Source: https://supreme.justia.com/cases/federal/us/271/500/
Timestamp: 2019-04-20 16:17:12+00:00

Document:
1. The Supreme Court of the Philippine Islands has discretionary jurisdiction, under § 516, Philippine Code of Civil Procedure, to determine the validity of a new penal statute seriously affecting numerous persons and extensive property interests, by a writ of prohibition against criminal proceedings under it in the Court of First Instance, rather than await judgment in those proceedings and determine the question on review, in the usual way. P. 271 U. S. 507.
2. Act No. 2972 of the Philippine legislature, approved February 21, 1921, making it a crime, punishable by fine and imprisonment, for any person engaged in business for profit in the Islands to keep his account books in any language other than English, Spanish, or any local dialect must be taken as absolutely prohibiting Chinese merchants from keeping any accounts in their own language and writing. P. 271 U. S. 517.
3. This is made plain by the history as well as the language of the enactment. P. 271 U. S. 513.
4. The Act is not susceptible of a construction limiting its requirement to the keeping of such account books in English, Spanish, or the Filipino dialects, as would be reasonably adapted to the needs of the taxing officials in preventing and detecting evasions of the local sales tax and other taxes, but leaving the Chinese merchant free to keep books also in Chinese. P. 271 U. S. 515.
5. The duty of a court to construe an act of legislation in harmony with the fundamental law does not authorize the court to depart from the plain terms and intention of a statute, and thus in effect to make a new law. P. 271 U. S. 518.
6. Especially is such a departure objectionable when the result is to introduce uncertainty into the meaning of a highly penal statute. Id.
7. The court may not, in a criminal statute reduce its generally inclusive terms by construction so as to limit its application to that class of cases which it was within the power of the legislature to enact, and thus save the statute from invalidity. P. 271 U. S. 522.
8. On a question of the construction of the Philippine Code of Procedure adopted by the United States Philippine Commission, this Court, in reviewing a decision of the Supreme Court of the Philippines, may exercise its independent judgment. P. 271 U. S. 522.
9. The application of American constitutional limitations to a Philippine statute dealing with the rights of persons living under the government established there by the United States is not a local one, especially when the persons are the subject of another sovereignty with which the United States has made a treaty for protection of their rights. P. 271 U. S. 523.
10. The limitations in the Philippine Bill of Rights are to be enforced in the light of the construction by this Court of such limitations as recognized by it since the foundation of our government. P. 271 U. S. 523.
11. In view of the history of the Islands, the large and important mercantile interests of Chinese residing there, who are unacquainted with other languages than their own, the above Act of the legislature, in prohibiting them from maintaining a set of account books in Chinese, and thus preventing them from keeping advised of their business and directing its conduct, is not within the police power, but is arbitrary and discriminatory, and deprives them of liberty and property without due process of law and denies them the equal protection of the laws, in violation of the Philippine Bill of Rights. P. 271 U. S. 524.
Certiorari to a judgment of the Supreme Court of the Philippine Islands denying an original petition for a writ of prohibition against officials in the Philippine Islands to prevent enforcement by criminal proceedings of an Act of the legislature making it an offense to keep business account books in any language except English, Spanish, or a Filipino dialect.
their own behalf, and on behalf of all the other Chinese merchants in the Philippines, filed the petition against the fiscal or prosecuting attorney of Manila, and the collector of internal revenue engaged in the prosecution, and against the judge presiding.
By the Code of Civil Procedure of the Philippine Islands, § 516, the Philippine Supreme Court is granted concurrent jurisdiction in prohibition with courts of first instance over inferior tribunals or persons, and original jurisdiction over courts of first instance, when such courts are exercising functions without or in excess of their jurisdiction. It has been held by that court that the question of the validity of a criminal statute must usually be raised by a defendant in the trial court and be carried regularly in review to the Supreme Court. Cadwallader-Gibson Lumber Co. v. Del Rosario, 26 Philippine Reports 192. But, in this case, where a new act seriously affected numerous persons and extensive property rights and was likely to cause a multiplicity of actions, the Supreme Court exercised its discretion to bring the issue of the Act's validity promptly before it and decide it in the interest of the orderly administration of justice. The court relied by analogy upon the cases of Ex parte Young, 209 U. S. 123, Truax v. Raich, 239 U. S. 33, and Wilson v. New, 243 U. S. 332. Although objection to the jurisdiction was raised by demurrer to the petition, this is now disclaimed on behalf of the respondents, and both parties ask a decision on the merits. In view of broad powers in prohibition granted to that court under the Island Code, we acquiesce in the desire of the parties.
