CTA Case No. 3180 (Decision)

�; ... r�JB U (. Of 'IIlii rllJLf PP l'\'Y~;;. ;:-oun1 011 TAX APPEALS fll'r lt:r.t~" m~ OSEO T. ALCOBILLA� Petitioner. - versus - C.T.A. CASE NO. 3180 REGIONAL DIRECTOR� REVENUE \I REGION NO. 6A (WEST VISAYAS) BUREAU OF INTERNAL REVENUE� ILOILO CITY, Respondento X- - - - - - - - - - - - - X DECI S I 0 N This is an appeal from the decision of the Regional Director, who is the legal represent- ative of the Commissioner of Internal Revenue , Revenue Region No. 6A (West Visayas), Bureau of Internal Revenue, Iloil o City assessing against and demanding from petitioner the sum of ~36.36, which was paid on October 19 , 1980, as deficiency income tax , jnclus ive of interest and penalty for late payment for the year 1975. Petitioner Oseo T. Alcobilla, a resident of San Remigio. Antique, on January 7 ~ 1976 filed with the BIR Collect i on Agent of San Remigio his inc ome tax return f or 1975. In said income tax return, 4S l '.~

DECISION CTA CASE NO. 3180 - 2- he claimed a total additional personal exemption of ~5,000.00 covering the personal exemption for five (5) minor dependent children at ~1,000.00 for each child. In said return, petitioner claimed, therefore, an additional exemption of ~1,000.00 for his fifth (5th) minor c hild who was born on July 31, 1973. The minor children of petitioner and their corresponding dates of bi r th are as f o llows : 1. Oseo, Jr. Alcobilla Feb. 26, 1966 2. May Fl o r Alcobilla - Aug. 26~ 1 967 3. Neil Floro Alcobilla - AUCJo 7 . 1969 4. Luella Alcobilla - Aug. 21, 1971 5e Daphne Alcobilla - July 31, 1973 On June 19, 1980q petitioner was sent an Audit sheet showing the following pertinent data : EUREAU OF INI'ERNAL REVENUE INCOME TAX DIVISION AUDIT SHEET .FOR .INDIVIWAL Mr. Oseo Alcobilla Assessment No. 53-2-6A-033729-75 {Name of Individual ) Income as per return - - - - - -- - -- - - - - ~7,696.28 ADD: Deductions disallowed, etc. , in office audit; Note: Taxpayer is only allowed 4 depen- dent children entitled to addi- tional exemption of ~1qOOO.OO . Total exemption - -- - - �'17 ;OOOoOO Total net income as per office audit - - - ~7 ,696.28 LESS: Personal exemption - - - - ~3, 000.00 Additional exemption 4, 000.00 Total exemptions - - - - -- - - - -- - - -. 7 , 000.00 Amount subject to tax --------------- 696.28

DECISION - CTA CASE NO. 3180 - .3 - Amount of t~ due --~~~~~~~~~~~~~~~~~~ ~ 21.00 Balance of tax due ----~~~~~~-~~~~~~~~ . 21.00 14% annual int.. fr 4/16/76-8/15/80 (.42 max) - . . 8.82 'IOTAL AM)UNT DUE OR REFUNDABLE --~~~~~~~ =~==2=9�::8::2 On Aug.ust 15, 1980, after the pre-audit examin- ation of the inc ome t.ax return of petit.ioner for the year 1975, Assistant Regional Director Felixberto v. Arenas of said Revenue Region No. 6-A, due to the disallowance of petitioner 's claim for exempt i on of t he fifth child born on July 31, 1973, sent a letter to petitioner Oseo T. A1cobil1a assessing against and demanding from him the payment of the sum of ~29.82 as deficiency income tax, inclusive: of interest, computed as follows: Deficiency tax due -~ -~~~~~~~~~ P 21.00 1.167% mo. int. from 4-16-76 to 8-15-8.0 (. 42% max) .----.--.- . 8.82 Total amount due & collectible- ~ 29.82 On August 29, 1980, petitioner sent a letter to the Assistant Re gional Directo~ requesting for the reconsideration of the above assessment on the ground s that (l) _petitioner is entitled to the add- itional personal exemption of five (5) _dependent children and; ( 2) .that t he asses.smen t has prescribed since the three year period within which to assess and collect the tax has prescribed.

