stat cons case perfecto to jabina

7/31/2019 Stat Cons Case Perfecto to Jabina

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G.R. No. L-2348 February 27, 1950

GREGORIO PERFECTO, plaintiff-appellee,vs.BIBIANO MEER, Collector of Internal Revenue, defendant-appellant.

First Assistant Solicitor General Roberto A. Gianzon and Solicitor FranciscoCarreon for oppositor and appellant.Gregorio Perfecto in his own behalf.

BENGZON, J.:

In April, 1947 the Collector of Internal Revenue required Mr. Justice GregorioPerfecto to pay income tax upon his salary as member of this Court duringthe year 1946. After paying the amount (P802), he instituted this action inthe Manila Court of First Instance contending that the assessment was illegal,his salary not being taxable for the reason that imposition of taxes thereonwould reduce it in violation of the Constitution.

The Manila judge upheld his contention, and required the refund of theamount collected. The defendant appealed.

The death of Mr. Justice Perfecto has freed us from the embarrassment ofpassing upon the claim of a colleague. Still, as the outcome indirectly affectsall the members of the Court, consideration of the matter is not without itsvexing feature. Yet adjudication may not be declined, because (a) we are notlegally disqualified; (b) jurisdiction may not be renounced, ad it is thedefendant who appeals to this Court, and there is no other tribunal to whichthe controversy may be referred; (c) supreme courts in the United Stateshave decided similar disputes relating to themselves; (d) the questiontouches all the members of the judiciary from top to bottom; and (e) theissue involves the right of other constitutional officers whose compensation isequally protected by the Constitution, for instance, the President, the Auditor-General and the members of the Commission on Elections. Anyway thesubject has been thoroughly discussed in many American lawsuits andopinions, and we shall hardly do nothing more than to borrow therefrom and

to compare their conclusions to local conditions. There shall be little occasionto formulate new propositions, for the situation is not unprecedented.

Our Constitution provides in its Article VIII, section 9, that the members of theSupreme Court and all judges of inferior courts "shall receive suchcompensation as may be fixed by law, which shall not be diminished duringtheir continuance in office." It also provides that "until Congress shall provideotherwise, the Chief Justice of the Supreme Court shall receive an annualcompensation of sixteen thousand pesos". When in 1945 Mr. Justice Perfectoassumed office, Congress had not "provided otherwise", by fixing a differentsalary for associate justices. He received salary at the rate provided by theConstitution, i.e., fifteen thousand pesos a year.

Now, does the imposition of an income tax upon this salary in 1946 amountto a diminution thereof?.

A note found at page 534 of volume 11 of the American Law Reports answersthe question in the affirmative. It says:

Where the Constitution of a state provides that the salaries of its judicialofficers shall not be dismissed during their continuance in office, it had beenheld that the state legislature cannot impose a tax upon the compensationpaid to the judges of its court. New Orleans v. Lea (1859) 14 La. Ann. 194;Opinion of Attorney-General if N. C. (1856) 48 N. C. (3 Jones, L.) Appx. 1; Re

Taxation of Salaries of Judges (1902) 131 N. C. 692, 42 S. E. 970; Com. ex.rel. Hepburn v. Mann (1843) 5 Watts & S,. (Pa.) 403 [but see to the contrarythe earlier and much criticized case of Northumberland county v. Chapman(1829) 2 Rawle (Pa.) 73]*

A different rule prevails in Wisconsin, according to the same annotation.Another state holding the contrary view is Missouri.

The Constitution of the United States, likes ours, forbids the diminution of thecompensation of Judges of the Supreme Court and of inferior courts. TheFederal Governments has an income tax law. Does it embrace the salaries offederal judges? In answering this question, we should consider four periods:

First period. No attempts was made to tax the compensation of Federaljudges up to 1862 1.

Second period. 1862-1918. In July, 1862, a statute was passed subjecting thesalaries of "civil officers of the United States" to an income tax of three percent. Revenue officers, construed it as including the compensation of alljudges; but Chief Justice Taney, speaking for the judiciary, wrote to theSecretary of the Treasury a letter of protest saying, among other things:

The act in question, as you interpret it, diminishes the compensation of everyjudge 3 per cent, and if it can be diminished to that extent by the name of atax, it may, in the same way, be reduced from time to time, at the pleasureof the legislature.

The judiciary is one of the three great departments of the government,created and established by the Constitution. Its duties and powers arespecifically set forth, and are of a character that requires it to be perfectlyindependent of the two other departments, and in order to place it beyondthe reach and above even the suspicion of any such influence, the power toreduce their compensation is expressly withheld from Congress, andexcepted from their powers of legislation.

Language could not be more plain than that used in the Constitution. It is,moreover, one of its most important and essential provisions. For the articleswhich limits the powers of the legislative and executive branches of thegovernment, and those which provide safeguards for the protection of thecitizen in his person and property, would be of little value without a judiciary

to uphold and maintain them, which was free from every influence, direct and


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indirect, that might by possibility in times of political excitement warp theirjudgments.

Upon these grounds I regard an act of Congress retaining in the Treasury aportion of the Compensation of the judges, as unconstitutional and void2.

The protest was unheeded, although it apparently bore the approval of thewhole Supreme Court, that ordered it printed among its records. But in 1869Attorney-General Hoar upon the request of the Secretary of the Treasury

rendered an opinion agreeing with the Chief Justice. The collection of the taxwas consequently discontinued and the amounts theretofore received wereall refunded. For half a century thereafter judges' salaries were not taxed asincome.3

Third period. 1919-1938. The Federal Income Tax Act of February 24, 1919expressly provided that taxable income shall include "the compensation ofthe judges of the Supreme Court and inferior courts of the United States".Under such Act, Walter Evans, United States judge since 1899, paid incometax on his salary; and maintaining that the impost reduced his compensation,he sued to recover the money he had delivered under protest. He was upheldin 1920 by the Supreme Court in an epoch-making decision.*, explaining thepurpose, history and meaning of the Constitutional provision forbiddingimpairment of judicial salaries and the effect of an income tax upon thesalary of a judge.

With what purpose does the Constitution provide that the compensation ofthe judges "shall not be diminished during their continuance in office"? Is itprimarily to benefit the judges, or rather to promote the public weal by givingthem that independence which makes for an impartial and courageousdischarge of the judicial function? Does the provision merely forbid directdiminution, such as expressly reducing the compensation from a greater to aless sum per year, and thereby leave the way open for indirect, yet effective,diminution, such as withholding or calling back a part as tax on the whole? Ordoes it mean that the judge shall have a sure and continuing right to thecompensation, whereon he confidently may rely for his support during hiscontinuance in office, so that he need have no apprehension lest his situation

in this regard may be changed to his disadvantage?

The Constitution was framed on the fundamental theory that a largermeasure of liberty and justice would be assured by vesting the three powers the legislative, the executive, and the judicial in separate departments,each relatively independent of the others and it was recognized that withoutthis independence if it was not made both real and enduring theseparation would fail of its purpose. all agreed that restraints and checksmust be imposed to secure the requisite measure of independence; forotherwise the legislative department, inherently the strongest, mightencroach on or even come to dominate the others, and the judicial, naturallythe weakest, might be dwarf or swayed by the other two, especially by thelegislative.

The particular need for making the judiciary independent was elaboratelypointed our by Alexander Hamilton in the Federalist, No. 78, from which weexcerpt the following:

x x x x x x x x x

At a later period John Marshall, whose rich experience as lawyer, legislator,and chief justice enable him to speak as no one else could, tersely said(debates Va. Gonv. 1829-1831, pp. 616, 619): . . . Our courts are the balance

wheel of our whole constitutional system; and our is the only constitutionalsystem so balanced and controlled. Other constitutional systems lackscomplete poise and certainly of operation because they lack the support andinterpretation of authoritative, undisputable courts of law. It is clear beyondall need of exposition that for the definite maintenance of constitutionalunderstandings it is indispensable, alike for the preservation of the liberty ofthe individual and for the preservation of the integrity of the powers of thegovernment, that there should be some nonpolitical forum in which thoseunderstandings can be impartially debated and determined. That forum ourcourts supply. There the individual may assert his rights; there thegovernment must accept definition of its authority. There the individual maychallenge the legality of governmental action and have it adjudged by thetest of fundamental principles, and that test the government must abide;there the government can check the too aggressive self-assertion of theindividual and establish its power upon lines which all can comprehend andheed. The constitutional powers of the courts constitute the ultimatesafeguard alike of individual privilege and of governmental prerogative. It isin this sense that our judiciary is the balance wheel of our entire system; it ismeant to maintain that nice adjustment between individual rights andgovernmental powers which constitutes political liberty. Constitutionalgovernment in the United States, pp. 17, 142.