"No. 2972. An act to provide in what languages account books shall be kept, and to establish penalties for its violation. "
"Be it enacted by the Senate and House of Representatives of the Philippines in legislature assembled and by the authority of the same:"
"Section 1. It shall be unlawful for any person, company, or partnership or corporation engaged in commerce, industry or any other activity for the purpose of profit in the Philippine Islands, in accordance with existing law, to keep its account books in any language other than English, Spanish, or any local dialect."
"Sec. 2. Any person violating the provisions of this act shall, upon conviction, be punished by a fine of not more than ten thousand pesos, or by imprisonment for not more than two years, or both."
"Sec. 3. This act shall take effect on November 1st, nineteen hundred and twenty-one."
This was amended as to its date by a subsequent act, and it did not take effect until January 1, 1923. Various efforts were made to repeal the act or amend it, but they were defeated.
Chinese language and the language or dialect in which such books might be kept, in order to enable the petitioner to ascertain by hearsay the contents thereof; that he would be completely at the mercy of such employees, who, if dishonest, might cheat and defraud him of the proceeds of his business, and involve him in criminal or civil liability in its conduct; that, under the provisions of the Act, he is prohibited from even keeping a duplicate set of accounts in his own language, and would, in the event of the enforcement of the law, be compelled to remain in total ignorance of the status of his business, and that the enforcement of the Act would drive the petitioner and many other Chinese merchants in the Philippines, who do 60 percent of the business of the Islands and who are in like circumstance, out of business.
The petition avers that the other petitioner in this case, Co Liam, is a Chinese person and conducts a small general merchandise business in Manila, commonly known in the Philippines as a Chinese tienda; that he carries a stock of goods of about 10,000 pesos, or $5,000; that his sales taxes amount to from 40 to 60 pesos per quarter; that he neither reads, writes, nor understands the English or Spanish language or any local dialect; that he keeps books of account of his small business in Chinese, the only language known to him, without the assistance of a bookkeeper; that he has been losing money for some time in the operation of his business, but that, even in prosperous times, his profits could never be sufficient to justify the employment of a Filipino bookkeeper, and that, without the opportunity to keep Chinese books, be would be kept completely ignorant of the changing condition of his business were he compelled to keep his books in English, Spanish, or a local dialect, and that the enforcement of the Act would drive him and all the small merchants or tienda keepers in the Islands who are Chinese out of business.
The petitioners aver that the Act, if enforced, will deprive the petitioners, and the 12,000 Chinese merchants whom they represent, of their liberty and property without due process of law, and deny them the equal protection of the laws, in violation of the Philippine Autonomy Act of Congress of August 29, 1916, c. 416, § 3, 39 Stat. 546.
An amendment to the petition set up the rights of the petitioners under the treaty now in force between the United States and China, alleging that, under it, the petitioners are entitled to the same rights, privileges, and immunities as the citizens and subjects of Great Britain and Spain, and that the treaty has the force and effect of a law of Congress, which this law violates.
An answer was filed by the Fiscal which is a general denial of the averments of the petition as to the effect of the law. He avers that the law is valid and necessary, and is only the exercise of proper legislative power, because the government of the Philippine Islands depends upon the taxes and imposts which it may collect in order to carry out its functions, and the determination of whether the mercantile operations of the merchants are or are not subject to taxation, as well as the fixing of its amount, cannot and ought not to be left to the mercy of those who are to bear it; that, due to the inability of the officials of the internal revenue to revise and check up properly the correctness of the books of account which the Chinese merchants keep in their own language, the public treasury loses every year very large sums.
court had exceeded its powers and, by legislation, made it a different act.
There are two tax laws from which a substantial part of the revenue of the Islands is derived. There is a sales tax of 1 1/2 percent on the gross sales of businesses and occupations, for which a quarterly return is required. Administrative Code, § 1453, et seq., Act 3065. There is also an income tax. The annual revenue accruing from the sales tax is roughly 10,000,000 pesos, and that from the income tax about 2,000,000 pesos.
Another statute is the so-called Code of Commerce, brought over from the Spanish Code, the thirty-third article of which provides that all merchants shall keep a book of inventories and balances, a day book, a ledger, a copy book of telegrams, letters, etc., and such other books as may be required by special laws. Under the provisions of that Code and the internal revenue law, the collector of internal revenue is authorized to require the keeping of daily records of sales, and makes regulations prescribing the manner in which the proper books, invoices and other papers should be kept and entries made therein by the persons subject to the sales tax. R. 1164, Act No. 2339, §§ 5, 6; Administrative Code, § 1424(j).
