your joint venture partnership which is undertaking a
certain government construction project be exempted from the payment of
income tax; that you be allowed to order from your printers the printing of
official receipts, invoices and other business forms; and to register separate
books of accounts for the joint venture. cdta

Documentary evidence submitted show that Engineering Equipment,

Inc. (EEI) and F.F. Mañacop Construction Company, Inc. (FFMCCI), which are
corporations duly registered in accordance with the laws of the Republic of
the Philippines, entered into a contractual relationship whereby they will
undertake the construction of the Iloilo Fishing Port of the Ministry of Public
Works for and in consideration of an estimated price of P118,449,992.13;
that under this relationship, FFMCCI shall manage the implementation and
prosecution of the project as Project Principal; that EEI and FFMCCI shall
contribute equally to a common fund to prosecute the project; that the
parties shall participate equally in the profits, after deducting project
management fees; and that there is joint and several commitment,
responsibility and undertaking of the parties, as well as their right to collect
payment from the Government.
In reply thereto, I have the honor to inform you that under the
foregoing facts, a joint venture or consortium was formed for the purpose of
undertaking a construction project. Accordingly, the joint venture is exempt
from the corporate income tax pursuant to Section 20(b) of the Tax Code, as
amended by P.D. No. 1774. Such being the case, it is not required to file
quarterly and final or adjustment returns with respect to income earned from
the said project. However, the joint venture is subject to the payment of
business taxes, such as the fixed tax of P100.00 and 3% contractor's tax
prescribed by Sections 192(l) and 205 of the Tax Code, as amended.
Moreover, since all corporations, companies, partnerships or persons
required by law to pay internal revenue taxes, are required to keep books of
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 accounts pursuant to Section 321 of the Tax Code, as implemented by
Revenue Regulations No. V-1, otherwise known as the "Bookkeeping
Regulations", the joint venture is, therefore, required to register with this
office the joint venture's books of accounts, invoices and receipts serially
numbered in duplicate, showing among other things, its name or style and
business address, before starting its operation as a joint venture. This
registration and printing requirement, however, is within the jurisdiction of
the Regional Director of the region where the principal office of the joint
venture is located.
The above ruling is based on your representation and the same will be
revoked if, after investigation, it is ascertained that the facts are different
from those represented. cdasia

Very truly yours,

RUBEN B. ANCHETA
Acting Commissioner

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