Conscious in the nature and scope of the power being vested in the nationalcourts, recognizing that they would be charge with responsibilities moredelicate and important than any ever before confide to judicial tribunals, andappreciating that they were to be, in the words of George Washington, "thekeystone of our political fabric", the convention with unusual accord

incorporated in the Constitution the provision that the judges "shall hold theiroffices during good behavior, and shall at stated times receive for theirservices a compensation which shall not be diminished during theircontinuance in office." Can there be any doubt that the two things thuscoupled in place the clause in respect of tenure during good behaviour andthat in respect of an undiminishable compensation-were equally coupled inpurpose? And is it not plain that their purposes was to invest the judges withan independence in keeping with the delicacy and importance of their task,and with the imperative need for its impartial and fearless performance? Mr.Hamilton said in explanation and support of the provision (Federalist No. 79):"Next to permanency in office, nothing can contribute more to theindependence of the judges than a fixed provision for their support. . . . In thegeneral course of human nature, a power over a man's subsistence amounts

to a power over his will.


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x x x x x x x x x

These considerations make it very plain, as we think, that the primarypurpose of the prohibition against diminution was not to benefit the judges,but, like the clause in respect of tenure, to attract good and competent mento the bench, and to promote that independence of action and judgmentwhich is essential to the maintenance of the guaranties, limitations, andpervading principles of the constitution, and to the admiration of justicewithout respect to persons, and with equal concern for the poor and the rich.

x x x x x x x x x

But it is urged that what plaintiff was made to pay back was an income tax,and that a like tax was exacted of others engaged in private employment.

If the tax in respect of his compensation be prohibited, it can find nojustification in the taxation of other income as to which there is noprohibition, for, of course, doing what the Constitution permits gives nolicense to do what it prohibits.

The prohibition is general, contains no excepting words, and appears to bedirected against all diminution, whether for one purpose or another; and thereason for its adoption, as publicly assigned at the time and commonlyaccepted ever since, make with impelling force for the conclusion that thefathers of the Constitution intended to prohibit diminution by taxation as wellas otherwise, that they regarded the independence of the judges as of fargreater importance than any revenue that could come from taxing theirsalaries. (American law Reports, annotated, Vol. 11, pp. 522-25; Evans vs.Gore, supra.)

In September 1, 1919, Samuel J. Graham assumed office as judge of theUnites States court of claims. His salary was taxed by virtue of the same timeincome tax of February 24, 1919. At the time he qualified, a statute fixed hissalary at P7,500. He filed action for reimbursement, submitting the sametheory on which Evans v. Gore had been decided. The Supreme Court of theUnited States in 1925 reaffirmed that decision. It overruled the distinction

offered by Solicitor-General Beck that Judge Graham took office after theincome tax had been levied on judicial salaries, (Evans qualified before), andthat Congress had power "to impose taxes which should apply to the salariesof Federal judges appointed after the enactment of the taxing statute." (Thelaw had made no distinction as to judges appointed before or after itspassage)

Fourth period. 1939 Foiled in their previous attempts, the Revenue menpersisted, and succeeded in inserting in the United States Revenue Act ofJune, 1932 the modified proviso that "gross income" on which taxes werepayable included the compensation "of judges of courts of the United Statestaking office after June 6, 1932". Joseph W. Woodrough qualified as UnitedStates circuit judge on May 1, 1933. His salary as judge was taxed, and

before the Supreme Court of the United States the issue of decrease of

remuneration again came up. That court, however, ruled against him,declaring (in 1939) that Congress had the power to adopt the law. It said:

The question immediately before us is whether Congress exceeded itsconstitutional power in providing that United States judges appointed afterthe Revenue Act of 1932 shall not enjoy immunity from the incidence oftaxation to which everyone else within the defined classes of income issubjected. Thereby, of course, Congress has committed itself to the positionthat a non-discriminatory tax laid generally on net income is not, when

applied to the income of federal judge, a diminution of his salary within theprohibition of Article 3, Sec. 1 of the Constitution. To suggest that it makesinroads upon the independence of judges who took office after the Congresshas thus charged them with the common duties of citizenship, by makingthem bear their aliquot share of the cost of maintaining the Government, isto trivialize the great historic experience on which the framers based thesafeguards of Article 3, Sec. 1. To subject them to a general tax is merely torecognize that judges also are citizens, and that their particular function ingovernment does not generate an immunity from sharing with their fellowcitizens the material burden of the government whose Constitution and lawsthey are charged with administering. (O'Malley vs. Woodrough, 59 S. Ct. 838,A. L. R. 1379.)

Now, the case for the defendant-appellant Collector of Internal Revenue ispremised mainly on this decision (Note A). He claims it holds "that federaljudges are subject to the payment of income taxes without violating theconstitutional prohibition against the reduction of their salaries during theircontinuance in office", and that it "is a complete repudiation of the ratiodecidenci of Evans vs. Gore". To grasp the full import of the O'Malleyprecedent, we should bear in mind that:

1. It does not entirely overturn Miles vs. Graham. "To the extent that whatthe Court now says is inconsistent with what said in Miles vs. Graham, thelatter can not survive", Justice Frankfurter announced.

2. It does not expressly touch nor amend the doctrine in Evans vs, Gore,although it indicates that the Congressional Act in dispute avoided in part the

consequences of that case.

Carefully analyzing the three cases (Evans, Miles and O'Malley) and piecingthem together, the logical conclusion may be reached that althoughCongress may validly declare by law that salaries of judges appointedthereafter shall be taxed as income (O'Malley vs. Woodrough) it may not taxthe salaries of those judges already in office at the time of such declarationbecause such taxation would diminish their salaries (Evans vs. Gore; Miles vs.Graham). In this manner the rationalizing principle that will harmonize theallegedly discordant decision may be condensed.

By the way, Justice Frankfurter, writing the O'Malley decision, says the Evansprecedent met with disfavor from legal scholarship opinion. Examining the

issues of Harvard Law review at the time of Evans vs. Gore (Frankfurter is aHarvard graduate and professor), we found that such school publication


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criticized it. Believing this to be the "inarticulate consideration that may haveinfluenced the grounds on which the case went off"4, we looked into thecriticism, and discovered that it was predicated on the position that the 16thAmendment empowered Congress "to collect taxes on incomes fromwhatever source derived" admitting of no exception. Said the Harvard LawJournal:

In the recent case of Evans vs. Gore the Supreme Court of the United Statesdecided that by taxing the salary of a federal judge as a part of his income,

Congress was in effect reducing his salary and thus violating Art. III, sec. 1, ofthe Constitution. Admitting for the present purpose that such a tax really is areduction of salary, even so it would seem that the words of the amendmentgiving power to tax 'incomes, from whatever source derived', are sufficientlystrong to overrule pro tanto the provisions of Art. III, sec. 1. But, two yearsago, the court had already suggested that the amendment in no wayextended the subjects open to federal taxation. The decision in Evans vs.Gore affirms that view, and virtually strikes from the amendment the words"from whatever source derived". (Harvard law Review, vol. 34, p. 70)

The Unites States Court's shift of position5 might be attributed to the abovedetraction which, without appearing on the surface, led to Frankfurter'ssweeping expression about judges being also citizens liable to income tax.But it must be remembered that undisclosed factor the 16th Amendment has no counterpart in the Philippine legal system. Our Constitution doesnot repeat it. Wherefore, as the underlying influence and the unutteredreason has no validity in this jurisdiction, the broad generality loses much ofits force.

Anyhow the O'Malley case declares no more than that Congress may validlyenact a law taxing the salaries of judges appointed after its passage. Here inthe Philippines no such law has been approved.

Besides, it is markworthy that, as Judge Woodrough had qualified after theexpress legislative declaration taxing salaries, he could not very wellcomplain. The United States Supreme Court probably had in mind what inother cases was maintained, namely, that the tax levied on the salary in

effect decreased the emoluments of the office and therefore the judgequalified with such reduced emoluments.6

The O'Malley ruling does not cover the situation in which judges already inoffice are made to pay tax by executive interpretation, without expresslegislative declaration. That state of affairs is controlled by the administrativeand judicial standards herein-before described in the "second period" of theFederal Government, namely, the views of Chief Justice Taney and ofAttorney-General Hoar and the constant practice from 1869 to 1938, i.e.,when the Income Tax Law merely taxes "income" in general, it does notinclude salaries of judges protected from diminution.

In this connection the respondent would make capital of the circumstance

that the Act of 1932, upheld in the O'Malley case, has subsequently beenamended by making it applicable even to judges who took office before 1932.

This shows, the appellant argues, that Congress interprets the O'Malley rulingto permit legislative taxation of the salary of judges whether appointedbefore the tax or after. The answer to this is that the Federal Supreme Courtexpressly withheld opinion on that amendment in the O'Malley case. Which issignificant. Anyway, and again, there is here no congressional directivetaxing judges' salaries.

