various full cases in statutory construction

8/11/2019 Various full cases in Statutory Construction

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Republic of the Philippines

SUPREME COURT

Manila

EN BANC

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 Francisco Carreon for oppositor and appellant.

Gregorio Perfecto in his own behalf.

BENGZON,J.:

In April, 1947 the Collector of Internal Revenue required Mr. Justice Gregorio Perfecto to pay income tax upon his salary as member

of this Court during the year 1946. After paying the amount (P802), he instituted this action in the Manila Court of First Instance

contending that the assessment was illegal, his salary not being taxable for the reason that imposition of taxes thereon would

reduce it in violation of the Constitution.

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

The death of Mr. Justice Perfecto has freed us from the embarrassment of passing upon the claim of a colleague. Still, as the

outcome indirectly affects all the members of the Court, consideration of the matter is not without its vexing feature. Yet

adjudication may not be declined, because (a) we are not legally disqualified; (b) jurisdiction may not be renounced, ad it is the

defendant who appeals to this Court, and there is no other tribunal to which the controversy may be referred; (c) supreme courts in

the United States have decided similar disputes relating to themselves; (d) the question touches all the members of the judiciary

from top to bottom; and (e) the issue involves the right of other constitutional officers whose compensation is equally protected by

the Constitution, for instance, the President, the Auditor-General and the members of the Commission on Elections. Anyway the

subject has been thoroughly discussed in many American lawsuits and opinions, and we shall hardly do nothing more than to borrow

therefrom and to compare their conclusions to local conditions. There shall be little occasion to formulate new propositions, for the

situation is not unprecedented.

Our Constitution provides in its Article VIII, section 9, that 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 be diminished during their continuance in office." It also provides

that "until Congress shall provide otherwise, the Chief Justice of the Supreme Court shall receive an annual compensation of sixteen

thousand pesos". When in 1945 Mr. Justice Perfecto assumed office, Congress had not "provided otherwise", by fixing a different

salary for associate justices. He received salary at the rate provided by the Constitution, i.e., fifteen thousand pesos a year.

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

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

Where the Constitution of a state provides that the salaries of its judicial officers shall not be dismissed during their continuance inoffice, it had been held that the state legislature cannot impose a tax upon the compensation paid 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

contrary the 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 the compensation of Judges of the Supreme Court and of

inferior courts. The Federal Governments has an income tax law. Does it embrace the salaries of federal judges? In answering this

question, we should consider four periods:

First period. No attempts was made to tax the compensation of Federal judges up to 1862

1

.


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Second period. 1862-1918. In July, 1862, a statute was passed subjecting the salaries of "civil officers of the United States" to an

income tax of three per cent. Revenue officers, construed it as including the compensation of all judges; but Chief Justice Taney,

speaking for the judiciary, wrote to the Secretary of the Treasury a letter of protest saying, among other things:

The act in question, as you interpret it, diminishes the compensation of every judge 3 per cent, and if it can be diminished to that

extent by the name of a tax, it may, in the same way, be reduced from time to time, at the pleasure of the legislature.

The judiciary is one of the three great departments of the government, created and established by the Constitution. Its duties and

powers are specifically set forth, and are of a character that requires it to be perfectly independent of the two other depar tments,

and in order to place it beyond the reach and above even the suspicion of any such influence, the power to reduce theircompensation is expressly withheld from Congress, and excepted 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 articles which limits the powers of the legislative and executive branches of the government, and those which

provide safeguards for the protection of the citizen 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 indirect, that might by possibility in times of political excitement

warp their judgments.

Upon these grounds I regard an act of Congress retaining in the Treasury a portion of the Compensation of the judges, as

unconstitutional and void2.

The protest was unheeded, although it apparently bore the approval of the whole Supreme Court, that ordered it printed among itsrecords. But in 1869 Attorney-General Hoar upon the request of the Secretary of the Treasury rendered an opinion agreeing with the

Chief Justice. The collection of the tax was consequently discontinued and the amounts theretofore received were all refunded. For

half a century thereafter judges' salaries were not taxed as income.3

Third period. 1919-1938. The Federal Income Tax Act of February 24, 1919 expressly provided that taxable income shall include "the

compensation of the judges of the Supreme Court and inferior courts of the United States". Under such Act, Walter Evans, United

States judge since 1899, paid income tax on his salary; and maintaining that the impost reduced his compensation, he sued to

recover the money he had delivered under protest. He was upheld in 1920 by the Supreme Court in an epoch-making decision.*,

explaining the purpose, history and meaning of the Constitutional provision forbidding impairment of judicial salaries and the effect

of an income tax upon the salary of a judge.

With what purpose does the Constitution provide that the compensation of the judges "shall not be diminished during their

continuance in office"? Is it primarily to benefit the judges, or rather to promote the public weal by giving them that independence

which makes for an impartial and courageous discharge of the judicial function? Does the provision merely forbid direct diminution,

such as expressly reducing the compensation from a greater to a less 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? Or does it mean that the judge shall have a sure

and continuing right to the compensation, whereon he confidently may rely for his support during his continuance 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 larger measure 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 without this independence if it was not made both real and enduring the separation would fail of its

purpose. all agreed that restraints and checks must be imposed to secure the requisite measure of independence; for otherwise the

legislative department, inherently the strongest, might encroach on or even come to dominate the others, and the judicial, na turally

the weakest, might be dwarf or swayed by the other two, especially by the legislative.

The particular need for making the judiciary independent was elaborately pointed our by Alexander Hamilton in the Federalist, No.

78, from which we excerpt 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 constitutional system so balanced and controlled. Other constitutional systems lacks complete poise and

certainly of operation because they lack the support and interpretation of authoritative, undisputable courts of law. It is clear

beyond all need of exposition that for the definite maintenance of constitutional understandings it is indispensable, alike for the


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preservation of the liberty of the individual and for the preservation of the integrity of the powers of the government, that there

should be some nonpolitical forum in which those understandings can be impartially debated and determined. That forum our

courts supply. There the individual may assert his rights; there the government must accept definition of its authority. There the

individual may challenge the legality of governmental action and have it adjudged by the test of fundamental principles, and that

test the government must abide; there the government can check the too aggressive self-assertion of the individual and establish its

power upon lines which all can comprehend and heed. The constitutional powers of the courts constitute the ultimate safeguard

alike of individual privilege and of governmental prerogative. It is in this sense that our judiciary is the balance wheel of our entire

system; it is meant to maintain that nice adjustment between individual rights and governmental powers which constitutes political

liberty. Constitutional government in the United States, pp. 17, 142.