DECISION - CTA CASE NO. 31 8 0 - 4- On September 30 1 1980 1 respondent in reply to petitioner's request for reconsideration , denied the same holding, (1) that since his f ifth child was bor.n on July 31 1 197 3, he can be allowed to claim for only f our (4) _dependent minor children pursuant to Section 23 (c) .of the National Internal Revenue Code, as amended by Presidential Decree No. 69, whic h t oo k effect on January 1, 1973; and (2) that the right to assess and demand payment has not. prescribed as the prescription period is five (5) _years from the date of filing of the 1975 income tax return which expired on April 15, 1981. On October 19, 1980 , petitioner paid, under protest, his deficiency income tax for 1975 to the BIR Collection Agent in San Remigio, Antique, the sum of l'l36.3 6 , which increased amount is due to the delay in the payment which brought about an increased int.erest upon the basic deficiency income tax. Hence, petitioner appealed. We are in full agreement with respondent's position t hat under Section 23 (c) of the Nation.al Internal Reve nue Code, as amended by P .D. 69, which took effect on January 1, 1973, already limited to only four (4) the number of dependents for which a

DECISION - CTA CASE NO. 3180 - 5- claim for addi tional exempt ion may be allowed. s�ection 23 (c) .of t he Tax Code, as amended by P. D. 69, is quoted as follows: "Sec. 23. Amount of personal ~xempti ons allowable to individuals. - XXX XXX xxx. (a ) XXX XXX xxx; (b) XXX XXX xxx ; (c) . Addi tiona! exemptions for dependents. - The sum of one thousand pesos f or each legitimate, recogn i zed natural, o r adopted child, wholly dependent upon and living with t he taxpayer if such dependen ts are not more than twenty-three years o f age , unmarried, and not gainfully employed or incapable of self-support bec ause mentally or physically defective. The exemption under this subsection shall be allowed only if the person making t he return is the head of the family." As of t h e years 1 972 or prior thereto, peti t ioner already has claimed an additi on al persona l exemp tio n for four (4) _mino r dependent children in his income ' t~x return. The ch ildren and their dates of birth for which a claim for additional exemption was made are as follows : 1. Osee, Jr. Alcobilla Feb. 26, 1966 2. May Flo r Alcobil la - Aug. 26 , 1967 3. Neil Floro Alcobilla - Aug. 7, 1969 4. Lue lla Alcob�lla - Aug. 21, 1971 Petitioner's c la im for his fifth (5th) _child, Daphn e Alcobilla, born on July 31, 1973, cannot be allowed .4sr--

DECISION - CTA CASE NO. 3180 - 6- for purposes of additional exemption as it is in violation of Section 23 {c) .of the National Internal Revenue Code, as amended by P.o. 69. With respect to the assertion that: respondent's. right to assess and collect: the deficiency income tax had prescribed under Section 51 of the National Internal Revenue Code , which pr.ovide only for three: {3) _years t:o assess from the filing of the income tax return, that provision of law is. no longer appli- cable in this instant case. This provision has long been amended by Republic Act No. 2343 on June 20, 1959, which gives the Government five {5) y ears from the date of the filing of the return within which t:.o assess and five (5} _years fr om the date o f the receipt of assessment within which to collect the tax thereon. {Section 331 , National Internal Revenue Code.} Considering, that the income tax. return of petitioner was filed on April 15, 1976, res pondent and in representat.ion of the Commissioner of Internal Revenue, has, there�ore, five {5) _years or up to April 15, 1981, within which to legally assess the tax. The assessment {53-2-GA-00729-75/80} was issued ag.ain s.t peti t.ioner only on Aug,ust 15, 198 0 {p. 5 , BIR rec.} ~ and, hence, was issued vJi thin the five (5) year period to assess provided

