I.

when tax is avoided because the FMV of the property

Estimated tax is a periodic advance pre-payment of taxes based on
the amount of income that is earned and the amount of estimated
tax liability that will have been incurred as a result. Estimated taxes
are assessed on income that is not subject to any type of
withholding.
II.
The possible issues are:
1. W/N premiums paid by the employer part of the taxable
compensation income of Noel or subject to fringe benefit tax.
The premiums are part of compensation if he is a rank-and-file
employee but it will be subjected to FBT if he is not a rank-and-
file employee provided such amount exceeds what the law
allows. Under NIRC, the cost of life or health insurance and other
non-life insurance premiums borne by the employer for his
employee shall be treated as taxable income or fringe benefit,
except when such contributions are pursuant to the provisions of
existing law, or the cost of premiums are for the group insurance
of his employees.
exceeded the value of the consideration received.
Here, the property involved is subject to capital gains tax
and there was no deemed gift since by applying the zonal
value, there should be no difference in taxable value and
the declared value. Granting there is difference, the
deemed gift provision is still not applicable since the basis
of CGT is always the higher between gross selling price and
FMV.
IV.
The ordinance is valid because provinces and cities have been
granted by the LGC the power to impose taxes on businesses
with franchise.
PLDT is liable to pay local franchise taxes since its exemption has
already been revoked upon the effectivity of LGC on January 1,
1992. LGC withdrew all tax exemptions or incentives previously
enjoyed by all persons, except certain entities.

2. W/N the employer can claim the insurance premiums as Smart and Globe are not liable because their legislative
deductions from gross income. franchises which were passed after the effectivity of LGC and
Yes, the insurance premiums can be deducted from its gross thus superseding the latter law granted them exemption from all
income provided it is not the beneficiary. Under NIRC, such local franchise taxes.
premiums constitute ordinary and necessary expenses of the
company, and hence, considered allowable deductions from
gross income.

3. W/N the proceeds of the insurance form part of the income of

the parents.
No, the proceeds are not part of income of parents because NIRC
provides that the proceeds of life insurance policies paid to heirs
or beneficiaries upon the death of the insured are excluded from
gross income.

4. W/N the proceeds of the insurance considered taxable transfer.

Yes because the NIRC includes as part of gross estate proceeds of
insurance policies if the designation is revocable or that the
insurance policy was taken by the decedent upon his own life.

III.
1. RDO has no discretion to unilaterally use the fair market
value

Under the NIRC, the basis of the value of the property to be

used for purposes of computing any internal revenue taxes
is either the FMV as determined by the Commissioner
(Zonal Value) or the FMV as shown in the schedule of values
of the Provincial and City Assessors.

Hence, the RDO cannot unilaterally use fair market value

other than the zonal value as determined by the
Commissioner.

2. No, the difference between the supposed values should not

be legally subject to donor’s tax.

Under NIRC, the “deemed gift” provision is applicable only

to properties other than those properties subjected to
capital gains tax. Further, there is taxable deemed gift only