Conscious in the nature and scope of the power being vested in the national courts, recognizing that they would be charge with

responsibilities more delicate and important than any ever before confide to judicial tribunals, and appreciating that they w ere to

be, in the words of George Washington, "the keystone of our political fabric", the convention with unusual accord incorporated in

the Constitution the provision that the judges "shall hold their offices during good behavior, and shall at stated times rece ive for

their services a compensation which shall not be diminished during their continuance in office." Can there be any doubt that the two

things thus coupled in place the clause in respect of tenure during good behaviour and that in respect of an undiminishable

compensation-were equally coupled in purpose? And is it not plain that their purposes was to invest the judges with an

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 the independence of the judges than a fixed provision for their support. . . . In the general course of

human nature, a power over a man's subsistence amounts to a power over his will.

x x x x x x x x x

These considerations make it very plain, as we think, that the primary purpose of the prohibition against diminution was not to

benefit the judges, but, like the clause in respect of tenure, to attract good and competent men to the bench, and to promote that

independence of action and judgment which is essential to the maintenance of the guaranties, limitations, and pervading principles

of the constitution, and to the admiration of justice without 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 no justification in the taxation of other income as to which there is

no prohibition, for, of course, doing what the Constitution permits gives no license to do what it prohibits.

The prohibition is general, contains no excepting words, and appears to be directed against all diminution, whether for one p urpose

or another; and the reason for its adoption, as publicly assigned at the time and commonly accepted ever since, make with impelling

force for the conclusion that the fathers of the Constitution intended to prohibit diminution by taxation as well as otherwise, that

they regarded the independence of the judges as of far greater importance than any revenue that could come from taxing their

salaries. (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 the Unites States court of claims. His salary was taxed by virtue

of the same time income tax of February 24, 1919. At the time he qualified, a statute fixed his salary at P7,500. He filed action for

reimbursement, submitting the same theory on which Evans v. Gore had been decided. The Supreme Court of the United 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), and that Congress had power "to impose taxes which should

apply to the salaries of Federal judges appointed after the enactment of the taxing statute." (The law had made no distinction as to

judges appointed before or after its passage)

Fourth period. 1939 Foiled in their previous attempts, the Revenue men persisted, and succeeded in inserting in the United States

Revenue Act of June, 1932 the modified proviso that "gross income" on which taxes were payable included the compensation "of

judges of courts of the United States taking office after June 6, 1932". Joseph W. Woodrough qualified as United States 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:


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The question immediately before us is whether Congress exceeded its constitutional power in providing that United States judg es

appointed after the Revenue Act of 1932 shall not enjoy immunity from the incidence of taxation to which everyone else within the

defined classes of income is subjected. Thereby, of course, Congress has committed itself to the position that 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 the prohibition

of Article 3, Sec. 1 of the Constitution. To suggest that it makes inroads upon the independence of judges who took office after the

Congress has thus charged them with the common duties of citizenship, by making them bear their aliquot share of the cost of

maintaining the Government, is to trivialize the great historic experience on which the framers based the safeguards of Article 3,

Sec. 1. To subject them to a general tax is merely to recognize that judges also are citizens, and that their particular function in

government does not generate an immunity from sharing with their fellow citizens the material burden of the government whose

Constitution and laws they 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 is premised mainly on this decision (Note A). He claims it

holds "that federal judges are subject to the payment of income taxes without violating the constitutional prohibition against the

reduction of their salaries during their continuance in office", and that it "is a complete repudiation of the ratio decidenciof Evans

vs. Gore". To grasp the full import of the O'Malley precedent, we should bear in mind that:

1. It does not entirely overturn Miles vs. Graham. "To the extentthat what the Court now says is inconsistent with what said in Miles

vs. Graham, the latter 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 partthe consequences of that case.

Carefully analyzing the three cases (Evans, Miles and O'Malley) and piecing them together, the logical conclusion may be reached

that although Congress may validly declare by law that salaries of judges appointed thereaftershall be taxed as income (O'Malley vs.

Woodrough) it may not tax the salaries of those judges already in officeat the time of such declaration because such taxation would

diminish their salaries (Evans vs. Gore; Miles vs. Graham). In this manner the rationalizing principle that will harmonize the allegedly

discordant decision may be condensed.

By the way, Justice Frankfurter, writing the O'Malley decision, says the Evans precedent met with disfavor from legal scholarship

opinion. Examining the issues of Harvard Law review at the time of Evans vs. Gore(Frankfurter is a Harvard graduate and professor),

we found that such school publication criticized it. Believing this to be the "inarticulate consideration that may have influenced the

grounds on which the case went off"4, we looked into the criticism, and discovered that it was predicated on the position that the

16th Amendment empowered Congress "to collect taxes on incomes from whatever source derived" admittingof no exception. Said

the Harvard Law Journal:

In the recent case of Evans vs. Gore the Supreme Court of the United States decided 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, of the Constitution. Admitting for the

present purpose that such a tax really is a reduction of salary, even so it would seem that the words of the amendment giving power

to tax 'incomes, from whatever source derived', are sufficiently strong to overrulepro tantothe provisions of Art. III, sec. 1. But, two

years ago, the court had already suggested that the amendment in no way extended 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 position5might be attributed to the above detraction which, without appearing on the surface, led

to Frankfurter's sweeping 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 does not repeat it.

Wherefore, as the underlying influence and the unuttered reason has no validity in this jurisdiction, the broad generality lo ses muchof its force.

Anyhow the O'Malley case declares no more than that Congress may validly enact a lawtaxing the salaries of judges appointed after

its passage. Here in the Philippines no such law has been approved.

Besides, it is markworthy that, as Judge Woodrough had qualified after the express legislative declarationtaxing salaries, he could

not very well complain. The United States Supreme Court probably had in mind what in other cases was maintained, namely, that

the tax levied on the salary in effect decreased the emoluments of the office and therefore the judge qualified with such reduced

emoluments.6


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The O'Malley ruling does not cover the situation in which judges already in office are made to pay tax by executive interpretation,

without express legislative declaration. That state of affairs is controlled by the administrative and judicial standards herein-before

described in the "second period" of the Federal Government, namely, the views of Chief Justice Taney and of Attorney-General Hoar

and the constant practice from 1869 to 1938, i.e., when the Income Tax Law merely taxes "income" in general, it does not include

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 been amended by making it applicable even to judges who took office before1932. This shows, the appellant argues,

that Congress interprets the O'Malley ruling to permit legislative taxation of the salary of judges whether appointed before the tax

or after. The answer to this is that the Federal Supreme Court expressly withheld opinion on that amendment in the O'Malley case.Which is significant. Anyway, and again, there is here no congressional directive taxing judges' salaries.

