TodayisTuesday,June23,2015

RepublicofthePhilippines
SUPREMECOURT
Manila
ENBANC
G.R.No.L2348February27,1950
GREGORIOPERFECTO,plaintiffappellee,
vs.
BIBIANOMEER,CollectorofInternalRevenue,defendantappellant.
FirstAssistantSolicitorGeneralRobertoA.GianzonandSolicitorFranciscoCarreonforoppositorandappellant.
GregorioPerfectoinhisownbehalf.
BENGZON,J.:
InApril,1947theCollectorofInternalRevenuerequiredMr.JusticeGregorioPerfectotopayincometaxuponhis
salaryasmemberofthisCourtduringtheyear1946.Afterpayingtheamount(P802),heinstitutedthisactionin
theManilaCourtofFirstInstancecontendingthattheassessmentwasillegal,hissalarynotbeingtaxableforthe
reasonthatimpositionoftaxesthereonwouldreduceitinviolationoftheConstitution.
The Manila judge upheld his contention, and required the refund of the amount collected. The defendant
appealed.
ThedeathofMr.JusticePerfectohasfreedusfromtheembarrassmentofpassingupontheclaimofacolleague.
Still,astheoutcomeindirectlyaffectsallthemembersoftheCourt,considerationofthematterisnotwithoutits
vexingfeature.Yetadjudicationmaynotbedeclined,because(a)wearenotlegallydisqualified(b)jurisdiction
maynotberenounced,aditisthedefendantwhoappealstothisCourt,andthereisnoothertribunaltowhichthe
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
involvestherightofotherconstitutionalofficerswhosecompensationisequallyprotectedbytheConstitution,for
instance, the President, the AuditorGeneral and the members of the Commission on Elections. Anyway the
subjecthasbeenthoroughlydiscussedinmanyAmericanlawsuitsandopinions,andweshallhardlydonothing
morethantoborrowtherefromandtocomparetheirconclusionstolocalconditions.Thereshallbelittleoccasion
toformulatenewpropositions,forthesituationisnotunprecedented.
OurConstitutionprovidesinitsArticleVIII,section9,thatthemembersoftheSupremeCourtandalljudgesof
inferiorcourts"shallreceivesuchcompensationasmaybefixedbylaw,whichshallnotbediminishedduringtheir
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
Perfectoassumedoffice,Congresshadnot"providedotherwise",byfixingadifferentsalaryforassociatejustices.
HereceivedsalaryattherateprovidedbytheConstitution,i.e.,fifteenthousandpesosayear.
Now,doestheimpositionofanincometaxuponthissalaryin1946amounttoadiminutionthereof?.
Anotefoundatpage534ofvolume11oftheAmericanLawReportsanswersthequestionintheaffirmative.It
says:
Where the Constitution of a state provides that the salaries of its judicial officers shall not be dismissed
duringtheircontinuanceinoffice,ithadbeenheldthatthestatelegislaturecannotimposeataxuponthe
compensation paid to the judges of its court. New Orleans v. Lea (1859) 14 La. Ann. 194 Opinion of
AttorneyGeneralifN.C.(1856)48N.C.(3Jones,L.)Appx.1ReTaxationofSalariesofJudges(1902)
131N.C.692,42S.E.970Com.ex.rel.Hepburnv.Mann(1843)5Watts&S,.(Pa.)403[butseetothe
contrarytheearlierandmuchcriticizedcaseofNorthumberlandcountyv.Chapman(1829)2Rawle(Pa.)
73]*
AdifferentruleprevailsinWisconsin,accordingtothesameannotation.Anotherstateholdingthecontraryviewis
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
salariesoffederaljudges?Inansweringthisquestion,weshouldconsiderfourperiods:
Firstperiod.NoattemptswasmadetotaxthecompensationofFederaljudgesupto18621.
Second period. 18621918. In July, 1862, a statute was passed subjecting the salaries of "civil officers of the
UnitedStates"toanincometaxofthreepercent.Revenueofficers,construeditasincludingthecompensationof
alljudgesbutChiefJusticeTaney,speakingforthejudiciary,wrotetotheSecretaryoftheTreasuryaletterof
protestsaying,amongotherthings:
Theactinquestion,asyouinterpretit,diminishesthecompensationofeveryjudge3percent,andifitcan
bediminishedtothatextentbythenameofatax,itmay,inthesameway,bereducedfromtimetotime,at
thepleasureofthelegislature.
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
perfectlyindependentofthetwootherdepartments,andinordertoplaceitbeyondthereachandabove
even the suspicion of any such influence, the power to reduce their compensation is expressly withheld

fromCongress,andexceptedfromtheirpowersoflegislation.
