G.R. No. L-78780; July 23, 1987
DAVID G. NITAFAN, WENCESLAO M. POLO, and MAXIMO A. SAVELLANO, JR., petitioners, vs. COMMISSIONER OF INTERNAL REVENUE and THE FINANCIAL OFFICER, SUPREME COURT OF THE PHILIPPINES, respondents.

FACTS

Petitioners, who are Regional Trial Court Judges, filed a petition for prohibition to enjoin the Commissioner of Internal Revenue and the Financial Officer of the Supreme Court from deducting withholding taxes from their salaries. They argued that such tax deductions constitute a diminution of their salaries, which is prohibited by Section 10, Article VIII of the 1987 Constitution , which states that judicial salaries “shall not be decreased” during their continuance in office. They contended this protection is essential to safeguard judicial independence.
Prior to this petition, the Supreme Court had already addressed the issue administratively. On June 4, 1987, the Court en banc reaffirmed a directive for the Fiscal Management and Budget Office to continue deducting withholding taxes from the salaries of all members of the judiciary, including Supreme Court Justices. However, due to the filing of this petition, the Court deemed it necessary to resolve the legal issue definitively through a judicial pronouncement.

ISSUE

Whether the deduction of income tax from the salaries of members of the judiciary constitutes an unconstitutional diminution of their salaries under Section 10, Article VIII of the 1987 Constitution .

RULING

The Supreme Court dismissed the petition. The constitutional prohibition against decreasing judicial salaries does not exempt judges from the general obligation to pay income tax. The Court examined the intent of the framers of the 1987 Constitution by reviewing the records of the Constitutional Commission. The original draft proposal for Section 10, Article VIII explicitly provided that judicial salaries shall not be “diminished nor subjected to income tax.” This explicit exemption was deliberately deleted during the deliberations.
Commissioners objected to the tax exemption clause, arguing it violated principles of uniform taxation and equality among the three branches of government. Commissioner Rigos proposed deleting the phrase “nor subjected to income tax” to promote equality, and Commissioner Bernas accepted this amendment, clarifying that judicial salaries would be subject to the general income tax applied to all taxpayers. Although the final ratified text of the Constitution did not include a general provision (like that in the 1973 Constitution) stating that no public officer’s salary is exempt from income tax, the clear deliberative intent was to remove any special tax exemption for the judiciary.
Therefore, the payment of income tax is a general burden shared by all citizens and does not amount to a constitutionally forbidden decrease in salary. Consequently, the Court discarded its prior rulings in Perfecto vs. Meer and Endencia vs. David, which had held that taxing judicial salaries was an unconstitutional diminution. The salaries of justices and judges are subject to general income tax laws.