Islands speak English. It is a polygot situation, and presents many difficulties in government. Comparatively few of the Chinese speak English or Spanish, or the native dialects, with any facility at all, and less are able to write or to read either. But, with capacity and persistence in trade, by signs and by a patois, they communicate with the Filipinos and others with whom they do business, making their calculations with the abacus, an instrument for mechanical calculation, and keeping their books in Chinese characters in ink, applied by a brush to strong paper, securely bound. They have a scientific system of double entry bookkeeping.
now in dispute, and evidence was introduced by the present collector to show that the proportion of taxes paid by them in 1918 and 1922 was much less, and that examination of the books of 400 Chinese taxpayers showed a very considerable loss, probably due to evasion and fraud.
The evidence of the president of the largest company in the Philippine Islands, an American who has been 21 years in business in the Philippines, as to the business activities of the Chinese was accepted by the court below as reliable. He says that the Chinese system of distribution covers the Philippine Islands through the medium of middlemen in the principal centers, and then by the small Chinese storekeepers throughout the Islands, extending even to the remotest barrios or small settlements. The Chinese are the principal distributing factors in the Philippines of imported goods, and the principal gatherers of goods for exportation in the same remote places. He said that, if they were driven out of business, there would be no other system of distribution available throughout the Islands, for the reason that there are not Filipino merchants sufficiently numerous, with resources and experience, to provide a substitute.
of the difficulty of determining what their sales tax should be. There has always been a sales tax in the Philippines. It is a method of taxation to which the people are used. Dr. Pardo de Tavera, the Philippine librarian and historian, testified in this case that efforts to enforce such a law as this in the Spanish times against the Chinese failed, and became a dead letter. Governor General Harrison made a general recommendation looking to a law requiring the Chinese to keep books in other than Chinese language, so that their business might be investigated, saying that, until it was done, taxes would be evaded. Since the passage of the law in 1921, as already said, its enforcement has been postponed. Governor General Wood has sought to have the law repealed or changed in such a way that exceptions might be made to it, or that the books of the Chinese should be kept on stamped paper with the pages registered, for the purpose of making it difficult for the Chinese taxpayer to change the records of his business. Protests from the Chinese government, from members of the insular committee of the House of Representatives, from Chambers of Commerce in the United States and elsewhere were brought to the attention of the Philippine Legislature, and the repeal or modification of the law came up for discussion, but all proposed changes were defeated. The great weight of the evidence sustains the view that the enforcement by criminal punishment of an inhibition against the keeping of any Chinese books of account by Chinese merchants in the Islands would seriously embarrass all of them, and would drive out of business a great number.
negligible, and would operate without especial burden on other classes of foreign residents. The Supreme Court, in its opinion in this case, refers to the Act as popularly known as the Chinese Bookkeeping Act.
"We come to the last question suggested, a construction of Act No. 2972 which allows the court legally to approve it."
"A literal application of the law would make it unlawful for any Chinese merchant to keep his account books in any language other than English, Spanish, or a local dialect. The petitioners say the law is susceptible of that interpretation. But such interpretation might, and probably would, cause us to hold the law unconstitutional."
as the first. Fraud is possible in any language. As approximation to governmental convenience and an approximation to equality in taxation is the most which may be expected."
"A third construction which is permissible in view of the history of the legislation and the wording of the statute is that the law only intended to require the keeping of such books as were necessary in order to facilitate governmental inspection for tax purposes. It has not escaped our notice that the law does not specify what books shall be kept. It is stated by competent witnesses that a cash book, a journal, and a ledger are indispensable books of account for an efficient system of accounting, and that, in the smaller shops, even simpler entries showing merely the daily records of sales and record of purchases of merchandise would be sufficient. The keeping of records of sales, and possibly further records of purchases, in English, Spanish, or a native dialect, and the filling out of the necessary forms would serve the purpose of the government while not being oppressive. Actually, notations in English, Spanish, or a dialect of all sales in sales books, and of data in other specified forms are insisted upon by the Bureau of Internal Revenue, although, as appears from Exhibit 2, it is doubtful if all Chinese merchants have complied with these regulations. The faithful observance of such rules by the Chinese is not far removed from the offer of cooperation oft made for them by the petitioners of the 'translation of the account books' oft mentioned and explained by the respondents."
argue that the law has this meaning. Or does the phrase 'its account books' mean that the persons, company, partnership, or corporation shall keep duplicate sets of account books, one set in Chinese and the other a translation into English, Spanish, or any local dialect? Counsel for the respondents urge this construction of the law upon the court. Or does the phrase 'its account books' mean that the person, company, partnership, or corporation must keep such account books as are necessary for taxation purposes? This latter interpretation occurs to us as a reasonable one, and as best safeguarding the rights of the accused."