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

thereafter appointed", the O'Malley case is not relevant. As in the United States during the second period, we must hold that

salaries of judges are not included in the word "income" taxed by the Income Tax Law. Two paramount circumstances may

additionally be indicated, to wit: First, when the Income Tax Law was first applied to the Philippines 1913, taxable "income" did not

include salaries of judicial officers when these are protected from diminution. That was the prevailing official belief in the United

States, which must be deemed to have been transplanted here;7and second, when the Philippine Constitutional Convention

approved (in 1935) the prohibition against diminution off the judges' compensation, the Federal principle was known that inco me

tax on judicial salaries really impairs them. Evans vs. Goreand Miles vs. Grahamwere then outstanding doctrines; and the inference

is not illogical that in restraining the impairment of judicial compensation the Fathers of the Constitution intended to preclude

taxation of the same.8

It seems that prior to the O'Malley decision the Philippine Government did not collect income tax on salaries of judges. This may be

gleaned from General Circular No. 449 of the Department of Finance dated March 4, 1940, which says in part:

x x x x x x x x x

The question of whether or not the salaries of judges should be taken into account in computing additional residence taxes is closely

linked with the liability of judges to income tax on their salaries, in fact, whatever resolution is adopted with respect to either of said

taxes be followed with respect to the other. 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 this department has been drawn, appears to have enunciated a new doctrine

regarding the liability of judges to income tax upon their salaries. In view of the fact that the question is of great significance, the

matter was taken up in the Council of State, and the Honorable, the Secretary of Justice was requested to give an opinion on

whether or not, having in mind the said decision 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 effect that judges are not liable to tax on their salaries . After going over the

opinion of the court in the said case, the Honorable, the Secretary of Justice, stated that although the ruling of the Supreme Court of

the United States is not binding in the Philippines, the doctrine therein enunciated has resolved the issue of the taxability of judges'

salaries into a question of policy. Forthwith, His Excellency the President decided that the best policy to adopt would be to collect

income and additional residence taxes from the President of the Philippines, the members of the Judiciary, and the Auditor General,

and the undersigned was authorized to act accordingly.

In view of the foregoing, income and additional residence taxes should be levied on the salaries received by the President of the

Philippines, members of the Judiciary, and the Auditor General during the calendar year 1939 and thereafter. . . . . (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 done in the O'Malley case, not byExecutive Fiat or interpretation.

This is not proclaiming a general tax immunity for men on the bench. These pay taxes. Upon buying gasoline, or other commodities,

they pay the corresponding duties. Owning real property, they pay taxes thereon. And on incomes other than their judicial salary,

assessments are levied. It is only when the tax is charged directly on their salary and the effect of the tax is to diminish their official

stipend that the taxation must be resisted as an infringement of the fundamental charter.

Judges would indeed be hapless guardians of the Constitution if they did not perceive and block encroachments upon their

prerogatives in whatever form. The undiminishable character of judicial salaries is not a mere privilege of judges personal and

therefore waivable but a basic limitation upon legislative or executive action imposed in the public interest. (Evans vs. Gore)


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Indeed the exemption of the judicial salary from reduction by taxation is not really a gratuity or privilege. Let the highest court of

Maryland speak:

The exemption of the judicial compensation from reduction is not in any true sense a gratuity, privilege or exemption. It is essentially

and primarily compensation based upon valuable consideration. The covenant on the part of the government is a guaranty whose

fulfillment is as much as part of the consideration agreed as is the money salary. The undertaking has its own particular value to the

citizens in securing the independence of the judiciary in crises; and in the establishment of the compensation upon a permanent

foundation whereby judicial preferment may be prudently accepted by those who are qualified by talent, knowledge, integrity and

capacity, but are not possessed of such a private fortune as to make an assured salary an object of personal concern. On the other

hand, the members of the judiciary relinquish their position at the bar, with all its professional emoluments, sever their connectionwith their clients, and dedicate themselves exclusively to the discharge of the onerous duties of their high office. So, it i s irrefutable

that they guaranty against a reduction of salary by the imposition of a tax is not an exemption from taxation in the sense of freedom

from a burden or service to which others are liable. The exemption for a public purpose or a valid consideration 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 tax may imperil the independence of the judicial department.

The danger may be demonstrated. Suppose there is power to tax the salary of judges, and the judiciary incurs the displeasure of the

Legislature and the Executive. In retaliation the income tax law is amended so as to levy a 30 per cent on all salaries 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 because the

tax is general on all receiving the same amount of earning, and affects the Executive and the Legislative branches in equal measure.

However, means are provided thereafter in other laws, for the increase of salaries of the Executive and the Legislative branches, or

their perquisites such as allowances, per diems, quarters, etc. that actually compensate for the 30 per cent reduction on their

salaries. Result: Judges compensation is thereby diminished during their incumbency thanks to the income tax law. Consequence:

Judges must "toe the line" or else. Second consequence: Some few judges might falter; the great majority will not. But knowing the

frailty of human nature, and this chink in the judicial armor, will the parties losing their cases against the Executive or t he Congress

believe that the judicature has not yielded to their pressure?

Respondent asserts in argumentation that by executive order the President has subjected his salary to the income tax law. In our

opinion this shows obviously that, without such voluntary act of the President, his salary would not be taxable, because of

constitutional protection against diminution. To argue from this executive gesture that the judiciary could, and should act in like

manner is to assume that, in the matter of compensation and power and need of security, the judiciary is on a par with the

Executive. Such assumption 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 this Court upon which devolves the duty to decide it finally. The

question of whether the salaries of the judges, the members of the Commission on Elections, the Auditor General, and the President

of the Philippines are immune from taxation, might have been raised by any interested party other than 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.

The first income tax law of the Philippines was Act No. 2833, which was approved 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 every individual, a citizen or resident of the Philippine Islands, a tax of two per centum upon such income. . . .

(Emphasis ours.)


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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 income derived from salaries, wages or compensation for personal service of whatever kind and is whatever form paid,

or from professions, vocations, businesses, trade, commerce, sales, or dealings in property, whether real or personal, growing out of

the ownership or use of or interest in real or personal property, also from interest, rent, dividends, securities, or th e transaction of

any business carried on for gain or profit, or gains, profits, and income derived from any source whatever.

That income tax law has been amended several times, specially as to the rates of the tax, but the above-quoted provisions (except as

to the rate) have been preserved intact in the subsequent Acts. The present income tax law is Title II of the National InternalRevenue Code, Commonwealth Act No. 466, sections 21, 28 and 29 of which incorporate the texts of the above-quoted provisions of

the original Act in exactly the same language. There can be no dispute whatsoever that judges (who are individuals) and their

salaries (which are income) are as clearly comprehended within the above-quoted provisions of the law as if they were specifically

mentioned therein; and in fact all judges had been and were paying income tax on their salaries when the Constitution of the

Philippines was discussed and approved by the Constitutional Convention and when it was submitted to the people for confirmat ion

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 fixed by 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 of the compensation of judges and other specified officersduring their continuance in office, did the framers of the Constitution intend to nullify the then existing income tax law insofar as it

imposed a tax on the salaries of said officers ? If they did not, then the income tax law, which has been incorporated in the present

National Internal Revenue Code, remains in force in its entirety and said officers cannot claim exemption therefrom on their salaries.

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

with this Constitution, until amended, altered, modified. or repealed by the Congress of the Philippines.

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

"A constitution shall be held to be prepared and adopted in reference to existing statutory laws, upon the provisions of which in

detail it must depend to 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., 25 Wend. (N. Y. 22). (Barry vs. Traux, 3 A. & E. Ann. Cas 191, 193.).

