Case Name: CALTEX (PHILIPPINES), INC. v. THE UNITED STATES; THE SHELL COMPANY OF PHILIPPINE ISLANDS, LTD. v. THE UNITED STATES; STANDARD-VACUUM OIL CO. v. THE UNITED STATES
Court: United States Claims Court
Jurisdiction: United States
Decision Date: 1951-11-06
Citations: 120 Ct. Cl. 518
Docket Number: No. 48324; No. 48265; No. 48319
Parties: CALTEX (PHILIPPINES), INC. v. THE UNITED STATES THE SHELL COMPANY OF PHILIPPINE ISLANDS, LTD. v. THE UNITED STATES STANDARD-VACUUM OIL CO. v. THE UNITED STATES
Judges: Madden, Judge, and Littleton, Judge, concur.
Reporter: United States Court of Claims Reports
Volume: 120
Pages: 518–558

Head Matter:
CALTEX (PHILIPPINES), INC. v. THE UNITED STATES THE SHELL COMPANY OF PHILIPPINE ISLANDS, LTD. v. THE UNITED STATES STANDARD-VACUUM OIL CO. v. THE UNITED STATES
No. 48324
No. 48265
No. 48319
[Decided November 6, 1951]
Mr. Leo T. Kissam and Mr. Albert R. Connelly for the-plaintiffs. Cravath, Swaine & Moore were on the briefs.
Mr. Kendall M. Barnes, with whom was Mr. Acting Assistant Attorney General Newell A. Clapp, for the defendant., Mr. Assistant Attorney General Holmes, Baldridge was on the brief.
Mr. W. Ney Evans, Trial Commissioner.
Defendant’s petition for writ of certiorari pending.

Opinion:
Howell, Judge,
delivered the opinion of the court:
Plaintiffs in these three suits, which have been consolidated, are The Shell Company of Philippine- Islands, Ltd., Standard-Vacuum Oil Company, and Caltex (Philippines), Inc., hereinafter referred to as Shell, Standard, and Caltex, respectively. All are corporate entities which, at the time this cause arose, were engaged in the commercial distribution of petroleum products in the Philippine Islands area. Each, of the plaintiffs maintained storage and terminal facilities in the Pandacan District of Manila, P. I., and on the Island of Cebu.
All three oil companies are suing for just compensation for the taking of their terminal facilities at Pandacan (Findings 1 through 33).
Standard makes an additional claim for just compensation for petroleum products which were in its terminal at Cebu at the time the terminal was taken on December 8, 1941, by the depot commander in the name of USAFFE, and which were destroyed along with Standard's terminal on April 10, 1942. Standard is not making any claim for just compensation for the taking of its terminal facilities on Cebu (Findings 36 through 41).
Shell is suing for $3,943.20 for 131.44 metric tons of Diesel fuel oil sold and delivered by Shell, on or about April 3, 1942, to defendant at Cebu for use on United States Navy submarines. Defendant promised and agreed to pay the amount claimed but has not done so (Findings 34 and 35).
PANDACAN CLAIM
For several years prior to the outbreak of war with Japan, the United States Army had maintained detailed plans for the defense of the Philippine Islands. These plans recognized the need for large quantities of petroleum supplies in an extended defense effort. The Army did not possess adequate storage facilities of its own to carry on a full scale war effort. Rather, it procured its day-to-day petroleum requirements from the commercial oil companies and planned to rely upon their stored supplies in the case of an emergency. The oil companies were aware of and acquiesced in this plan, cooperating with the Army by maintaining certain stock levels so that the Army might be assured of adequate supply in case of sudden mobilization.
