Republic of Philippines v. Marcos, s. 86-6091

• Decision Date: 24 June 1987
• Docket Number: Nos. 86-6091,86-6093,s. 86-6091
• Citation: 818 F.2d 1473
• Parties: , RICO Bus.Disp.Guide 6687 The REPUBLIC OF the PHILIPPINES, Plaintiff/Appellee, v. Ferdinand E. MARCOS, Imelda R. Marcos, Ramon Azurin, Diosdado C. Ordonez and Ancor Holdings, N.V., Defendants/Appellants.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1473

818 F.2d 1473 55 USLW 2686, RICO Bus.Disp.Guide 6687 The REPUBLIC OF the PHILIPPINES, Plaintiff/Appellee,
v.
Ferdinand E. MARCOS, Imelda R. Marcos, Ramon Azurin,
Diosdado C. Ordonez and Ancor Holdings, N.V.,
Defendants/Appellants. Nos. 86-6091, 86-6093. United States Court of Appeals,
Ninth Circuit. Argued and Submitted Oct. 3, 1986.
Decided June 4, 1987.
As Amended June 24, 1987.

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Ronald L. Olson, Richard B. Kendall, Los Angeles, Cal., for plaintiff/appellee.

Gerald Walpin, Lawrence G. Golde, Dorothy Heyl, New York City, Richard A. Hibey, Washington, D.C., for defendants/appellants.

Appeal from the United States District Court For the Central District of California.

Before NELSON, HALL and KOZINSKI, Circuit Judges.

KOZINSKI, Circuit Judge.

We review a preliminary injunction entered against the former president of the Philippines, his wife, several of their associates, corporations allegedly controlled by some or all of them, and a bank where Mrs. Marcos has an account.

Facts

A. Background

On February 7, 1986, a special presidential election was held in the Philippines. There were allegations of massive fraud against the existing government and outbreaks of violence against those supporting the opposition. The precise vote count may never be known, but the official tabulation, which showed an overwhelming victory for Ferdinand Marcos, was rejected by the Philippine people. On February 25, 1986, realizing perhaps that his regime was nearing its end, Marcos and his wife left. His successor, President Corazon Aquino, was almost immediately recognized by our government as the legitimate leader of the Philippines. N.Y. Times, Feb. 26, 1986, at 1, col. 3.

When the Marcoses arrived in Hawaii, they brought along numerous crates filled with currency, jewels, precious metals and negotiable instruments. These crates were impounded by the United States Customs Service. Litigation began. On February 28, the Central Bank of the Philippines sued in the United States District Court for the District of Hawaii, seeking the return of 22 crates full of Philippine currency. On March 13, the Marcoses' agents petitioned for a writ of mandamus against the Commissioner of Customs, seeking the release of all the crates. On March 21, the Central Bank sued for the return of all the crates or their monetary equivalent. All these actions were consolidated in Hawaii. The mandamus suit against the Commissioner of Customs was decided, on an expedited basis, against the Commissioner, then reversed by another panel of this court. Azurin v. Von Raab, 803 F.2d 993 (9th Cir.1986).

Assets allegedly belonging to the Marcoses, or held for their benefit, began to turn up around the world. The Republic of the Philippines (the Republic) has begun litigation in Switzerland, state and federal courts in California, and federal courts in New York, New Jersey and Texas. In each case, the Republic is trying to recover or freeze specific assets that it regards as property of the Philippines improperly possessed or controlled by the Marcoses.

B. The Complaint

The complaint in this case was filed on June 16, 1986. Unlike the cases filed in other jurisdictions, e.g., Republic of the Philippines v. Marcos, 806 F.2d 344, 361 (2d Cir.1986), this one does not simply seek the recovery or freezing of specific property. Instead, it alleges that during his tenure as president of the Philippines, Marcos committed depredations that enabled him to gain enormous riches at the expense of the Republic and its citizens. Raising various federal and state law claims, the Republic seeks to have all or part of this wealth returned; it also seeks $50 billion in punitive damages.

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The thrust of the Republic's claim is that the Marcoses abused their authority, depriving the Philippines and its people of wealth that is rightfully theirs. Paragraph 12 of the complaint charges that "Mr. Marcos used his position of power and authority to convert and cause to be converted, to his use and that of his friends, family, and associates, money, funds, and property belonging to the Philippines and its people." This allegation is incorporated into, and forms the basis of, every claim for relief in the complaint. In addition, plaintiff alleges as follows:

T]he Philippines existed as a sovereign government and thus constituted a RICO "enterprise".... Defendants conducted or participated ... in the conduct of the affairs of the Philippines through a pattern of racketeering activity.... [Complaint paragraphs 28, 29(a).

