BIR Ruling No. 087-64

December 29, 1964 BIR RULING NO. 087-64 2nd Indorsement Returned to the Regional Director, BIR Regional District No. 6, Manila (South), the entire docket bearing on the 1958 income tax cases of Diana-Jeanne Lopez, Mary-Elizabeth Lopez, Richard Lopez and Victoria Lopez, c/o Mr. Enrique Lopez, 1838 Singalong St., Malate, Manila. The case was referred to the Law Division for legal opinion on the following questions: (1) Whether or not subject taxpayers are entitled to a personal exemption of P1,800.00 each, despite the fact that their father claimed additional exemption of P600.00 for each of them for the same taxable year; and (2) Whether or not their father can still claim additional exemption of P600.00 for each of them as dependent children despite the fact that income tax returns were filed for said children showing that they derived income of their own. Questions of exemption are resolved in accordance with the law in force in the year for which the return was filed. (Ingalls vs. Trinidad, 46 Phil. 807). Accordingly, in the resolution of the issues involved in this case, we apply Section 23 of the Tax Code before its amendment by Republic Act No. 2343. Section 23 of the Tax Code reads in part as follows: SEC. 23. Amount of personal exemption allowable to individuals . For the purpose of the tax provided for in this Title, there shall be allowed in the nature of a deduction from the amount of net income the following personal exemptions: (a) Personal exemption of single individuals . The sum of one thousand eight hundred pesos, if the person making the return is a single person or a married person legally separated from his or her spouse. (b) Personal exemption of married persons or heads of family . The sum of three thousand pesos, if the person making the return is a married man with a wife not legally separated from him or a married woman with a husband not legally separated from her, or the head of a family; Provided , that only one exemption of three thousand pesos shall be made from the aggregate income of both husband and wife when not legally separated. For the purpose of this section, the term ' head of a family' includes an unmarried man or woman with one or more brothers or sisters , or one or more legitimate , recognized natural , or adopted children dependent upon him or her for their chief support where such brother , sisters , or children are less than twenty-one years of age , or where such children are incapable of self-support because mentally or physically defective . "(c) Additional exemption for dependents . The sum of six hundred pesos for each legitimate, recognized natural, or adopted child wholly dependent upon the taxpayer, if such dependents are under twenty-one years of age, or incapable of self-support because mentally or physically defective . The additional exemption under this subsection shall be allowed only if the person making the return is the head of a family . (Emphasis Supplied) The minors, bring income tax returns files themselves are entitled to a personal exemption of P1,800 each in their own right. The father can no longer claim the personal and additional exemptions as head of family because his children are no longer wholly dependent upon him for their chief support. His status for income tax purposes ceased to be that of a head of a family. cdtech Additional exemptions shall be allowed only if the person making the return is the head of a family. The children with respect to whom additional exemption is claimed must be wholly dependent upon the taxpayer for chief. support. (Sec. 12 Reg. No. 2) Chief support means principal or main support. Partial support not amounting to chief support will not entitle a taxpayer to claim exemption as head of a family. (Sec. 11, Rev. Regs. No. 2) Wholly dependent means full and complete dependence that the dependent individual has no consequential source or means of maintenance. (Golden vs. Wilson & Co., 281 p. 360, 862, 129 Ken 100.) (SGD.) BENJAMIN N. TABIOS Acting Commissioner of Internal Revenue