Wherefore, unless and until our Legislature approves an amendment to theIncome Tax Law expressly taxing "that salaries of judges thereafter

appointed", the O'Malley case is not relevant. As in the United States duringthe second period, we must hold that salaries of judges are not included inthe word "income" taxed by the Income Tax Law. Two paramountcircumstances may additionally be indicated, to wit: First, when the IncomeTax Law was first applied to the Philippines 1913, taxable "income" did notinclude salaries of judicial officers when these are protected from diminution.That was the prevailing official belief in the United States, which must bedeemed to have been transplanted here;7 and second, when the PhilippineConstitutional Convention approved (in 1935) the prohibition againstdiminution off the judges' compensation, the Federal principle was knownthat income tax on judicial salaries really impairs them. Evans vs. Gore andMiles vs. Graham were then outstanding doctrines; and the inference is notillogical that in restraining the impairment of judicial compensation theFathers of the Constitution intended to preclude taxation of the same.8

It seems that prior to the O'Malley decision the Philippine Government did notcollect income tax on salaries of judges. This may be gleaned from GeneralCircular No. 449 of the Department of Finance dated March 4, 1940, whichsays in part:

x x x x x x x x x

The question of whether or not the salaries of judges should be taken intoaccount in computing additional residence taxes is closely linked with theliability of judges to income tax on their salaries, in fact, whatever resolutionis adopted with respect to either of said taxes be followed with respect to theother. The opinion of the Supreme Court of the United States in the case of

O'Malley v. Woodrough, 59 S. Ct. 838, to which the attention of thisdepartment has been drawn, appears to have enunciated a new doctrineregarding the liability of judges to income tax upon their salaries. In view ofthe fact that the question is of great significance, the matter was taken up inthe Council of State, and the Honorable, the Secretary of Justice wasrequested to give an opinion on whether or not, having in mind the saiddecision of the Supreme Court of the United States in the case of O'Malley v.Woodrough, there is justification in reversing our present ruling to the effectthat judges are not liable to tax on their salaries. After going over the opinionof the court in the said case, the Honorable, the Secretary of Justice, statedthat although the ruling of the Supreme Court of the United States is notbinding in the Philippines, the doctrine therein enunciated has resolved theissue of the taxability of judges' salaries into a question of policy. Forthwith,

His Excellency the President decided that the best policy to adopt would beto collect income and additional residence taxes from the President of the


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Philippines, the members of the Judiciary, and the Auditor General, and theundersigned was authorized to act accordingly.

In view of the foregoing, income and additional residence taxes should belevied on the salaries received by the President of the Philippines, membersof the Judiciary, and the Auditor General during the calendar year 1939 andthereafter. . . . . (Emphasis ours.)

Of course, the Secretary of Justice correctly opined that the O'Malley decision

"resolved the issue of taxability of judges' salaries into a question of policy."But that policy must be enunciated by Congressional enactment, as was donein the O'Malley case, not by Executive Fiat or interpretation.

This is not proclaiming a general tax immunity for men on the bench. Thesepay taxes. Upon buying gasoline, or other commodities, they pay thecorresponding duties. Owning real property, they pay taxes thereon. And onincomes other than their judicial salary, assessments are levied. It is onlywhen the tax is charged directly on their salary and the effect of the tax is todiminish their official stipend that the taxation must be resisted as aninfringement of the fundamental charter.

Judges would indeed be hapless guardians of the Constitution if they did notperceive and block encroachments upon their prerogatives in whatever form.The undiminishable character of judicial salaries is not a mere privilege ofjudges personal and therefore waivable but a basic limitation uponlegislative or executive action imposed in the public interest. (Evans vs.Gore)

Indeed the exemption of the judicial salary from reduction by taxation is notreally a gratuity or privilege. Let the highest court of Maryland speak:

The exemption of the judicial compensation from reduction is not in any truesense a gratuity, privilege or exemption. It is essentially and primarilycompensation based upon valuable consideration. The covenant on the partof the government is a guaranty whose fulfillment is as much as part of theconsideration agreed as is the money salary. The undertaking has its own

particular value to the citizens in securing the independence of the judiciaryin crises; and in the establishment of the compensation upon a permanentfoundation whereby judicial preferment may be prudently accepted by thosewho are qualified by talent, knowledge, integrity and capacity, but are notpossessed of such a private fortune as to make an assured salary an object ofpersonal concern. On the other hand, the members of the judiciary relinquishtheir position at the bar, with all its professional emoluments, sever theirconnection with their clients, and dedicate themselves exclusively to thedischarge of the onerous duties of their high office. So, it is irrefutable thatthey guaranty against a reduction of salary by the imposition of a tax is notan exemption from taxation in the sense of freedom from a burden or serviceto which others are liable. The exemption for a public purpose or a validconsideration is merely a nominal exemption, since the valid and full

consideration or the public purpose promoted is received in the place of the

tax. Theory and Practice of Taxation (1900), D. A. Wells, p. 541. (Gordy vs.Dennis (Md.) 1939, 5 Atl. Rep. 2d Series, p. 80)

It is hard to see, appellants asserts, how the imposition of the income taxmay imperil the independence of the judicial department. The danger may bedemonstrated. Suppose there is power to tax the salary of judges, and thejudiciary incurs the displeasure of the Legislature and the Executive. Inretaliation the income tax law is amended so as to levy a 30 per cent on allsalaries of government officials on the level of judges. This naturally reduces

the salary of the judges by 30 per cent, but they may not grumble becausethe tax is general on all receiving the same amount of earning, and affectsthe Executive and the Legislative branches in equal measure. However,means are provided thereafter in other laws, for the increase of salaries ofthe Executive and the Legislative branches, or their perquisites such asallowances, per diems, quarters, etc. that actually compensate for the 30 percent reduction on their salaries. Result: Judges compensation is therebydiminished during their incumbency thanks to the income tax law.Consequence: Judges must "toe the line" or else. Second consequence: Somefew judges might falter; the great majority will not. But knowing the frailty ofhuman nature, and this chink in the judicial armor, will the parties losing theircases against the Executive or the Congress believe that the judicature hasnot yielded to their pressure?

Respondent asserts in argumentation that by executive order the Presidenthas subjected his salary to the income tax law. In our opinion this showsobviously that, without such voluntary act of the President, his salary wouldnot be taxable, because of constitutional protection against diminution. Toargue from this executive gesture that the judiciary could, and should act inlike manner is to assume that, in the matter of compensation and power andneed of security, the judiciary is on a par with the Executive. Suchassumption certainly ignores the prevailing state of affairs.

The judgment will be affirmed. So ordered.

Moran, C.J., Pablo, Padilla, Tuason, Montemayor, Reyes and Torres, JJ., concur.

Separate Opinions

OZAETA., J., dissenting:

It is indeed embarrassing that this case was initiated by a member of thisCourt upon which devolves the duty to decide it finally. The question ofwhether the salaries of the judges, the members of the Commission onElections, the Auditor General, and the President of the Philippines areimmune from taxation, might have been raised by any interested party otherthan a justice of the Supreme Court with less embarrassment to the latter.

The question is simple and not difficult of solution. We shall state our opinion

as concisely as possible.


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The first income tax law of the Philippines was Act No. 2833, which wasapproved on March 7, 1919, to take effect on January 1, 1920. Section 1 (a)of said Act provided:

There shall be levied, assessed, collected, and paid annually upon the entirenet income received in the preceding calendar year from all sources by everyindividual, a citizen or resident of the Philippine Islands, a tax of two percentum upon such income. . . . (Emphasis ours.)

Section 2 (a) of said Act provided:

Subject only to such exemptions and deductions as are hereinafter allowed,the taxable net income of a person shall include gains, profits, and incomederived from salaries, wages or compensation for personal service ofwhatever kind and is whatever form paid, or from professions, vocations,businesses, trade, commerce, sales, or dealings in property, whether real orpersonal, growing out of the ownership or use of or interest in real orpersonal property, also from interest, rent, dividends, securities, or thetransaction of any business carried on for gain or profit, or gains, profits, andincome derived from any source whatever.

That income tax law has been amended several times, specially as to therates of the tax, but the above-quoted provisions (except as to the rate) havebeen preserved intact in the subsequent Acts. The present income tax law isTitle II of the National Internal Revenue Code, Commonwealth Act No. 466,sections 21, 28 and 29 of which incorporate the texts of the above-quotedprovisions of the original Act in exactly the same language. There can be nodispute whatsoever that judges (who are individuals) and their salaries(which are income) are as clearly comprehended within the above-quotedprovisions of the law as if they were specifically mentioned therein; and infact all judges had been and were paying income tax on their salaries whenthe Constitution of the Philippines was discussed and approved by theConstitutional Convention and when it was submitted to the people forconfirmation in the plebiscite of May 14, 1935.

Now, the Constitution provides that the members of the Supreme Court and

all judges of inferior courts "shall receive such compensation as may be fixedby law, which shall not be diminished during their continuance in office."(Section 9, Article VIII, emphasis ours.)a

The simple question is: In approving the provisions against the diminution ofthe compensation of judges and other specified officers during theircontinuance in office, did the framers of the Constitution intend to nullify thethen existing income tax law insofar as it imposed a tax on the salaries ofsaid officers ? If they did not, then the income tax law, which has beenincorporated in the present National Internal Revenue Code, remains in forcein its entirety and said officers cannot claim exemption therefrom on theirsalaries.

Section 2 of Article XVI of the Constitution provides that all laws of thePhilippine Islands shall remain operative, unless inconsistent with this

Constitution, until amended, altered, modified. or repealed by the Congressof the Philippines.

