Source: https://supreme.justia.com/cases/federal/us/301/308/
Timestamp: 2019-04-25 18:38:24+00:00

Document:
"shall be held as a separate fund and paid to the Treasury of the Philippine Islands, but if at any time the Philippine Government provides by any law for any subsidy to be paid to the producers of copra, coconut oil, or allied products, no further payments to the Philippine Treasury shall be made under this subsection."
1. The imposition of the tax, in itself, is a valid exercise of the taxing power, consistent with the due process clause of the Fifth Amendment. P. 301 U. S. 312.
2. A valid tax may be bound to a valid appropriation of the moneys so realized, in the same Act of Congress. P. 301 U. S. 313.
3. Whether a tax serves any of the purposes enumerated in the Constitution, Art. I, § 8, cl. 1 -- "to pay the debts and provide for the common defence and general welfare of the United States" -- is a practical question addressed to the lawmaking power, whose conclusion must be accepted by the courts unless plainly without justification. P. 301 U. S. 313.
4. Owing to the peculiar relation of dependency of the Philippine Islands and their inhabitants on the United States, it is a moral obligation of the United States to protect, defend, and provide for their general welfare. P. 301 U. S. 313.
5. The tax and appropriation may be sustained as a discharge of a moral obligation amounting to a "debt" within the meaning of the taxing clause of the Constitution. P. 301 U. S. 314.
6. Congress, from the beginning, has acted upon the view that the term "debts" includes moral obligations. Id.
to provide, in a broad sense, for the public defense or the general welfare of the United States. P. 301 U. S. 315.
8. The determination of Congress to recognize the moral obligation of the Nation to make an appropriation as a requirement of justice and honor is obviously a matter of policy and discretion not open to judicial review, unless in circumstances such as are not present in this case. P. 301 U. S. 317.
9. It does not follow that, because a federal tax levied for the express purpose of paying the debts or providing for the welfare of a State might be invalid, such a tax for the uses of a territory or dependency, over which the United States has plenary power, would likewise be invalid. P. 301 U. S. 317.
10. The passage of the Philippine Independence Act of March 24, 1934, and the adoption and approval of the Constitution of the the Philippine Islands, did not withdraw the sovereignty of the United States from the Islands, nor make them foreign to the United States. P. 301 U. S. 319.
11. Congress has power to levy a tax with the collateral purpose of protecting industries of the United States. P. 301 U. S. 320.
12. Assuming the present tax levied for that purpose, it was for Congress to determine whether there was a moral duty to offset the burden of it on the Philippine production by an equivalent appropriation to the Philippine treasury. P. 301 U. S. 320.
14. The provision of the Constitution, Art. I, § 9, cl. 7, that "No money shall be drawn from the Treasury but in consequence of appropriations made by law" was intended as a restriction upon the disbursing authority of the Executive Department, and is without significance here. It means simply that no money can be paid out of the Treasury unless it has been appropriated by an Act of Congress. P. 301 U. S. 321.
15. The contention of the taxpayers in this case that there has been no constitutional appropriation of the proceeds of the tax, and that any attempted appropriation is bad, because the particular uses to which the appropriated money is to be put have not been specified, is without merit. P. 301 U. S. 321.
16. Payment of the proceeds of the tax to the Philippine Government, with no direction as to the expenditure thereof, was not an unconstitutional delegation of legislative power. P. 301 U. S. 321.
United States considered as a political body of States in union. P. 301 U. S. 323.
Certiorari, 300 U.S. 649, to review two judgments of the District Courts sustaining demurrers to the petitions filed by the Soap Company and another in actions to recover moneys exacted as taxes. The cases had been appealed to the Circuit Courts of Appeals, but had not been heard or submitted when the writs of certiorari issued.
of copra, coconut oil, or allied products, no further payments to the Philippine Treasury shall be made under this subsection."
Both petitioners are engaged in manufacturing soap, and at times stated in their petitions, used in its manufacture large quantities of coconut oil wholly the product of the Philippine Islands. In pursuance of § 602 1/2, they made returns and paid the amount of the tax as required by that section. Subsequently, each of them filed with the Bureau of Internal Revenue a claim for the refund of the tax on the ground that the imposition was not within the constitutional power of Congress. Both claims were denied, and petitions at law were filed in federal district courts to recover the sums paid. Demurrers were interposed attacking the sufficiency of the petitions, and these demurrers were sustained by the trial courts. Appeals were taken to the respective circuit courts of appeal named in the title, and we granted writs of certiorari before a hearing or submission in those courts, because of the importance to the Philippine Islands of an early final decision of the question.
of another; that the act does not impose a true tax, but is a regulatory measure outside the field of federal power; that it violates clause 7, § 9, of Art. I of the Constitution, which provides that "No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law;" that the payment in bulk of the entire proceeds of the tax to the Philippines, with no direction as to the expenditure thereof, constitutes an unlawful delegation of legislative power. In dealing with these contentions, we find it convenient to do so without following the precise order in which they have just been stated. And certain of them are so interrelated that they may be joined for consideration in the same subdivision of the opinion which follows.
federal constitutional purpose. In that view, the due process clause of the Fifth Amendment is not involved.