The court in effect concludes that what the legislature meant to do was to require the keeping of such account books in English, Spanish, or the Filipino dialects as would be reasonably adapted to the needs of the taxing officers in preventing and detecting evasion of taxes, and that this might be determined from the statutes and regulations then in force. What the court really does is to change the law from one which by its plain terms forbids the Chinese merchants to keep their account books in any language except English, Spanish, or the Filipino dialects, and thus forbids them to keep account books in the Chinese, into a law requiring them to keep certain undefined books in the permitted languages. This is to change a penal prohibitive law to a mandatory law of great indefiniteness to conform to what the court assumes was, or ought to have been, the purpose of the legislature, and which in the change would avoid a conflict with constitutional restriction.
It would seem to us, from the history of the legislation and the efforts for its repeal or amendment, that the Philippine Legislature knew the meaning of the words it used, and intended that the Act as passed should be prohibitory, and should forbid the Chinese merchants from keeping the account books of their business in Chinese.
Had the legislature intended only what the Supreme Court has construed it to mean, why should it not have amended it accordingly? Apparently the legislature thought the danger to the revenue was in the secrecy of the Chinese books, and additional books in the permitted languages would not solve the difficulty.
One of the strongest reasons for not making this law a nose of wax, to be changed from that which the plain language imports, is the fact that it is a highly penal statute authorizing sentence of one convicted under it to a fine of not more than 10,000 pesos, or by imprisonment for not more than two years, or both. If we change it to meet the needs suggested by other laws and fiscal regulations and by the supposed general purpose of the legislation, we are creating by construction a vague requirement, and one objectionable in a criminal statute. We are likely thus to trespass on the provision of the Bill of Rights that the accused is entitled to demand the nature and cause of the accusation against him, and to violate the principle that a statute which requires the doing of an act so indefinitely described that men must guess at its meaning violates due process of law. Connally v. 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; United States v. Reese, 92 U. S. 214, 92 U. S. 219.
restriction upon its operation to make it valid that is not in any way suggested by its language. In several cases, this Court has pointed out that such strained construction, in order to make a law conform to a constitutional limitation, cannot be sustained.
In United States v. Reese, 92 U. S. 214, the question for decision arose on a demurrer to an indictment against inspectors of municipal election for refusing to receive and count the vote of a colored man. The power of Congress to forbid such an act was confined under the Fifteenth Amendment to a refusal to receive such a vote from a colored man on account of his race, color, or previous condition of servitude, but the section under which the indictment was brought did not specifically confine the offense to a refusal for such a reason or to such discrimination, although, in previous sections of the Act, there was a general purpose disclosed in the Act to enforce the Fifteenth Amendment. The demurrer was sustained on the ground that the section was invalid.
whole or fall altogether. The language is plain. There is no room for construction unless it be as to the effect of the Constitution. The question, then, to be determined is whether we can introduce words of limitation into a penal statute so as to make it specific when, as expressed, it is general only. It would certainly be dangerous if the legislature could set a net large enough to catch all possible offenders, and leave it to the courts to step inside and say who could be rightfully detained and who should be set at large. This would, to some extent, substitute the judicial for the legislative department of the government."
And again, the Chief Justice said: "To limit this statute in the manner now asked for would be to make a new law, not to enforce an old one. This is no part of our duty."
than they are manifestly intended to bear in order that crimes may be punished which are not described in language that brings them within the constitutional power of that body."
alike in all places within that jurisdiction be said to indicate a purpose to make a law which should be applicable to a minor part of that jurisdiction and inapplicable to the major part? Besides, it is not to be forgotten that the intended law is both penal and criminal,"
citing the case of United States v. Reese, and the Trade-Mark Cases, supra, as well as United States v. Harris, 106 U. S. 629, 106 U. S. 642; Baldwin v. Franks, 120 U. S. 678, 120 U. S. 685; James v. Bowman, 190 U. S. 127, 190 U. S. 140; United States v. Ju Toy, 198 U. S. 253, 198 U. S. 262; Illinois Central Railroad Co. v. McKendree, 203 U. S. 514, 203 U. S. 529-530; Karem v. United States, 121 F. 250, 259.
"It is also urged that, since the construction of § 285 is a matter of purely local concern, we should not disturb the decision of the Supreme Court of the Philippine Islands. This Court is always disposed to accept the construction which the highest court of a territory or possession has placed upon a local statute. Phoenix Ry. Co. v. Landis, 231 U. S. 578. But that disposition may not be yielded to, where the lower court has clearly erred. Carrington v. United States, 208 U. S. 1."