Courts are bound to presume that the people adopting a constitution are familiar with the previous and existing laws upon the

subjects to which its provisions relate, and upon which they express their judgment and opinion in its 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;

People vs. 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 and adopted in the light and understanding of prior and existing

laws and with reference to them. Constitutions, like statutes, are properly to be expounded in the light of conditions existing at the

time of their adoption, the general spirit of the times, and the prevailing sentiments among the people. Reference may be made to

the historical facts relating to the original or political institutions of the community or to prior well-known practices and usages. (11

Am. Ju., Constitutional Law, 676-678.)

The salaries provided in the Constitution for the Chief Justice and each associate Justice, respectively, of the Supreme Court were

the same salaries ]which they were receiving at the time the Constitution was framed and adopted and on which they were paying

income tax under the existing income 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 as before does not involve any diminution at all. The fact that the plaintiff was not a

member of the Court when the Constitution took effect, makes no difference. The salaries of justices and judges were subject to

income tax when he was appointed in the early part of 1945. In fact he must have declared and paid income tax on his salary for

19454 he claimed exemption only beginning 1946. It seems likewise clear that when the framers of the Constitution fixed those

salaries, they must have taken into consideration that the recipients were paying income tax thereon. There was no necessity to

provide expressly that said salaries shall be subject to income tax because they knew that already so provided. On the other hand, if

exemption from any tax on said salaries had been intended, it would have been specifically to so provide, instead of merely saying

that the compensation as fixed "shall not be diminished during their continuance in office."


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In the light of the antecedents, the prohibition against diminution cannot be interpreted to include or refer to general taxa tion but

to a law by which said salaries may be fixed. The sentence in question reads: "They shall receive such compensation as may be fixed

by law, which shall not be diminished during their continuance in office." The next sentence reads: "Until the Congress shall provide

otherwise, the Chief Justice of the Supreme Court shall receive 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 higher than that which the justices receive at he time of its enactment or, if lower, it must not affect those justice

already in office. In other words, Congress may approve a law increasing the salaries of the justices at any time, but it cannot

approve a law decreasing their salaries unless such law is made effective only as to justices appointed after its approval.

It would be a strained and unreasonable construction of the prohibition against diminution to read into it an exemption fromtaxation. There is no justification for the belief or assumption that the framers of the Constitution intended to exempt the salaries of

said officers from taxes. They knew that it was and is the unavoidable duty of every citizen to bear his aliquot share of the cost of

maintaining the Government; that taxes are the very blood that sustains the life of the Government. To make all citizens share the

burden of taxation equitably, the Constitution expressly provides that "the rule of taxation shall be uniform." (Section 22 [1], Article

VI.) We think it would be a contravention of this provision to read into the prohibition against diminution of the salaries of the

judges and other specified officers an exemption from taxes on their salaries. How could the rule of income taxation be uniform if it

should not be applied to a group of citizens in the same situation as other income earners ? It is to us inconceivable that the framers

ever intended to relieve certain officers of the Government from sharing with their fellows citizens the material burden of the

Government to exempt their salaries from taxes. Moreover, the Constitution itself specifies what properties are exempt from

taxes, namely: "Cemeteries, churches, and parsonages or convents appurtenant thereto, and all lands, buildings, and improvements

used exclusively for religious, charitable, or educational purposes." (Sec. 22 [3], Article VI.) The omission of the salaries in question

from this enumeration is in itself an eloquent manifestation of intention to continue the imposition of taxes thereon as provided in

the existing law. Inclusio est exclusio alterius.

We have thus far read and construed the pertinent portions of our own Constitution and income tax law in the light of the

antecedent circumstances and of the operative factors which prevailed at the time our Constitution was framed, independently of

the construction now prevailing in the United States of similar provisions of the federal Constitution in relation to the present

federal income tax law, under which the justices of the Supreme Court, and the federal judges are now, and since the case

of O'Malley vs. Woodroughwas decided on May 22, 1939, have been, paying income tax on their salaries. 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. Who knows? The Gospel itself was a voice in the wilderness at the time it was uttered.

We have to comment on Anglo-American precedents since the majority decision from which we dissent is based on some of them.

Indeed, the majority say they "hardly do nothing more than to borrow therefrom and to compare their conclusions to localconditions." which we shall presently show did not obtain in the United States at the time the federal and state Constitutions were

adopted. We shall further show that in any event what they now borrow is not usable because it has long been withdrawn from

circulation.

When the American Constitution was framed and adopted, there was no income tax law in the United States. To this circumstance

may be attributed the claim made by some federal judges headed by Chief Justice Taney, when under the Act of Congress of July 1,

1862, their salaries were subjected to an income tax, that such tax was a diminution of their salaries and therefore prohibited by the

Constitution. Chief Justice Taney's claim and his protest against the tax were not heeded, but no federal judge deemed it proper to

sue the Collector of Internal Revenue to recover the taxes they continued to pay under protest for several years. In 1869, th e

Secretary of the Treasury referred the question to Atty. General Hoar, and that o fficer rendered an opinion in substantial accord

with Chief Justice Taney's protest, and also advised that the tax on the President's compensation was likewise invalid. No judicial

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) was decided upon the constitutionality of section 213 of the Act of February 24, 1919, which required the computation of

incomes for the purpose of taxation to embrace all gains, profits, income and the like, "including in the case of the President of the

United States, the judges of the Supreme and inferior courts of the United States, [and others] . . . the compensation received as

such." The Supreme Court of the United States, speaking through Mr. Justice Van Devanter, sustained the suit with the dissent of

Justice Holmes and Brandeis. The doctrine of Evans vs. Gore holding in effect that an income tax on 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 the Revenue Act of June 6, 1932, which included in the "gross income," on the basis of which taxes were to be paid, the

compensation of "judges of courts of the United States taking office after June 6, 1932." And in that case the Supreme Court of the

United States, with only one dissent (that of Justice Butler), abandoned the doctrine of Evans vs. Gore and Miles vs. Graham by

holding:


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

government does not generate an immunity from sharing with their fellow citizens the material burden of the government whose

Constitution and laws they are charged with administering.

The decision also says:

To suggest that it [the law in question] makes inroads upon the independence of judges who took office after Congress had thus

charged them with the common duties of citizenship, by making them bear their aliquot share of the cost of maintaining the

Government, is to trivialize the great historic experience on which the framers based the safeguard of Article 3 , section 1.

Commenting on the above-quoted portions of the latest decision of the Supreme 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 a text in various universities, says: ". . .

All of which seems to be common sense, for surely the framers of the Constitution from ever cutting a judge's salary, did not intend

to relieve all federal judges from the general obligations of citizenship. As for the President, he has never raised the issue; every

occupant of the White House since 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 no longer operative, and that all United States judges,

including those who took office beforeJune 6, 1932, are subject to and pay income tax on their salaries; for after the submission of

O'Malley vs. Woodrough for decision the Congress 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 it applicable to "judges of courts of the United States who took

office on or beforeJune 6, 1932." And the validity of that Act, in force for more than a decade, has not been challenged.