In resolving the question at bar, we must take into consideration thefollowing well-settled rules:

"A constitution shall be held to be prepared and adopted in reference toexisting statutory laws, upon the provisions of which in detail it must dependto be set in practical operation" (People vs. Potter, 47 N. Y. 375; People vs.

Draper, 15 N. Y. 537; Cass vs. Dillon, 2 Ohio St. 607; People vs. N. Y., 25Wend. (N. Y. 22). (Barry vs. Traux, 3 A. & E. Ann. Cas 191, 193.).

Courts are bound to presume that the people adopting a constitution arefamiliar with the previous and existing laws upon the subjects to which itsprovisions relate, and upon which they express their judgment and opinion inits adoption (Baltimore vs. State, 15 Md. 376, 480; 74 Am. Dec. 572; State vs.Mace, 5 Md. 337; Bandel vs. Isaac, 13 Md. 202; Manly vs. State, 7 Md. 135;Hamilton vs. St. Louis County Ct., 15 Mo. 5; People vs. Gies, 25 Mich. 83;Servis vs. Beatty, 32 Miss. 52; Pope vs. Phifer, 3 Heisk. (Tenn.) 686; Peoplevs. Harding, 53 Mich. 48, 51 Am. Rep. 95; Creve Coeur Lake Ice Co. vs.Tamm, 138 Mo. 385, 39 S. W. Rep. 791). (Idem.)

A constitutional provision must be presumed to have been framed andadopted in the light and understanding of prior and existing laws and withreference to them. Constitutions, like statutes, are properly to be expoundedin the light of conditions existing at the time of their adoption, the generalspirit of the times, and the prevailing sentiments among the people.Reference may be made to the historical facts relating to the original orpolitical institutions of the community or to prior well-known practices andusages. (11 Am. Ju., Constitutional Law, 676-678.)

The salaries provided in the Constitution for the Chief Justice and eachassociate Justice, respectively, of the Supreme Court were the same salaries ]which they were receiving at the time the Constitution was framed andadopted and on which they were paying income tax under the existingincome tax law. It seems clear to us that for them to receive the same

salaries, subject to the same tax, after the adoption of the Constitution asbefore does not involve any diminution at all. The fact that the plaintiff wasnot a member of the Court when the Constitution took effect, makes nodifference. The salaries of justices and judges were subject to income taxwhen he was appointed in the early part of 1945. In fact he must havedeclared and paid income tax on his salary for 19454 he claimedexemption only beginning 1946. It seems likewise clear that when theframers of the Constitution fixed those salaries, they must have taken intoconsideration that the recipients were paying income tax thereon. There wasno necessity to provide expressly that said salaries shall be subject to incometax because they knew that already so provided. On the other hand, ifexemption from any tax on said salaries had been intended, it would havebeen specifically to so provide, instead of merely saying that the

compensation as fixed "shall not be diminished during their continuance inoffice."


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In the light of the antecedents, the prohibition against diminution cannot beinterpreted to include or refer to general taxation but to a law by which saidsalaries may be fixed. The sentence in question reads: "They shall receivesuch compensation as may be fixed by law, which shall not be diminishedduring their continuance in office." The next sentence reads: "Until theCongress shall provide otherwise, the Chief Justice of the Supreme Court shallreceive an annual compensation of P16,000, and each associate Justice,P15,000." It is plain that the Constitution authorizes the Congress to pass a

law fixing another rate of compensation, but that such rate must be higherthan that which the justices receive at he time of its enactment or, if lower, itmust not affect those justice already in office. In other words, Congress mayapprove a law increasing the salaries of the justices at any time, but it cannotapprove a law decreasing their salaries unless such law is made effectiveonly as to justices appointed after its approval.

It would be a strained and unreasonable construction of the prohibitionagainst diminution to read into it an exemption from taxation. There is nojustification for the belief or assumption that the framers of the Constitutionintended to exempt the salaries of said officers from taxes. They knew that itwas and is the unavoidable duty of every citizen to bear his aliquot share ofthe cost of maintaining the Government; that taxes are the very blood thatsustains the life of the Government. To make all citizens share the burden oftaxation equitably, the Constitution expressly provides that "the rule oftaxation shall be uniform." (Section 22 [1], Article VI.) We think it would be acontravention of this provision to read into the prohibition against diminutionof the salaries of the judges and other specified officers an exemption fromtaxes on their salaries. How could the rule of income taxation be uniform if itshould not be applied to a group of citizens in the same situation as otherincome earners ? It is to us inconceivable that the framers ever intended torelieve certain officers of the Government from sharing with their fellowscitizens the material burden of the Government to exempt their salariesfrom taxes. Moreover, the Constitution itself specifies what properties areexempt from taxes, namely: "Cemeteries, churches, and parsonages orconvents appurtenant thereto, and all lands, buildings, and improvementsused exclusively for religious, charitable, or educational purposes." (Sec. 22

[3], Article VI.) The omission of the salaries in question from this enumerationis in itself an eloquent manifestation of intention to continue the imposition oftaxes thereon as provided in the existing law. Inclusio est exclusio alterius.

We have thus far read and construed the pertinent portions of our ownConstitution and income tax law in the light of the antecedent circumstancesand of the operative factors which prevailed at the time our Constitution wasframed, independently of the construction now prevailing in the United Statesof similar provisions of the federal Constitution in relation to the presentfederal income tax law, under which the justices of the Supreme Court, andthe federal judges are now, and since the case of O'Malley vs. Woodroughwas decided on May 22, 1939, have been, paying income tax on theirsalaries. Were this a majority opinion, we could end here with the consequent

reversal of the judgment appealed from. But ours is a voice in the wilderness,and we may permit ourselves to utter it with more vehemence and emphasis

so that future players on this stage perchance may hear and heed it. Whoknows? The Gospel itself was a voice in the wilderness at the time it wasuttered.

We have to comment on Anglo-American precedents since the majoritydecision from which we dissent is based on some of them. Indeed, themajority say they "hardly do nothing more than to borrow therefrom and tocompare their conclusions to local conditions." which we shall presently showdid not obtain in the United States at the time the federal and state

Constitutions were adopted. We shall further show that in any event whatthey now borrow is not usable because it has long been withdrawn fromcirculation.

When the American Constitution was framed and adopted, there was noincome tax law in the United States. To this circumstance may be attributedthe claim made by some federal judges headed by Chief Justice Taney, whenunder the Act of Congress of July 1, 1862, their salaries were subjected to anincome tax, that such tax was a diminution of their salaries and thereforeprohibited by the Constitution. Chief Justice Taney's claim and his protestagainst the tax were not heeded, but no federal judge deemed it proper tosue the Collector of Internal Revenue to recover the taxes they continued topay under protest for several years. In 1869, the Secretary of the Treasuryreferred the question to Atty. General Hoar, and that officer rendered anopinion in substantial accord with Chief Justice Taney's protest, and alsoadvised that the tax on the President's compensation was likewise invalid. Nojudicial pronouncement, however, was made of such invalidity until June 1,1920, when the case of Evans vs. Gore (253 U.S. 245, 64 L. ed. 887) wasdecided upon the constitutionality of section 213 of the Act of February 24,1919, which required the computation of incomes for the purpose of taxationto embrace all gains, profits, income and the like, "including in the case ofthe President of the United States, the judges of the Supreme and inferiorcourts of the United States, [and others] . . . the compensation received assuch." The Supreme Court of the United States, speaking through Mr. JusticeVan Devanter, sustained the suit with the dissent of Justice Holmes andBrandeis. The doctrine of Evans vs. Gore holding in effect that an income taxon a judge's salary is a diminution thereof prohibited by the Constitution, was

reaffirmed in 1925 in Miles vs. Graham, 69 L. ed 1067.

In 1939, however, the case of O'Malley vs. Woodrough (59 S. Ct. 838, 122 A.L. R. 1379) was brought up to the test the validity of section 22 of theRevenue Act of June 6, 1932, which included in the "gross income," on thebasis of which taxes were to be paid, the compensation of "judges of courtsof the United States taking office after June 6, 1932." And in that case theSupreme Court of the United States, with only one dissent (that of JusticeButler), abandoned the doctrine of Evans vs. Gore and Miles vs. Graham byholding:

To subject them [the judges] to a general tax is merely to recognize thatjudges are also citizens, and that their particular function in government does

not generate an immunity from sharing with their fellow citizens the material


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burden of the government whose Constitution and laws they are chargedwith administering.

The decision also says:

To suggest that it [the law in question] makes inroads upon theindependence of judges who took office after Congress had thus chargedthem with the common duties of citizenship, by making them bear theiraliquot share of the cost of maintaining the Government, is to trivialize the

great historic experience on which the framers based the safeguard of Article3, section 1.

Commenting on the above-quoted portions of the latest decision of theSupreme Court of the United States on the subject, Prof. William Bennett,Munro, in his book, The Government of the United States, which is used as atext in various universities, says: ". . .

All of which seems to be common sense, for surely the framers of theConstitution from ever cutting a judge's salary, did not intend to relieve allfederal judges from the general obligations of citizenship. As for thePresident, he has never raised the issue; every occupant of the White Housesince 1913 has paid his income tax without protest. (Pages 371-372.)

