TodayisTuesday,June23,2015

RepublicofthePhilippinesSUPREMECOURT

Manila

ENBANC

G.R.No.L2348February27,1950

GREGORIOPERFECTO,plaintiffappellee,vs.BIBIANOMEER,CollectorofInternalRevenue,defendantappellant.

FirstAssistantSolicitorGeneralRobertoA.GianzonandSolicitorFranciscoCarreonforoppositorandappellant.GregorioPerfectoinhisownbehalf.

BENGZON,J.:

InApril,1947theCollectorofInternalRevenuerequiredMr.JusticeGregorioPerfectotopayincometaxuponhissalaryasmemberofthisCourtduringtheyear1946.Afterpayingtheamount(P802),heinstitutedthisactionintheManilaCourtofFirstInstancecontendingthattheassessmentwasillegal,hissalarynotbeingtaxableforthereasonthatimpositionoftaxesthereonwouldreduceitinviolationoftheConstitution.

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

ThedeathofMr.JusticePerfectohasfreedusfromtheembarrassmentofpassingupontheclaimofacolleague.Still,astheoutcomeindirectlyaffectsallthemembersoftheCourt,considerationofthematterisnotwithoutitsvexingfeature.Yetadjudicationmaynotbedeclined,because(a)wearenot legallydisqualified(b) jurisdictionmaynotberenounced,aditisthedefendantwhoappealstothisCourt,andthereisnoothertribunaltowhichthecontroversymaybe referred (c)supremecourts in theUnitedStateshavedecidedsimilardisputes relating tothemselves (d) the question touches all the members of the judiciary from top to bottom and (e) the issueinvolvestherightofotherconstitutionalofficerswhosecompensationisequallyprotectedbytheConstitution,forinstance, the President, the AuditorGeneral and the members of the Commission on Elections. Anyway thesubjecthasbeenthoroughlydiscussedinmanyAmericanlawsuitsandopinions,andweshallhardlydonothingmorethantoborrowtherefromandtocomparetheirconclusionstolocalconditions.Thereshallbelittleoccasiontoformulatenewpropositions,forthesituationisnotunprecedented.

OurConstitutionprovides in itsArticleVIII,section9, that themembersof theSupremeCourtandall judgesofinferiorcourts"shallreceivesuchcompensationasmaybefixedbylaw,whichshallnotbediminishedduringtheircontinuance in office." It also provides that "until Congress shall provide otherwise, the Chief Justice of theSupreme Court shall receive an annual compensation of sixteen thousand pesos".When in 1945Mr. JusticePerfectoassumedoffice,Congresshadnot"providedotherwise",byfixingadifferentsalaryforassociatejustices.HereceivedsalaryattherateprovidedbytheConstitution,i.e.,fifteenthousandpesosayear.

Now,doestheimpositionofanincometaxuponthissalaryin1946amounttoadiminutionthereof?.

Anotefoundatpage534ofvolume11oftheAmericanLawReportsanswersthequestionintheaffirmative.Itsays:

Where theConstitution of a state provides that the salaries of its judicial officers shall not be dismissedduringtheircontinuanceinoffice,ithadbeenheldthatthestatelegislaturecannotimposeataxuponthecompensation paid to the judges of its court. New Orleans v. Lea (1859) 14 La. Ann. 194 Opinion ofAttorneyGeneralifN.C.(1856)48N.C.(3Jones,L.)Appx.1ReTaxationofSalariesofJudges(1902)131N.C.692,42S.E.970Com.ex.rel.Hepburnv.Mann(1843)5Watts&S,.(Pa.)403[butseetothecontrarytheearlierandmuchcriticizedcaseofNorthumberlandcountyv.Chapman(1829)2Rawle(Pa.)73]*

AdifferentruleprevailsinWisconsin,accordingtothesameannotation.AnotherstateholdingthecontraryviewisMissouri.

TheConstitution of theUnited States, likes ours, forbids the diminution of the compensation of Judges of theSupremeCourt andof inferior courts.TheFederalGovernmentshasan income tax law.Does it embrace thesalariesoffederaljudges?Inansweringthisquestion,weshouldconsiderfourperiods:

Firstperiod.NoattemptswasmadetotaxthecompensationofFederaljudgesupto18621.

Second period. 18621918. In July, 1862, a statutewas passed subjecting the salaries of "civil officers of theUnitedStates"toanincometaxofthreepercent.Revenueofficers,construeditasincludingthecompensationofall judgesbutChiefJusticeTaney,speakingfor the judiciary,wrote to theSecretaryof theTreasurya letterofprotestsaying,amongotherthings:

Theactinquestion,asyouinterpretit,diminishesthecompensationofeveryjudge3percent,andifitcanbediminishedtothatextentbythenameofatax,itmay,inthesameway,bereducedfromtimetotime,atthepleasureofthelegislature.

The judiciary is one of the three great departments of the government, created and established by theConstitution. Itsdutiesandpowersarespecificallyset forth,andareofacharacter that requires it tobeperfectly independentof thetwootherdepartments,andinordertoplaceitbeyondthereachandaboveeven the suspicion of any such influence, the power to reduce their compensation is expresslywithheld

fromCongress,andexceptedfromtheirpowersoflegislation.

Language could not be more plain than that used in the Constitution. It is, moreover, one of its mostimportantandessentialprovisions.Forthearticleswhichlimitsthepowersofthelegislativeandexecutivebranches of the government, and thosewhich provide safeguards for the protection of the citizen in hispersonandproperty,wouldbeof littlevaluewithouta judiciary toupholdandmaintain them,whichwasfreefromeveryinfluence,directandindirect, thatmightbypossibility intimesofpoliticalexcitementwarptheirjudgments.