Our colleagues import and transplant here the dead limbs of Evans vs. Goreand Miles vs. Grahamand attempt to revive and nurture

them with painstaking analyses and diagnoses that they had not suffered a fatal blow fromO'Malley vs. Woodrough. We refuse to

join this heroic attempt because we believe it is futile.

They disregard the actual damage and minimize it by trying to discover the process by which it was inflicted and he motivations that

led to the infliction. They say that the chief axe-wielder, Justice Frankfurter, was a Harvard graduate and professor and that the

Harvard Law Journal had criticized Evans vs. Gore; that the dissenters in said case (Holmes and Brandeis) were Harvard men like

Frankfurter; and that they believe this to be the "inarticulate consideration that may have influenced the grounds on which the case

[O'Malley vs. Woodrough] went off." This argument is not valid, in our humble belief. It was not only the Harvard Law Journal that

had criticized Evans vs. Gore. Justice Frankfurter and his colleagues said that the decision in that case "met with wide and steadily

growing disfavor from legal scholarship and professional opinion," and they cited the following: Clark, Furthermore Limitations Upon

Federal Income Taxation, 30 Yale L. J. 75; Corwin, Constitutional Law in1919-1920, 15 Am. Pol. Sci. Rev. 635, 641-644;

Fellman, Diminution of Judicial Salaries, 24 Iowa L. Rev. 89; Lowndes, Taxing Income of Federal Judiciary, 19 Va. L. Rev. 153;

Powell, Constitutional Law in 1919-1920, 19 Mich. L. Rev. 117, 118; Powell,The Sixteenth Amendment and Income 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; 45

Law 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. Goreitself was rejected by most of the courts before whom the matter came after that decision." Is not the intention to

throw Evans vs. Gore into the graveyard of abandoned cases manifest from all this and from the holding that judges are also citizens,

liable to income tax on their salaries?

The majority say that "unless and until our legislature approves an amendment to the income tax law expressly taxing 'the salaries of

judges thereafter appointed,' the O'Malley case is not relevant." We have shown that our income tax law taxes the salaries of judges

as clearly as if they are specifically mentioned therein, and that said law took effect long before the adoption of the Constitution and

long before the plaintiff was appointed.

We agree that the purpose of the constitutional provision against diminution of the salaries of judges during their continuan ce in

office is to safeguard the independence of the Judicial Department. But we disagree that to subject the salaries of judges to a

general income tax law applicable to allincome earners would in any way affect their independence. Our own experience since the

income tax law went effect in 1920 is the best refutation of such assumption.

The majority give an example by which the independence of judges may be imperiled thru the imposition of a tax on their salar ies.

They say: Suppose there is power to tax the salaries of judges and the judiciary incurs the displeasure of the Legislature and the

Executive. In retaliation the income tax law is amended so as to levy a 30 per cent tax on all salaries of government officials on the

level of judges, and by means of another law the salaries of the 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 a vindictive measure is ever resorted to (which we cannot


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imagine), we shall be the first ones to vote to strike it down as a palpable violation of the Constitution. There is no parity between

such hypothetical law and the general income tax law invoked by the defendant in this case. We believe that an income tax law

applicable only against the salaries of judges and not against those or all other income earners may be successfully assailed as being

in contravention not only of the provision against diminution of the salaries of judges but also of the uniformity of the rule of

taxation as well as of the equal protection clause of the Constitution. So the danger apprehended 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.

Paras J.,concurs.

=========================================


SUPREME COURT

Manila

EN BANC

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 for appellant.

Manuel O. Chan for appellees.

MONTEMAYOR,J.:

This is a joint appeal from the decision of the Court of First Instance of Manila declaring section 13 of Republic Act No. 590

unconstitutional, and ordering the appellant Saturnino David as Collector of Internal Revenue to re-fund to Justice Pastor M.Endencia the sum of P1,744.45, representing the income tax collected 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 the income 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 to December 31,1950, as

Associate Justice of the Supreme Court, without special pronouncement as to costs.

Because of the similarity of the two cases, involving as they do the same question of law, they were jointly submitted for

determination in the lower court. Judge Higinio B. Macadaeg presiding, in a rather exhaustive and well considered decision found

and held that under the doctrine laid down by this Court in the case of Perfecto vs. Meer, 85 Phil., 552, the collection of income

taxes from the salaries of Justice Jugo and Justice Endencia was a diminution of their compensation and therefore was in violation of

the Constitution of the Philippines, and so ordered the refund of said taxes.

We see no profit and necessity in again discussing and considering the proposition and the arguments pro and cons involved in thecase of Perfecto vs. Meer, supra, which are raised, brought up and presented here. In that case, we have held despite the rul ing

enunciated by the United States Federal 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 a diminution of such salary and so violates the Constitution. We shall now confine our-selves

to a discussion and determination of the remaining question of whether or not Republic Act No. 590, particularly section 13, can

justify and legalize the collection of income tax on the salary of judicial officers.

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, was not received favorably by Congress, because immediately after its promulgation, Congress enacted

Republic Act No. 590. To bring home his point, the Solicitor General reproduced what he considers the pertinent discussion in the

Lower House of House Bill No. 1127 which became Republic Act No. 590.

For purposes of reference, we are reproducing section 9, Article VII I of our Constitution:.


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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 seventy years, or become incapacitated to discharge the duties of their office. They shall receive such compensation as

may be fixed by law, which shall not be diminished during their continuance in office. Until the Congress shall provide otherwise, the

Chief Justice of the Supreme Court shall receive an annual compensation of sixteen thousand pesos, and each Associate Justice,

fifteen thousand pesos.

As already stated construing and applying the above constitutional provision, we held in the Perfecto case that judicial officers are

exempt from the payment of income tax on their salaries, because the collection thereof by the Government was a decrease or

diminution of their salaries during their continuance in office, a thing which is expressly prohibited by the Constitution. Thereafter,

according to the Solicitor General, because Congress did not favorably receive the decision in the Perfecto case, Congresspromulgated Republic Act No. 590, if not to counteract the ruling in that decision, at least now to authorize and legalize the

collection of income tax on the salaries of judicial officers. We quote section 13 of Republic Act No. 590:

SEC 13. No salary wherever received by any public officer of the Republic of the Philippines shall be considered as exempt from the

income tax, payment of which is hereby declared not to be dimunition of his compensation fixed by the Constitution or by law.

So we have this situation. The Supreme Court in a decision interpreting the Constitution, particularly section 9, Article VIII, has held

that judicial officers are exempt from payment of income tax on their salaries, because the collection thereof was a diminution of

such salaries, specifically prohibited by the Constitution. Now comes the Legislature and in section 13, Republic Act No. 590, says

that "no salary wherever received by any public officer of the Republic (naturally including a judicial officer) shall be considered as

exempt from the income tax," and proceeds to declare that payment of said income tax is not a diminution of his compensation. Can

the Legislature validly do this? May the Legislature lawfully declare the collection of income tax on the salary of a public official,

specially a judicial officer, not a decrease of his salary, after the Supreme Court has found and decided otherwise? To determine this

question, we shall have to go back to the fundamental principles regarding separation of powers.

