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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF TEXAS

FORT WORTH DIVISION

MARIANO J. PIMENTEL §

§

VS. § CIVIL ACTION NO.4:05-CV-234-Y

 § 

B.N. DEVELOPMENT COMPANY, §

INC., et al. §

ORDER REGARDING MOTIONS

TO DISMISS, FOR CONTINUANCE, AND TO STRIKE

Pending before the Court is Defendants’ Motion to Dismiss [doc.

# 21], filed June 3, 2005. Also pending before the Court are

plaintiff Mariano J. Pimentel’s Amended Rule 56(f) Motion to Abate

or Continue Defendant’s Motion to Dismiss [doc. # 30], filed June

30, and Motion to Strike Affidavits Submitted in Support of Rule 56

Motion [doc. # 41], filed December 27. Having carefully reviewed

the motions, responses, and replies, the Court concludes that

Defendants’ motion to dismiss should be DENIED and Pimentel’s motions

should be DENIED AS MOOT.

I. BACKGROUND

On April 8, 2005, Pimentel filed a complaint in this Court on

behalf of himself and a class of plaintiffs seeking a declaration

that certain real property (“the Seven Properties”) located in Tarrant

County, Texas, is beneficially owned by the estate of former

Philippine President Ferdinand E. Marcos. The complaint also seeks

execution on the Seven Properties due to a large judgment in the

District Court for Hawaii against the Marcos Estate for human-rights

violations committed by the Marcos regime. Defendants are the record

 

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owners of the Seven Properties.

Marcos was president of the Republic of the Philippines from

1965 to 1986, at which point he was deposed. He fled to Hawaii.

After he fled it became apparent that Marcos and his associates had

been defrauding the Filipino Republic through use of his official

position. See Hilao v. Estate of Marcos (In re Estate of Marcos Human

Rights Litigation), 94 F.3d 539, 542 (9th Cir. 1996). In light of

Marcos’s corruption, the Republic’s new president, Corazon Aquino,

created the Presidential Commission on Good Government (“PCGG”), an

official agency charged with recovering the assets of the Filipino

Republic from the Marcos family and its associates. See id.

Philippine law provides for the forfeiture to the national treasury

of property unlawfully obtained by public officials. See id.

In accumulating and hiding his ill-gotten wealth, Marcos used

the services of a financial advisor, Jose Yao Campos. Pimentel

alleges that Campos acquired the Seven Properties for Marcos, placing

them in Netherlands Antilles corporations under Campos’s control.

In 1986, upon the PCGG’s recommendation, the Filipino Republic

filed suit (“the 1986 action”) in the Southern District of Texas

against Marcos, Campos, and other defendants, including most of the

defendants in this cause (or a predecessor in interest). The 1986

action sought a declaration that certain property was beneficially

owned by Marcos and a decree forcing the corporations with record

title to the property to convey it to the Filipino Republic. 

After Marcos’s flight to Hawaii, Campos provided assistance to

the PCGG. The PCGG then entered a resolution whereby, in recognition

 

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of Campos’s assistance, the PCGG granted to Campos and his family

criminal immunity and immunity from civil liabilities with respect

to all matters arising from a past relationship with Marcos. (Defs.’

Mot. App. at 112-13 (PCGG Resolution).) The resolution also stated

that the PCGG, on the basis and in consideration of Campos’s

disclosures, determined that Campos rightfully and beneficially owned

certain property (“the listed property”), a list of which (“Attachment

A”) was cited in the resolution and attached to an affidavit by

Campos. (Id. at 114-15.) The PCGG certified this resolution in 1986.

(Id. at 140-141 (PCGG Certification).) The resolution and

certification also provided that the Filipino Republic would drop

its cause of action in the Southern District of Texas. In June 1986

the Filipino Republic filed a notice dismissing with prejudice its

claims against Campos in the 1986 action. (Id. at 132-133 (Notice

of Dismissal).)

In 1987 the Filipino Republic filed a civil complaint in the

Sandiganbayan, a Filipino court, against Campos and others for

reconveyance, reversion, accounting, and restitution. Campos moved

to dismiss the complaint as to the claims against him based upon the

PCGG’s provision to him of civil immunity. The Filipino Republic

also filed a motion to drop Campos as a defendant in the action.

