B-89725, OCT. 4, 1955

B-89725: Oct 4, 1955

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INC.: REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 16. 000 PESOS REPRESENTS RENTALS ALLEGED TO BE DUE FOR USE AND OCCUPANCY BY THE ARMED FORCES OF THE UNITED STATES OF CERTAIN BUILDINGS OWNED BY YOU WHICH WERE SITUATED WITHIN THE CAMP ELDRIDGE MILITARY RESERVATION. SUSTAINED THE DISALLOWANCE OF YOUR CLAIM ON THE BASIS THAT THE USE AND OCCUPANCY OF THE BUILDINGS BY THE ARMED FORCES FOLLOWING THE RETAKING OF THE PHILIPPINES WAS A PART OF NECESSARY MILITARY OPERATIONS IN CONNECTION WITH THE WAR AND WAS NOT A TAKING OF PRIVATE PROPERTY FOR PUBLIC USE FOR WHICH JUST COMPENSATION IS REQUIRED TO BE PAID UNDER THE FIFTH AMENDMENT OF THE CONSTITUTION OF THE UNITED STATES. YOU CITE NUMEROUS CASES TO SUPPORT YOUR CONTENTION THAT AFTER THE AREA IN WHICH THE BUILDINGS WERE LOCATED BECAME SECURE THE ARMED SERVICES SHOULD HAVE EITHER VACATED THE BUILDINGS OR PAID COMPENSATION FOR THEIR USE.

B-89725, OCT. 4, 1955

TO PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, INC.:

REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 16, 1955, REQUESTING RECONSIDERATION OF OUR DECISION B-89725, DATED NOVEMBER 29, 1954, WHICH SUSTAINED THE GENERAL ACCOUNTING OFFICE SETTLEMENT DATED APRIL 11, 1950, THAT DISALLOWED YOUR CLAIM.

YOUR CLAIM FOR 105,000 PESOS REPRESENTS RENTALS ALLEGED TO BE DUE FOR USE AND OCCUPANCY BY THE ARMED FORCES OF THE UNITED STATES OF CERTAIN BUILDINGS OWNED BY YOU WHICH WERE SITUATED WITHIN THE CAMP ELDRIDGE MILITARY RESERVATION, LOS BANOS, LAGUNA, PHILIPPINES, FROM MARCH 25, 1945, TO NOVEMBER 25, 1947.

OUR DECISION OF NOVEMBER 29, 1954, SUSTAINED THE DISALLOWANCE OF YOUR CLAIM ON THE BASIS THAT THE USE AND OCCUPANCY OF THE BUILDINGS BY THE ARMED FORCES FOLLOWING THE RETAKING OF THE PHILIPPINES WAS A PART OF NECESSARY MILITARY OPERATIONS IN CONNECTION WITH THE WAR AND WAS NOT A TAKING OF PRIVATE PROPERTY FOR PUBLIC USE FOR WHICH JUST COMPENSATION IS REQUIRED TO BE PAID UNDER THE FIFTH AMENDMENT OF THE CONSTITUTION OF THE UNITED STATES.

IN YOUR REQUEST FOR REVIEW, YOU CITE NUMEROUS CASES TO SUPPORT YOUR CONTENTION THAT AFTER THE AREA IN WHICH THE BUILDINGS WERE LOCATED BECAME SECURE THE ARMED SERVICES SHOULD HAVE EITHER VACATED THE BUILDINGS OR PAID COMPENSATION FOR THEIR USE. YOU ALSO STATE THAT SEPTEMBER 2, 1945, THE DATE OF THE JAPANESE FORMAL SURRENDER, IS THE LAST POSSIBLE DATE IT COULD BE CLAIMED THAT THE BUILDINGS WERE NEEDED AS A PART OF AN ESSENTIAL MILITARY OPERATION. YOU FURTHER STATE THAT THE USE AND OCCUPANCY WAS A DIRECT TAKING FOR WHICH YOU ARE ENTITLED TO COMPENSATION WITHOUT ANY DEDUCTION FOR REPAIRS AND IMPROVEMENTS OR ANY CONSIDERATION OF THE FACT THAT THE CONDITION OF THE BUILDINGS WOULD HAVE PRECLUDED YOUR USE OF THE BUILDINGS EVEN IF THEY WERE MADE AVAILABLE BY THE ARMED SERVICES.