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

Executive department is charged with the execution of carrying out of the provisions of said laws. But the interpretation and

application of said laws belong exclusively to the Judicial department. And this authority to interpret and apply the laws extends to

the Constitution. Before the courts can determine whether a law is constitutional or not, it will have to interpret and ascertain the

meaning not only of said law, but also of the pertinent portion of the Constitution in order to 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 and unconstitutional.

Defining and interpreting the law is a judicial function and the legislative branch may not limit or restrict the power granted to the

courts by the Constitution. (Bandy vs. Mickelson et al., 44N. W., 2nd 341, 342.)

When it is clear that a statute transgresses the authority vested in the legislature by the Constitution, it is the duty of the courts to

declare the act unconstitutional because they cannot shrink from it without violating their oaths of office. This duty of the courts to

maintain the Constitution as the fundamental law of the state is imperative and unceasing; and, as Chief Justice Marshall said,

whenever a statute is in violation of the fundamental law, the courts must so adjudge and thereby give effect to the Constitu tion.

Any other course would lead to the destruction of the Constitution. Since the question as to the constitutionality of a statute is a

judicial matter, the courts will not decline the exercise of jurisdiction upon the suggestion that action might be taken by political

agencies in disregard of the judgment of the judicial tribunals. (11 Am. Jur., 714-715.)

Under the American system of constitutional government, among the most important functions in trusted to the judiciary are th e

interpreting of Constitutions and, as a closely connected power, the determination of whether laws and acts of the legislature are or

are not contrary to the provisions 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 off icer is not a

decrease of compensation. This is a clear example of interpretation or ascertainment of the meaning of the phrase "which shall not

be diminished during their continuance in office," found in section 9, Article VIII of the Constitution, referring to the salaries of

judicial officers. This act of interpreting the Constitution 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 any declaratory act, or act declaratory of what the law was before

its passage, so as to give it any binding weight with the courts. A legislative definition of a word as used in a statute is not conclusive

of its meaning as used elsewhere; otherwise, the legislature would be usurping a judicial function in defining a term. (11 Am. Jur.,

914, emphasis supplied)


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The legislature cannot, upon passing a law which violates a constitutional provision, validate it so as to prevent an attack thereon in

the courts, by a declaration that it shall be so construed as not to violate the constitutional inhibition. (11 Am. Jur., 919, emphasis

supplied)

We have already said that the Legislature under our form of government is assigned the task and the power to make and enact laws,

but not to interpret them. This is more true with regard to the interpretation of the basic law, the Constitution, which is not within

the sphere of the Legislative department. If the Legislature may declare what a law means, or what a specific portion of the

Constitution means, especially after the courts have in actual case ascertain its meaning by interpretation and applied it in a

decision, this would surely cause confusion and instability in judicial processes and court decisions. Under such a system, a final

court determination of a case based on a judicial interpretation of the law of the Constitution may be undermined or even ann ulledby a subsequent and different interpretation of the law or of the Constitution by the Legislative department. That would be neither

wise nor desirable, besides being clearly violative of the fundamental, principles of our constitutional system of government,

particularly those governing the separation of powers.

So much for the constitutional aspect of the case. Considering the practical side thereof, we believe that the collection of income tax

on a salary is an actual and evident diminution thereof. Under the old system where the in-come tax was paid at the end of the year

or sometime thereafter, the decrease may not be so apparent and clear. All that the official who had previously received his full

salary was called upon to do, was to fulfill his obligation 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 comes from his other sources of income, he may not fully realize the fact

that his salary had been decreased in the amount of said income tax. But under the present system of withholding the income tax at

the source, where the full amount of the income tax corresponding to his salary is computed in advance and divided into equal

portions corresponding to the number of pay-days during the year and actually deducted from his salary corresponding to each

payday, said official actually does not receive his salary in full, because the income tax is deducted therefrom every payday, that is to

say, twice a month. 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, he should receive P1,000 a month or P500 every payday, fifteenth and end of month. In the present

case, the amount collected by the Collector of Internal Revenue 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 will bring it down to P72.685, which is the income tax

deducted form the collected on his salary each half month. So, if Justice Endencia's salary as a judicial officer were not exempt from

payment of the income tax, instead of receiving P500 every payday, he would be actually receiving P427.31 only, and instead of

receiving P12,000 a year, he would be receiving but P10,255.55. Is it not therefor clear that every payday, his salary is actually

decreased 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 certain legislators that members of the

Supreme Court should not enjoy any exemption and that as citizens, out of patriotism and love for their country, they should payincome tax on their salaries. It might be stated in this connection that the exemption is not enjoyed by the members of the Supreme

Court alone but also by all judicial officers including Justices of the Court of Appeals and judges of inferior courts. The exemption also

extends to other constitutional officers, like the President of the Republic, the Auditor General, the members of the Commission on

Elections, and possibly members of the Board of Tax Appeals, commissioners of the Public Service Commission, and judges of the

Court of Industrial Relations. Compares to the number of all these officials, that of the Supreme Court Justices is relatively

insignificant. There are more than 990 other judicial officers enjoying the exemption, including 15 Justices of the Court of Appeals,

about 107 Judges of First Instance, 38 Municipal Judges and about 830 Justices of the Peace. The reason behind the exemption in

the Constitution, as interpreted by the United States Federal Supreme Court and this Court, is to preserve the independence of the

Judiciary, not only of this High Tribunal but of the other courts, whose present membership number more than 990 judicial officials.

The exemption was not primarily intended to benefit judicial officers, but was grounded on public policy. As said by Justice Van

Devanter of the United States Supreme Court in the case of Evans vs. Gore (253 U. S., 245):

The primary purpose of the prohibition against diminution was not to benefit the judges, but, like the clause in respect of tenure, to

attract good and competent men to the bench and to promote that independence of action and judgment which is essential to the

maintenance of the guaranties, limitations and pervading principles of the Constitution and to the administration of justice without

respect to person and with equal concern for the poor and the rich. Such being its purpose, it is to be construed, not as a private

grant, but as a limitation imposed in the public interest; in other words, not restrictively, but in accord with its spirit and the

principle on which it proceeds.

Having in mind the limited number of judicial officers in the Philippines enjoying this exemption, especially when the great bulk

thereof are justices of the peace, many of them receiving as low as P200 a month, and considering further the other exemptions

allowed by the income tax law, such as P3,000 for a married person and P600 for each dependent, the amount of national revenue

to be derived from income tax on the salaries of judicial officers, were if not for the constitutional exemption, could not be large or


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substantial. But even if it were otherwise, it should not affect, much less outweigh the purpose and the considerations that

prompted the establishment of the constitutional exemption. In the same case of Evans vs. Gore, supra, the Federal Supreme Court

declared "that they (fathers of the Constitution) regarded the independence of the judges as far as greater importance than a ny

revenue that could come from taxing their salaries.

