In the case of Puerto Rico v. Rubert Hermanos, Inc., 1939, the U.S Supreme Court ruled in favor of Puerto Rico. The dispute centered around a tax imposed by Puerto Rican law on foreign corporations doing business within its jurisdiction. Rubert Hermanos, Inc., a Cuban corporation that had been conducting business in Puerto Rico for several years without paying this tax, argued that it was exempt from such taxation under an existing treaty between Cuba and the United States which prohibited discriminatory taxes against Cuban businesses operating in US territories. However, the court held that since Puerto Rico is not considered part of "the territory" of the United States as defined by said treaty but rather an unincorporated territory with its own separate government and constitutionally granted powers to levy taxes; therefore it was not bound by this non-discrimination clause contained within said treaty between Cuba and USA. Henceforth ruling that Rubert Hermanos must pay these back-taxes owed to the Commonwealth Government.

In the dissenting opinion for Puerto Rico v. Rubert Hermanos, Inc., it was argued that the Supreme Court should not have jurisdiction over this case as it involves a dispute between private parties within Puerto Rico's local courts and does not involve any federal question or constitutional issue. The dissenting justices believed that the majority had misinterpreted previous rulings on similar cases and expanded their interpretation of "public rights" too broadly to include disputes involving public utilities in territories like Puerto Rico. They contended that such matters should be left to local authorities unless there is a clear violation of federal law or constitutionality at stake. Furthermore, they disagreed with the majority’s decision to overturn an established precedent set by Insular Cases which limited federal court intervention in territorial affairs only when fundamental personal rights were violated.