Act No. 2972 of the Philippine Legislature, which prohibits keeping business account books in any language other than English, Spanish, or a local dialect, is unconstitutional because it violates the Due Process and Equal Protection clauses of the Philippine Bill of Rights by arbitrarily interfering with the liberty and property of Chinese merchants without reasonable justification under the police power.

The Philippine Legislature enacted Act No. 2972, primarily targeting Chinese merchants who constituted a significant portion of the commercial sector (around 60%) and traditionally kept their books in Chinese. The stated purpose was to facilitate tax inspection and prevent fraud, as revenue officials struggled to examine books kept in Chinese. This led to concerns about tax evasion but also significant opposition from the Chinese community, who argued the law would effectively drive them out of business due to their inability to understand or use books in the permitted languages.

• Petitioners Yu Cong Eng (a wholesale lumber merchant) and Co Liam (a small general merchandise retailer) were Chinese merchants in Manila who kept their business account books exclusively in Chinese, as they did not understand English, Spanish, or any local dialect.
• Act No. 2972 of the Philippine Legislature made it unlawful for any person, company, partnership, or corporation engaged in commerce in the Philippines to keep its account books in any language other than English, Spanish, or a local dialect, punishable by fine or imprisonment.
• Yu Cong Eng was criminally charged with violating the Act, arrested, and his books were seized.
• Petitioners, representing themselves and approximately 12,000 other Chinese merchants similarly situated (who conducted about 60% of the total commercial business in the Islands), sought prohibition against the Act's enforcement.
• Evidence showed that the vast majority of Chinese merchants could not comply with the Act without employing bookkeepers and translators, placing them at the mercy of employees, rendering them ignorant of their business status, and potentially driving many, especially small retailers, out of business.
• The Act was primarily directed at Chinese merchants due to difficulties faced by tax authorities in inspecting Chinese-language books, although the government struggled to hire competent Chinese-speaking inspectors.
• Attempts to repeal or modify the Act in the Philippine Legislature had failed despite concerns raised by officials like Governor General Wood and protests from various groups.

• The Act, if enforced literally, deprives petitioners and other Chinese merchants of their liberty and property without due process of law, violating Section 3 of the Philippine Autonomy Act (Philippine Bill of Rights).
• The Act denies Chinese merchants the equal protection of the laws, as it disproportionately affects them compared to other merchants.
• Petitioners are unable to comply with the law due to their lack of knowledge of the permitted languages, and hiring compliant bookkeepers would be impractical, costly, and make them vulnerable to fraud.
• Prohibiting them from keeping books in Chinese, even duplicate sets, would prevent them from understanding and managing their own businesses, effectively driving them out of business.
• The Act violates rights guaranteed under the treaty between the United States and China.

• The Act is a valid exercise of legislative power necessary for the government to effectively collect taxes and prevent fraud, as officials cannot properly inspect books kept in Chinese.
• The Act should be construed not as a complete prohibition on Chinese books, but as requiring merchants to also keep necessary books (like records of sales) for tax inspection purposes in one of the permitted languages.
• This interpretation (the "third construction" adopted by the Philippine Supreme Court) renders the law reasonable and constitutional, serving the governmental purpose without being unduly oppressive.
• The difficulty in tax collection from Chinese merchants due to language barriers justifies the legislative measure.

• Whether Act No. 2972, prohibiting the keeping of account books in languages other than English, Spanish, or a local dialect, violates the Due Process and Equal Protection clauses of the Philippine Bill of Rights.
• Whether the construction adopted by the Supreme Court of the Philippine Islands, interpreting the Act to merely require the keeping of certain necessary books for tax inspection in a permitted language alongside Chinese books, is a permissible judicial interpretation or constitutes impermissible judicial legislation.
• Whether a court can narrow the scope of a broadly worded penal statute to cure its potential unconstitutionality, especially when the plain language indicates a clear prohibition.

• The U.S. Supreme Court reversed the decision of the Philippine Supreme Court, holding Act No. 2972 unconstitutional.
• The Court interpreted the Act according to its plain language, finding it clearly prohibits the keeping of account books in Chinese, rather than merely requiring additional books in other languages.
• This prohibition was found to be arbitrary and oppressive, violating the Due Process clause by depriving Chinese merchants of the liberty to conduct their business effectively (as their Chinese books were essential for understanding their affairs) and damaging their property rights.
• The Act also violated the Equal Protection clause as it was primarily directed at and disproportionately burdened Chinese merchants, denying them a means essential to their livelihood available to others.
• The Court rejected the Philippine Supreme Court's "saving construction," stating that courts cannot rewrite a statute or substitute amendment for construction to save it from constitutional infirmity, especially a penal statute; doing so would constitute judicial legislation and violate principles against vagueness in criminal law.
• The requirement must be reasonable; while the government can mandate record-keeping for tax purposes, completely prohibiting merchants from keeping records in the only language they understand goes beyond legitimate police power.