When a judicial officer assumed office, he does not exactly ask for exemption from payment of income tax on his salary, as a

privilege . It is already attached to his office, provided and secured by the fundamental law, not primarily for his benefit, but based

on public interest, to secure and preserve his independence of judicial thought and action. When we come to the members of the

Supreme Court, this excemption to them is relatively of short duration. Because of the limited membership in this High Tribun al,

eleven, and due to the high standards of experience, practice and training required, one generally enters its portals and comes tojoin its membership quite late in life, on the aver-age, around his sixtieth year, and being required to retire at 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. It is

rather to the justices of the peace that the exemption can give more benefit. They are relatively more numerous, and because of the

meager salary they receive, they can less afford to pay the income tax on it and its diminution by the amount of the income tax if

paid would be real, substantial and onerous.

Considering exemption in the abstract, there is nothing unusual or abhorrent in it, as long as it is based on public policy or public

interest. While all other citizens are subject to arrest when charged with the commission of a crime, members of the Senate and

House of Representatives except in cases of treason, felony and breach of the peace are exempt from arrest, during their

attendance in the session of the Legislature; and while all other citizens are generally liable for any speech, remark or statement,

oral or written, tending to cause the dishonor, discredit or contempt of a natural or juridical person or to blacken the memory of one

who is dead, Senators and Congressmen in making such statements during their sessions are extended immunity and exemption.

And as to tax exemption, there are not a few citizens who enjoy this exemption. Persons, natural and juridical, are exempt from

taxes on their lands, buildings and improvements thereon when used exclusively for educational purposes, even if they derive

income therefrom. (Art. VI, Sec. 22 [3].) Holders of government bonds are exempted from the payment of taxes on the income or

interest they receive therefrom (sec. 29 (b) [4], National Internal Revenue Code as amended by Republic Act No. 566). Payments or

income received by any person residing in the Philippines under the laws of the United States administered by the United States

Veterans Administration are exempt from taxation. (Republic Act No. 360). Funds received by officers and enlisted men of the

Philippine Army who served in the Armed Forces of the United States, allowances earned by virtue of such services corresponding to

the taxable years 1942 to 1945, inclusive, are exempted from income tax. (Republic Act No. 210). The payment of wages and

allowances of officers and enlisted men of the Army Forces of the Philippines sent to Korea are also exempted from taxation.

(Republic Act No. 35). In other words, for reasons of public policy and public interest, a citizen may justifiably by constitutional

provision or statute be exempted from his ordinary obligation of paying taxes on his income. Under the same public policy and

perhaps for the same it not higher considerations, the framers of the Constitution deemed it wise and necessary to exempt jud icialofficers 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 a judicial officer is a diminution thereof and so violates the Constitution. We further hold that the interpretation

and application of the Constitution and of statutes is within the exclusive province and jurisdiction of the Judicial department, and

that in enacting a law, the Legislature may not legally provide therein that it be interpreted in such a way that it may not violate a

Constitutional prohibition, thereby tying the hands of the courts in their task of later interpreting said statute, specially when the

interpretation sought and provided in said statute runs counter to a previous interpretation already given in a case by the highest

court of the land.

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

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

Separate Opinions

BAUTISTA ANGELO,J., concurring:


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Without expressing any opinion on the doctrine laid down by this Court in the case of Perfecto vs. Meer, G. R. No. L-2314, in view of

the part I had in that case as former Solicitor General, I wish however to state that I concur in the opinion of the majority to the

effect that section 13, Republic Act No. 590, in so far as it provides that taxing of the salary of a judicial officer shall be considered

"not to be a diminution of his compensation fixed by the Constitution or by law", constitutes an invasion of the province and

jurisdiction of the judiciary. In this sense, I am of the opinion that said section is null and void, it being a transgression of the

fundamental principle underlying the separation of powers.

PARAS, C.J., concurring and dissenting:

I dissent for the same reasons stated in the dissenting opinion of Mr. Justice Ozaeta in Perfecto vs. Meer, 85 Phil., 552, in which I

concurred. But I disagree with the majority in ruling that no legislation may provide that it be held valid although against a provision

of the Constitution.

FACTS:

Saturnino David was the Internal Revenue Collector who ordered Judges Endencio and Jugos salaries. A case was filed. However,

upon construing Article VIII Section 9 of the constitution, it shows that judicial officers are exempt from paying tax from their salaries

and thus considered that the deduction of salaries from the said judges as a violation from the compensation received by judicial

officers.

ISSUE: Whether or not Section 13 of RA 590 is constitutional.

RULING:

No, the Section 13 of RA 590 is unconstitutional. The collection of income taxes in judicial officers is considered as against the

provisions given by the Article VIII Sec 9 of the Constitution. The compensation shall not be diminished during their continuance of

their service. Section 13 of RA 590 stated that no salary received by any public officer of the republic shall be exempted from paying

its taxes. This specific part of RA 590 is in contrary with what is Article VIII Sec 9 has provided.

====================================

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.

Facts: Petitioners, the duly appointed and qualified Judges presiding over Branches 52, 19 and 53, respectively, of the Regional Tria

Court, National Capital Judicial Region, all with stations in Manila, seek to prohibit and/or perpetually enjoin respondents, the

Commissioner of Internal Revenue and the Financial Officer of the Supreme Court, from making any deduction of withholding taxes

from their salaries.

Issue: Whether or not members of the Judiciary are exempt from income taxes.

Ruling: Yes. The Court held that the salaries of Justices and Judges are properly subject to a general income tax law applicable to al

income earners and that the payment of such income tax by Justices and Judges does not fall within the constitutional protection

against decrease of their salaries during their continuance in office and the ruling that "the imposition of income tax upon the salary

of judges is a diminution thereof, and so violates the Constitution" in Perfecto vs. Meer, as affirmed in Endencia vs. David must be

declared discarded. The framers of the fundamental law, as the alter ego of the people, have expressed in clear and unmistakable

terms the meaning and import of Section 10, Article VIII, of the 1987 Constitution that they have adopted.


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NITAFAN vs. COMMISSIONER OF INTERNAL REVENUE

G.R. No. 78780, July 23, 1987, 152 SCRA 284

FACTS:

Petitioners, the duly appointed and qualified Judges presiding over Branches 52, 19 and 53, respectively, of the Regional Trial Court

National Capital Judicial Region, all with stations in Manila, seek to prohibit and/or perpetually enjoin respondents, the



They submit that "any tax withheld from their emoluments or compensation as judicial officers constitutes a decrease or diminution

of their salaries, contrary to the provision of Section 10, Article VIII of the 1987 Constitution mandating that during their continuance

in office, their salary shall not be decreased," even as it is anathema to the Ideal of an independent judiciary envisioned in and by

said Constitution."

