July 31, 1969
Ponente: Barredo, J.
FACTS
Pursuant to R.A. 333, the Republic of the Philippines sued E. Rodriguez for the expropriation of 1.36M sq. meters in the area delimited for the new capital city site. CFI ruled in favor of the Republic and ordered it to pay him as just compensation.
The parties later entered into a compromise agreement, where it was stipulated that E. Rodriguez would partly accept the payment or compensation in the form of government bonds. E. Rodriguez assumed that the income derived from such bonds were exempt from taxation, and thus did not include it in his tax return.
The BIR assessed a deficiency tax against him, which E. Rodriguez refused to pay, prompting the collector to file an action to collect said assessment.
RULING
The SC ruled for the CTA.
The income derived from bonds is taxable because income from the sale of the property is a distinct taxable item from government bonds.
It is also the purpose of the law to induce landowners to accept payment in bonds, as they would still be exempted from documentary stamp tax and interest.
Congress also did not intend to provide a tax exemption as there was also no express provision in R.A. 333 that provided such.
