Act No. 2972 is interpreted to mean that persons and entities engaged in business in the Philippines must keep account books necessary for taxation purposes (specifically, sales books and other records and returns required by Bureau of Internal Revenue regulations) in English, Spanish, or a local dialect; this construction renders the Act constitutional as a valid fiscal measure.

• The case arose from the Philippine government's efforts to effectively collect sales and income taxes, particularly from Chinese merchants, many of whom kept their account books exclusively in Chinese, making inspection difficult for revenue agents.
• An earlier attempt by the Collector of Internal Revenue to mandate bookkeeping in English or Spanish via administrative circular was invalidated by the Supreme Court (Young vs. Rafferty) for exceeding administrative authority, prompting the Legislature to enact Act No. 2972.
• The Act faced significant opposition from the Chinese community and diplomatic channels, and its enforcement was initially suspended before being pursued, leading to the arrest of petitioner Yu Cong Eng and this challenge.

• Act No. 2972, enacted Feb 21, 1921, and effective Jan 1, 1923, made it unlawful for any person or entity engaged in business for profit in the Philippines to keep its account books in any language other than English, Spanish, or any local dialect.
• Petitioners, Chinese merchants representing themselves and approximately 12,000 others similarly situated, challenged the Act's constitutionality via a petition for prohibition and injunction.
• Respondents were the Collector of Internal Revenue, the Fiscal of Manila, and a Judge of the Court of First Instance of Manila.
• The Bureau of Internal Revenue (BIR) agents inspected the books of petitioner Yu Cong Eng, found they were kept only in Chinese, seized them, and referred the matter to the city fiscal.
• An information was filed against Yu Cong Eng in the CFI Manila for violating Act No. 2972, alleging his books kept only in Chinese hindered tax inspection; he was subsequently arrested.
• Chinese merchants represented about 60% of the total commercial business in the Philippines.
• Evidence indicated that a vast majority of Chinese merchants (estimated 90-99%) could not read, write, or understand English, Spanish, or local dialects sufficiently to keep books in those languages, and obtaining qualified bookkeepers was allegedly impossible for many, especially smaller businesses.
• The government presented evidence suggesting difficulties in tax collection due to unintelligible books, citing instances of under-declarations found when Chinese books were audited and the necessity of the law to protect public revenue.
• Prior to Act No. 2972, a BIR circular attempting similar regulation was invalidated by the Supreme Court in Young vs. Rafferty.
• The Philippine Legislature passed Act No. 2972 despite opposition and requests for repeal or modification, relying on BIR representations that it was crucial for preventing large-scale tax fraud.

• Act No. 2972 is unconstitutional as it violates the equal protection clause of the Jones Law (Philippine Organic Act) by discriminating against Chinese merchants.
• The Act violates the due process clause of the Jones Law because it is unreasonable, oppressive, confiscatory, and impossible for most Chinese merchants to comply with, thereby depriving them of liberty and property.
• The law constitutes an arbitrary interference with private business and lawful occupations.
• The law infringes upon the treaty rights accorded to Chinese subjects in the Philippines.
• The subject matter of Act No. 2972 is not sufficiently expressed in its title, violating procedural requirements for legislation.

• The Supreme Court should not exercise original jurisdiction via prohibition, as the constitutional question should first be raised and decided in the pending criminal case against Yu Cong Eng.
• Act No. 2972 is a valid exercise of the State's police power, aimed at preventing fraud, deceit, and cheating in commercial transactions and tax payments.
• The Act is a valid exercise of the State's power of taxation, necessary to ensure the effective assessment and collection of internal revenue taxes (sales tax, income tax) by facilitating the inspection of merchants' books.
• The requirement is reasonable and necessary because books kept in languages inaccessible to government examiners hinder tax enforcement and enable tax evasion.
• The alleged difficulty of compliance and oppressiveness of the law are exaggerated.

