Hooven and Allison co. v. Evatt, 324 U.S. 652 (1945)
This is one of the VERY few cases that explains the meaning of the term “United States”. It is thus extremely important in discerning WHICH “United States” is meant in the context of the Internal Revenue Code. This case dealt with EXTERNAL excise taxation of imports under Article 1, Section 8, Clause 1 of the constitution. Thus, it was not entirely relevant to INTERNAL taxation within the nation “United States*” such as that addressed by Internal Revenue Code Subtitle A.
The court defined “United States” as follows:
The term “United States” may be used in any one of several senses.
[1] It may be merely the name of a sovereign occupying the position analogous to that of other sovereigns in the family of nations.
[2] It may designate the territory over which the sovereignty of the United States extends, 672*672 or
[3] it may be the collective name of the states which are united by and under the Constitution.[6]
When Brown v. Maryland, supra, was decided, the United States was without dependencies or territories outside its then territorial boundaries on the North American continent, and the Court had before it only the question whether foreign articles brought into the State of Maryland could be subjected to state taxation. It seems plain that Chief Justice Marshall, in his reference to imports as articles brought into the country, could have had reference only to articles brought into a state which is one of the states united by and under the Constitution, and in which alone the constitutional prohibition here involved is applicable.
The relation of the Philippines to the United States, taken as the collective name of the states which are united by and under the Constitution, is in many respects different from the status of those areas which, when the Constitution was adopted, were brought under the control of Congress and which were ultimately organized into states of the United States. See Balzac v. Porto Rico, 258 U.S. 298, 304-305, and cases cited. Hence we do not stop to inquire whether articles brought into such territories or brought from such territories into a state, could have been regarded as imports, constitutionally immune from state taxation. We confine the present discussion to the question whether such articles, brought from the Philippines and introduced into the United States, are imports so immune.
We have adverted to the fact that the reasons for protecting from interference, by state taxation, the constitutional 673*673 power of the national government to collect customs duties, apply equally whether the merchandise brought into the country is of foreign origin or not. The Constitution has not made the foreign origin of articles imported the test of importation, but only their origin in a place over which the Constitution has not extended its commands with respect to imports and their taxation. Hence our question must be decided, not by determining whether the Philippines are a foreign country, as indeed they have been held not to be within the meaning of the general tariff laws of the United States, Fourteen Diamond Rings v. United States, 183 U.S. 176; cf. De Lima v. Bidwell, 182 U.S. 1; Dooley v. United States, 182 U.S. 222, and within the scope of other general laws, Faber v. United States, 221 U.S. 649; cf. Huus v. New York & P.R.S.S. Co., 182 U.S. 392; Gonzales v. Williams, 192 U.S. 1; West India Oil Co. v. Domenech, 311 U.S. 20, but by determining whether they have been united governmentally with the United States by and under the Constitution.
That our dependencies, acquired by cession as the result of our war with Spain, are territories belonging to, but not a part of, the Union of states under the Constitution, was long since established by a series of decisions in this Court beginning with The Insular Tax Cases in 1901; De Lima v. Bidwell, supra; Dooley v. United States, supra, 182 U.S. 222; Downes v. Bidwell, 182 U.S. 244; Dooley v. United States, 183 U.S. 151; and see also Public Utility Commissioners v. Ynchausti & Co., 251 U.S. 401, 406-407; Balzac v. Porto Rico, supra. This status has ever since been maintained in the practical construction of the Constitution by all the agencies of our government in dealing with our insular possessions. It is no longer doubted that the United States may acquire territory by conquest or by treaty, and may govern it through the exercise of the power of Congress conferred by § 3 of Article IV of the Constitution “to dispose of and make all needful Rules and Regulations 674*674 respecting the Territory or other Property belonging to the United States.” Dooley v. United States, supra, 183 U.S. at 157; Dorr v. United States, 195 U.S. 138, 149; Balzac v. Porto Rico, supra, 305; Cincinnati Soap Co. v. United States, 301 U.S. 308, 323.