On December 7, 1941, war between the United States and Japan commenced at Pearl Harbor. Simultaneously, the Japanese attack on tlie Philippines got under way. The' Army immediately commandeered quantities of motor transport, including vehicles belonging to the plaintiffs. On December 12, 1941, the Army took control of the operation of supply and disposition of petroleum products from the stocks on hand of the oil companies at their Pandacan terminals to. the troops in the field. In the exercise-of this control the Army used the land, buildings, fixed installations, equipment, containers, rolling stock, and personnel of the oil-companies' Pandacan terminals (Finding 29). Army authorities kept track of the amount of petroleum products-going to military users and organized the movements of petroleum to the field. It was understood that the Army would pay for all the petroleum taken for its own use. The-Army also screened orders from civilian sources, allowing: sales only to essential users such as the fire department, ambulances, etc. Measures were taken to safeguard the facilities by the use of troops, and the personnel of the oil companies remained on the job taking instructions from Army personnel.
An effort was made by the Army to negotiate temporary-leases with the oil companies of their terminal facilities, but the press of the Japanese invasion did not allow time for the-completion of such agreements before it became necessary to' abandon Manila (Finding 20).
Until December 27, 1941, no officer in the Quartermaster Corps, United States Army, possessed authority, except to the-extent that it was delegated to him by the commanding general, to commandeer or requisition the use or title of the-stocks of the petroleum products, the land, fixed installations, equipment, supplies, or rolling stock of the oil companies on Pandacan. Such authority ivas not delegated by the commanding general to officers of the Quartermaster-Corps on Pandacan except as described in Findings 13 to 20.
Between December 25 and 27, 1941, the oil companies-were notified that their remaining stocks together with alls terminal facilities were to be requisitioned and that whatever part could not be transported to the Army in the field; was to be destroyed. Officials of the oil companies were reluctant to take the responsibility for destruction because- of the imminent necessity of answering to the Japanese, and the Army agreed to take care of the demolition. On December 27,1941, the Army requisitioned all remaining petroleum stocks and all storage and handling facilities at the Pandacan terminals of the oil companies, and on December 31,1941, in fulfillment of planned military policy, the terminal facilities and all products remaining therein were demolished by the Army for the purpose of denying their use to the Japanese.
The United States has paid plaintiffs for rolling stock requisitioned and for such of the petroleum stocks in the Pandacan terminals as were used by the Army. The United States also paid plaintiffs for the petroleum stocks which were in the terminals and were destroyed at the time of demolition. Defendant has refused to compensate plaintiffs for the loss of terminal facilities at Pandacan on the ground that these properties were taken on December 27, 1941, for the sole purpose of destruction in order to prevent their use by the enemy. The Government contends that such a taking is not compensable under the Fifth Amendment.
Plaintiffs base their claims for just compensation for the Pandacan terminal facilities upon the Requisition of Military Materials Act of October 16, 1941, 55 Stat. 742-43, as amended, 50 U. S. C. App. § 721-24, and upon the Fifth Amendment to the Constitution, contending (1) that the terminals were taken for public, use by the United States on December 12, 1941, and were used by the Government until destroyed on December 27, 1941, and (2) that if taken for the first time on December 27, 1941, and solely for .the purpose of destruction to keep the terminals from the enemy, such a taking is compensable.
Inasmuch as this court must render a judgment for just compensation where there has been a taking by the United States of private property for .public use on the basis of the constitutional requirement alone, no purpose is served in a discussion of the applicability of the statute in this instance, particularly as it is apparent that no effort was made to comply, with that Act. The question of damages has been separated from that of liability under Rule 39 (b) (1949 Reprint) , and accordingly the only question before the court is whether or not there was a taking of plaintiffs' terminal facilities on Pandacan for public use. for which the Government is required to make just compensation.
The plaintiffs contend that the Army's act of taking over the control of operation of supply and distribution on December 12, 1941, amounted to a "taking" of the terminal properties for use on that date and that such use continued until the moment of destruction on December 31,1941.