Language could not be more plain than that used in the Constitution. It is, moreover, one of its most
importantandessentialprovisions.Forthearticleswhichlimitsthepowersofthelegislativeandexecutive
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
freefromeveryinfluence,directandindirect,thatmightbypossibilityintimesofpoliticalexcitementwarp
theirjudgments.
UponthesegroundsIregardanactofCongressretainingintheTreasuryaportionoftheCompensationof
thejudges,asunconstitutionalandvoid2.
Theprotestwasunheeded,althoughitapparentlyboretheapprovalofthewholeSupremeCourt,thatorderedit
printedamongitsrecords.Butin1869AttorneyGeneralHoarupontherequestoftheSecretaryoftheTreasury
renderedanopinionagreeingwiththeChiefJustice.Thecollectionofthetaxwasconsequentlydiscontinuedand
theamountstheretoforereceivedwereallrefunded.Forhalfacenturythereafterjudges'salarieswerenottaxed
asincome.3
Third period. 19191938. 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 epochmaking decision.*, explaining the purpose,
historyandmeaningoftheConstitutionalprovisionforbiddingimpairmentofjudicialsalariesandtheeffectofan
incometaxuponthesalaryofajudge.
With what purpose does the Constitution provide that the compensation of the judges "shall not be
diminishedduringtheircontinuanceinoffice"?Isitprimarilytobenefitthejudges,orrathertopromotethe
publicwealbygivingthemthatindependencewhichmakesforanimpartialandcourageousdischargeof
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,suchaswithholdingorcallingbackapartastaxonthewhole?Ordoesitmeanthat
thejudgeshallhaveasureandcontinuingrighttothecompensation,whereonheconfidentlymayrelyfor
hissupportduringhiscontinuanceinoffice,sothatheneedhavenoapprehensionlesthissituationinthis
regardmaybechangedtohisdisadvantage?
TheConstitutionwasframedonthefundamentaltheorythatalargermeasureoflibertyandjusticewould
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
independenceifitwasnotmadebothrealandenduringtheseparationwouldfailofitspurpose.all
agreedthatrestraintsandchecksmustbeimposedtosecuretherequisitemeasureofindependencefor
otherwise the legislative department, inherently the strongest, might encroach on or even come to
dominate the others, and the judicial, naturally the weakest, might be dwarf or swayed by the other two,
especiallybythelegislative.
The particular need for making the judiciary independent was elaborately pointed our by Alexander
HamiltonintheFederalist,No.78,fromwhichweexcerptthefollowing:
xxxxxxxxx
AtalaterperiodJohnMarshall,whoserichexperienceaslawyer,legislator,andchiefjusticeenablehimto
speakasnooneelsecould,terselysaid(debatesVa.Gonv.18291831,pp.616,619):...Ourcourtsare
thebalancewheelofourwholeconstitutionalsystemandouristheonlyconstitutionalsystemsobalanced
andcontrolled.Otherconstitutionalsystemslackscompletepoiseandcertainlyofoperationbecausethey
lackthesupportandinterpretationofauthoritative,undisputablecourtsoflaw.Itisclearbeyondallneedof
expositionthatforthedefinitemaintenanceofconstitutionalunderstandingsitisindispensable,alikeforthe
preservation of the liberty of the individual and for the preservation of the integrity of the powers of the
government,thatthereshouldbesomenonpoliticalforuminwhichthoseunderstandingscanbeimpartially
debatedanddetermined.Thatforumourcourtssupply.Theretheindividualmayasserthisrightstherethe
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
governmentmustabidetherethegovernmentcancheckthetooaggressiveselfassertionoftheindividual
and establish its power upon lines which all can comprehend and heed. The constitutional powers of the
courtsconstitutetheultimatesafeguardalikeofindividualprivilegeandofgovernmentalprerogative.Itisin
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.
ConstitutionalgovernmentintheUnitedStates,pp.17,142.
Consciousinthenatureandscopeofthepowerbeingvestedinthenationalcourts,recognizingthatthey
wouldbechargewithresponsibilitiesmoredelicateandimportantthananyeverbeforeconfidetojudicial
tribunals,andappreciatingthattheyweretobe,inthewordsofGeorgeWashington,"thekeystoneofour
political fabric", the convention with unusual accord incorporated in the Constitution the provision that the
judges"shallholdtheirofficesduringgoodbehavior,andshallatstatedtimesreceivefortheirservicesa
compensationwhichshallnotbediminishedduringtheircontinuanceinoffice."Cantherebeanydoubtthat
thetwothingsthuscoupledinplacetheclauseinrespectoftenureduringgoodbehaviourandthatin
respectofanundiminishablecompensationwereequallycoupledinpurpose?Andisitnotplainthattheir
purposes was to invest the judges with an independence in keeping with the delicacy and importance of
theirtask,andwiththeimperativeneedforitsimpartialandfearlessperformance?Mr.Hamiltonsaidine