It may be pointed out that, early on, the Court had dealt with the matter administratively in response to representations that the

Court shall direct its Finance Officer to discontinue the withholding of taxes from salaries of members of the Bench. Thus, on June 4,

1987, it was reaffirmed by the Court en banc.

ISSUE:

Whether or not members of the Judiciary are exempt from income taxes.

HELD:

No. The debates, interpellations and opinions expressed regarding the constitutional provision in question until it was finallyapproved by the Commission disclosed that the true intent of the framers of the 1987 Constitution, in adopting it, was to make the

salaries of members of the Judiciary taxable. The ascertainment of that intent is but in keeping with the fundamental principle of

constitutional construction that the intent of the framers of the organic law and of the people adopting it should be given effect. The

primary task in constitutional construction is to ascertain and thereafter assure the realization of the purpose of the framers and of

the people in the adoption of the Constitution. It may also be safely assumed that the people in ratifying the Constitution were

guided mainly by the explanation offered by the framers.

The ruling that "the imposition of income tax upon the salary of judges is a dimunition thereof, and so violates the Constitution"

in Perfecto vs. Meer, as affirmed in Endencia vs. David must be declared discarded. The framers of the fundamental law, as the alte

ego of the people, have expressed in clear and unmistakable terms the meaning and import of Section 10, Article VIII, of the 1987

Constitution that they have adopted

Stated otherwise, we accord due respect to the intent of the people, through the discussions and deliberations of their

representatives, in the spirit that all citizens should bear their aliquot part of the cost of maintaining the government and should

share the burden of general income taxation equitably. Therefore, the petition for Prohibition is hereby dismissed.


SUPREME COURT

Manila

EN BANC

G.R. No. 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.

R E S O L U T I O N

MELENCIO-HERRERA,J.:

Petitioners, the duly appointed and qualified Judges presiding over Branches 52, 19 and 53, respectively, of the Regional Trial Court,

National Capital Judicial Region, all with stations in Manila, seek to prohibit and/or perpetually enjoin respondents, the


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In a nutshell, they submit that "any tax withheld from their emoluments or compensation as judicial officers constitutes a decrease

or diminution of their salaries, contrary to the provision of Section 10, Article VIII of the 1987 Constitution mandating that "(d)uring

their continuance in office, their salary shall not be decreased," even as it is anathema to the Ideal of an independent judiciary

envisioned in and by said Constitution."

It may be pointed out that, early on, the Court had dealt with the matter administratively in response to representations that the

Court direct its Finance Officer to discontinue the withholding of taxes from salaries of members of the Bench. Thus, on June 4,1987, the Court en banchad reaffirmed the Chief Justice's directive as follows:

RE: Question of exemption from income taxation. The Court REAFFIRMED the Chief Justice's previous and standing directive to the

Fiscal Management and Budget Office of this Court to continue with the deduction of the withholding taxes from the salaries of the

Justices of the Supreme Court as well as from the salaries of all other members of the judiciary.

That should have resolved the question. However, with the filing of this petition, the Court has deemed it best to settle the legal

issue raised through this judicial pronouncement. As will be shown hereinafter, the clear intent of the Constitutional Commission

was to delete the proposed express grant of exemption from payment of income tax to members of the Judiciary, so as to "give

substance to equality among the three branches of Government" in the words of Commissioner Rigos. In the course of the

deliberations, it was further expressly made clear, specially with regard to Commissioner Joaquin F. Bernas' accepted amendment to

the amendment of Commissioner Rigos, that the salaries of members of the Judiciary would be subject to the general income taxapplied to all taxpayers.

This intent was somehow and inadvertently not clearly set forth in the final text 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 in the 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, as well as from the salaries of all other members of the Judiciary. The Court hereby makes of record that it had then

discarded the ruling in Perfectovs. Meer and Endencia vs.David, infra,that declared the salaries of members of the Judiciary exempt

from payment of the income tax and considered such payment as a diminution of their salaries during their continuance in office.

The Court hereby reiterates that the salaries of Justices and Judges are properly subject to a general income tax law applicable to all

income earners and that the payment of such income tax by Justices and Judges does not fall within the constitutional protection

against decrease of their salaries during their continuance in office.

A comparison of the Constitutional provisions involved is cal led for. The 1935 Constitution 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 be diminishedduring their continuance in office ... 1(Emphasis supplied).

Under the 1973 Constitution, the same provision read:

The salary of the Chief Justice and of the Associate Justices of the Supreme court, and of judges of inferior courts shall be fixed by

law, which shall not be decreasedduring their continuance in office. ...2(Emphasis ours).

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

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

payment of income tax.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 Supreme Court, and of judges of lower courts shall be fixed by law.

During their continuance in office, their salary shall not be decreased.4(Emphasis supplied).

The 1987 Constitution does not contain a provision similar to Section 6, Article XV of the 1973 Constitution, for which reason,

petitioners claim that the intent of the framers is to revert to the original concept of "non-diminution "of salaries of judicial officers.
http://www.lawphil.net/judjuris/juri1987/jul1987/gr_78780_1987.html#fnt1http://www.lawphil.net/judjuris/juri1987/jul1987/gr_78780_1987.html#fnt1http://www.lawphil.net/judjuris/juri1987/jul1987/gr_78780_1987.html#fnt1http://www.lawphil.net/judjuris/juri1987/jul1987/gr_78780_1987.html#fnt2http://www.lawphil.net/judjuris/juri1987/jul1987/gr_78780_1987.html#fnt2http://www.lawphil.net/judjuris/juri1987/jul1987/gr_78780_1987.html#fnt2http://www.lawphil.net/judjuris/juri1987/jul1987/gr_78780_1987.html#fnt3http://www.lawphil.net/judjuris/juri1987/jul1987/gr_78780_1987.html#fnt3http://www.lawphil.net/judjuris/juri1987/jul1987/gr_78780_1987.html#fnt3http://www.lawphil.net/judjuris/juri1987/jul1987/gr_78780_1987.html#fnt4http://www.lawphil.net/judjuris/juri1987/jul1987/gr_78780_1987.html#fnt4http://www.lawphil.net/judjuris/juri1987/jul1987/gr_78780_1987.html#fnt4http://www.lawphil.net/judjuris/juri1987/jul1987/gr_78780_1987.html#fnt4http://www.lawphil.net/judjuris/juri1987/jul1987/gr_78780_1987.html#fnt3http://www.lawphil.net/judjuris/juri1987/jul1987/gr_78780_1987.html#fnt2http://www.lawphil.net/judjuris/juri1987/jul1987/gr_78780_1987.html#fnt1


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The deliberations of the 1986 Constitutional Commission relevant to Section 10, 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 the Supreme 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 subjected to income tax. Until the National

Assembly shall provide otherwise, the Chief Justice shall receive an annual salary of _____________ and each Associate Justice

______________ pesos.5(Emphasis ours)

During the debates on the draft Article (Committee Report No. 18), two Commissioners presented their o

various full cases in statutory construction

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