From the record it appears that the officers in the Quartermaster Corps did not have authority to take title to plaintiffs' terminal facilities on Pandacan prior to December 27, 1941, and that no formal act of requisition took place until that date. Regarding the substance of the Army's acts as related in detail in the findings, and in the light of the situation known to exist, we do not believe that the control exercised by the Army between December 12, 1941, and December 27, 1941, amounted to a taking of plaintiffs' terminal facilities on Pandacan for public use. The Army control in this instance, all circumstances considered, seems no more complete to us than that exercised by Army meat inspectors in the Safeway case. In that case it appeared that the Army representatives enforced Government set-aside orders, inspected and rejected meat at the slaughterhouse, regulated shipments, etc. Besides that, the Government, through other agencies, controlled the amount of beef slaughtered, the cuts prepared, and the prices charged. Later, the Government required Safeway to deliver to it certain portions of the beef set aside. We held the product to have been taken for public use, but it was never contended that the slaughterhouse itself was taken. In that case, as in this, the facility itself was subjected to regulations permissible under the Government's police and war powers, but was not taken for public use. We have no doubt that the petroleum set aside for the. use of the Army in the instant case was taken for public use. However, as the Government has paid plaintiffs in full for all the petroleum used and destroyed on Pandacan, this problem does not confront us.
We conclude that the Government's actions with respect to-plaintiff's Pandacan terminal facilities between December 12,. 1941, and December 27, 1941, did not amount to a taking of those facilities.
On December 27, 1941, the Government formally requisitioned the Pandacan terminals for destruction. By this date it was apparent that the area would have to be yielded to the enemy, and it had been determined that the terminals and their contents should be destroyed to deny them to the enemy. The Army took over the preparation for demolition and the actual demolition in part, at least, at the instance of the oil companies representatives, who, understandably, did not want' to answer to the Japanese for such an act. Prom December 27, 1941, to the moment of demolition on the afternoon of December 31, 1941, the Army had complete control of the premises and was engaged in removing petroleum to the field and in laying the demolition charges. On the latter date the entire terminal facilities were destroyed to deny their use and contents to the Japanese, who were by this time already entering Manila.
The only use the Army made of plaintiffs' terminal facilities following the requisition on December 27, 1941, was to destroy them. The plaintiffs claim that this destruction was-such a public use as entitles them to just compensation for the destroyed terminals. Defendant's position is that governmental destruction of property in a time of great peril to-. prevent its falling into the hands of the enemy is noncorn-pensable and that the loss must remain where it falls as one of the general ravages of war.
The Courts of the United States have had little occasion to-delineate the extent of the exception urged by defendant to the fundamental principle that the power of requisition in time of war is subject to the constitutional prohibition of the Fifth Amendment against the taking of private property for public use without just compensation. It has been made clear, however, that the war power conferred upon Congress by the Constitution does not abrogate this constitutional guaranty; it is not suspended or affected by war or the conditions. following thereafter, nor is it subject to being taken away by statute. Generally, when private property is requisitioned or confiscated for war purposes, the owner thereof is entitled to, and the Government is obligated to pay just and full compensation therefor. See Annotation 137 A. L. it. 1290 and the- cases cited therein. Further, it is settled that property to be compensable if seized need not be a specific interest or estate, but may amount only to an agreement covering an indefinite period. Portsmouth Harbor Land & Hotel Company v. United States, 260 U. S. 327; United States v. Causby, 328 U. S. 256; United States v. General Motors Corp., 323 U. S. 373; Johnson v. United States, 2 C. Cls. 391.
Ordinarily, cases involving the question of just compensation under the Fifth Amendment involve the Government's exercise of its power of eminent domain or the question of whether or not some exercise of the Government's regulatory authority has amounted in law to a taking of another's property. .The instant case is of a rarer type involving the seizure by the. military authorities of property, the destruction of which is urgently required for the defense of the republic.
The power of the military to seize and use property was upheld by the United States Supreme Court in 1851 in Mitchell v. Harmony, 54 U. S. 115. In deciding that case, Chief Justice Taney said, at page 134:
There are, without doubt, occasions in which private property may lawfully be taken possession of or destroyed to prevent it from falling into the hands of the public enemy; and also where a military officer, charged with a particular duty,-may impress private property into'the'public service or take it for public use. Unquestionably, in such cases, the government is bound to make full compensation to the owner; but the officer is not a-trespasser.