We emphasize that the doctrine of Evans vs. Gore and Miles vs. Graham is nolonger operative, and that all United States judges, including those who tookoffice before June 6, 1932, are subject to and pay income tax on theirsalaries; for after the submission of O'Malley vs. Woodrough for decision theCongress of the United States, by section 3 of the Public Salary Act of 1939,amended section 22 (a) of the Revenue Act of June 6, 1932, so as to make itapplicable to "judges of courts of the United States who took office on orbefore June 6, 1932." And the validity of that Act, in force for more than adecade, has not been challenged.

Our colleagues import and transplant here the dead limbs of Evans vs. Goreand Miles vs. Graham and attempt to revive and nurture them withpainstaking analyses and diagnoses that they had not suffered a fatal blow

from O'Malley vs. Woodrough. We refuse to join this heroic attempt becausewe believe it is futile.

They disregard the actual damage and minimize it by trying to discover theprocess by which it was inflicted and he motivations that led to the infliction.They say that the chief axe-wielder, Justice Frankfurter, was a Harvardgraduate and professor and that the Harvard Law Journal had criticized Evansvs. Gore; that the dissenters in said case (Holmes and Brandeis) wereHarvard men like Frankfurter; and that they believe this to be the"inarticulate consideration that may have influenced the grounds on whichthe case [O'Malley vs. Woodrough] went off." This argument is not valid, inour humble belief. It was not only the Harvard Law Journal that had criticizedEvans vs. Gore. Justice Frankfurter and his colleagues said that the decision

in that case "met with wide and steadily growing disfavor from legalscholarship and professional opinion," and they cited the following: Clark,

Furthermore Limitations Upon Federal Income Taxation, 30 Yale L. J. 75;Corwin, Constitutional Law in 1919-1920, 15 Am. Pol. Sci. Rev. 635, 641-644;Fellman, Diminution of Judicial Salaries, 24 Iowa L. Rev. 89; Lowndes, TaxingIncome of Federal Judiciary, 19 Va. L. Rev. 153; Powell, Constitutional Law in1919-1920, 19 Mich. L. Rev. 117, 118; Powell, The Sixteenth Amendment andIncome from State Securities, National Income Tax Magazine (July, 1923), 5,6; 20 Columbia L. Rev. 794; 43 Harvard L. Rev. 318; 20 Ill. L. Rev. 376; 45Law Quarterly Rev. 291; 7 Va. L. Rev. 69; 3 University of Chicago L. Rev. 141.Justice Frankfurter and his colleagues also said that "Evans vs. Gore itself was

rejected by most of the courts before whom the matter came after thatdecision." Is not the intention to throw Evans vs. Gore into the graveyard ofabandoned cases manifest from all this and from the holding that judges arealso citizens, liable to income tax on their salaries?

The majority say that "unless and until our legislature approves anamendment to the income tax law expressly taxing 'the salaries of judgesthereafter appointed,' the O'Malley case is not relevant." We have shown thatour income tax law taxes the salaries of judges as clearly as if they arespecifically mentioned therein, and that said law took effect long before theadoption of the Constitution and long before the plaintiff was appointed.

We agree that the purpose of the constitutional provision against diminutionof the salaries of judges during their continuance in office is to safeguard theindependence of the Judicial Department. But we disagree that to subject thesalaries of judges to a general income tax law applicable to all incomeearners would in any way affect their independence. Our own experiencesince the income tax law went effect in 1920 is the best refutation of suchassumption.

The majority give an example by which the independence of judges may beimperiled thru the imposition of a tax on their salaries. They say: Supposethere is power to tax the salaries of judges and the judiciary incurs thedispleasure of the Legislature and the Executive. In retaliation the income taxlaw is amended so as to levy a 30 per cent tax on all salaries of governmentofficials on the level of judges, and by means of another law the salaries ofthe executive and the legislative branches are increased to compensate for

the 30 per cent reduction of their salaries. To this we reply that if such avindictive measure is ever resorted to (which we cannot imagine), we shallbe the first ones to vote to strike it down as a palpable violation of theConstitution. There is no parity between such hypothetical law and thegeneral income tax law invoked by the defendant in this case. We believethat an income tax law applicable only against the salaries of judges and notagainst those or all other income earners may be successfully assailed asbeing in contravention not only of the provision against diminution of thesalaries of judges but also of the uniformity of the rule of taxation as well asof the equal protection clause of the Constitution. So the dangerapprehended by the majority is not real but surely imaginary.

We vote for the reversal of the judgment appealed from the dismissal of

plaintiff's complaint.


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Paras J., concurs.

Footnotes

* Evans vs. Gore, 253 U. S. 245 and Gordy v. Dennis, 5 Atl. (2d) 69, holdidentical view.

1 Evans vs. Gore, 253 U. S. 254, 64 L. ed. 887.

2 157 U. S. 701, Evans vs. Gore, supra.

3 See Evans vs. Gore, supra.

* Evans vs. Gore, supra.

(Note A) The defendant also relies on the dissenting opinion of Mr. JusticeHolmes in Evans vs. Gore, supra, forgetting that subsequently Justice Holmesdid not dissent in Miles vs. Graham, and apparently accepted Evans vs. Goreas authority in writing his opinion in Gillespie vs. Oklahoma, 257 U. S. 501, 66Law ed. 338. This remark applies to Taylor vs. Gehner (1931), No. 45 S. W.(2d) 59, which merely echoes Holmes dissent.

State vs. Nygaard, 159, Wisc. 396 and the decision of English courts invokedby appellant, are refuted or distinguished in Gordy vs. Dennis, 5 Alt. (2d) 68,known to him since he invokes the minority opinion therein.

4 Frankfurter, The Administrative Side of Chief Justice Hughes, Harvard LawReview, November, 1949.

5 It was a coincidence that the dissenters (Holmes and Brandeis) wereHarvard men like Frankfurter. It is not unlikely that the Harvard professor andadmirer of Justice Holmes (whose biography he wrote in 1938) noted andunconsciously absorbed the dissent.

6 Baker vs. C.I.R. 149 Fed. (2d) 342.

7 It requires a very clear case to justify changing the construction of aconstitutional provision which has been acquiesced in for so long a period asfifty years. (States vs. Frear, 138 Wisc. 536, 120 N. W. 216. See also Hill vs.Tohill, 225 Ill. 384, 80 NE, 253.

8 On persuasive weight of contemporary construction of constitutionalprovision, see generally Cooley, Constitutional Limitation 98th Ed.) Vol. I pp.144 et seq.

a The Constitution also provides that the President shall "receive acompensation to be ascertained by law which shall be neither increased nordiminished during the period for which he shall have been elected" (section

9, Article VII); that the Auditor General "shall receive an annual compensationto be fixed by law which shall not be diminished during his continuance in

office" (section 1, Article XI); and that the salaries of the chairman and themembers of the Commission on Elections "shall be neither increased nordiminished during their term of office" (section 1, Article X).

G.R. No. L-6355-56 August 31, 1953

PASTOR M. ENDENCIA and FERNANDO JUGO, plaintiffs-appellees,vs.SATURNINO DAVID, as Collector of Internal Revenue, defendant-appellant.

Office of the Solicitor General Juan R. Liwag and Solicitor Jose P. Alejandro forappellant.Manuel O. Chan for appellees.

MONTEMAYOR, J.:

This is a joint appeal from the decision of the Court of First Instance of Maniladeclaring section 13 of Republic Act No. 590 unconstitutional, and orderingthe appellant Saturnino David as Collector of Internal Revenue to re-fund toJustice Pastor M. Endencia the sum of P1,744.45, representing the income taxcollected on his salary as Associate Justice of the Court of Appeals in 1951,and to Justice Fernando Jugo the amount of P2,345.46, representing theincome tax collected on his salary from January 1,1950 to October 19, 1950,as Presiding Justice of the Court of Appeals, and from October 20, 1950 toDecember 31,1950, as Associate Justice of the Supreme Court, withoutspecial pronouncement as to costs.

Because of the similarity of the two cases, involving as they do the samequestion of law, they were jointly submitted for determination in the lowercourt. Judge Higinio B. Macadaeg presiding, in a rather exhaustive and wellconsidered decision found and held that under the doctrine laid down by thisCourt in the case of Perfecto vs. Meer, 85 Phil., 552, the collection of incometaxes from the salaries of Justice Jugo and Justice Endencia was a diminutionof their compensation and therefore was in violation of the Constitution of thePhilippines, and so ordered the refund of said taxes.

We see no profit and necessity in again discussing and considering theproposition and the arguments pro and cons involved in the case of Perfectovs. Meer, supra, which are raised, brought up and presented here. In thatcase, we have held despite the ruling enunciated by the United StatesFederal Supreme Court in the case of O 'Malley vs. Woodrought 307 U. S.,277, that taxing the salary of a judicial officer in the Philippines is adiminution of such salary and so violates the Constitution. We shall nowconfine our-selves to a discussion and determination of the remainingquestion of whether or not Republic Act No. 590, particularly section 13, canjustify and legalize the collection of income tax on the salary of judicialofficers.