• Due Process of Law (Philippine Bill of Rights, equivalent to U.S. Constitution): Defined as protecting individuals from arbitrary deprivation of life, liberty, or property. The Court applied it by finding the Act's prohibition on keeping books in Chinese was an arbitrary interference with the liberty of Chinese merchants to conduct their business and manage their property, as these books were essential ("their eyes") to their operations.
• Equal Protection of the Laws (Philippine Bill of Rights, equivalent to U.S. Constitution): Defined as requiring that similarly situated persons be treated alike under the law. The Court applied it by concluding the Act, though general on its face, was clearly aimed at Chinese merchants and imposed a burden essential to their business operations not placed on others, thus denying them equal protection.
• Police Power: Defined as the state's authority to enact laws to protect public health, safety, morals, and general welfare. The Court acknowledged the government's interest in tax collection but held that the means chosen (complete prohibition of Chinese books) were unduly oppressive and arbitrary, exceeding the reasonable bounds of police power.
• Statutory Construction (Limits of Judicial Interpretation vs. Legislation): Defined as the process of interpreting and applying legislation. The Court emphasized that while courts should construe statutes to uphold constitutionality if reasonably possible, they cannot rewrite plain statutory language or change a prohibition into a limited mandate; doing so usurps the legislative function. This was applied to reject the Philippine Supreme Court's interpretation of Act No. 2972.
• Void for Vagueness (in Penal Statutes): Implicitly invoked when discussing the rejected construction. The principle that a penal statute must define the criminal offense with sufficient definiteness that ordinary people can understand what conduct is prohibited. The Court noted that changing the Act from a clear prohibition to an indefinite mandate (requiring unspecified "necessary" books) would create vagueness, violating due process.
• Separation of Powers: The principle that judicial power is distinct from legislative power. The Court invoked this by stating that limiting the statute's plain meaning to save it would be making a new law, which is the legislature's role, not the court's.

• "We can not give any other meaning to the Bookkeeping Act than that which its plain language imports, making it a crime for any one in the Philippine Islands engaged in business to keep his account books in Chinese."
• "...it is not within the police power of the Philippine Legislature, because it would be oppressive and arbitrary, to prohibit all Chinese merchants from maintaining a set of books in the Chinese language, and in the Chinese characters, and thus prevent them from keeping advised of the status of their business and directing its conduct."
• "As the petitioner Yu Cong Eng well said in his examination, the Chinese books of those merchants who know only Chinese... are their eyes in respect of their business. Without them, such merchants would be a prey to all kinds of fraud and without possibility of adopting any safe policy."
• "But it is very clear that amendment may not be substituted for construction, and that a court may not exercise legislative functions to save the law from conflict with constitutional limitation."
• "To limit this statute in the manner now asked for would be to make a new law, not to enforce the old one. This is no part of our duty." (Quoting United States v. Reese)
• "The legislature may not, under the guise of protecting the public interests, arbitrarily interfere with private business or impose unusual and unnecessary restrictions upon lawful occupations." (Quoting Lawton v. Steele)

