In the 1923 case of Trinidad v. Sagrada Orden de Predicadores, the U.S Supreme Court ruled on a dispute involving tax exemption for religious organizations in the Philippines. The Insular Collector of Internal Revenue had imposed taxes on properties owned by Sagrada Orden de Predicadores, a Catholic order, which claimed that its properties were exempt from taxation under Spanish law still effective at that time. However, after examining both American and Philippine laws regarding tax exemptions for religious institutions, the court concluded that only those properties used directly and exclusively for religious purposes could be exempted from taxation. Therefore it upheld most of the taxes levied against Sagrada Orden's non-religious-use property but invalidated those applied to their convents and churches.

In the dissenting opinion for Trinidad v. Sagrada Orden, Justice McReynolds disagreed with the majority's ruling that a religious order was not exempt from taxation under Philippine law. He argued that the tax exemption should be interpreted broadly to include all property used for religious purposes, including those owned by religious orders like Sagrada Orden de Predicadores. In his view, this interpretation would align more closely with both American and Spanish legal traditions regarding church property and taxation. Furthermore, he contended that it was unjust to impose taxes on an organization whose primary purpose is charitable work and spiritual guidance rather than profit-making activities.