In Perez v. Fernandez (1905), the U.S Supreme Court was tasked with deciding on a dispute regarding property rights in Puerto Rico following the Spanish-American War. The plaintiff, Perez, claimed ownership of certain properties based on titles granted by Spain before 1898 when Puerto Rico became a territory of the United States after the war. However, these claims were contested by Fernandez who argued that under American law and jurisdiction, he held rightful ownership to those properties. The court ruled in favor of Fernandez stating that upon acquisition of new territories like Puerto Rico from foreign nations such as Spain, existing private property rights are generally respected unless explicitly revoked or altered by Congress. Therefore since there had been no congressional action altering pre-existing Spanish land grants at that time; they remained valid under American rule. This case is significant because it established an important precedent for how property rights would be handled in newly acquired territories and emphasized respect for local customs and laws until officially changed through legislative means.

The dissenting opinion in Perez v. Fernandez argued that the majority's decision to uphold a tax on foreign bills of exchange was incorrect. The dissent contended that such a tax was not within the power of Puerto Rico's legislative authority, as it violated provisions set forth by Congress in the Foraker Act. This act established civil government and free commerce between Puerto Rico and the United States after Spain ceded Puerto Rico to America following the Spanish-American War. According to this view, imposing taxes on foreign bills of exchange would hinder free trade between nations, contradicting both international law principles and U.S federal laws promoting unrestricted commercial relations with other countries. Therefore, they believed that such taxation should be considered unconstitutional under American law governing territories like Puerto Rico.