806 F.2d 344 (2nd Cir. 1986), 1455, Republic of Philippines v. Marcos

Docket Nº:1455, 1456, 1457, Dockets 86-7350, 86-7356, 86-7362.
Citation:806 F.2d 344
Party Name:The REPUBLIC OF the PHILIPPINES, Plaintiff-Appellee, v. Ferdinand E. MARCOS, Imelda Marcos, Ralph Bernstein, Joseph Bernstein, Gliceria Tantoco, Vilma Bautista, Antonio Floirendo, Paul A. Crotty, as Commissioner of Finance of the City of New York, Department of Finance of the City of New York, City Register's Office of the City of New York, John Ki
Case Date:November 26, 1986
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit
 
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Page 344

806 F.2d 344 (2nd Cir. 1986)

The REPUBLIC OF the PHILIPPINES, Plaintiff-Appellee,

v.

Ferdinand E. MARCOS, Imelda Marcos, Ralph Bernstein, Joseph

Bernstein, Gliceria Tantoco, Vilma Bautista, Antonio

Floirendo, Paul A. Crotty, as Commissioner of Finance of the

City of New York, Department of Finance of the City of New

York, City Register's Office of the City of New York, John

Kinsella, County Clerk, Suffolk County, New York Land

Company, a/k/a Greatneckers Realty, Inc., Canadian Land

Company of America, a/k/a Canadian Land Company of America,

N.V. (formerly Lastura Corporation, N.V.), Lastura

Corporation, N.V., Herald Center, Ltd. (formerly Volby,

Ltd.), Volby, Ltd., Glockhurst Corp., N.V., Realmad

Properties Ltd., Briwater Associates, a partnership, Nyland

(CF8) Ltd. (formerly Ainsville, N.V.), Ainsville, N.V., and

Ancor Holdings, N.V., Defendants,

New York Land Company, Joseph Bernstein, Ralph Bernstein,

the Canadian Land Company of America, Herald Center Ltd.,

and Nyland (CF8) Ltd., and Ancor Holdings, N.V., and

Glockhurst Corp., N.V., Defendants-Appellants.

Nos. 1455, 1456, 1457, Dockets 86-7350, 86-7356, 86-7362.

United States Court of Appeals, Second Circuit

November 26, 1986

Argued June 11, 1986.

Page 345

[Copyrighted Material Omitted]

Page 346

Michael J. Silverberg, New York City (Phillips, Nizer, Benjamin, Krim & Ballon, Lawrence M. Sands, New York City, of counsel), for defendants-appellants New York Land Co., Joseph Bernstein and Ralph Bernstein.

Philip R. Carter, New York City (Bernstein, Carter & Deyo, Tina Schechter, New York City, of counsel), for defendants-appellants The Canadian Land Co. of America, Herald Center Ltd., and Nyland (CF8) Ltd.

Gerald Walpin, New York City (Rosenman Colin Freund Lewis & Cohen, Lawrence G. Golde, Steven Dixon, Donna Soares, New York City, of counsel), for defendant-appellant Ancor Holdings, N.V.

David J. Eiseman, New York City (Golenbock, Eiseman, Assor, Bell & Perlmutter, Jeffrey T. Golenbock, New York City, of counsel), for defendant-appellant Glockhurst Corp., N.V.

Morton Stavis, Peter Weiss, New York City (Center for Constitutional Rights, Franklin Siegel, Juan Saavedra-Castro, New York City, of counsel); (Severina Rivera, Mahlon F. Perkins, Jr., Ralph Shapiro, Michael Krinsky, Washington, D.C., on the brief); (Sills, Beck, Cummis, Zuckerman, Radin, Tischman & Epstein, P.A., Clive S. Cummis, Jeffrey J. Greenbaum, Washington, D.C., of counsel), for plaintiff-appellee The Republic of the Philippines.

Before OAKES, ALTIMARI, and MAHONEY, Circuit Judges.

OAKES, Circuit Judge:

This appeal is from a grant of a preliminary injunction in favor of The Republic of the Philippines ("The Republic") by the United States District Court for the Southern District of New York, Pierre N. Leval, Judge. The injunction continued an expiring temporary restraining order conditioned on the posting of a bond of $3 million against the transfer or encumbrance of five pieces of real property (the "properties"), four of which are located in New York City and one of which is in Long Island, New York. Judge Leval found that The Republic of the Philippines had met the standard under Jackson Dairy, Inc. v. H.P. Hood & Sons, Inc., 596 F.2d 70, 72 (2d Cir.1979) (per curiam), for issuing a preliminary injunction by "amply show[ing] 'sufficiently serious questions going to the merits to make them a fair ground for litigation' together with irreparable harm and a balance of hardships tipping in [the Republic's] favor." Order of May 2, 1986, as amended May 5, 1986 (quoting Jackson Dairy, 596 F.2d at 72). 634 F.Supp. 279.

