G.R. No. L-10951; February 14, 1916
K.S. YOUNG, ET AL., plaintiffs-appellees, vs. JAMES J. RAFFERTY, Collector of Internal Revenue, defendant-appellant.

FACTS:
The Collector of Internal Revenue issued Internal Revenue Circular Letter No. 467, which required every merchant and manufacturer subject to the percentage tax under Act No. 2339 to keep a daily record of sales in either the English or Spanish language. Failure to comply would subject the violator to criminal or administrative prosecution under the said Act. The plaintiffs, merchants affected by the circular, filed an action seeking to enjoin its enforcement. The lower court issued a preliminary injunction, which it later made permanent after trial on the merits. The Collector appealed.

ISSUE:
1. Whether the Collector of Internal Revenue was authorized under Act No. 2339 to issue a regulation requiring merchants to keep their daily sales records specifically in the English or Spanish language.
2. Whether injunction is a proper remedy to restrain the enforcement of the said circular.

RULING:
1. On the Validity of the Regulation: The Supreme Court ruled that the regulation requiring the use of English or Spanish was not authorized by law and was therefore invalid.
The Court recognized that under Sections 5 and 6(j) of Act No. 2339, the Collector had the general authority to prescribe the manner of keeping proper books and records to ensure efficient tax collection. This included the power to require a daily sales record in a bound book with a specific tabulated form.
However, the Court held that the mandate to use only English or Spanish exceeded this authority. The law did not prescribe any specific language. The required sales information could be accurately recorded in any language, including Chinese or local dialects. Imposing a language requirement created an unnecessary and onerous burden, particularly on Chinese and Filipino merchants who might not know English or Spanish, potentially costing them more than the tax itself to hire compliant record-keepers. The regulation was deemed not reasonably necessary for tax collection and was thus ultra vires.

2. On the Propriety of Injunction: The Supreme Court held that injunction was a proper remedy in this case.
The Court applied equitable principles, stating that an injunction may issue to restrain the enforcement of an invalid law or regulation where it would cause irreparable injury or lead to a multiplicity of suits.
Here, the circular affected thousands of merchants with identical interests. Each daily failure to comply constituted a separate offense, threatening a multitude of criminal prosecutions that would overwhelm the courts. An injunction provided a single, comprehensive, and efficacious remedy to avoid this multiplicity of suits and to settle the common question of the regulation’s validity for all affected parties once and for all.

DISPOSITIVE PORTION: The judgment of the lower court making the preliminary injunction permanent was AFFIRMED. Costs against the appellant.

CONCURRING OPINION:
Justice Carson concurred, emphasizing that the Collector’s authority was limited to regulations reasonably necessary for tax collection. He opined that the circular, in effect, required merchants to conduct and record transactions in an unknown language, which was an unreasonable overreach of power.