Second. Standing apart, therefore, the tax is unassailable. It is said to be bad because it is earmarked and devoted from its inception to a specific purpose. But if the tax, qua tax, be good, as we hold it is, and the purpose specified be one which would sustain a subsequent and separate appropriation made out of the general funds of the Treasury, neither is made invalid by being bound to the other in the same act of legislation. The only concern which we have in that aspect of the matter is to determine whether the purpose specified is one for which Congress can make an appropriation without violating the fundamental law. If Congress, for reasons deemed by it to be satisfactory, chose to adopt the quantum of receipts from this particular tax as the measure of the appropriation, we perceive no valid basis for challenging its power to do so.
We inquire first: is the proposed appropriation to the Philippine Treasury for a constitutional purpose?, since an affirmative answer to that question will establish the constitutional purpose of the tax. The pertinent taxing clause provides in general terms (Art. I, § 8, cl. 1) that taxes may be laid "to pay the Debts and provide for the common Defence and general Welfare of the United States." Primarily, and in a very high degree, whether a tax serves any of these purposes is a practical question addressed to the lawmaking department. And it will require a very plain case to warrant the courts in setting aside the conclusion of Congress in that regard. Compare Nicol v. Ames, 173 U. S. 509, 173 U. S. 514-516. Nevertheless, such plain cases may exist, and the question is whether this is one of them.
"I assume also that the obligations correlative to this great power are of the highest character, and that it is our unquestioned duty to make the interests of the people over whom we assert sovereignty the first and controlling consideration in all legislation and administration which concerns them, and to give them, to the greatest possible extent, individual freedom, self-government in accordance with their capacity, just and equal laws, and opportunity for education, for profitable industry, and for development in civilization."
Military and Colonial Policy of the United States 161, 162.
"A legislative practice such as we have here, evidenced not by only occasional instances, but marked by the movement of a steady stream for a century and a half of time, goes a long way in the direction of proving the presence of unassailable ground for the constitutionality of the practice, to be found in the origin and history of the power involved, or in its nature, or in both combined."
other cases in this Court, Emerson v. Hall, 13 Pet. 409; United States v. Price, 116 U. S. 43; Williams v. Heard, 140 U. S. 529. The last-cited case arose under an act of Congress in relation to the Alabama claims."
Later decisions of this Court have followed that view. United States v. Cook, 257 U. S. 523; Marion & R.V. Ry. Co. v. United States, 270 U. S. 280, 270 U. S. 284. The determination of Congress to recognize the moral obligation of the nation to make an appropriation as a requirement of justice and honor is obviously a matter of policy and discretion not open to judicial review unless in circumstances which here we are not able to find. United States v. Realty Co., supra, p. 163 U. S. 444.
powerless to appropriate money for its needs is to deny -- what the foregoing considerations forbid us to deny -- that the United States has in that regard the equivalent power of a state in comparable circumstances.
"All military, civil, and judicial powers necessary to govern the Philippine Islands . . . shall, until otherwise provided by Congress, be vested in such person and persons and shall be exercised in such manner as the President of the United States shall direct, for the establishment of civil government and for maintaining and protecting the inhabitants of said islands in the free enjoyment of their liberty, property, and religion."
of the national power over the Philippines, and the high character of the moral obligations which the possession of such power correlatively imposes. With the extension of power to the islands, our moral obligations may have grown less, but whether or to what extent this has been the case is a question for the determination of the political departments of the government.
But it is contended that the passage of the Philippine Independence Act of March 24, 1934, c. 84, 48 Stat. 456, and the adoption and approval of a constitution for the the Philippine Islands have created a different situation, and that, since then, whatever may have been the case before, the United States has been under no duty to make any financial contribution to the islands. Undoubtedly these acts have brought about a profound change in the status of the islands and in their relations to the United States, but the sovereignty of the United States has not been, and, for a long time, may not be, finally withdrawn. So far as the United States is concerned, the Philippine Islands are not yet foreign territory. By express provision of the Independence Act, we still retain powers with respect to our trade relations with the islands, with certain exceptions set forth particularly in the act. We retain powers with respect to their financial operations and their currency, and we continue to control their foreign relations. The power of review by this Court over Philippine cases, as now provided by law, is not only continued, but is extended to all cases involving the Constitution of the the Philippine Islands.
people now will be called upon to meet as one of its results. The existence and character of the consequent obligations and the extent of the relief, if any, which should be afforded by the United States in respect of them are matters not for judicial, but for Congressional, consideration and determination.