ASIDE FROM THE QUESTION AS TO WHETHER THERE EXISTS ANY LEGAL BASIS FOR PAYMENT OF RENTAL DURING THE PERIOD THE GOVERNMENT OCCUPIED YOUR BUILDINGS, IT IS OUR VIEW THAT, NOTWITHSTANDING THE FACT THE GOVERNMENT DID NOT OCCUPY THE BUILDINGS UNDER THE FORMAL LEASE OR OTHER EXPRESS CONTRACT, IN THE DETERMINATION OF ANY AMOUNT WHICH PROPERLY COULD BE PAID, THERE NECESSARILY IS FOR CONSIDERATION THE PROVISIONS OF SECTION 322 OF THE ACT OF JUNE 30, 1932, 47 STAT. 412, AS AMENDED BY THE ACT OF MARCH 3, 1933, 47 STAT. 1517, 40 U.S.C. 278A. THIS VIEW IS CONSISTENT WITH THE PRIOR HOLDINGS OF THE ACCOUNTING OFFICERS OF THE GOVERNMENT. SECTION 322 OF THE ACT OF JUNE 30, 1932, EXPRESSLY PROVIDES THAT "NO APPROPRIATION SHALL BE OBLIGATED OR EXPENDED" FOR THE RENT OF ,ANY BUILDING" OR PART OF A BUILDING TO BE OCCUPIED FOR GOVERNMENT PURPOSES AT A RENTAL IN EXCESS OF THE PER ANNUM RATE OF 15 PERCENTUM "OF THE FAIR MARKET VALUE OF THE RENTED PREMISES AT DATE OF THE LEASE.' THIS SECTION WAS AMENDED BY SECTION 15 OF THE ACT OF MARCH 3, 1933, SO AS TO APPLY ONLY "WHERE THE RENTAL TO BE PAID SHALL EXCEED $2,000 PER ANNUM.' THUS, AS $2,000 IS 15 PERCENT OF $13,333, WHERE THE ANNUAL RENTAL UNDER ANY GOVERNMENT LEASE NOT EXEMPTED FROM THE LIMITATION OF THE ABOVE REFERRED-TO STATUTORY PROVISION IS IN EXCESS OF $2,000, EVIDENCE IS REQUIRED TO ESTABLISH THAT THE FAIR MARKET VALUE IS PROPORTIONATELY IN EXCESS OF $13,333. IN THIS PARTICULAR INSTANCE, THE RECORD SHOWS THAT AFTER COMPETITIVE BIDDING, THE GOVERNMENT SOLD THE BUILDINGS INVOLVED TO YOU ON MARCH 11, 1937, FOR THE SUM OF 11,310 PESOS OR THE EQUIVALENT OF $5,655 IN UNITED STATES DOLLARS. THE RECORD ALSO SHOWS THAT THE TOTAL ASSESSED VALUATION OF THE BUILDINGS IN NOVEMBER 1938, FOR TAX PURPOSES, WAS 41,240 PESOS OR $20,620 IN UNITED STATES DOLLARS. SINCE YOU ARE CLAIMING RENTAL AT THE RATE OF $1,640.63 PER MONTH IT WOULD BE NECESSARY FOR YOU TO ESTABLISH A FAIR MARKET VALUE OF $131,250.40 FOR THE BUILDINGS AT THE DATE THE GOVERNMENT OCCUPIED THE PREMISES.

IN VIEW OF THE FACTS RELATED ABOVE, THERE IS SUFFICIENT DOUBT AS TO THE VALIDITY OF THE CLAIM TO REQUIRE THIS OFFICE TO APPLY THE PRINCIPLES LAID DOWN BY THE COURT OF CLAIMS OF THE UNITED STATES IN LONGWILL V. UNITED STATES, 17 C.CLS. 288, AND CHARLES V. UNITED STATES, 19 C.CLS. 316. THOSE CASES HOLD, IN EFFECT, THAT IT IS THE DUTY OF THE ACCOUNTING OFFICERS OF THE GOVERNMENT TO REJECT, IN WHOLE OR IN PART, AS THEIR JUDGMENT DICTATES, ALL THOSE CLAIMS TO WHICH THEY BELIEVE THERE MAY BE SUBSTANTIAL DEFENSES IN LAW, OR AS TO THE VALIDITY OF WHICH THEY ARE IN DOUBT.