• Whether the Supreme Court should exercise its jurisdiction to rule on the constitutionality of Act No. 2972 in an original petition for prohibition.
• Whether Act No. 2972 violates the due process and equal protection clauses of the Philippine Organic Act (Jones Law).
• Whether Act No. 2972 is a valid exercise of the police power and/or the power of taxation.
• What is the proper interpretation and scope of Act No. 2972, specifically the phrase "its account books"?

• The Supreme Court held that it could properly exercise jurisdiction in this original action due to the extraordinary circumstances involving a new penal statute affecting numerous persons and extensive property rights, potentially leading to a multiplicity of suits.
• The Court ruled that Act No. 2972 is susceptible to multiple interpretations: a literal reading prohibiting all non-specified language books (likely unconstitutional), requiring duplicate books (potentially unsatisfactory), or requiring only tax-relevant books in specified languages.
• Applying the principle of statutory construction that courts should adopt an interpretation that upholds constitutionality, the Court construed Act No. 2972 to mean that only those account books necessary for tax inspection (consisting of sales books and other records and returns required by BIR regulations) must be kept in English, Spanish, or a local dialect.
• Under this construction, the Act is deemed a valid fiscal measure, reasonably related to the exercise of the power of taxation and police power (preventing tax fraud), and not unduly oppressive or violative of due process or equal protection.
• The law, as construed, does not prohibit merchants from keeping their primary or other account books in any language they choose (like Chinese) for their own convenience or business needs, as long as the required tax-related records are maintained in a permitted language.
• The title of the Act was found sufficient.
• The petition for prohibition was denied, and the temporary injunction previously issued was dissolved.

• Police Power: The inherent power of the state to enact regulations promoting public health, safety, morals, and general welfare. The Court acknowledged this as a potential basis but primarily justified the law under the taxing power, ensuring the means chosen (as construed) were not unduly oppressive, a key police power limitation (Lawton v. Steele test).
• Power of Taxation: The fundamental and broad power of the legislature to impose taxes for public purposes. The Court identified Act 2972 primarily as a fiscal measure enacted under this power to aid tax collection and prevent fraud, which heavily influenced its interpretation.
• Equal Protection: Constitutional guarantee that laws operate equally on all persons under like circumstances. Petitioners claimed discrimination; the Court's construction aimed to apply the law neutrally to all merchants regarding tax records, thus avoiding invalidation on this ground.
• Due Process: Constitutional guarantee against arbitrary deprivation of life, liberty, or property. Petitioners claimed the law was oppressive and impossible to comply with; the Court's restrictive interpretation limited the burden on merchants, finding it reasonably necessary for tax purposes and thus not violating due process.
• Presumption of Constitutionality: The principle that laws enacted by the legislature are presumed valid. This doctrine required the Court to favor an interpretation that saved the law from being declared unconstitutional.
• Statutory Construction (Saving Construction): When a statute is susceptible of two interpretations, one constitutional and one unconstitutional, the court must adopt the interpretation that upholds the law. This was the central doctrine applied by the Court to interpret "its account books" restrictively to mean only those required for tax inspection.
• Statutory Construction (Legislative Intent): Courts interpret statutes to ascertain and effectuate the legislature's purpose, considering the context, mischief aimed at, and policy objectives. The Court determined the intent behind Act 2972 was fiscal (tax collection and fraud prevention) and construed the law accordingly.
• Jurisdiction (Extraordinary Writs): While generally constitutional issues should be raised in lower courts, the Supreme Court may take original jurisdiction in exceptional cases (e.g., involving new laws, numerous parties, multiplicity of suits) via writs like prohibition. The Court invoked this exception to justify hearing the case directly.

