Philippine Export & Foreign Loan Guarantee Corp. v. Chuidian

• Decision Date: 14 March 1990
• Docket Number: Nos. H003831,H004275,s. H003831
• Citation: 218 Cal.App.3d 1058,267 Cal.Rptr. 457
• Court: California Court of Appeals Court of Appeals
• Parties: PHILIPPINE EXPORT AND FOREIGN LOAN GUARANTEE CORPORATION, Plaintiff/Appellant, v. Vicente B. CHUIDIAN, et al., Defendants/Respondents. PHILIPPINE EXPORT AND FOREIGN LOAN GUARANTEE CORPORATION, Petitioner, v. The SUPERIOR COURT of Santa Clara County, Respondent; Vicente B. CHUIDIAN, et al., Real Parties in Interest.

Page 457

267 Cal.Rptr. 457

218 Cal.App.3d 1058

PHILIPPINE EXPORT AND FOREIGN LOAN GUARANTEE CORPORATION, Plaintiff/Appellant, v. Vicente B. CHUIDIAN, et al., Defendants/Respondents.

PHILIPPINE EXPORT AND FOREIGN LOAN GUARANTEE CORPORATION, Petitioner, v. The SUPERIOR COURT of Santa Clara County, Respondent;

Vicente B. CHUIDIAN, et al., Real Parties in Interest.

Nos. H003831, H004275.

Court of Appeal, Sixth District, California.

March 14, 1990.

As Modified on Denial of Rehearing April 13, 1990.

Review Denied June 7, 1990.

James P. Kleinberg, Gregory P. Landis, Christine E. Sherry, Patrick A. Broderick, McCutchen, Doyle, Brown & Enersen, San Francisco, for plaintiff/appellant

Steven C. Finley, Lee S. Harris, Cartwright, Slobodin, Bokelman, Borowsky, Wartnick, Moore & Harris, Inc., San Francisco, for defendants/respondents.

COTTLE, Associate Justice.

The issues in controversy in this case arise from an attempt by appellant and petitioner Philippine Export and Foreign Loan Guarantee Corporation ("Philguarantee") to persuade the trial court to set aside a stipulated judgment in favor of respondents and real parties in interest Vicente B. Chuidian and several corporations (collectively "Chuidian"). We here decide together three matters: (1) the appeal of Philguarantee from the trial court's order refusing to set aside the stipulated judgment; (2) Philguarantee's motion for production of additional evidence on appeal or alternatively for a writ of error coram vobis to allow it to present evidence discovered while the matter was pending on appeal which allegedly was deliberately concealed by Chuidian and therefore could not have been obtained earlier; (3) Philguarantee's petition for a writ of mandate (or other extraordinary writ) seeking to stay execution or enforcement on the stipulated judgment. For reasons we shall state, we shall affirm the judgment on appeal and deny the motion to produce new evidence or for a writ of error coram vobis, and grant the writ of mandate in part.

FACTS

Philguarantee was created in 1974 by the decree of former president of the Philippines Ferdinand Marcos as a government owned entity intended to guarantee loans to be used to promote business in the Philippines. Chuidian obtained loan guaranties totalling $25 million from Philguarantee for his company, Asian Reliability Company, Inc. (ARCI), representing that the funds would be invested in Philippine industrial projects. In June, 1985, Philguarantee sued Chuidian in the Santa Clara County Superior Court, contending that he had defaulted on the loans, requiring Philguarantee to pay them, and that the funds had been misused, in violation of the loan terms, for investment in Silicon Valley corporations and for Chuidian's private benefit.

Chuidian and Philguarantee entered into settlement agreements resulting in a stipulated judgment. Philguarantee relinquished all its claims for restitution against Chuidian, and abandoned its security interest in stock which Chuidian pledged on the ARCI loan. Philguarantee further agreed to pay Chuidian $5.3 million, to be paid by means of an irrevocable letter of credit from a United States Bank. In return, Chuidian agreed to surrender stock in three corporations to Philguarantee--ARCI, Dynetics, Inc. (Dynetics) and Interlek Semiconductor, Inc. (Interlek)--companies that Philguarantee later claimed were debt ridden. (Interlek is allegedly now in bankruptcy; Dynetics is insolvent.) Chuidian also agreed to sign an affidavit denying that the Marcos family had any interest in his companies, and to surrender all copies of his deposition. Pursuant to these agreements, the parties signed a stipulated judgment December 17, 1985.

In February 1986 Marcos was deposed and the government of Corazon Aquino assumed power in the Philippines.

On April 16, 1986, Philguarantee moved to vacate the judgment, contending that it had been compelled by the Marcos government to make the settlement, that it was highly unfavorable to Philguarantee, and further that Chuidian had coerced Marcos into ordering the settlement by threatening to expose the investments of Marcos and his wife, Imelda, in Chuidian's enterprises. Philguarantee contended the agreements were illegal in purpose, coerced, and void, because the purpose of the settlement was to buy Chuidian's silence. On these grounds Philguarantee sought relief from the judgment under Code of Civil Procedure section 473.