In exercising this power, Congress is not subject to the same constitutional limitations, as when it is legislating for the United States. See Downes v. Bidwell, supra; Hawaii v. Mankichi, 190 U.S. 197; Dorr v. United States, supra; Dowdell v. United States, 221 U.S. 325, 332; Ocampo v. United States, 234 U.S. 91, 98; Public Utility Commissioners v. Ynchausti & Co., supra, 406-407; Balzac v. Porto Rico, supra. And in general the guaranties of the Constitution, save as they are limitations upon the exercise of executive and legislative power when exerted for or over our insular possessions, extend to them only as Congress, in the exercise of its legislative power over territory belonging to the United States, has made those guaranties applicable. See Balzac v. Porto Rico, supra. The constitutional restrictions on the power of Congress to deal with articles brought into or sent out of the United States, do not apply to articles brought into or sent out of the Philippines. Despite the restrictions of §§ 8 and 9 of Article I of the Constitution, such articles may be taxed by Congress and without apportionment. Downes v. Bidwell, supra. It follows that articles brought from the Philippines into the United States are imports in the sense that they are brought from territory, which is not a part of the United States, into the territory of the United States, organized by and under the Constitution, where alone the import clause of the Constitution is applicable.
The status of the Philippines as territory belonging to the United States, but not constitutionally united with it, has been maintained consistently in all the governmental relations between the Philippines and the United 675*675 States. Following the conquest of the Philippines, they were governed for a period under the war power. After annexation by the Treaty of Paris of December 10, 1898, military government was succeeded by a form of executive government. By the Spooner Amendment to the Army Appropriation Bill of March 2, 1901, c. 803, 31 Stat. 895, 910, it was provided that “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 . . .” On July 1, 1902 Congress provided for a complete system of civil government by the original Philippine Organic Act, c. 1369, 32 Stat. 691. Step by step Congress has conferred greater powers upon the territorial government, and those of the federal government have been diminished correspondingly, although Congress retains plenary power over the territorial government until such time as the Philippines are made independent. This process culminated in the Act of March 24, 1934, c. 84, 48 Stat. 456, providing for the independence of the islands. The adoption by the Philippines and approval by the United States of a constitution for the Commonwealth of the Philippine Islands, as provided by the Act, have prepared the way for their complete independence.
The Act of 1934 made special provisions for the relations between the two governments pending the final withdrawal of sovereignty of the United States from the Philippines and in particular provided for a limit on the number and amount of articles produced or manufactured in the Philippine Islands that might be “exported” to the United States free of duty. § 6. It provided for the complete withdrawal and surrender of all right of possession, 676*676 supervision, jurisdiction, control or sovereignty of the United States over the Philippines on the 4th of July following the expiration of ten years from the date of the inauguration of the new government, organized under the Constitution provided for by the Independence Act.[7] § 10 (a). The new Philippine Constitution was adopted on February 8, 1935, and the new government under it was inaugurated on November 14, 1935. By the provisions of the Independence Act, the United States retained certain powers with respect to our trade relations with the Islands, with respect to their financial operations and currency, and the control of their foreign relations. The power of review by this Court of Philippine cases is continued and extended to all cases involving the Constitution of the Commonwealth of the Philippine Islands. § 7 (6). Thus by the organization of the new Philippine government under the constitution of 1935, the Islands have been given, in many aspects, the status of an independent government, which has been reflected in its relations as such with the outside world.[8]
677*677 In the meantime, and ever since The Insular Tax Cases, supra, Congress has often treated as imports, articles brought to the United States from the Philippines. By the Act of August 29, 1916, c. 416, 39 Stat. 548, 48 U.S.C. § 1042, the territorial government of the Philippines was authorized to enact tariff laws. The Sugar Quota Law, 7 U.S.C. § 608a (1), defined as imports the amounts of sugar permitted to be brought into the United States from the Philippines, and prohibited such importation in excess of prescribed quotas. The Act of June 14, 1935, c. 240, 49 Stat. 340, 48 U.S.C. § 1236a, provided for restriction of the amount of hard fibers and its products which could be brought annually from the Philippines to the United States. See also 48 U.S.C. § 1236. And the Independence Act, supra, 48 U.S.C. § 1236 (a) (b), also regulated the amount of “export tax” which might be levied by the Philippines on articles shipped to the United States from the Philippine Islands.[9]
