BIR Ruling

March 11, 1977 Atty. Amancio H. de los Angeles Room 101, Ban Chuan Building 614 T. Pinpin Corner Ongpin Manila S i r : This refers to your letter dated January 21, 1977 requesting information as to whether or not the exclusion of a dependent child from the income tax returns filed by his father in view of the former's continuous residence abroad is in accordance with law. It appears that your client, Chan Ban is a businessman from Vigan, Ilocos Sur who became a Filipino citizen by naturalization on May, 1976; that Chan Ban filed a petition before the Special Committee on Naturalization, Office of the Solicitor General, Manila that his son, Chan Wah 13 years old, be allowed to follow his (Chan Ban's) Philippine citizenship; that among the evidence presented during the hearing of the petition were Chan Ban's income tax for 1973, 1974 and 1975 wherein his child Chan Wah was not listed as a son and dependent; and that the exclusion of Chan Wah's name among Chan Ban's dependents was due to the refusal of the BIR personnel in Vigan, Ilocos Sur to include Chan Wah as dependent on account of the latter's continuous residence abroad up to August 15, 1976. In reply, I have the honor to inform you that under Section 23(c) of the Tax Code, besides the personal exemption of P3,000 for married person not legally separated from his spouse and head of family, a taxpayer is entitled to additional exemption of one thousand pesos (P1,000.00) for each legitimate, recognized natural, or legally adopted child wholly dependent upon and living with the taxpayer, if such dependent is not more than twenty-one years old, unmarried and not gainfully employed or incapable of self-support because mentally or physically defective, provided that the person claiming additional exemption is a head of family and that the total number of dependent children for whom additional exemption may be claimed shall not exceed four. These exceptions can be enjoyed by all citizens of the Philippines, and by resident aliens under certain conditions. However, since a resident alien with children abroad is not entitled to credit as the head of the family, (see par. 2, Section 11, Revenue Regulations No. 2), Chan Ban who was a resident alien until May 16, 1876 cabbit therefore claim additional exemption for his dependents who are living or saving abroad inasmuch as only a head of a family can claim the additional exemption. Accordingly, your client, Chan Ban, who was naturalized only on May 17, 1976 could not have been named his son Chan Wah as his dependent during the latter's continuous residence abroad, in his income tax returns for 1973, 1974 and 1975. In view thereof, this Office is of the opinion as it hereby holds that the BIR personnel in Vigan, Ilocos Sur did right in not allowing Chan Ban to name his son, Chan Wah, as dependent in his income tax returns for the years prior to 1976. cdt Very truly yours, EFREN I. PLANA Acting Commissioner of Internal Revenue TAN-1456-040-3