• "It may be said to be an elementary, a fundamental, and a universal rule of construction, applied when considering constitutional questions, that when a law is susceptible of two constructions one of which will maintain and the other destroy it, the courts will always adopt the former."
• "Whenever a law can be so construed as to uphold it, it will be so construed although the construction which is adopted does not appear to be as natural as another construction."
• "We construe Act No. 2972 as meaning that any person, company, partnership, or corporation, engaged in commerce, industry, or any other activity for the purpose of profit in the Philippine Islands, shall keep its account books, consisting of sales books and other records and returns required for taxation purposes by regulations of the Bureau of Internal Revenue, in effect when this action was begun, in English, Spanish, or a local dialect. Agreeable to such construction, we hold Act No. 2972 valid and constitutional."
• "...it seeks to prohibit not only the Chinese but all merchants of whatever nationality from making entries in the books of account or forms subject to inspection for taxation purposes in any other language than either the English or Spanish language or a local dialect..." (Explaining the effect of the Court's construction).

• Young vs. Rafferty (33 Phil. 556): Referenced extensively as background, establishing that the Collector of Internal Revenue lacked authority via regulation to dictate bookkeeping language, leaving the matter to the Legislature. Distinguished because the current case involves a legislative act, not an administrative circular.
• Kwong Sing vs. City of Manila (41 Phil. 103): Referenced as upholding a municipal ordinance requiring laundry receipts in Spanish/English under police power. Distinguished based on the perceived greater burden and different justification (taxation vs. consumer protection) of Act 2972 before construction.
• Cadwallader-Gibson Lumber Co. vs. Del Rosario (26 Phil. 192): Cited to support the general rule that constitutionality should be raised first in the trial court, but also the exception allowing the Supreme Court to take original jurisdiction in extraordinary cases like this one.
• Lawton vs. Steele (152 U.S. 133): Cited for the standard test of valid police power regulation (public interest, reasonable means, not unduly oppressive), relevant to assessing the law's justification.
• Yick Wo vs. Hopkins (118 U.S. 356): Cited for the principle that aliens are protected by the Equal Protection clause.
• Barbier vs. Connolly (113 U.S. 27): Cited for the principle that Equal Protection allows reasonable classifications applied uniformly.
• Meyer vs. Nebraska (262 U.S. 390): Discussed (and relied upon by dissent) regarding liberty interests under Due Process, specifically language rights. Implicitly distinguished by the majority's construction focusing on taxation.
• The King vs. Lau Kiu (7 Hawaii 489): Discussed (and relied upon by dissent) as a case striking down a similar bookkeeping language law in Hawaii. Implicitly distinguished by the majority's saving construction based on the taxation power.
• United States vs. Coombs (12 Peters 72): Cited as authority for the rule of construction favoring constitutionality when a statute is ambiguous.
• Board of Supervisors of Grenada County vs. Brown (112 U.S. 261): Cited as further authority for adopting a construction that harmonizes a statute with the Constitution.
• In re Guariña (24 Phil. 37): Cited as Philippine precedent for construing statutes to avoid conflict with higher law (Acts of Congress/Constitution).
• Fuentes vs. Director of Prisons (46 Phil. 22): Cited as recent Philippine precedent where the Court adopted a non-literal construction to uphold a law's validity.

• Act No. 2972 (Chinese Bookkeeping Law): The statute under review.
• Philippine Organic Act of 1916 (Jones Law), Secs. 3 (Due Process & Equal Protection clauses), 8, 12 (Legislative Power).
• Code of Civil Procedure, Sec. 516 (Supreme Court jurisdiction in prohibition).
• Code of Commerce, Arts. 33 et seq. (Merchant's required books).
• Administrative Code, Secs. 1453 et seq. (Sales Tax); Sec. 1424(j) (BIR regulatory power).
• Act No. 2339 (Former Internal Revenue Law), Secs. 5, 6(j).
• Act No. 2833 & Act No. 2926 (Income Tax Law).
• Act No. 2998 (Postponed effective date of Act 2972).
• Treaty Rights (Most Favored Nation for Chinese): Mentioned by petitioners.