The Sandiganbayan denied the motions, concluding that, while the PCGG

possessed the authority to grant immunity for criminal charges, it

lacked that authority in relation to civil actions. The Filipino

Supreme Court reversed that decision, holding that the PCGG had the

authority to grant immunity for civil claims. (Id. at 148-65 (Supreme

 

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1 The Court declines to convert Defendants’ motion to dismiss into a

summary-judgment motion for the reasons stated by Defendants in their filings on

the issue.

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Court Order).) 

A number of lawsuits were later filed in American courts against

the Marcos family for human-rights violations, which cases eventually

were consolidated in the district court in Hawaii and certified as

a class action suit against the Marcos Estate. See Hilao v. Estate

of Ferdinand Marcos (In re Estate of Ferdinand Marcos, Human Rights

Litig.), 25 F.3d 1467, 1469 (9th Cir. 1994). That consolidated case

resulted in the judgment upon which Pimentel presently moves for

declaratory relief and execution upon the Seven Properties.

It is Defendants’ position that the Seven Properties were

included within the PCGG’s determination that the listed properties

were beneficially owned by Campos in 1986. Defendants argue that

the act-of-state doctrine precludes Pimentel’s suit because the Court

must defer to the determination made by the PCGG, an arm of the

executive branch of the Filipino government. Defendants also contend

that dismissal is further warranted because res judicata and issue

preclusion due to the 1986 action bar this suit.

II. STANDARD OF REVIEW1

“[A] motion to dismiss for failure to state a claim is viewed

with disfavor and is rarely granted." Kaiser Aluminum & Chem. Sales

v. Avondale Shipyards, Inc., 677 F.2d 1045, 1050 (5th Cir. 1982),

cert. denied, 459 U.S. 1105 (1983) (quoting Wright & Miller, Federal

Practice and Procedure § 1357 (1969)). The court must accept as true

 

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all well pleaded, non-conclusory allegations in the complaint, and

must liberally construe the complaint in favor of the plaintiff.

See Kaiser Aluminum, 677 F.2d at 1050. However, conclusory

allegations, unwarranted deductions of fact, or “legal conclusions

masquerading as factual conclusions will not suffice to prevent [the

granting of] a motion to dismiss.” Fernandez-Montes v. Allied Pilots

Ass’n, 987 F.2d 278, 284 (5th Cir. 1993); see Spiller v. City of Texas

City, Police Dept., 130 F.3d 162, 167 (5th Cir. 1997); Associated

Builders, Inc. v. Alabama Power Co., 505 F.2d 97, 100 (5th Cir. 1974).

“Dismissal is proper if the complaint lacks an allegation regarding

a required element necessary to obtain relief.” Blackburn v. City

of Marshall, 42 F.3d 925, 930 (5th Cir. 1995). A court should not

dismiss a complaint for failure to state a claim unless it appears

beyond doubt from the face of the plaintiff’s pleadings that he can

prove no set of facts in support of his claim that would entitle him

to relief. See Hishon v. King & Spalding, 467 U.S. 69, 73 (1984);

Garrett v. Commonwealth Mortgage Corp., 938 F.2d 592, 594 (5th Cir.

1991); Kaiser Aluminum, 677 F.2d at 1050.

III. ANALYSIS

A. The 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.” Underhill v. Hernandez, 168 U.S. 250, 252 (1897);

see also Philippine Nat’l Bank v. United States Dist. Court (In re

 

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2 The act-of-state doctrine 

recognizes that the judicial branch should refrain from exercising

its jurisdiction in sensitive foreign policy matters traditionally

left to the executive branch. Thus, it has been said that the act

of state doctrine recognizes not only the sovereignty of foreign

states, but also the spheres of power of the coequal branches of our

government.

Frolova v. Union of Soviet Socialist Republics, 558 F. Supp. 358, 360 (N.D. Ill.

1983) (citing Int’l Ass’n of Machinists v. OPEC, 649 F.2d 1354, 1359 (9th

Cir.1981)); see also Arango, 621 F.2d at 1380 (citation omitted). 