But we are clearly of opinion, that in all of these cases, the danger must be immediate and impending; or the necessity urgent for the public service, such as 'will not admit of delay, and where the action of the civil authority would be too late in providing the-'means which the occasion calls for. It is impossible to define the particular circumstances of danger or necessity in which this' power may be lawfully' exercised. Every case must' depend on its own circumstances. .It is the emergency that gives the right, and the emergency must be shown to exist before the taking can be justified.
The Chief Justice's statement in Mitchell v. Harmony, supra, was- essentially dictum because the action there had been against Mitchell, the military officer who had seized the property in question, as an individual.
In 1863, however, a case was presented to this court involving essentially the same question as is now before us. Grant v. United States, 1 C. Cls. 41. The plaintiff in that case, Grant, was a government contractor furnishing commissary and quartermaster' supplies to the United States forts and military posts'in Arizona. Grant maintained a flour mill, dwelling houses, storehouses, shops and corrals in Tucson, Arizona. The outbreak of the Civil War found the people of that city and state in open rebellion against the United States and few Federal troops in the area. Information came that Confederate troops were entering Arizona from Texas with the evident intent of cutting off the Union troops therein. Under this state of affairs orders were given and carried out for the removal of such military stores as could be transported and the destruction of such as could not be removed, together with such private property of Grant as might be of value to the enemy. At the time the property was put to the torch the Confederate flag; was actually flying in the city of Tucson and the armed and rebellious citizenry were threatening immediate attack. Grant was ousted of possession a mere half hour before the destruction. Grant brought his suit in the Court of Claims and the Government interposed the defense heard here — that the destruction was noncompensable because of the law of overruling necessity.
In a learned and well-considered opinion, Wilmot, J., speaking for the court, held that the destruction of Grant's property to deny it to the enemy's use was a taking for public use for which compensation must be made under the Fifth Amendment. In the course of its opinion the court cited with approval the major treatises written on the subject, Ibid., p. 44:
The damages under consideration are to be distinguished into two kinds — those done by the. State itself or the sovereign, and those done by the enemy. Of the first kind, some are done deliberately and by way of precaution, as when a field, a house, or a garden, belonging to a private person, is taken for the purpose of erecting on the spot a town, a rampart, or any other piece of fortification; or where his standing corn or storehouses are destroyed to prevent their being of use to the enemy. Such damages are to be made good to the individual, who should bear only his quota of the loss (Vattel, 408).
We must observe this, that the king may in two ways deprive his subjects of their right, either by way of punishment or by virtue of his eminent power. But if he do so in the last way, it must be for some public advantage, and then the subject ought to receive, if possible, a just satisfaction for the loss he suffers out of the common stock (Grotius, b. 2, ch. 14, sec. 7).
The State has an eminent right of property over the goods of the subjects, .so that the State or those that represent it may make use of them, and even destroy and alienate them, not only on extreme necessity, but' for the public benefit, to which we must add that the State is obliged to repair the damages suffered by any subject on that account out of the public stock (Grotius, b. 3, ch. 20, sec. 7).
The court then disposed of the argument that the state possessed the right to destroy property because of overruling necessity by pointing out that the right to, destroy another's property under the pressure of overbearing necessity, and to be free of liability for the act, is an ancient natural right as between individuals. The court concluded that the rights of self-defense and of self-preservation have no connection with the state's right of eminent domain. The latter right is limited by the Constitution — the former are beyond its reach.
The court went on to point out that the denial of sustenance to the enemy was of nearly as great importance as providing sustenance for one's own army, and that a destruction of another's property to deny it to the enemy was as much a public use as if it had been consumed by friendly troops in battle. The dictum of Chief Justice Taney in Mitchell v. Harmony, supra, was cited as evidence of Supreme Court approval of this doctrine.