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At the heart of this case is the issue of who owns the five properties, 1 which consist of the following:

1. 40 Wall Street, a 71-story office building owned by Nyland (CF8) Ltd., a Netherlands Antilles corporation which in turn is owned by three Panamanian corporations that issued "bearer" shares to unknown persons.

2. The Crown Building, previously the Genesco Building, at 57th Street and Fifth Avenue, owned by The Canadian Land Company of America, formerly a Netherlands Antilles corporation called Lastura Corporation, which in turn is owned by three other Panamanian corporations that also issued "bearer" shares.

3. Herald Center, previously the Korvette Building, at Sixth Avenue and 34th Street, which is owned by Herald Center Ltd., formerly Voloby Ltd., a British Virgin Islands corporation. Herald Center Ltd. is owned by three other Panamanian corporations, again issuers of "bearer" shares.

(These three properties have been managed by the appellants Joseph and Ralph Bernstein, and will sometimes be referred to as the Bernstein properties.)

4. 200 Madison Avenue, at the southwest corner of 36th Street and Madison Avenue, which is owned by Glockhurst Corp., N.V., which in turn is owned by the same three Panamanian corporations that own Herald Center Ltd.

5. Lindenmere, an estate in Suffolk County, Long Island, in the town of Brookhaven, Center Moriches, Long Island. Lindenmere was originally purchased by Luna 7 Corporation, which was owned by several Filipinos, and was later conveyed to Ancor Holdings, N.V., a Netherlands Antilles corporation. Beneficial ownership is claimed by defendant Antonio Floirendo, a Philippine businessman and close associate of the Marcoses.

The appellants are the corporations holding title to the properties, together with Joseph Bernstein and Ralph Bernstein (the "Bernsteins"), whose law firm represents three of the corporate appellants, and New York Land Company, which is owned by the Bernsteins and which manages three of the properties. Other defendants named in this suit include Ferdinand E. Marcos and Imelda Marcos, the former President and First Lady of the Philippines who purportedly are the beneficial owners of the properties, and their alleged associates Gliceria Tantoco, Vilma Bautista, and Antonio Floirendo, although these individuals are not involved in this appeal and did not appear in the proceedings below.

The original complaint in this action, dated March 2, 1986, was filed in the Supreme Court of the State of New York, County of New York, prior to its removal to the United States District Court for the Southern District of New York. After the complaint was filed, but prior to removal of the case to federal court, President Corazon C. Aquino signed Executive Order Number 2, which, among other things, authorized the Commission on Good Government 2 to appeal to foreign countries to freeze the assets of the Marcoses and their associates. This order, as discussed later, contributed heavily to interjecting a federal issue into the case sufficient to confer federal question subject matter jurisdiction.

Page 348

In a section entitled "Background," the complaint outlines the well-publicized circumstances leading up to the recent upheaval in the Philippines. It first states that Ferdinand Marcos became president of the Philippines in 1966. On September 21, 1972, he declared martial law, thus allegedly becoming the dictator of the Philippines with personal control over its government and economy. During the entire period of his rule, and particularly after the imposition of martial law, Marcos allegedly participated in a variety of activities constituting a gross denial of human rights, including abduction, murder, torture, summary incarceration and execution, and control of the media. In addition, he is also alleged to have engaged in widespread and systematic theft of funds and properties that were and are the property of the Philippine government and people. The complaint charges that Marcos accomplished this by using techniques such as (1) accepting payments, bribes, kickbacks, interests in business ventures, and other things of value in exchange for the grant of government favors, contracts, licenses, franchises, loans and other public benefits; (2) blatantly expropriating private property for the benefit of persons beholden to or fronting for Marcos, with this expropriation at times carried out by violence or the threat of violence or incarceration; (3) arranging loans by the Philippine government to private parties who were Marcos's cronies or friends; (4) directly raiding the public treasury; (5) diverting loans, credits, and advances from other governments intended for use by the Philippine government; and (6) creating public monopolies which were placed in the hands of Marcos's loyalists or nominees. These actions of Marcos, together with similar acts by his wife, are said not only to be in violation of the laws of the Philippines but also to have caused a massive drain upon the funds of the Philippine government.

Returning to the specific facts of this case, the complaint alleges that Ferdinand Marcos now resides in Hawaii with his wife, Imelda, after fleeing the Philippines and surrendering his position on February 25, 1986. The Marcoses allegedly do business in New York and use agents, representatives, and nominees in New York and elsewhere to assist in the operation of the properties. Specifically, the complaint charges that there was a conspiracy among Ferdinand and Imelda Marcos; Ralph and Joseph Bernstein; Gliceria Tantoco, a close friend and business associate of the Marcoses who until February 1985 dealt with the Bernsteins in New York; Vilma Bautista, who worked in the Philippine consulate in New York and the Philippine Mission to the United Nations and acted as personal secretary to Imelda Marcos in New York; Antonio Floirendo, a Philippine plantation owner and businessman who made a $600,000 payment as a deposit on Herald Center and claims to be the owner of Ancor Holdings; and numerous other persons, including Fe Giminez...

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