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Philippines), 397 F.3d 768, 772 (9th Cir. 2005).2

 The doctrine

“applies only when [a] dispute implicates the legitimacy of public

acts undertaken by a sovereign nation.” Af-Cap Inc. v. Republic of

Congo, 383 F.3d 361, 372 n. 14 (5th Cir. 2004) (citing Banco Nacional

de Cuba v. Sabbatino, 376 U.S 398, 401 (1964); Callejo v. Bancomer,

S.A., 764 F.2d 1101, 1112-24 (5th Cir. 1985)). “In the act of state

context, even if the defendant is a private party, not an instrumentality of a foreign state, and even if the suit is not based

specifically on a sovereign act, [a court] nevertheless [must] decline

to decide the merits of the case if in doing so [it] would need to

judge the validity of the public acts of a sovereign state performed

within its own territory.” Callejo, 764 F.2d at 1113 (citing

Sabbatino, 376 U.S. at 428; Compania de Gas de Nuevo Laredo v. Entex,

Inc., 686 F.2d 322, 325-26 (5th Cir. 1982); Tabacalera Severiano

Jorge, S.A. v. Stan. Cigar Co., 392 F.2d 706 (5th Cir. 1986)).

The doctrine is one of judicial restraint as opposed to

jurisdictional limitation. See Sabbatino, 376 U.S. at 421-423.

“Under the doctrine, the courts exercise jurisdiction but decline

to decide certain issues.” Callejo, 764 F.2d at 1113 (citing Arango,

621 F.2d at 1380 (5th Cir. 1980). Thus, the doctrine operates as

 

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an issue-preclusion device, foreclosing, in litigation between any

set of parties, judicial inquiry into the validity or propriety of

a foreign government’s acts. Arango, 621 F.2d at 1380 (citing Nat’l

American Corp. v. Fed. Republic of Nigeria, 448 F.Supp. 622, 640 (S.D.

N.Y. 1978); Hunt v. Mobil Oil Corp., 550 F.2d 68 (2d Cir. 1977)).

If a suit violates the act-of-state doctrine, dismissal is required.

See id. at 1378-81.

When the doctrine is raised in connection with a Rule 12(b)(6)

motion to dismiss, 

the court must be satisfied that there is no set of facts

favorable to the plaintiffs and suggested by the complaint

[that] could fail to establish the occurrence of an act

of state. To the extent crucial facts pertaining to the

defense are disputed, or not fully developed in a complete

record, the reviewing court must be certain that it does

not leap to conclusions arguable under the unelaborated

pleadings but which could be refuted through the ordinary

process of discovery and fact-finding in the district

court. To do otherwise is to deny the claimant an

opportunity to prove his case.

Ramirez de Arellano v. Weinberger, 745 F.2d 1500, 1534 (D.C. Cir.

1984), vacated other grounds, 471 U.S. 1113 (1985).

At present, based upon the current filings on the matter, the

Court cannot conclude that the act-of-state doctrine mandates

dismissal of this case. First, the Court is not persuaded that the

determination by the PCGG constitutes the act of a sovereign nation.

As stated by the Supreme Court of the Philippines in its order

reversing the Sandiganbayan’s conclusion that the PCGG lacked the

authority to grant civil immunity to Campos:

“[T]he PCGG is not, and never was intended to act as, a

judge. Its general function is to conduct investigations

in order to collect evidence establishing instances of

 

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‘ill-gotten wealth;’ issue sequestration, and such orders

as may be warranted by the evidence thus collected and as

may be necessary to preserve and conserve custody and

control and prevent their disappearance, loss or dissipation; and eventually file and prosecute in the proper court

of competent jurisdiction all cases investigated by it as

may be warranted by its findings. It does not try and

decide, or hear and determine, or adjudicate with any

character of finality or compulsion, cases involving the

essential issue of whether or not property should be

forfeited and transferred to the State because ‘ill-gotten’

within the meaning of the Constitution and the executive

orders. This function is reserved to the designated court,

in this case, the Sandiganbayan. (Ex. Ord. No. 14)”

(Defs.’ Mot. App. at 155 (Filipino S. Ct. Order (quoting Bataan

Shipyard & Engineering Co., Inc. v. Presidential Commission on Good

Government, (150 SCRA 181 (1987)) (emphasis in original)).)