The question of applying American constitutional limitations to a Philippine or Porto Rican statute dealing with the rights of persons living under the government established by the United States is not a local one, especially when the persons affected are subjects of another sovereignty with which the United States has made a treaty promising to make every effort to protect their rights. The fundamental law we administer in the Philippine bill of rights was a marked change from that which prevailed in the Islands before we took them over, and is to be enforced in the light of the construction by this Court of such limitations as it has recognized them since the foundation of our own government. In its application here, we must determine for ourselves the necessary meaning of a statute officially enacted in English and its conformity with fundamental limitations.
We cannot give any other meaning to the Bookkeeping Act than that which its plain language imports, making it a crime for anyone in the Philippine Islands engaged in business to keep his account books in Chinese. This brings us to the question whether the law, thus construed to mean what it says, is invalid.
"It is settled that, by virtue of the Bill of Rights, enacted by Congress for the Philippine Islands, 32 Stat. 691, 692, that guaranties equivalent to the due process and equal protection of the law clause of the Fourteenth Amendment, the twice in jeopardy clause of the Fifth Amendment, and the substantial guaranties of the Sixth Amendment, exclusive of the right to trial by jury, were extended to the Philippine Islands. It is further settled that the guaranties which Congress has extended to the Philippine Islands are to be interpreted as meaning what the like provisions meant at the time when Congress made them applicable to the Philippine Islands. Kepner v. United States, 195 U. S. 100."
"For the purpose, therefore, of passing on the errors assigned, we must test the correctness of the action of the court below by substantially the same criteria which we would apply to a case arising in the United States and controlled by the bill of rights expressed in the amendments to the Constitution of the United States."
with their extensive and important business long established, of their liberty and property without due process of law, and denies them the equal protection of the laws.
Of course, the Philippine government may make every reasonable requirement of its taxpayers to keep proper records of their business transactions in English or Spanish or Filipino dialect by which an adequate measure of what is due from them in meeting the cost of government can be had. How detailed those records should be we need not now discuss, for it is not before us. But we are clearly of opinion that 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 and do not know English and Spanish (and they constitute a very large majority of all of them in the Islands) 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. It would greatly and disastrously curtail their liberty of action, and be oppressive and damaging in the preservation of their property. We agree with the Philippine Supreme Court in thinking that the statute construed as we think it must be construed is invalid.
upon individuals. 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. In other words, its determination as to what is a proper exercise of its police powers is not final or conclusive, but is subject to the supervision of the courts."
"The question in each case is whether the legislature has adopted the statute in exercise of a reasonable discretion, or whether its action be a mere excuse for an unjust discrimination, or the oppression or spoliation of a particular class."
the public interest, by legislative action which is arbitrary or without reasonable relation to some purpose within the competency of the state to effect. Determination by the legislature of what constitutes proper exercise of police power is not final or conclusive, but is subject to supervision by the courts."
The same principle is laid down in Pierce v. Society of Sisters, 268 U. S. 510, in Truax v. Raich, 239 U. S. 33, and in Adams v. Tanner, 244 U. S. 590, in which this Court has held legislative attempts arbitrary and oppressively to interfere with the liberty of the individual in the pursuit of lawful occupations to involve a lack of due process.
"Because abuses may, and probably do, grow up in connection with this business is adequate reason for hedging it about by proper regulations. But this is not enough to justify destruction of one's right to follow a distinctly useful calling in an upright way. Certainly there is no profession, possibly no business, which does not offer peculiar opportunities for reprehensible practices, and, as to every one of them, no doubt, some can be found quite ready earnestly to maintain that its suppression would be in the public interest. Skillfully directed agitation might also bring about apparent condemnation of any one of them by the public. Happily for all, the fundamental guaranties of the Constitution cannot be freely submerged if and whenever some ostensible justification is advanced and the police power invoked."
citizens of the United States in their employment against noncitizens of the United States," and provided that an employer of more than five workers at any one time in that state should not employ less than 80 percent qualified electors or native-born citizens, and that any employer who did so should be subject upon conviction to the payment of a fine and imprisonment. It was held that such a law denied aliens an opportunity of earning a livelihood and deprived them of their liberty without due process of law, and denied them the equal protection of the laws. As against the Chinese merchants of the Philippines, we think the present law which deprives them of something indispensable to the carrying on of their business, and is obviously intended chiefly to affect them, as distinguished from the rest of the community, is a denial to them of the equal protection of the laws.
* The opinion was announced by MR. JUSTICE HOLMES, the CHIEF JUSTICE being absent.

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 § 285
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