Nitafan v. Commissioner of Internal Revenue
ABANDONMENTFacts
The Antecedents: Petitioners, Judges of the Regional Trial Court, sought to prohibit the Commissioner of Internal Revenue and the Financial Officer of the Supreme Court from deducting withholding taxes from their salaries. Procedural History: The Supreme Court en banc had previously reaffirmed the Chief Justice's directive to continue deducting withholding taxes from the salaries of the members of the Bench. The Petition: Petitioners argued that withholding taxes from their emoluments constitutes a decrease in their salaries, contrary to Section 10, Article VIII of the 1987 Constitution, which mandates that their salaries shall not be decreased during their continuance in office. They also contended that such deductions are anathema to the ideal of an independent judiciary.
Issue(s)
Whether the deduction of withholding taxes from the salaries of judicial officers constitutes a decrease or diminution of their salaries prohibited by Section 10, Article VIII of the 1987 Constitution. Whether the salaries of members of the Judiciary are exempt from income tax.
Ruling
The petition is dismissed. The salaries of Justices and Judges are properly subject to a general income tax law applicable to all income earners, and 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.
Ratio Decidendi
On the issue of whether the deduction of withholding taxes constitutes a decrease or diminution of salaries: The Court held that the clear intent of the Constitutional Commission was to delete the proposed express grant of exemption from income tax to members of the Judiciary. This was done to "give substance to equality among the three branches of Government." The deliberations expressly clarified that the salaries of members of the Judiciary would be subject to the general income tax applied to all taxpayers. Although this intent was not clearly set forth in the final text of the Constitution, the Court has since then authorized the continuation of the deduction of withholding tax from the salaries of the members of the Supreme Court and all other members of the Judiciary. The Court explicitly discarded the rulings in Perfecto vs. Meer and Endencia vs. David that declared the salaries of members of the Judiciary exempt from income tax and considered such payment as a diminution of their salaries. The Court reiterated that the payment of income tax by Justices and Judges does not fall within the constitutional protection against the decrease of their salaries during their continuance in office. On the issue of whether the salaries of members of the Judiciary are exempt from income tax: The Court found that the 1987 Constitution does not contain a provision similar to Section 6, Article XV of the 1973 Constitution, which specifically stipulated that "No salary or any form of emolument of any public officer or employee, including constitutional officers, shall be exempt from payment of income tax." However, the debates in the Constitutional Commission clearly negated the contention that the framers intended to revert to the original concept of "non-diminution" of salaries to include tax exemption. Commissioner Bernas' accepted amendment clarified that while the salary shall not be decreased, it "MAY BE SUBJECT TO GENERAL INCOME TAX." This was understood to mean that the doctrine in Perfecto vs. Meer and Endencia vs. David would no longer apply. The Court emphasized that the ascertainment of the framers' intent is crucial in constitutional construction, and their intent was to make the salaries of members of the Judiciary taxable. The Court concluded that it is plain that the Constitution authorizes Congress to pass a law fixing another rate of compensation for Justices and Judges, but such rate must be higher than that which they are receiving at the time of enactment, or if lower, it would be applicable only to those appointed after its approval. It would be a strained construction to read into the provision an exemption from taxation in light of the discussion in the Constitutional Commission. The Court accorded due respect to the intent of the people, through their representatives, that all citizens should bear their aliquot part of the cost of maintaining the government and share the burden of general income taxation equitably.
Main Doctrine
The salaries of members of the Judiciary are subject to general income tax laws, and the payment of such taxes does not constitute a decrease or diminution of their salaries prohibited by Section 10, Article VIII of the 1987 Constitution.