It is not improbable that a failure to exercise control over imports from the Philippines would injuriously affect the industries of this country; and, on the other hand, an exercise of the power to tax imports might prove injurious to the people of the islands. Congress, in passing the legislation here under consideration, is not forbidden to balance these respective probabilities. The tax itself, it is said, was imposed for the purpose of protecting certain industries in this country, and it is challenged on that ground. That Congress has power to levy a tax with the collateral purpose of thereby protecting the industries of the United States is no longer open to doubt. Hampton & Co. v. United States, 276 U. S. 394, 276 U. S. 411. But, in exercising the power here with that purpose, Congress may have concluded that it would thereby impose a hardship upon the Philippines which it was the moral duty of Congress to redress so far as possible. In that situation, we see no constitutional objection to a discharge of the duty by the appropriation of an amount equivalent to the tax in order to offset the anticipated burden. Certainly this Court cannot judicially declare that justice and fair dealing in respect of a people not yet completely independent of our authority does not warrant such action.
Nor do we see any objection to the plan because the payment of the funds is subject to the condition that the Philippine Government shall not provide for any subsidy to be paid to the Philippine producers of coconut oil and the other products named in § 602 1/2 of the act.
It is perfectly plain that, since Congress may levy the tax with the collateral purpose of protecting the industries of this country, it may, in appropriating the proceeds, put such restriction upon their use as will prevent the purpose from being nullified. This, we think, is the aim and the effect of the proviso.
Fourth. The contention that there has been no constitutional appropriation, or that any attempted appropriation is bad because the particular uses to which the appropriated money are to be put have not been specified, is without merit. The provision of the Constitution (clause 7, § 9, Art. 1) that, "No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law" was intended as a restriction upon the disbursing authority of the Executive department, and is without significance here. It means simply that no money can be paid out of the Treasury unless it has been appropriated by an act of Congress. Reeside v. Walker, 11 How. 272, 52 U. S. 291; 2 Story on the Constitution (4th Ed.) §§ 1348, 1349; 1 Willoughby on the Constitution, § 63, p. 105. We deem it unnecessary to elaborate the point. The petitions for certiorari, filed in January of the present year, inform us that none of the proceeds of the tax in question has been transmitted to the Philippine Treasury. Evidently the moneys in the form of a trust fund, as the government asserts, are still in the Treasury of the United States. If Congress has not made an appropriation, it may still do so (Head Money Cases, 112 U. S. 580, 112 U. S. 599-600); and, all other considerations aside, the interjection of the question into the present cases is premature.
needs. Compare United States v. Heinszen & Co., 206 U. S. 370, 206 U. S. 384-385. In dealing with the territories, possessions, and dependencies of the United States, this nation has all the powers of other sovereign nations, and Congress, in legislating, is not subject to the same restrictions which are imposed in respect of laws for the United States considered as a political body of states in union. Dorr v. United States, 195 U. S. 138, 195 U. S. 140-142.
Congress has power to create a local legislature for the Philippines, and it has done so. Congress has power to authorize the legislature to impose taxes for all the lawful needs of the islands, and to appropriate the proceeds for such uses and in such amounts as the legislature may determine (compare 61 U. S. Webb, 20 How. 176, 61 U. S. 182), and this it has done. Congress has power to appropriate the moneys here in question and cause them to be paid from the national treasury into the Treasury of the Philippine Islands, and for this it has provided. It would result in a strange anomaly now to hold that Congress had power to devolve upon the Philippine Government the authority to appropriate revenue derived from local taxation as the government saw fit, but that Congress was without power to confer similar authority in respect of moneys which lawfully will come into the Philippine Treasury from the Treasury of the United States or from other sources apart from taxation. It is true, as already appears, that the uses to which the money is to be put are not specified. But in all instances where funds shall come into the Philippine Treasury, we may indulge the presumption, in favor of a responsible and duly constituted legislative body, that the funds will be appropriated for public purposes, and not for private uses.
of the islands require it, and other queries directly or indirectly challenging the wisdom or necessity of the Congressional action are all matters, as we repeatedly have pointed out, with which the courts have nothing to do. We find the legislation to be free from constitutional infirmity, and there both our power and responsibility end.
* Together with No. 687, Haskins Bros. & Co. v. O'Malley, Collector of Internal Revenue. Certiorari to the Circuit Court of Appeals for the Eighth Circuit.
* Act March 8, 1902, c. 140, 32 Stat. 54; Act Aug. 5, 1909, c. 6, 36 Stat. 11, 84, 85; Act Oct. 3, 1913, c. 16, 38 Stat. 114, 193; Act Sept. 21, 1922, c. 356, 42 Stat. 858, 935; Act of June 17, 1930, c. 497, 46 Stat. 590, 686.

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