According to the brief of the Solicitor General on behalf of appellant Collector

of Internal Revenue, our decision in the case of Perfecto vs. Meer, supra, wasnot received favorably by Congress, because immediately after its


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promulgation, Congress enacted Republic Act No. 590. To bring home hispoint, the Solicitor General reproduced what he considers the pertinentdiscussion in the Lower House of House Bill No. 1127 which became RepublicAct No. 590.

For purposes of reference, we are reproducing section 9, Article VIII of ourConstitution:.

SEC. 9. The members of the Supreme Court and all judges of inferior courts

shall hold office during good behavior, until they reach the age of seventyyears, or become incapacitated to discharge the duties of their office. Theyshall receive such compensation as may be fixed by law, which shall not bediminished during their continuance in office. Until the Congress shall provideotherwise, the Chief Justice of the Supreme Court shall receive an annualcompensation of sixteen thousand pesos, and each Associate Justice, fifteenthousand pesos.

As already stated construing and applying the above constitutional provision,we held in the Perfecto case that judicial officers are exempt from thepayment of income tax on their salaries, because the collection thereof bythe Government was a decrease or diminution of their salaries during theircontinuance in office, a thing which is expressly prohibited by theConstitution. Thereafter, according to the Solicitor General, becauseCongress did not favorably receive the decision in the Perfecto case,Congress promulgated Republic Act No. 590, if not to counteract the ruling inthat decision, at least now to authorize and legalize the collection of incometax on the salaries of judicial officers. We quote section 13 of Republic ActNo. 590:

SEC 13. No salary wherever received by any public officer of the Republic ofthe Philippines shall be considered as exempt from the income tax, paymentof which is hereby declared not to be dimunition of his compensation fixed bythe Constitution or by law.

So we have this situation. The Supreme Court in a decision interpreting theConstitution, particularly section 9, Article VIII, has held that judicial officers

are exempt from payment of income tax on their salaries, because thecollection thereof was a diminution of such salaries, specifically prohibited bythe Constitution. Now comes the Legislature and in section 13, Republic ActNo. 590, says that "no salary wherever received by any public officer of theRepublic (naturally including a judicial officer) shall be considered as exemptfrom the income tax," and proceeds to declare that payment of said incometax is not a diminution of his compensation. Can the Legislature validly dothis? May the Legislature lawfully declare the collection of income tax on thesalary of a public official, specially a judicial officer, not a decrease of hissalary, after the Supreme Court has found and decided otherwise? Todetermine this question, we shall have to go back to the fundamentalprinciples regarding separation of powers.

Under our system of constitutional government, the Legislative department isassigned the power to make and enact laws. The Executive department is

charged with the execution of carrying out of the provisions of said laws. Butthe interpretation and application of said laws belong exclusively to theJudicial department. And this authority to interpret and apply the lawsextends to the Constitution. Before the courts can determine whether a law isconstitutional or not, it will have to interpret and ascertain the meaning notonly of said law, but also of the pertinent portion of the Constitution in orderto decide whether there is a conflict between the two, because if there is,then the law will have to give way and has to be declared invalid andunconstitutional.

Defining and interpreting the law is a judicial function and the legislativebranch may not limit or restrict the power granted to the courts by theConstitution. (Bandy vs. Mickelson et al., 44N. W., 2nd 341, 342.)

When it is clear that a statute transgresses the authority vested in thelegislature by the Constitution, it is the duty of the courts to declare the actunconstitutional because they cannot shrink from it without violating theiroaths of office. This duty of the courts to maintain the Constitution as thefundamental law of the state is imperative and unceasing; and, as ChiefJustice Marshall said, whenever a statute is in violation of the fundamentallaw, the courts must so adjudge and thereby give effect to the Constitution.Any other course would lead to the destruction of the Constitution. Since thequestion as to the constitutionality of a statute is a judicial matter, the courtswill not decline the exercise of jurisdiction upon the suggestion that actionmight be taken by political agencies in disregard of the judgment of thejudicial tribunals. (11 Am. Jur., 714-715.)

Under the American system of constitutional government, among the mostimportant functions in trusted to the judiciary are the interpreting ofConstitutions and, as a closely connected power, the determination ofwhether laws and acts of the legislature are or are not contrary to theprovisions of the Federal and State Constitutions. (11 Am. Jur., 905.).

By legislative fiat as enunciated in section 13, Republic Act NO. 590,Congress says that taxing the salary of a judicial officer is not a decrease ofcompensation. This is a clear example of interpretation or ascertainment of

the meaning of the phrase "which shall not be diminished during theircontinuance in office," found in section 9, Article VIII of the Constitution,referring to the salaries of judicial officers. This act of interpreting theConstitution or any part thereof by the Legislature is an invasion of the well-defined and established province and jurisdiction of the Judiciary.

The rule is recognized elsewhere that the legislature cannot pass anydeclaratory act, or act declaratory of what the law was before its passage, soas to give it any binding weight with the courts. A legislative definition of aword as used in a statute is not conclusive of i ts meaning as used elsewhere;otherwise, the legislature would be usurping a judicial function in defining aterm. (11 Am. Jur., 914, emphasis supplied)

The legislature cannot, upon passing a law which violates a constitutionalprovision, validate it so as to prevent an attack thereon in the courts, by a


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declaration that it shall be so construed as not to violate the constitutionalinhibition. (11 Am. Jur., 919, emphasis supplied)

We have already said that the Legislature under our form of government isassigned the task and the power to make and enact laws, but not to interpretthem. This is more true with regard to the interpretation of the basic law, theConstitution, which is not within the sphere of the Legislative department. Ifthe Legislature may declare what a law means, or what a specific portion ofthe Constitution means, especially after the courts have in actual case

ascertain its meaning by interpretation and applied it in a decision, this wouldsurely cause confusion and instability in judicial processes and courtdecisions. Under such a system, a final court determination of a case basedon a judicial interpretation of the law of the Constitution may be underminedor even annulled by a subsequent and different interpretation of the law or ofthe Constitution by the Legislative department. That would be neither wisenor desirable, besides being clearly violative of the fundamental, principles ofour constitutional system of government, particularly those governing theseparation of powers.

So much for the constitutional aspect of the case. Considering the practicalside thereof, we believe that the collection of income tax on a salary is anactual and evident diminution thereof. Under the old system where the in-come tax was paid at the end of the year or sometime thereafter, thedecrease may not be so apparent and clear. All that the official who hadpreviously received his full salary was called upon to do, was to fulfill hisobligation and to exercise his privilege of paying his income tax on his salary.His salary fixed by law was received by him in the amount of said tax comesfrom his other sources of income, he may not fully realize the fact that hissalary had been decreased in the amount of said income tax. But under thepresent system of withholding the income tax at the source, where the fullamount of the income tax corresponding to his salary is computed inadvance and divided into equal portions corresponding to the number of pay-days during the year and actually deducted from his salary corresponding toeach payday, said official actually does not receive his salary in full, becausethe income tax is deducted therefrom every payday, that is to say, twice amonth. Let us take the case of Justice Endencia. As Associate Justice of the

Court of Appeals, his salary is fixed at p12,000 a year, that is to say, heshould receive P1,000 a month or P500 every payday, fifteenth and end ofmonth. In the present case, the amount collected by the Collector of InternalRevenue on said salary is P1,744.45 for one year. Divided by twelve (months)we shall have P145.37 a month. And further dividing it by two paydays willbring it down to P72.685, which is the income tax deducted form thecollected on his salary each half month. So, if Justice Endencia's salary as ajudicial officer were not exempt from payment of the income tax, instead ofreceiving P500 every payday, he would be actually receiving P427.31 only,and instead of receiving P12,000 a year, he would be receiving butP10,255.55. Is it not therefor clear that every payday, his salary is actuallydecreased by P72.685 and every year is decreased by P1,744.45?

Reading the discussion in the lower House in connection with House Bill No.1127, which became Republic Act No. 590, it would seem that one of the

main reasons behind the enactment of the law was the feeling among certainlegislators that members of the Supreme Court should not enjoy anyexemption and that as citizens, out of patriotism and love for their country,they should pay income tax on their salaries. It might be stated in thisconnection that the exemption is not enjoyed by the members of theSupreme Court alone but also by all judicial officers including Justices of theCourt of Appeals and judges of inferior courts. The exemption also extends toother constitutional officers, like the President of the Republic, the AuditorGeneral, the members of the Commission on Elections, and possibly

members of the Board of Tax Appeals, commissioners of the Public ServiceCommission, and judges of the Court of Industrial Relations. Compares to thenumber of all these officials, that of the Supreme Court Justices is relativelyinsignificant. There are more than 990 other judicial officers enjoying theexemption, including 15 Justices of the Court of Appeals, about 107 Judges ofFirst Instance, 38 Municipal Judges and about 830 Justices of the Peace. Thereason behind the exemption in the Constitution, as interpreted by theUnited States Federal Supreme Court and this Court, is to preserve theindependence of the Judiciary, not only of this High Tribunal but of the othercourts, whose present membership number more than 990 judicial officials.

