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Endencia v. David [GR L-6355-56, 31 August 1953]


En Banc, Montemayor (p): 6 concur

Facts: RA590 was enacted by Congress after the promulgation of the Court’s decision in Perfecto v. Meer. Section 13 of said act provided that “no salary wherever received by any public officer of the Republic of the Philippines shall be considered as exempt from the income tax, payment of which is hereby declared not to be a diminution of his compensation fixed by the Constitution or by law.”

This is a joint appeal from the decision of the CFI Manila declaring section 13 of RA 590 unconstitutional, and ordering Saturnino David as Collector of Internal Revenue to refund to Justice Pastor M. Endencia the sum of P1,744.45, representing the income tax collected on his salary as Associate Justice of the CA in 1951, and to Justice Fernando Jugo the amount of P2,345.46, representing the income tax collected on his salary from 1 January 1950 to 19 October 1950, as Presiding Justice of the CA, and from 20 October 1950 to 31 December 1950, as Associate Justice of the SC, without special pronouncement as to costs. The lower court, through Judge Higinio Macadaeg, held that the collection of income taxes on the salaries of the Justices was a diminution of their compensation, and ordered the refund of the taxes.

The Supreme Court affirmed the decision, affirming the ruling in Perferto v. Meer and holding the interpretation and application of laws belong to the Judiciary.

  1. Collection of income tax on salaries of judicial officers a diminution or decrease
    As held in the Perfecto case, judicial officers are exempt from the payment of income tax on their salaries, because the collection thereof by the Government was a decrease or diminution of their salaries during their continuance in office, a thing which is expressly prohibited by the Constitution. O’Malley v. Woodrought does not apply.
  2. Separation of powers
    Under the system of constitutional government, the Legislative department is assigned the power to make and enact laws. The Executive department is charged with the execution or carrying out of the provisions of said laws. But the interpretation and application of said laws belong exclusively to the Judicial department. And this authority to interpret and apply the laws extends to the Constitution. Before the courts can determine whether a law is constitutional or not, it will have to interpret and ascertain the meaning not only of said law, but also of the pertinent portion of the Constitution in order to decide whether there is a conflict between the two, because if there is, then the law will have to give way and has to be declared invalid and unconstitutional.
  3. Interpretation and application of Constitution and statutes belong to Judiciary
    The interpretation and application of the Constitution and of statutes is within the exclusive province and jurisdiction of the judicial department, and that in enacting a law, the Legislature may not legally provide therein that it be interpreted in such a way that it may not violate a Constitutional prohibition, thereby tying the hands of the courts in their task of later interpreting said statute, specially when the interpretation sought and provided in said statute runs counter to a previous interpretation already given in a case by the highest court of the land. In the case at bar, Section 13 of RA 590 interpreted or ascertained the meaning of the phrase “which shall not be diminished during their continuance in office,” found in section 9, Article VIII of the Constitution, referring to the salaries of judicial officers. This act of interpreting the Constitution or any part thereof by the Legislature is an invasion of the well-defined and established province and jurisdiction of the Judiciary. The Legislature under our form of government is assigned the task and the power to make and enact laws, but not to interpret them. This is more true with regard to the interpretation of the basic law, the Constitution, which is not within the sphere of the Legislative department. Allowing the legislature to interpret the law would bring confusion and instability in judicial processes and court decisions.
  4. Exemption from tax not intended to benefit judicial officers, but grounded on public policy
    The primary purpose of the prohibition against diminution was not to benefit the judges, but, like the clause in respect of tenure, to attract good and competent men to the bench and to promote that independence of action and judgment which is essential to the maintenance of the guaranties, limitations and pervading principles of the Constitution and to the administration of justice without respect to persons and with equal concern for the poor and the rich. Such being its purpose, it is to be construed, not as a private grant, but as a limitation imposed in the public interest; in other words, not restrictively, but in accord with its spirit and the principle on which it proceeds (Evans v. Gore). The independence of the judges is of far greater importance than any revenue that could come from taxing their salaries.
  5. Exception in abstract not unusual nor abhorrent as long as it is base on public policy or interest
    Considering exemption in the abstract, there is nothing unusual or abhorrent in it, as long as it is based on public policy or public interest. While all other citizens are subject to arrest when charged with the commission of a crime, members of the Senate and House of Representatives except in cases of treason, felony and breach of the peace are exempt from arrest, during their attendance in the session of the Legislature; and while all other citizens are generally liable for any speech, remark or statement, oral or written, tending to cause the dishonor, discredit or contempt of a natural or juridical person or to blacken the memory of one who is dead, Senators and Congressmen in making such statements during their sessions are extended immunity and exemption.
  6. Other persons also provided tax exemptions; Examples
    Persons, natural and juridical, are exempt from taxes on their lands, buildings and improvements thereon when used exclusively for educational purposes, even if they derive income therefrom. (Art. VI, Sec. 22 [3].) Holders of government bonds are exempted from the payment of taxes on the income or interest they receive therefrom (sec. 29 (b) [4], National Internal Revenue Code as amended by RA 566). Payments or income received by any person residing in the Philippines under the laws of the United States administered by the United States Veterans Administration are exempt from taxation. (RA 360). Funds received by officers and enlisted men of the Philippine Army who served in the Armed Forces of the United States, allowances earned by virtue of such services corresponding to the taxable years 1942 to 1945, inclusive, are exempted from income tax. (RA 210). The payment of wages and allowances of officers and enlisted men of the Armed Forces of the Philippines sent to Korea are also exempted from taxation. (RA 815). New and necessary industries are also exempted from taxation for a certain number of years. (RA 35). For reasons of public policy and public interest, a citizen may justifiably by constitutional provision or statute be exempted from his ordinary obligation of paying taxes on his income.