In the case of Rafferty v. Smith, Bell & Company, Limited (1921), the U.S Supreme Court was tasked with determining whether a tax imposed by the Philippine Islands on dividends received from corporations engaged in business within its territory violated due process rights under U.S law. The plaintiff, Smith, Bell & Co., argued that they were being double-taxed because their income had already been taxed once as corporate profit before it was distributed to them as dividends. However, Collector of Internal Revenue for the Philippines Mr. Rafferty contended that this taxation did not violate any constitutional provisions and should be upheld. The court sided with Mr. Rafferty and held that there was no violation of due process rights under U.S law since these taxes were levied by a territorial government rather than directly by Congress itself - thus falling outside direct federal jurisdiction or control over domestic taxation matters within states or territories themselves. This decision affirmed that territorial governments have broad powers to levy taxes without violating constitutional protections against double jeopardy or other forms of unfair treatment under American jurisprudence.

In the dissenting opinion for Rafferty v. Smith, Bell & Company, Limited (1921), Justice McReynolds disagreed with the majority's interpretation of Section 1400 of the Philippine Tariff Law. He argued that this section was not intended to impose a tax on foreign corporations doing business in the Philippines but rather aimed at preventing such corporations from escaping taxation by claiming exemption under treaties between their home countries and Spain or other nations. According to him, if Congress had intended to levy a tax on these companies' gross receipts as interpreted by the majority, it would have done so explicitly through clear language in legislation instead of leaving it up to judicial interpretation. Furthermore, he contended that interpreting Section 1400 as imposing an income tax could lead to double taxation since these companies were already subject to income taxes under existing laws.