DECISION - CTA CASE NO . 3180 - .7 - by law. (Sectioro 331 and 332 , Ibid.) . Hence:, the right of respondent to assess or collect the tax has not yet prescribed. The contention of petitioner that the amend- ment in Section 23 (c) of the National Internal Revenue Code by PD 69 limiting the additional personal exemption t o four (4) ~ependent children does not apply to this case because his r.ig,ht to claim the additional exemption to five (5) ~hildren became vested on petitioner prior to the: d ate the amendment of Section 23 (c) of the Tax Code took effect in 1973 is unten 2ble. The provision of Section 23 (c) of the National I nternal Revenue Code is very clear that the number of dependent. children for which an individual taxpayer can claim f or additional personal exemption is four (4) chil- dren and is effective January 1, 1973, when said Section 23 (c)~ as amended by PD 69 was passed . In the t axable year: 1972 , we take it that petitioner claimed in his return additional exemption f or only fou r (4) .dependent minor children which were the only dependent children at t hat time. The fif th � child, said Daphne Alcobilla, conceived in 1972, was born later on July 31, 1973, for which ch ild 1 s conce ption, petitioner claims his en titlement to 48 7

DECISION - CTA CASE NO :na0 -.a - an additional exemption of Pl ,O OO .OO begi nn ing 1972 and succeeding years. Petitioner reasoned out that "The additional exemption claimed by pe tit.i oner (him) .is favorable to his fifth child" He claimed th at under Articles 40 and 41 of the New Civi l Code , the said c hild of the petitioner should be deemed born o n the day she was conceived in November, 1972. " (p. 3, Petitioner ' s Me mo, p. 56, CTA rec.) In c onclu sion, petiti oner, stated that - "Accordingly, under Section 23 (c) of the Nati o nal Internal Revenue (Code)~ the peti - tioner 's f ifth child was al ready a "dependent" ent.it le d to an additional exemption of Pl,OOO.OO when President i a l Decree No. 69 took effect on January 1, 1973." (~, Petitioner's Me mo ; ibi d , CTA rec; Underli ning ours.) We cannot agree with the contention of peti- t ioner. The r ig,ht to claim for additional exemp- tion is one that be longs to the parent or head of t he family and not a right, claimable by or accru ing to the child himself. The Civil Code provis i ons, Articles 40 and 4 1, pertains to the ri gh ~of the � conceived chi ld which 'are favorable to him when born ali ve, or born 24 hou rs after complete delivery if the fet us had an intra-uterine life of l ess than

DECISION - CTA CASE NO. 3180 - 9- s e ven months . The rights properly accruing, to a conce ived child, among others, are the rights to receive donations and inheritance. But the rights accruing under Arts. 40 and 41 of the Civil Code, indeed, does not include the r ig,ht. of the " depende�nt". minor child to claim and be e:nt.itle:d to an add - 1tional e~emption of fil,OOO.OO when PD 69 , amend- ing, Section 23 (c) _of the Tax Code took effect on January 1, 1973. The right t o claim for exemption belongs properly to the parent, or head of the family . Stated otherwise, the claim fox: additional exemption privilege can be claimed b:,' the head of the f amily or parent only, and it is not the child that is entitled to claim for exemption. It is not also one of the rights, to repeat for emphasis, that accrues to a conceived child pursuant to said Articles 40 and 41 of the Civil Code. The fact that the child, Daphne Alcobilla, . conceived in November, 1972 was born on July 31, 1973 will not giive to the parent-petitioner a vested r ig,ht to claim for an additional exemption with respect to t.he aforesaid conceived child after January 1, 1"973. Moreover, claims for 'exemption, like in this case at bar , are generally derogator y to the taxing, power and the clearest mandate of law must be s hown

r DECISION - CTA CASE NO. 31 80 - 10 - by the petitioner claimant to exist in order to entitle him to an exemption under the law . The denial by respondent of the claim for ~dditional exemption of ~ 1 ,0 0 0 . 00 for petitioner'~ child born on July 31 , 1973, in his income tax r eturn for 197~ is legally in order and, hence, is dis- allowed. WHEREFORE, respondent's decis i on dated September 30 , 1980, is hereby a ffirmed in !2.!;2. With costs de officio. Quezon Cit.y, November 29, 1982. WE CONCUR: ~d~ AMANTE tFILLER Presiding, Judge 490