UponthesegroundsIregardanactofCongressretainingintheTreasuryaportionoftheCompensationofthejudges,asunconstitutionalandvoid2.

Theprotestwasunheeded,althoughitapparentlyboretheapprovalofthewholeSupremeCourt,thatordereditprintedamongitsrecords.Butin1869AttorneyGeneralHoarupontherequestoftheSecretaryoftheTreasuryrenderedanopinionagreeingwiththeChiefJustice.Thecollectionofthetaxwasconsequentlydiscontinuedandtheamountstheretoforereceivedwereallrefunded.Forhalfacenturythereafterjudges'salarieswerenottaxedasincome.3

Third period. 19191938. The Federal Income Tax Act of February 24, 1919 expressly provided that taxableincome shall include "the compensation of the judges of the SupremeCourt and inferior courts of the UnitedStates". Under such Act, Walter Evans, United States judge since 1899, paid income tax on his salary andmaintaining that the impost reducedhis compensation, he sued to recover themoneyhehaddeliveredunderprotest.Hewasupheld in1920by theSupremeCourt inanepochmakingdecision.*, explaining the purpose,historyandmeaningoftheConstitutionalprovisionforbiddingimpairmentofjudicialsalariesandtheeffectofanincometaxuponthesalaryofajudge.

With what purpose does the Constitution provide that the compensation of the judges "shall not bediminishedduringtheircontinuanceinoffice"?Isitprimarilytobenefitthejudges,orrathertopromotethepublicwealbygivingthemthat independencewhichmakesforan impartialandcourageousdischargeofthe judicial function?Does the provisionmerely forbid direct diminution, such as expressly reducing thecompensation from a greater to a less sum per year, and thereby leave the way open for indirect, yeteffective,diminution,suchaswithholdingorcallingbackapartastaxonthewhole?Ordoesitmeanthatthejudgeshallhaveasureandcontinuingrighttothecompensation,whereonheconfidentlymayrelyforhissupportduringhiscontinuanceinoffice,sothatheneedhavenoapprehensionlesthissituationinthisregardmaybechangedtohisdisadvantage?

TheConstitutionwasframedonthefundamentaltheorythatalargermeasureoflibertyandjusticewouldbe assured by vesting the three powers the legislative, the executive, and the judicial in separatedepartments, each relatively independent of the others and it was recognized that without thisindependenceif itwasnotmadebothrealandenduringtheseparationwouldfailof itspurpose.allagreedthatrestraintsandchecksmustbeimposedtosecuretherequisitemeasureofindependenceforotherwise the legislative department, inherently the strongest, might encroach on or even come todominate theothers,and the judicial,naturally theweakest,mightbedwarforswayedby theother two,especiallybythelegislative.

The particular need for making the judiciary independent was elaborately pointed our by AlexanderHamiltonintheFederalist,No.78,fromwhichweexcerptthefollowing:

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AtalaterperiodJohnMarshall,whoserichexperienceaslawyer,legislator,andchiefjusticeenablehimtospeakasnooneelsecould,terselysaid(debatesVa.Gonv.18291831,pp.616,619):...Ourcourtsarethebalancewheelofourwholeconstitutionalsystemandouristheonlyconstitutionalsystemsobalancedandcontrolled.Otherconstitutionalsystemslackscompletepoiseandcertainlyofoperationbecausetheylackthesupportandinterpretationofauthoritative,undisputablecourtsoflaw.Itisclearbeyondallneedofexpositionthatforthedefinitemaintenanceofconstitutionalunderstandingsitisindispensable,alikeforthepreservation of the liberty of the individual and for the preservation of the integrity of the powers of thegovernment,thatthereshouldbesomenonpoliticalforuminwhichthoseunderstandingscanbeimpartiallydebatedanddetermined.Thatforumourcourtssupply.Theretheindividualmayasserthisrightstherethegovernment must accept definition of its authority. There the individual may challenge the legality ofgovernmental action and have it adjudged by the test of fundamental principles, and that test thegovernmentmustabidetherethegovernmentcancheckthetooaggressiveselfassertionoftheindividualandestablish itspowerupon lineswhichallcancomprehendandheed.Theconstitutionalpowersof thecourtsconstitutetheultimatesafeguardalikeofindividualprivilegeandofgovernmentalprerogative.Itisinthis sense that our judiciary is the balancewheel of our entire system it ismeant tomaintain that niceadjustment between individual rights and governmental powers which constitutes political liberty.ConstitutionalgovernmentintheUnitedStates,pp.17,142.

Consciousinthenatureandscopeofthepowerbeingvestedinthenationalcourts,recognizingthattheywouldbechargewithresponsibilitiesmoredelicateandimportant thananyeverbeforeconfideto judicialtribunals,andappreciatingthattheyweretobe,inthewordsofGeorgeWashington,"thekeystoneofourpolitical fabric", theconventionwithunusualaccord incorporated in theConstitution theprovision that thejudges"shallholdtheirofficesduringgoodbehavior,andshallatstatedtimesreceivefor theirservicesacompensationwhichshallnotbediminishedduringtheircontinuanceinoffice."Cantherebeanydoubtthatthetwothingsthuscoupledinplacetheclauseinrespectof tenureduringgoodbehaviourandthat inrespectofanundiminishablecompensationwereequallycoupledinpurpose?Andisitnotplainthattheirpurposeswas to invest the judgeswithan independence inkeepingwith thedelicacyand importanceoftheirtask,andwiththeimperativeneedforitsimpartialandfearlessperformance?Mr.Hamiltonsaidine