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ACT OF STATE DOCTRINE

CASES
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 768
No. 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 courts 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.

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