Mr. Marcos represented on countless occasions to the Philippines and its people that he was governing and would govern fairly and honestly, pursuant to his oath of office and the Constitution and Laws of the Philippines. He further made numerous and frequent declarations to his people that he had never taken money, property, or funds belonging to the Philippines or its people for his own personal use, nor that of his friends, family and associates. [Id. p 49.]

Mrs. Marcos [as Governor of Manila] made similar representations of honesty, integrity and willingness to act within and not above the laws to the people of the Philippines residing in Manila. [Id. p 50.]

The Marcoses] intended that the Philippines and its people rely on these misrepresentations and thereby permit Mr. and Mrs. Marcos to remain in power and positions of authority. [Id. p 51.

They further intended that the people of the Philippines would be deceived and not realize that Mr. and Mrs. Marcos, and their accomplices, family, and associates were plundering the wealth of the country to enrich themselves at the expense of the Philippines and its people. [Id.]

Plaintiff [the Republic] relied to its detriment on the representations of Mr. and Mrs. Marcos, and their accomplices, by permitting them to remain in positions of power and authority for twenty years and by allowing, through ignorance, the plunder of the country. [Id. at p 52.]

Mr. Marcos as President, and Mrs. Marcos as Governor of Manila, occupied positions of trust and confidence as to the government and people of the Philippines. [Id. at p 57.]

Mr. and Mrs. Marcos breached that trust and confidence by committing numerous acts of fraud, deceit, conversion, civil conspiracy, acts of racketeering, and other unlawful acts [and that as a consequence thereof plaintiff] permitted them to remain in positions of power and to conduct the affairs of the Philippines virtually unchecked. [Id. paragraphs 58-59.]

Mr. and Mrs. Marcos, by virtue of their position [sic] as President of the Philippines and Governor of Manila, respectively, occupied positions of trust as to the Philippines and its people. [Id. p 62.]

Before] Mr. Marcos assumed the office of President of the Philippines ... he took the Oath of Office.... By accepting the duties and obligations imposed by the oath, in consideration for the remuneration ... provided by Philippine law, Mr. Marcos entered into an implied contract with the Philippine government to use the power of the Presidency according to law, in good faith, and not for personal aggrandizement. [Id. paragraphs 71-72.

The complaint also alleges that during Marcos' rule, he and his wife converted and caused to be converted property worth $1.55 billion belonging to the Philippine government and its citizens. Most of this, approximately $1.5 billion, allegedly went into Swiss bank accounts; four million dollars went to buy a house in Beverly Hills; some $800,000 went into two bank accounts at Lloyds Bank in California; and property worth $7 million is in the Hawaii crates.

Only Ferdinand and Imelda Marcos are charged with having participated in all of these transactions. Defendants Ramon Azurin and Gregorio Araneta are alleged to have been the Marcoses' agents for bringing the crates of money and jewelry into Hawaii. Defendants Antonio Floriendo, Diosdado Ordonez, Calno Holdings N.V., Krodo Properties N.V., and Al Djebel Corp. (collectively the "minor defendants") participated

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only in the acquisition and holding of the Beverly Hills property. Lloyds Bank was named as a defendant only because it held the two accounts in the name of Mrs. Marcos. There are no specific allegations of wrongdoing against Ancor Holdings, Inc.

On this foundation, the Republic strives to build eleven claims. Only the first three, based on the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. Secs. 1961-1968 (1982), are grounded on federal law; the remainder are pendent. The first RICO claim charges the Marcoses and the minor defendants with conducting a RICO enterprise, consisting either of the Philippine government itself or, alternatively, of an association-in-fact made up of the defendants with an existence apart from the racketeering activity in which they allegedly engaged. The specific activities alleged are: (a) the transfer, by mail and wire, of converted funds, which the Republic claims amounted to mail or wire fraud; (b) the transportation of the crates to Hawaii, which the Republic claims was the knowing transportation of stolen goods in foreign commerce; (c) the acquisition of the Beverly Hills property by Calno (later transferred to Krodo and Al Djebel) with funds that the Republic claims were stolen, and so known to be by all the defendants involved; (d) the knowing concealment of stolen goods moved in foreign commerce; and (e) the sale of a deed of trust to the Beverly Hills property (part of Calno's disposition of the property) knowing that the deed was stolen or taken by fraud.

The second federal claim charges investments of funds produced by racketeering into two "enterprises": the Beverly Hills property and the Lloyds Bank accounts. The third claim alleges a conspiracy among the defendants to conduct the RICO enterprise and invest the funds.

The remainder of the complaint propounds various state law theories of recovery on the same allegations of fact. They include, in particular...