The exemption was not primarily intended to benefit judicial officers, but wasgrounded on public policy. As said by Justice Van Devanter of the UnitedStates Supreme Court in the case of Evans vs. Gore (253 U. S., 245):

The primary purpose of the prohibition against diminution was not to benefitthe judges, but, like the clause in respect of tenure, to attract good andcompetent men to the bench and to promote that independence of actionand judgment which is essential to the maintenance of the guaranties,limitations and pervading principles of the Constitution and to theadministration of justice without respect to person and with equal concern forthe poor and the rich. Such being its purpose, it is to be construed, not as aprivate grant, but as a limitation imposed in the public interest; in otherwords, not restrictively, but in accord with its spirit and the principle on whichit proceeds.

Having in mind the limited number of judicial officers in the Philippines

enjoying this exemption, especially when the great bulk thereof are justicesof the peace, many of them receiving as low as P200 a month, andconsidering further the other exemptions allowed by the income tax law,such as P3,000 for a married person and P600 for each dependent, theamount of national revenue to be derived from income tax on the salaries ofjudicial officers, were if not for the constitutional exemption, could not belarge or substantial. But even if it were otherwise, it should not affect, muchless outweigh the purpose and the considerations that prompted theestablishment of the constitutional exemption. In the same case of Evans vs.Gore, supra, the Federal Supreme Court declared "that they (fathers of theConstitution) regarded the independence of the judges as far as greaterimportance than any revenue that could come from taxing their salaries.

When a judicial officer assumed office, he does not exactly ask for exemptionfrom payment of income tax on his salary, as a privilege . It is already


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attached to his office, provided and secured by the fundamental law, notprimarily for his benefit, but based on public interest, to secure and preservehis independence of judicial thought and action. When we come to themembers of the Supreme Court, this excemption to them is relatively of shortduration. Because of the limited membership in this High Tribunal, eleven,and due to the high standards of experience, practice and training required,one generally enters its portals and comes to join its membership quite latein life, on the aver-age, around his sixtieth year, and being required to retireat seventy, assuming that he does not die or become incapacitated earlier,

naturally he is not in a position to receive the benefit of exemption for long. Itis rather to the justices of the peace that the exemption can give morebenefit. They are relatively more numerous, and because of the meagersalary they receive, they can less afford to pay the income tax on it and itsdiminution by the amount of the income tax if paid would be real, substantialand onerous.

Considering exemption in the abstract, there is nothing unusual or abhorrentin it, as long as it is based on public policy or public interest. While all othercitizens are subject to arrest when charged with the commission of a crime,members of the Senate and House of Representatives except in cases oftreason, felony and breach of the peace are exempt from arrest, during theirattendance in the session of the Legislature; and while all other citizens aregenerally liable for any speech, remark or statement, oral or written, tending

to cause the dishonor, discredit or contempt of a natural or juridical person orto blacken the memory of one who is dead, Senators and Congressmen inmaking such statements during their sessions are extended immunity andexemption.

And as to tax exemption, there are not a few citizens who enjoy thisexemption. Persons, natural and juridical, are exempt from taxes on theirlands, buildings and improvements thereon when used exclusively foreducational purposes, even if they derive income therefrom. (Art. VI, Sec. 22[3].) Holders of government bonds are exempted from the payment of taxeson the income or interest they receive therefrom (sec. 29 (b) [4], NationalInternal Revenue Code as amended by Republic Act No. 566). Payments orincome received by any person residing in the Philippines under the laws of

the United States administered by the United States Veterans Administrationare exempt from taxation. (Republic Act No. 360). Funds received by officersand enlisted men of the Philippine Army who served in the Armed Forces ofthe United States, allowances earned by virtue of such servicescorresponding to the taxable years 1942 to 1945, inclusive, are exemptedfrom income tax. (Republic Act No. 210). The payment of wages andallowances of officers and enlisted men of the Army Forces of the Philippinessent to Korea are also exempted from taxation. (Republic Act No. 35). Inother words, for reasons of public policy and public interest, a citizen mayjustifiably by constitutional provision or statute be exempted from hisordinary obligation of paying taxes on his income. Under the same publicpolicy and perhaps for the same it not higher considerations, the framers ofthe Constitution deemed it wise and necessary to exempt judicial officers

from paying taxes on their salaries so as not to decrease their compensation,thereby insuring the independence of the Judiciary.

In conclusion we reiterate the doctrine laid down in the case of Perfecto vs.Meer, supra, to the effect that the collection of income tax on the salary of ajudicial officer is a diminution thereof and so violates the Constitution. Wefurther hold that the interpretation and application of the Constitution and ofstatutes is within the exclusive province and jurisdiction of the Judicialdepartment, and that in enacting a law, the Legislature may not legallyprovide therein that it be interpreted in such a way that it may not violate aConstitutional prohibition, thereby tying the hands of the courts in their task

of later interpreting said statute, specially when the interpretation soughtand provided in said statute runs counter to a previous interpretation alreadygiven in a case by the highest court of the land.

In the views of the foregoing considerations, the decision appealed from ishereby affirmed, with no pronouncement as to costs.

Pablo, Bengzon, Padilla, Tuason, Reyes, and Labrador, JJ., concur.

Separate Opinions

BAUTISTA ANGELO, J., concurring:

Without expressing any opinion on the doctrine laid down by this Court in thecase of Perfecto vs. Meer, G. R. No. L-2314, in view of the part I had in thatcase as former Solicitor General, I wish however to state that I concur in theopinion of the majority to the effect that section 13, Republic Act No. 590, inso far as it provides that taxing of the salary of a judicial officer shall beconsidered "not to be a diminution of his compensation fixed by theConstitution or by law", constitutes an invasion of the province andjurisdiction of the judiciary. In this sense, I am of the opinion that said sectionis null and void, it being a transgression of the fundamental principleunderlying the separation of powers.

PARAS, C.J., concurring and dissenting:

I dissent for the same reasons stated in the dissenting opinion of Mr. JusticeOzaeta in Perfecto vs. Meer, 85 Phil., 552, in which I concurred. But I disagreewith the majority in ruling that no legislation may provide that it be held validalthough against a provision of the Constitution.

G.R. No. L-78780 July 23, 1987

DAVID G. NITAFAN, WENCESLAO M. POLO, and MAXIMO A. SAVELLANO, JR.,petitioners,

vs.

COMMISSIONER OF INTERNAL REVENUE and THE FINANCIAL OFFICER,SUPREME COURT OF THE PHILIPPINES, respondents., ,


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R E S O L U T I O N

MELENCIO-HERRERA, J.:

Petitioners, the duly appointed and qualified Judges presiding over Branches52, 19 and 53, respectively, of the Regional Trial Court, National CapitalJudicial Region, all with stations in Manila, seek to prohibit and/or perpetuallyenjoin respondents, the Commissioner of Internal Revenue and the Financial

Officer of the Supreme Court, from making any deduction of withholdingtaxes from their salaries.

In a nutshell, they submit that any tax withheld from their emoluments orcompensation as judicial officers constitutes a decrease or diminution of theirsalaries, contrary to the provision of Section 10, Article VIII of the 1987Constitution mandating that (d)uring their continuance in office, their salaryshall not be decreased, even as it is anathema to the ideal of anindependent judiciary envisioned in and by said Constitution.

It may be pointed out that, early on, the Court had dealt with the matteradministratively in response to representations that the Court direct its

Finance Officer to discontinue the withholding of taxes from salaries ofmembers of the Bench. Thus, on June 4, 1987, the Court en banc hadreaffirmed the Chief Justices directive as follows:

RE: Question of exemption from income taxation. The Court REAFFIRMEDthe Chief Justices previous and standing directive to the Fiscal Managementand Budget Office of this Court to continue with the deduction of thewithholding taxes from the salaries of the Justices of the Supreme Court aswell as from the salaries of all other members of the judiciary.

That should have resolved the question. However, with the filing of thispetition, the Court has deemed it best to settle the legal issue raised throughthis judicial pronouncement. As will be shown hereinafter, the clear intent of

the Constitutional Commission was to delete the proposed express grant ofexemption from payment of income tax to members of the Judiciary, so as togive substance to equality among the three branches of Government in thewords of Commissioner Rigos. In the course of the deliberations, it wasfurther expressly made clear, specially with regard to Commissioner JoaquinF. Bernas accepted amendment to the amendment of Commissioner Rigos,that the salaries of members of the Judiciary would be subject to the generalincome tax applied to all taxpayers.

This intent was somehow and inadvertently not clearly set forth in the finaltext of the Constitution as approved and ratified in February, 1987 (infra, pp.7-8). Although the intent may have been obscured by the failure to include inthe General Provisions a proscription against exemption of any public officer

or employee, including constitutional officers, from payment of income tax,the Court since then has authorized the continuation of the deduction of the

withholding tax from the salaries of the members of the Supreme Court, aswell as from the salaries of all other members of the Judiciary. The Courthereby makes of record that it had then discarded the ruling in Perfecto vs.Meer and Endencia vs. David, infra, that declared the salaries of members ofthe Judiciary exempt from payment of the income tax and considered suchpayment as a diminution of their salaries during their continuance in office.The Court hereby reiterates that the salaries of Justices and Judges areproperly subject to a general income tax law applicable to all income earnersand that payment of such income tax by Justices and Judges does not fall

within the constitutional protection against decrease of their salaries duringtheir continuance in office.