• Cadwallader-Gibson Lumber Company v. Del Rosario (26 Phil. Rep. 192): Cited to note the usual procedure for challenging a criminal statute's validity (in trial court), but distinguished because the Philippine Supreme Court exercised discretion to hear this prohibition case due to widespread impact.
• Ex parte Young (209 U.S. 123), Truax v. Raich (239 U.S. 33), Wilson v. New (243 U.S. 332): Cited by analogy for the Philippine Supreme Court's exercise of jurisdiction in prohibition to promptly decide the validity of a new Act with broad impact.
• Young v. Rafferty (33 Phil. Rep. 556): Cited for historical context regarding a previous attempt by the Collector of Internal Revenue to require books in Spanish/English and for statistical data on Chinese merchants.
• Connally v. General Construction Co. (269 U.S. 385), United States v. Cohen Grocery Co. (255 U.S. 81), International Harvester Co. v. Kentucky (234 U.S. 216): Cited for the principle that statutes requiring acts so indefinitely described that people must guess at their meaning violate due process (void for vagueness).
• United States v. Reese (92 U.S. 214): Cited as key precedent establishing that courts cannot limit the general language of a penal statute to only its constitutionally permissible applications; the statute must stand or fall as written.
• Trade Mark Cases (100 U.S. 82): Cited alongside Reese to reinforce that courts cannot narrow a statute's scope (e.g., applying a general trademark law only to interstate commerce) to save it from invalidity.
• Butts v. Merchants & Miners Transportation Co. (230 U.S. 126): Cited to show that if a statute is void because it covers subjects beyond legislative power, it cannot be saved by applying it only to subjects within that power, especially if the language is all-inclusive.
• Civil Rights Cases (109 U.S. 3): Referenced in the discussion of Butts as the case establishing the limits of federal power under the Civil Rights Act of 1875.
• Cami v. Central Victoria, Ltd. (268 U.S. 469), Diaz v. Gonzales (261 U.S. 102): Cited for the principle that the U.S. Supreme Court defers to Philippine courts on local law/custom, but distinguished here.
• Philippine Sugar Co. v. Philippine Islands (247 U.S. 385): Cited to establish that the U.S. Supreme Court can exercise independent judgment on the construction of Philippine statutes, especially those based on U.S. models or involving fundamental rights, and is not bound by the local court if it clearly erred.
• Serra v. Mortiga (204 U.S. 470): Cited to affirm that the guarantees in the Philippine Bill of Rights (Due Process, Equal Protection) are interpreted consistently with their meaning in the U.S. Constitution.
• Kepner v. United States (195 U.S. 100): Cited alongside Serra for the principle that U.S. constitutional guarantees extended to the Philippines carry the same meaning as in the U.S.
• Lawton v. Steele (152 U.S. 133): Cited for the test of valid police power regulation: it must serve public interest and the means must be reasonably necessary and not unduly oppressive.
• Holden v. Hardy (169 U.S. 366): Cited for the principle that courts review whether legislative action under police power is reasonable or merely an excuse for unjust discrimination or oppression.
• Meyer v. Nebraska (262 U.S. 390): Cited as analogous precedent where a state law forbidding teaching foreign languages was struck down as an arbitrary infringement on liberty under the Due Process clause.
• Pierce v. Society of Sisters (268 U.S. 510): Cited alongside Meyer and Truax as examples where legislative attempts arbitrarily interfering with lawful occupations or choices violate due process.
• Adams v. Tanner (244 U.S. 590): Cited for the principle that potential abuses in a business do not justify its destruction or unduly oppressive regulation if it's a useful calling; regulation, not prohibition, is the appropriate response.

• Act No. 2972, Philippine Legislature (The Chinese Bookkeeping Act): The statute whose validity was the central issue of the case. Sections 1 (prohibition), 2 (penalty), and 3 (effective date) are discussed.
• Philippine Code of Civil Procedure, § 516: Cited as granting the Philippine Supreme Court concurrent original jurisdiction in prohibition.
• Philippine Autonomy Act of Congress (Jones Law), August 29, 1916, c. 416, sec. 3 (39 Stat. 546): The source of the Philippine Bill of Rights, specifically the Due Process and Equal Protection clauses invoked by petitioners.
• Philippine Administrative Code, §§ 1453, et seq.; Act 3065: Mentioned regarding the sales tax requiring quarterly returns.
• Philippine Administrative Code, section 1424(j); Act No. 2339, §§ 5, 6: Cited regarding the Collector of Internal Revenue's authority to require record-keeping for tax purposes.
• Spanish Code of Commerce, Article 33: Mentioned as the origin of requirements for merchants to keep certain books (inventory, day book, ledger, etc.).
• Treaty between the United States and China: Invoked by petitioners as granting them rights violated by the Act.
• U.S. Constitution, Fifth Amendment: Referenced via Serra as analogous source of double jeopardy protection extended to Philippines.
• U.S. Constitution, Sixth Amendment: Referenced via Serra as analogous source of substantial guarantees (excluding jury trial) extended to Philippines.
• U.S. Constitution, Fourteenth Amendment: Referenced via Serra as analogous source of Due Process and Equal Protection clauses extended to Philippines.
• U.S. Constitution, Fifteenth Amendment: Discussed in relation to United States v. Reese concerning limits on Congressional power regarding voting rights.
• Civil Rights Act of March 1, 1875 (U.S.): Discussed in relation to the Civil Rights Cases and Butts v. Merchants & Miners Transp. Co. regarding its application and constitutionality.