Wiggins v. United States, 3 C. Cls. 412, approved the doctrine of the Grant case, following it in a similar case involving the destruction of black powder belonging to an Ameri•can- citizen living abroad in a friendly country, to keep the powder from falling into the hands of certain Central American banditti then engaged in hostilities against the United ^States. The view taken by the Court of Claims was approved and applied by Judge, later Justice, Holmes in Miller v. Horton, 152 Mass. 540, 26 N. E. 100, 102. To our knowledge, no case directly involving the point in question here has been decided in the courts of the United States since the Grant and Wiggins cases. Certain cases decided in this court under the Bowman Act (13 Stat. 381) contained dicta indicating that if the question had been then presented to the court, a contrary result might have been obtained. See Walker v. United States, 34 C. Cls. 345; Presbyterian Church v. United States, 33 C. Cls. 339. At least one of these cases reached the Supreme Court, and the opinion handed down therein is today the chief reliance of the defendant. That was the case of United States v. Pacific Railroad, 120 U. S. 227. Like Mitchell v. Harmony, and, indeed, all the authorities upon the point except the Grant and Wiggins cases, the language applicable to the instant case is dictum. And the •dictum is contrary to the dictum in Mitchell v. Harmony and to the holdings of the Grant and Wiggins cases. The Pacific Railroad case involved the following factual situation. The Union armies, in retreat, had destroyed certain of the plaintiff railroad bridges. Later in the war, as the Union armies advanced, it became a military necessity that the bridges be immediately restored to use. The railroad company was not in a financial position to rebuild at the moment, and the '•Government rebuilt the bridges on the railroad's right-of-way. Later, the Government withheld from freight charges it owed the railroad the cost of rebuilding the bridges, claiming that the bridges were destroyed as an incident to the military campaign; that the loss to Pacific Bailroad was noncompensable; and that, having built the bridges for the .railroad and they having been accepted and used, an implied promise of repayment arose. The court found against the Government on the ground- that the railroad was under no-duty to rebuild and that no implied promise to pay grew out of the Government's construction of the bridges to further the war effort. It was held that the bridges, having been constructed upon the land of the railroad, adhered to the realty and that Pacific Kailroad took title thereto without obligation to repay the construction costs. Justice Field,, who delivered the opinion of the court, gratuitously went into the question of whether or not Pacific Kailroad could have recovered had it been suing for the value of its destroyed bridges. It was stated that the railroad could not have recovered and that, "Whatever would embarrass or impede the advance of the enemy, as the breaking up of roads,, or the burning of bridges, or would cripple and defeat him, as destroying his means of subsistence, were lawfully ordered by the commanding general. The safety of the state in such cases overrides all considerations of private loss." Ibid, p. 234. As authority for this position Justice-Field cites Yattel, several state court cases, and the proceedings upon certain bills before Congress for the relief of' citizens suffering war losses.
The citation from Vattel (Ibidp. 234) is the same as that relied upon by Wilmot, J., in the Grant case, and includes the statement that where a citizen's standing corn or storehouses, are destroyed to prevent their being of use to the enemy just compensation must be made. Of the state court cases relied upon, Republica v. Sparhawk, 1 Dall. (Pa.) 357, involved! property destroyed by the enemy; Parham v. The Justices, 9 Geo. (Ga.) 341, involved injunctive relief; Taylor v. Nashville & Chattanooga Railroad, 6 Coldwell (Tenn.) 646, involved the legality of destruction (Cf. Mitchell v. Harmony, supra); Mayor v. Lord, 18 Wend. (N. Y.) 126, involved the construction of a statute and the question of whether or not there had been compliance. 1 .
The subject matter of the bills before Congress discussed by Justice Field do not involve the issue here. The first, was the case of a citizen's home burned while in possession of the enemy. Clearly, such a destruction is not com-pensable. Juragua Iron Co. v. United States, 212 U. S. 297. Another involved a citizen's property damaged by water from a levee breached to impede the advance of enemy artillery. This is a case of damage incidental to the actual battle. A state has. never been held liable for the consequential damages that fall upon occupants of the battle area due to the clash of arms. Such losses are those of chance alone, comparable to losses sustained as the result of an unavoidable accident. Cf. Perrin v. Unted States, 4 C. Cls. 543. The instant case, on the other hand, deals with private property not in the hands of the enemy, yet singled out for deliberate destruction.
The third congressional action involved a bill to compensate a citizen for his house which had been taken by the enemy, recaptured, and then destroyed to deny the enemy the possibility of recapture. The question actually involved was whether or not the house had been destroyed in the course of the battle. The latter interpretation was the President's (Cong. Globe, 42nd Cong., 2d Sess. 4155 (1872)) and, although a majority of the Congress disagreed with him, the bill died under the veto.
The Pacific Railroad decision does not mention the Grant and Wiggins cases, but cited with approval Mitchell v. Harmony, supra, with no mention of its contrary dictum.
It is obvious from the language of the foregoing cases upon which the parties rely that the distinction between cases where property may be destroyed without liability because their destruction was an incident of battle, and cases where the owner of property destroyed must be compensated is somewhat less than clear cut. We are of the opinion, however, that the reasoning of the Grant case, where the court necessarily met the very issue involved here and considered it fully, together with the Chief Justice Taney's dictum in Mitchell v. Harmony, present sounder precedents upon which to found óür decision today than does the dictum of the Pacific Railroad case.
The United States Government was organized as a government of limited powers under a written constitution. One of its purposes was declared to be to "provide for the common defence" (sic). To effect this end, Congress was empowered to raise funds by a system of taxation uniform throughout the states, to maintain an army and a. navy, and to declare war. Throughout the history of the Republic, it has been recognized- that the- Federal Government, being charged with the common defense, must call upon the citizenry of the country for common' sacrifice of life and treasure in that defense. It has been a fundamental principle, however, that the burden to be met should be distributed among the people as uniformly as practicable. The costs of war are not met alone by volunteers. A system of taxation spreads the financial burden among all the inhabitants according to their ability to pay — dissenters, slackers, and even aliens must contribute. When it becomes necessary to call upon the nation's manhood for personal service in the armed forces, that burden, which may call for the contribution of life itself, is distributed as uniformly as possible throughout the qualified men of the nation, the impartial hand of chance being employed to select specific individuals from the qualified classes. The Government does not attempt to insure it's citizenry against losses due to the ravages of war inflicted by our own or enemy forces in the conduct of a campaign. But when.it is determined that a specific person's property because of its nature or location is so essential to war effort that it must be taken and put to use for the good of the nation, it is our belief that the public generally should bear the cost of acquisition. Ordinarily, time is not so much of the essence but that the ordinary procedures of eminent domain under civilian control are followed and Just compensation determined and awarded as a matter of course. At times, however, the- emergency may be so great and the time so short that an officer of the Government is justified in impressing the property summarily into service. Because the impressment is summary and dictated by immediate necessity would not seem to make it less an exercise of eminent domain. The Constitution provides that funds for the common defense shall be raised by a uniform method of taxation; it provides also that the owner of private property taken for public use — and the common defense is a public use — shall be justly compensated.
It appears to us that the destruction of the Pandacan terminals was a use thereof in the common defense and that a taking of plaintiffs' property for that purpose without making compensation therefor would be as much a violation of the Constitution as would a tax directed solely at a named individual.
The néarness of the enemy and the causes necessitating the destruction, we feel, made the Army's action lawful and may have a bearing upon the question of damages (see dissenting opinion of Loring, J., in Grant v. United States, 2 C. Cls. 551), but we do not believe that it made the action other than an action of eminent domain for which plaintiff is entitled to just compensation.
We are aware that our decision, on its face, appears contra to certain principles of the common law. In Bowditch v. Boston, 101 U. S. 16, 18, it was said:
At, the common law everyone had the right to destroy real and personal property, in cases of actual necessity, to prevent the spreading of a fire, and .there was no responsibility on the part of such .destroyer, and no remedy for the owner. In the case of the Prerogative, 12 Rep. 13, it is said: "For the Commonwealth a man shall suffer damage, as for saving a city or town á house shall be plucked down if the next one be on fire; and a thing for the Commonwealth every man may do without being liable to an action." There are many other cases besides that of fire — some of them involving the destruction of life itself — where the same rule is applied. "The rights of necessity are a part of the law." Respublica v. Sparhawk, 1 Dall. 357, 362 [citing further cases'].
^ • ¿‡*
The statute of Massachusetts, as far as it goes., gives as a bounty that which could not have been claimed before.
The Bowditch case involved, as concerned, the Commonwealth of Massachusetts, a somewhat similar state of affairs as is presented here. The statute referred to provided compensation for a home owner whose house was destroyed under certain circumstances to prevent the spread of-fire. It was recognized that the statute gave a right of action not cognizable at common law. In the instant case we are bound by the Fifth Amendment to the Constitution to recognize plaintiffs' right under that Amendment irrespective of the English common law; precedents. Justice Holmes has, .indeed, expressed the'thought that such cases have perhaps stood-as much upon tradition as upon principle. Pennsylvania Coal Co. v. Mahon, 260 U. S. 393, 416. As pointed out in Grant v. United States, supra, the doctrine of absence of liability for a destruction dictated by overriding necessity may still have validity in- this country as applied to individuals, but the power of the Federal Government, derived from and limited by the Constitution does not extend to the deliberate destruction of an individual's property for the common cause without the payment to thé'owner of just compensation.
We conclude that the Government is liable on plaintiffs' claim for just compensation for the destruction of. their Pandacam terminal facilities.
CEBU CLAIM
In case No. 48319 plaintiff, Standard-Vacuum Oil Company, seeks-to recover just compensation for the value of certain petroleum products destroyed on or about April 10, 1942, on the Island of Cebu to deny their use to the Japanese.
In addition-to the Pandacan terminal at Manila on the Island of Luzon, Standard, Caltex, and Shell, each- owned and operated terminals on the Island of Cebu. In November 1941, the Chief Quartermaster, USAFFE, arranged for the dispatch of an officer of the Quartermaster Corps to Cebu to establish and command an advance Quartermaster Depot. This Depot Commander was authorized and directed to procure supplies for USAFFE, including petroleum products, for use in the southern islands of the Philippines. He was authorized to exercise his discretion as to the manner of procurement. USAFFE had no bulk stocks of petroleum products in or near Cebu and only a negligible amount in drums. It had been decided at USAFFE headquarters not to send supplies of petroleum products from Manila to Cebu. The only petroleum supplies in the Cebu area were those of the three oil companies.
Cebu is an island in the Philippine chain, located some 350 miles southeast of Manila.
On December 8, 1941, the Cebu Depot Commander, pursuant to his authorization mentioned above, called a meeting of the representatives of the three oil companies and informed them (1) that in the name of USAFFE he was taking over all their supplies of petroleum products and (2) that he was freezing the price of such products at the current Army contract rate. He stated that the oil companies would be permitted to take out a certain amount of stock from tbeir terminals for the use of the local government on Cebu and for such civilian agencies as were essential to the Island's economy.
Within a few days after December 8 the Depot'Commander had established complete control over the oil companies' terminals and had stationed military patrols thereon. He issued an order that no petroleum products could be withdrawn without approval by him or his authorized representative. Work was begun on the packaging of petroleum products in tins or drums and the removal of such products for use or ,for dispersal to warehouses and supply dumps for protection against possible enemy bombing.
Records were maintained of the amounts of petroleum stocks removed and the amounts on hand at the terminals. Petroleum products released to civilians or for civilian purposes were recorded as stock credits against the amount initially taken by and for the Army under the above-mentioned requisition. The oil companies were permitted to charge for the amount so released at prices prevailing for local civilian use.
On April. 10, 1942, the oil companies' terminals and the petroleum products remaining in them were destroyed by order of the Depot Commander, pursuant to a demolition plan, to prevent the facilities and supplies from falling into the hands of the enemy. Japanese forces were then in the harbor and began their landings on Cebu within hours after the demolition.
Defendant has paid Standard for the petroleum products removed from Standard's Opon terminal for use or dispersal by the Army, but has refused to pay for the petroleum products which remained in the terminal' and were destroyed with it on April 10,1942. The products.so remaining and so destroyed had been on hand on December 8,1941, at the Opon terminal when the Army Depot Commander requisi tioned all of Standard's petroleum products in the name of USAFFE.
It is the Government's contention that there was no taking of Standard's Cebu petroleum products on December 8,1941, and that the action of the Depot Commander amounted merely to the establishment of a priority system for Standard's petroleum products. Accordingly, the Government concludes that if there was any taking at all it was a taking on April 10, 1942, for the sole purpose of destruction in the same manner that the Government took the Pandacan facilities on December 27,1941.
Unlike the somewhat confused situation on Pandacan in December of 1941 relative to the authority of Quartermaster officials to requisition private property, the Quartermaster Corps official at Cebu was given authority in November of 1941 to procure supplies for USAFFE, including petroleum products, in any manner he found expedient. On December 8 the Depot Commander actually requisitioned these products. These facts áre found by the Commissioner in Findings 37 and 38 and were not excepted to by defendant. The Depot Commander's actions permitting the oil companies to take out a certain amount of their stock for the use of the local government and their civilian agencies, subject to the approval of the Depot Commander, were not inconsistent with an act of taking or requisition. As of December 8,1941, when the Army took title to the petroleum products in Standard's Opon terminal, it did not take them for destruction. It took them and used them for approximately four months. The products which were destroyed by the Army on April 10, 1942, had been in existence and in the Opon terminal on December 8,1941, the date of taking.
. We conclude that the Depot Commander, with full authority to do so, took Standard's petroleum products for the United States on December 8, 1941, not for destruction, but for use, and Standard is clearly entitled to just compensation for its products so taken.
SHELL CONTRACT CLAIM:
On or about April 3, 1942, Shell sold and delivered to defendant at Cebu, for use on United States Navy submarines, 181.44 metric tons of Diesel fuel oil, for which defendant promised and agreed to pay the sum of $3,943.20. The parties have agreed that Shell (case No. 48265) is entitled to judgment in the sum of $3,943.20 and judgment for this amount will be entered in favor of Shell.
Caltex, Standard, and Shell are entitled to recover for the taking of their terminal facilities on Pandacan, and Standard is entitled to recover for the taking of its petroleum products on Cebu, the exact amounts being reserved for further proceedings under Rule 38, (c).
It is so ordered.
Madden, Judge, and Littleton, Judge, concur.
Under the new 1951 Rules, the applicable rule is 38 (e).
Standard's claim for just compensation for oil products alleged to have been taken from Standard's Cebu properties is also before the court under Rule 39 (b) (1949 Reprint, new Rule 38 (c)> on the question of liability, and will be dealt with separately in this opinion.
Safeway Stores, Inc. v. United States, 118 C. Cls. 73.
At least during the period from December 12 to December 27, 1941.
Cf. Aleutian Livestock Co. Inc. v. United States, 119 C. Cls. 326; Oro Fino Consolidated Mines, Inc. v. United States, 118 C. Cls. 18; St. Regis Paper Co. v. United States, 110 C. Cls. 271, cert. den., 335 U. S. 815.
Standard's Cebu installation, known as tie Opon terminal, included oil storage tanks, pipe lines, pumping equipment, dock facilities, -warehouses, can-making machinery, containers, and supplies of petroleum products. Only the supplies of petroleum products are in issue in Standard's Third Amended Petition. Shell and Caltex have not made-, any claim- with respect to their Cebu properties in this proceeding.