A comparison of the Constitutional provisions involved is called for. The 1935Constitution provided:

. . . (The members of the Supreme Court and all judges of inferior courts)shall receive such compensation as may be fixed by law, which shall not bediminished during their continuance in office . . . 1

Under the 1973 Constitution, the same provision read:

The salary of the Chief Justice and of the Associate Justices of the SupremeCourt, and of judges of inferior courts shall be fixed by law, which shall not be

decreased during their continuance in office . . . 2

And in respect of income tax exemption, another provision in the same 1973Constitution specifically stipulated:

No salary or any form of emolument of any public officer or employee,including constitutional officers, shall be exempt from payment of incometax. 3

The provision in the 1987 Constitution, which petitioners rely on, reads:

The salary of the Chief Justice and of the Associate Justices of the SupremeCourt, and of judges of lower courts shall be fixed by law. During their

continuance in office, their salary shall not be decreased..4

The 1987 Constitution does not contain a provision similar to Section 6,Article XV of the 1973 Constitution, for which reason, petitioners claim thatthe intent of the framers is to revert to the original concept of non-diminution of salaries of judicial officers.

The deliberations of the 1986 Constitutional Commission relevant to Section10, Article VIII, negate such contention.

The draft proposal of Section 10, Article VIII, of the 1987 Constitution read:Section 13. The salary of the Chief Justice and the Associate Justices of theSupreme Court and of judges of the lower courts shall be fixed by law. During

their continuance in office, their salary shall not be diminished nor subjectedto income tax. Until the National Assembly shall provide otherwise, the Chief


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Justice shall receive an annual salary of _________ and each Associate Justice____ pesos. 5

During the debates on the draft Article (Committee Report No. 18), twoCommissioners presented their objections to the provision on tax exemption,thus:

MS. AQUINO. Finally, on the matter of exemption from tax of the salary ofjustices, does this not violate the principle of the uniformity of taxation andthe principle of equal protection of the law? After all, tax is levied not on thesalary but on the combined income, such that when the judge receives asalary and it is comingled with the other income, we tax the income, not thesalary. Why do we have to give special privileges to the salary of justices?

MR. CONCEPCION. It is the independence of the judiciary. We prohibit theincrease or decrease of their salary during their term. This is an indirect wayof decreasing their salary and affecting the independence of the judges.

MS. AQUINO. I appreciate that to be in the nature of a clause to respecttenure, but the special privilege on taxation might, in effect, be a violation ofthe principle of uniformity in taxation and the equal protection clause. 6

-xxx- -x- -xxx-

MR. OPLE. . . .

Of course, we share deeply the concern expressed by the sponsor,Commissioner Roberto Concepcion, for whom we have the highest respect, tosurround the Supreme Court and the judicial system as a whole with thewhole armor of defense against the executive and legislative invasion of theirindependence. But in so doing, some of the citizens outside, especially thehumble government employees, might say that in trying to erect a bastion ofjustice, we might end up with the fortress of privileges, an island of extraterritoriality under the Republic of the Philippines, because a good number ofpowers and rights accorded to the Judiciary here may not be enjoyed in theremotest degree by other employees of the government.

An example is the exception from income tax, which is a kind of economicimmunity, which is, of course, denied to the entire executive department andthe legislative. 7

And during the period of amendments on the draft Article, on July 14, 1986,Commissioner Cirilo A. Rigos proposed that the term diminished bechanged to decreased and that the words nor subjected to income tax bedeleted so as to give substance to equality among the three branches in thegovernment.

Commissioner Florenz D. Regalado, on behalf of the Committee on theJudiciary, defended the original draft and referred to the ruling of this Court in

Perfecto vs. Meer 8 that the independence of the judges is of far greaterimportance than any revenue that could come from taxing their salaries.

Commissioner Rigos then moved that the matter be put to a vote.Commissioner Joaquin G. Bernas stood up in support of an amendment tothe amendment with the request for a modification of the amendment, asfollows:

FR. BERNAS. Yes. I am going to propose an amendment to the amendmentsaying that it is not enough to drop the phrase shall not be subjected toincome tax, because if that is all that the Gentleman will do, then he will justfall back on the decision in Perfecto vs. Meer and in Dencia vs. David [shouldbe Endencia and Jugo vs. David, etc., 93 Phil. 696] which excludes them fromincome tax, but rather I would propose that the statement will read: Duringtheir continuance in office, their salary shall not be diminished BUT MAY BESUBJECT TO GENERAL INCOME TAX. In support of this position, I would saythat the argument seems to be that the justice and judges should not besubjected to income tax because they already gave up the income from theirpractice. That is true also of Cabinet members and all other employees. And Iknow right now, for instance, there are many people who have acceptedemployment in the government involving a reduction of income and yet arestill subject to income tax. So, they are not the only citizens whose income isreduced by accepting service in government.

Commissioner Rigos accepted the proposed amendment to the amendment.Commissioner Rustico F. de los Reyes, Jr. then moved for a suspension of the

session. Upon resumption, Commissioner Bernas announced:

During the suspension, we came to an understanding with the originalproponent, Commissioner Rigos, that his amendment on page 6,. line 4 wouldread: During their continuance in office, their salary shall not beDECREASED. But this is on the understanding that there will be a provision inthe Constitution similar to Section 6 of Article XV, the General Provisions ofthe 1973 Constitution, which says:

No salary or any form of emolument of any public officer or employee,including constitutional officers, shall be exempt from payment of incometax.

So, we put a period (.) after DECREASED on the understanding that thesalary of justices is subject to tax.

When queried about the specific Article in the General Provisions on non-exemption from tax of salaries of public officers, Commissioner Bernasreplied:

FR. BERNAS. Yes, I do not know if such an article will be found in theGeneral Provisions. But at any rate, when we put a period (.) afterDECREASED, it is on the understanding that the doctrine in Perfecto vs.Meer and Dencia vs. David will not apply anymore.

The amendment to the original draft, as discussed and understood, wasfinally approved without objection.


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THE PRESIDING OFFICER (Mr. Bengzon). The understanding, therefore, isthat there will be a provision under the Article on General Provisions. CouldCommissioner Rosario Braid kindly take note that the salaries of officials ofthe government including constitutional officers shall not be exempt fromincome tax? The amendment proposed herein and accepted by theCommittee now reads as follows: During their continuance in office, theirsalary shall not be DECREASED; and the phrase nor subjected to incometax is deleted. 9

The debates, interpellations and opinions expressed regarding theconstitutional provision in question until it was finally approved by theCommission disclosed that the true intent of the framers of the 1987Constitution, in adopting it, was to make the salaries of members of theJudiciary taxable. The ascertainment of that intent is but in keeping with thefundamental principle of constitutional construction that the intent of theframers of the organic law and of the people adopting it should be giveneffect. 10 The primary task in constitutional construction is to ascertain andthereafter assure the realization of the purpose of the framers and of thepeople in the adoption of the Constitution. 11 It may also be safely assumedthat the people in ratifying the Constitution were guided mainly by theexplanation offered by the framers. 12

Besides, construing Section 10, Articles VIII, of the 1987 Constitution, which,for clarity, is again reproduced hereunder:

The salary of the Chief Justice and of the Associate Justices of the SupremeCourt, and of judges of lower courts shall be fixed by law. During theircontinuance in office, their salary shall not be decreased.

it is plain that the Constitution authorizes Congress to pass a law fixinganother rate of compensation of Justices and Judges but such rate must behigher than that which they are receiving at the time of enactment, or iflower, it would be applicable only to those appointed after its approval. Itwould be a strained construction to read into the provision an exemptionfrom taxation in the light of the discussion in the Constitutional Commission.

With the foregoing interpretation, and as stated heretofore, the ruling thatthe imposition of income tax upon the salary of judges is a dimunitionthereof, and so violates the Constitution in Perfecto vs. Meer, 13 as affirmedin Endencia vs David 14 must be declared discarded. The framers of thefundamental law, as the alter ego of the people, have expressed in clear andunmistakable terms the meaning and import of Section 10, Article VIII, of the1987 Constitution that they have adopted.

Stated otherwise, we accord due respect to the intent of the people, throughthe discussions and deliberations of their representatives, in the spirit that allcitizens should bear their aliquot part of the cost of maintaining thegovernment and should share the burden of general income taxation

equitably.

WHEREFORE, the instant petition for Prohibition is hereby dismissed.

G.R. No. L-12088THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee,vs.MORO SUMAGUINA MACARANDANG, defendant-appellant.

Cipriano Cid and Associates for petitioner.S. Emiliano Calma for respondents.

, J.:

This is a petition for certiorari which

stat cons case perfecto to jabina

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