The Independence Act, while it did not render the Philippines foreign territory, Cincinnati Soap Co. v. United States, supra, 318-320, treats the Philippines as a foreign country for certain purposes. In 48 U.S.C. § 1238 (a) (1), it established immigration quotas for Filipinos coming to the United States, as if the Philippines were a separate country, and in that connection extended to Filipinos the immigration laws relating to the exclusion or expulsion of aliens. It also provided, 48 U.S.C. § 1238 (a) (2), that citizens of the Philippine Islands who are not citizens of the United States shall be considered as if they were aliens. For purposes of 8 U.S.C. §§ 154 and 156, relating to deportation, the Philippine Islands are declared to be a foreign country. 48 U.S.C. § 1238 (a) (4). Foreign 678*678 service officers of the United States may be assigned to the Philippines, and are to be considered as stationed in a foreign country. 48 U.S.C. § 1238a. And the Independence Act, § 6, 48 Stat. 456, 460, provides that “when used in this section in a geographical sense, the term `United States’ includes all Territories and possessions of the United States, except the Philippine Islands, the Virgin Islands, American Samoa, and the island of Guam.” As we have said, the Philippines have frequently dealt with other countries as a sovereignty distinct from the United States.
The United States acquired the Philippines by cession without obligation to admit them to statehood or incorporate them in the Union of states or to make them a part of the United States, as distinguished from merely belonging to it. As we have seen, they are not a part of the United States in the sense that they are subject to and enjoy the benefits or protection of the Constitution, as do the states which are united by and under it. In particular, the constitutional provisions governing imports and exports and their taxation, do not extend to articles brought into or out of the Philippines. The several acts of Congress providing for the government of the Philippines have not altered their status in these respects, and Congressional legislation governing trade relations of the United States with the Philippines has not only been consistent with that status, but has often treated articles brought from the Philippines to the United States as imports. Our tariff laws in their practical operation have in general placed merchandise brought from the Philippines into the United States in the same relationship to the constitutional taxing power of the national government and the states as articles brought here from foreign countries.
The national concern in protecting national commercial relations, by exempting imports from state taxation, would seem not to be essentially different or less in the 679*679 case of merchandise brought from the Philippines, which are not included in the territory organized under the Constitution, but for which we have assumed a national responsibility, than in the case of articles originating on the high seas or in foreign countries. As we have said, the reasons for protecting from state taxation articles thus brought into the territorial United States are the same in either case. The advantages and disadvantages, if any, which result from the tax immunity, are inherent in the import clause. But those advantages and disadvantages in the case of the Philippines are no more beyond the reach of Congress than in the case of other imports. Congress is left free by the terms of the import clause to remove the prohibition of state taxation of imports and with it the advantages or disadvantages, whatever they may be, arising from the tax immunity. Congress, through the commerce clause, possesses the same power of control of state taxation of all merchandise moving in interstate or foreign commerce. And Congress is free, as in the case of other imports, to regulate the flow of merchandise from the Philippines into the United States by the imposition of either customs duties or internal revenue taxes.
We conclude that practical as well as theoretical considerations and the structure of our constitutional system require us to hold that articles brought from the Philippines into the United States are imports, subject to the constitutional provisions relating to imports both because, as was said in Brown v. Maryland, they are brought into the United States, and because the place from whence they are brought is not a part of the United States in the constitutional sense to which the provisions with respect to imports are applicable.
[Hooven & Allison v. Evatt, 324 U.S. 652, 671-273 (1945); SOURCE: https://scholar.google.com/scholar_case?case=15188855763817953191]
___________________
FOOTNOTES:
[6] Treaty of Paris, December 10, 1898, 30 Stat. 1754:
“Article II. Spain cedes to the United States the island of Porto Rico and other islands now under Spanish sovereignty in the West Indies, and the island of Guam in the Marianas or Ladrones.
“Article III. Spain cedes to the United States the archipelago known as the Philippine Islands, and comprehending the islands lying within the following line: . . .”
For other authorities dealing with this on this site see: