ACT OF STATE DOCTRINECASES

Jowee Ann Marquez

In re PHILIPPINE NATIONAL BANK,Philippine National Bank, Petitioner,

v.United States District Court for the District of

Hawaii, Respondent,

397 F.3d 768No. 04-71843.

United States Court of Appeals, Ninth Circuit.Argued and Submitted June 16, 2004.

Filed February 4, 2005.

FACTS• This is a petition by the PNB for a writ of mandamus to

prevent the district court from pursuing contempt and discovery proceedings against the Bank because of the Bank's transfer of funds to the Republic of the Philippines pursuant to a judgment of the Philippine Supreme Court.

• Class of plaintiffs obtained a large judgment in the federal district court in Hawaii against the Marcos estate for human rights violations by the Marcos regime.

• On the other side is the Republic of the Philippines, sought forfeiture of the Marcos estate's assets on the ground that assets from the Philippine government and its people.

FACTS• In an earlier case, there was an attempt of the class

plaintiff to reach assets of the Marcos estate located in Swiss banks.

• The Swiss assets had been frozen by the Swiss government at the request of the Republic, which was seeking to recover them.

• The class plaintiffs obtained an injunction from the district court requiring the Swiss banks to hold the assets for class plaintiffs but this was held to have been a violation of the “act of state doctrine.”

FACTS• Because: ACT OF STATE DOCTRINE in this particular case:

precludes courts from declaring "invalid" a foreign sovereign's official act — in this case the freeze order of the Swiss government.

• The Swiss government released the funds to the Philippine National Bank in escrow pending determination of proper disposal by a competent court in the Philippines.

• The Philippine National Bank deposited the funds in Singapore. The Philippine Supreme Court subsequently held that the assets were forfeited to the Republic of the Philippines.

FACTS• The district court ruled that the Philippine Supreme Court

had violated "due process by any standard" and that its judgment was entitled to no deference and any disobedience to the injuction will be considered contempt of court.

• The district court then issued an Order to Show Cause against the Philippine Bank, (which was not a party to the litigation in the district court,) requiring the Bank to show why it should not be held in contempt for violating the court's injunction against transfer of assets by the estate.

• Hence, the filing of the present petition for for a writ of mandamus.

ISSUE

• Whether or not the injuction is violative of the ACT OF STATE DOCTRINE

HELD

• The district court's orders violated the act of state doctrine, and we accordingly issue the writ.

RATIO

ACT OF STATE DOCTRINE•Every sovereign state is bound to respect the independence of every other sovereign state, and the courts of one country will not sit in judgment on the acts of the government of another, done within its own territory.

•Redress of grievances by reason of such acts must be obtained through the means open to be availed of by sovereign powers as between themselves.

RATIO• The district court's orders in issue violated this

principle by necessarily (and expressly) holding invalid the forfeiture judgment of the Philippine Supreme Court.

• Class Plaintiff Argument#1: Inapplicability to Judicial Decisions

While usually applicable to the executive and legislative branches and normally inapplicable to court judgments arising from private litigation, there is no inflexible rule preventing a judgment sought by a foreign government from qualifying as an act of state.

RATIO• Class Plaintiff Argument #2: Judgment of the

Supreme Court did not involve matters within its own territory

Generally, the act of state doctrine applies to official acts of foreign sovereigns performed within their own territory, but such acts were not wholly external. The Republic did not simply intrude into Singapore in exercising its forfeiture jurisdiction.

The presence of the assets in Singapore was a direct result of events that were the subject of the forfeiture.

RATIO

WRIT OF MANDAMUS ISSUED•BAUMAN FACTOR: when courts order is clearly erroneous as a matter of law.

•As discussed, state doctrine makes clear that the district court's orders are erroneous as a matter of law. •The district court’s is attempt for injuction against the PNB as an aider and abettor is in error. PNB transferred assets to the Republic pursuant to the forfeiture judgment of the Philippine Supreme Court, entered over the opposition of the Marcos estate.

The REPUBLIC OF THE PHILIPPINES, Plaintiff-Appellee,

v.Ferdinand E. MARCOS, et al., Defendants-

Appellants.

862 F. 2d 1355 No. 86-6091.

United States Court of Appeals,Ninth Circuit.

Argued and Submitted Feb. 10, 1988.Decided Dec. 1, 1988.

Special Concurrence, Dec. 2, 1988.

FACTS• The Republic brought a civil suit against the Marcoses

asserting claims under the Racketeer Influenced and Corrupt Organizations Act (RICO).

• The district court on June 25, 1986 entered a preliminary injunction enjoining the Marcoses from disposing of any of their assets save for the payment of attorney fees and normal living expenses.

• The Marcoses appealed. A panel of this court reversed, Hence, this case is to be decided en banc.

FACTS

• The Republic alleges that the Marcoses engaged in mail fraud, wire fraud, and the transportation of stolen property in the foreign or interstate commerce of the United States and such acts were repeated, forming a pattern of predicate acts under RICO.

• The gravamen of the Republic's entire case is the allegation that the Marcoses stole public money.

ISSUE

•Whether or not the issuance of an injuction is proper

HELD

• The issuance of the injuction is proper, thus not violative of the act of state doctrine.

RATIO• Marcos Argument #1: that their acts are insulated

because they were acts of state not reviewable by our courts.

The purpose of the ACT OF STATE DOCTRINE is to keep the judiciary from embroiling the courts and the country in the affairs of the foreign nation whose acts are challenged. But it is not a promise to the ruler of any foreign country that his conduct, if challenged by his own country after his fall, may not become the subject of scrutiny in our courts.

The act of state doctrine is supple, flexible, ad hoc. The doctrine is meant to facilitate the foreign relations of the United States, not to furnish the equivalent of sovereign immunity to a deposed leader.

In the instant case the Marcoses offered no evidence whatsoever to support the classification of their acts as acts of state. The burden of proving acts of state rested upon them.

While seen to be ruler and vested with extraordinary powers, Ferdinand did not have the authority of an absolute autocrat. He was not the state, but the head of the state, bound by the laws that applied to him. Our courts have had no difficulty in distinguishing the legal acts of a deposed ruler from his acts for personal profit that lack a basis in law.

RATIO• Marcos Argument #2: any adjudication of these acts

would involve the investigation of political questions beyond our courts' competence

Bribetaking, theft, embezzlement, extortion, fraud, and conspiracy to do these things are all acts susceptible of concrete proofs that need not involve political questions. The court, it is true, may have to determine questions of Philippine law in determining whether a given act was legal or illegal. But questions of foreign law are not beyond the capacity of our courts.