Lex Rex Ph

When Taxes Imperil Judicial Independence | Perfecto v. Meer


Does taxing an officer of the Court constitute a diminution of his salary and is therefore unconstitutional?
GREGORIO PERFECTO, plaintiff-appellee, (Judge)vs.BIBIANO MEER, Collector of Internal Revenue, defendant-appellant.G.R. No. L-2348

Further reading: It’s “ConstiClear”: Taxing Judges is Not Diminution | Nitafan v. CIR


Justice Gregorio Perfecto filed a case against Internal Revenue Commissioner on the ground that taxing the salary of judges equates to diminution of their salary and is therefore unconstitutional.


Constitutional Construction
There is ambiguity about to the prohibition against diminution of the salary of the judges. The Court construed the INTENT behind the PROVISIONS of the CONSTITUTION, that their JUDGMENTS will NOT BE IMPEDED if there is no diminution through taxation.


In April, 1947 the Collector of Internal Revenue required a member of the Supreme Court, Mr. Justice Gregorio Perfecto, to pay income tax upon his salary 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.
Constitution Article VIII, section 9, 1935 Consti: members of the Supreme Court and all judges of inferior courts “Justices….shall receive such compensation as may be fixed by law, which shall not be diminished during their continuance in office….
Now, does the imposition of an income tax upon this salary in 1946 amount to a diminution thereof? Yes. 
Page 534 of volume 11 of the American Law Reports answers the question in the affirmative. Where the Constitution of a state provides that the salaries of its judicial officers shall not be dismissed during their continuance in office, 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) et al

  • First period, up to 1862: No attempts to tax federal judges
  • Second period. 1862-1918. Chief Justice Taney, speaking for the judiciary: “he judiciary is one of the three great departments of the government… to place it beyond the reach and above even the suspicion of any such influence, the power to reduce their compensation is expressly withheld from Congress.” The judiciary must be “free from every influence, direct and indirect, that might by possibility in times of political excitement warp their judgments.”
  • Third period 1919-1938. “Without independence [esp with taxation], the three branches of the government will fail its purpose. the judicial, naturally the weakest, might be dwarfed..by the legislative.” – US Supreme Court (Walter Evans in Evans v Gore)
  • John Marshall: 
    • there must be a nonpolitical forum in which those understandings can be impartially debated
    • the primary purpose of the prohibition against diminution was not to benefit the judges, but to attract good and competent men to the bench, promote that independence,  justice without respect to persons, and with equal concern for the poor and the rich….
    • The prohibition is general, contains no excepting words, and appears to be directed against all diminution,
    • the fathers of the Constitution intended to prohibit diminution by taxation
    • 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.)
  • Fourth period. 1939 — present: 
    • 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

Congress may validly declare by law that salaries of judges appointed thereafter shall be taxed as income (O’Malley vs. Woodrough) it may not tax the salaries of those judges already in office at the time of such declaration because such taxation would diminish their salaries (Evans vs. Gore; Miles vs. Graham).
‘incomes, from whatever source derived’, – (Harvard law Review, vol. 34, p. 70)
Frankfurter: judges being also citizens liable to income tax


Is taxing the salary of a Judge a violation of the Constitution? 


The Judgment of Manila CFI was AFFIRMED. It is UNCONSTITUTIONAL to TAX the salary of JUDGES.

  2. Knowing the frailty of human nature, will the parties losing their cases against the Executive or the Congress believe that the judicature has not yielded to their pressure?

Manila Court of First Instance Judge ruled that it was ILLEGAL or UNCONSTITUTIONAL to tax the SALARY of JUDGES.
The case is not unprecedented, as the subject has been thoroughly discussed in many American lawsuits and opinions. 

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