G.R. No. L- 2348 February 27 1950 [Salaries of Judges Exemption]
FACTS:
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, he instituted this action before
the Manila CFI 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. Art. 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"
ISSUE:
Whether or not the salaries of judges are immune from
taxation.
RULING:
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 connection with their clients, and dedicate themselves
exclusively to the discharge of the onerous duties of their high office. So, it
is 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)