Philguarantee also argued that the present government of the Philippines has On its motion to vacate the judgment, Philguarantee presented evidence susceptible of the inference that Marcos ordered Philguarantee to execute the settlement because he feared that otherwise Chuidian would expose the Marcoses' alleged financial interests in Chuidian's American companies. This evidence included, first, newspaper articles, particularly a series of articles published in the San Jose Mercury News in June 1985 stating that a serious financial problem for the Philippine government during the last years of the Marcos regime was the diversion of money out of the country by wealthy Philippine residents, particularly powerful persons in the government or in business, who invested this money in businesses and real estate in the United States. Marcos was also accused of this practice, although because he and his wife did not make investments directly in their names it was difficult to trace their investments. Also there were articles in both the American and the Philippine press suggesting that the Marcoses were part owners of Chuidian's enterprise, ARCI, or were trying to gain control of it. These articles suggested that direct evidence that Marcos had invested in foreign property would seriously embarrass him at home.

ordered it not to pay the judgment. It offered in evidence a memorandum dated March 13, 1986, memorializing a directive of the Philippine Commission on Audit, a government agency, ordering Philguarantee to make no further payments to Chuidian in whatever manner out of government funds, as contemplated under the agreements. The memorandum stated that President Aquino has ordered a restudy/reexamination of the agreements "with a view to determining their wisdom and propriety, if not legality, in the face of preliminary findings that the terms, provisions, and conditions stipulated therein, particularly the monetary aspects thereof, are manifestly and grossly disadvantageous to the Government."

Against this background, Philguarantee attempted to show that Chuidian exploited Marcos's vulnerability on the question of diversion of Philippine monies abroad, by threatening to inform American journalists of Marcos's investments, or offers to invest, in Chuidian's enterprises here, unless Marcos agreed to order the governmental corporation, Philguarantee, to settle its lawsuit with Chuidian on terms favorable to Chuidian. It offered evidence that Chuidian had told persons that he had evidence that Marcos had invested money in ARCI and that he intended to use this evidence to his advantage. For example, one Steve Psinakis, a Marcos opponent and a paralegal employed in a United States law firm, testified Chuidian told him that the Marcoses were 50 percent owners of ARCI. He also testified Chuidian told him he had proof that Marcos had been given funds from the company.

Further, Chuidian told Psinakis that he possessed tape recordings of some 40 hours of telephone conversations about the lawsuit with Philguarantee, touching on settlement negotiations, Marcos's links with ARCI, and related matters. According to Psinakis, Chuidian played some of these tapes for him and they were "valuable hard evidence" of Marcos's involvement in the lawsuit.

A former chairman of Philguarantee, Cesar Virata, testified Marcos expressed concerns about these tapes to Virata in a conversation in September 1985. Marcos was then facing impeachment and acknowledged concern about what Chuidian might reveal of these tapes.

A handwritten letter dated July 23, 1985, from Rosendo Bondoc (a former official of Philguarantee, who however allegedly acted on behalf of Marcos personally during settlement negotiations) to the Marcoses' personal lawyer, Ronaldo Zamora, reveals that Marcos told Bondoc to participate in secret negotiations in the lawsuit with Chuidian, with Zamora to be the vocal negotiator. Bondoc was then an employee of an agency run by Imelda Marcos, Home Financing Corporation (HFC). Bondoc and Zamora corresponded regarding a proposed stipulated judgment during July and August 1985, and one settlement draft submitted by Bondoc to Zamora included (1) a proposed assurance from Marcos to Chuidian Between the end of August and mid-September 1985, telexes containing further drafts of the settlement agreement were exchanged among Zamora, Marcos, Chuidian and Chuidian's lawyers. Philguarantee alleges its officials and counsel did not participate in these negotiations. However, the declaration of Gregory Landis, one of Philguarantee's counsel, stated that the Philguarantee consulted with its California lawyers, McCutchen, Doyle, Brown & Enersen (McCutchen) before signing, although disputing whether there was sufficient time for meaningful consultation. Landis made suggestions and changes.

                that no criminal charges would be filed against Chuidian in the Philippines and (2) a proposed promise by Chuidian that he would at "all times refrain from any further comment of any matter whatsoever or to entice commentaries relating to the ARCI controversy and any of the legal cases that have arisen therefrom.  Chuidian will, separate to this agreement, execute a letter addressed to the president of the Philippines stating the true and exact nature of the stockholdings in ARCI and Dynetics.  This letter shall not be publicly disseminated except in case of breach by Chuidian of his warranty of silence in paragraph ___ herein.  This letter shall confirm the fact of the matter that Vicente B.

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