The Court concedes that, for a public act to fall within the

act-of-state doctrine, it is not required that the act be judicial

in nature. Such a requirement would be illogical as many public acts

by foreign powers are committed pursuant to executive power. The

fact that the PCGG lacks the authority to make judicial findings,

however, is crucial. As stated above, the PCGG “does not try and

decide, or hear and determine, or adjudicate with any character of

finality or compulsion, cases involving the essential issue of whether

or not property should be forfeited and transferred to the State

because ‘ill-gotten.’” Id. (emphasis added). Thus, it is not

unreasonable to infer that the PCGG’s determination may not be

eligible for the deference granted to final conclusions by the

Filipino judiciary. Cf. In re Philippines, 397 F.3d at 770 (finding

that the act-of-state doctrine applied to decision by Filipino Supreme

Court). Instead, the Filipino Supreme Court’s order indicates that

the PCGG’s authority is prosecutorial in nature, meaning that it may

 

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3 In its decision regarding the PCGG’s authority to grant Campos civil

immunity, the Filipino Supreme Court did not discuss or issue a ruling as to

whether the PCGG possessed the authority to make determinations regarding the

ownership of property. That decision merely discussed the PCGG’s power to grant

both civil and criminal immunity in relation to prosecution. Simply because the

PCGG can grant immunity--a function completely in line with its prosecutorial

powers--however, does not compel an inference that its determination as to

Campos’s beneficial ownership of the listed properties is entitled to act-ofstate-doctrine deference.

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decide whether and under what circumstances it will bring or dismiss

charges or claims in the Sandiganbayan. There is no clear indication

that the PCGG’s determinations are official acts of state or entitled

to preclusive effect; the facts now before the Court imply the

opposite. 

The PCGG may very well possess the authority to make determinations that are recognizable as public acts by a sovereign nation.

The record before the Court, however, does not compel such treatment.3

Second, even if the PCGG’s determination could be deemed to be

a public act by a sovereign nation, the act-of-state doctrine would

not apply, at present, because there is an insufficient showing that

the PCGG determination applies to the Seven Properties. The PCGG

Resolution and Certification did not themselves list the properties

beneficially owned by Campos; instead, they relied upon a list of

properties included within another document--Attachment A. (Defs.

App. at 114-15 (Resolution); 139-40 (Certification).) Attachment

A contained a list of several Netherlands Antilles corporations that

held properties in the United States for the rightful ownership of

Campos. (Id. at 105-06 (Campos Sworn Statement).) Five of the

defendants in this suit are listed in Attachment A as Netherlands

Antilles corporations owning property for Campos; another defendant,

 

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who is not listed, has a predecessor in interest on the list

(collectively, “the listed defendants”). (Id.) 

Even if in 1986 the listed defendants did own property in the

United States for Campos, however, that does not compel an inference

that (1) the Seven Properties were owned by the listed defendants

at the time of the PCGG decision; or (2) the listed defendants still

own property (specifically, the Seven Properties) for Campos. Absent

from the record is any type of evidentiary showing (at least to which

the Court was directed) demonstrating either that the Seven Properties

were included in 1986 within the listed properties or within the

control of the listed defendants or that the listed defendants

presently own properties for Campos. Any number of events could have

occurred since 1986 that would affect Campos’s present beneficial

ownership. It is possible that Campos freed himself of his ties to

the listed defendants. Or, the listed defendants might not have owned

some or all of the Seven Properties in 1986. If they did not control

the Seven Properties in 1986 and, at some point, no longer owned

property for Campos, the listed defendants could have acquired the

Seven Properties after the date ties with Campos were severed. It

would therefore be irrelevant that the listed defendants are presently

the record owners of the Seven Properties. 

To obtain dismissal of this suit based upon the act-of-state

doctrine, Defendants would have to provide, among other things,

evidence connecting the 1986 PCGG determination to the present

ownership of the Seven Properties. Otherwise, the Court must “leap

to conclusions arguable under the unelaborated pleadings but which

 

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could be refuted through the ordinary process of discovery and

fact-finding.” Ramirez de Arellano, 745 F.2d at 1534. This the Court

is not permitted to do.

 As to the remaining defendant (that is unlisted in Attachment

A as a Netherlands Antilles corporation owning property for Campos)--

Jason Development Company, Inc. (“Jason”)--Attachment A also states

that Campos beneficially owned a “604 acre Mallard Tract in Tarrant

County, Texas.” (Id. at 106). Pimentel’s complaint alleges that

Jason “is the record owner of a 605 acre parcel of real property

located in Tarrant County.” (Compl. at 3, ¶ 7.) The description

for the property indicates that it is a Mallard tract. (Id. at Ex.

D.) 

Concluding that the Mallard 605-acre tract in Pimentel’s

complaint is the same one set out in the PCGG’s 1986 determination

(and thus that the 1986 PCGG determination establishes Campos’s

present record title to the tract) would require the Court to make

several assumptions: First, that the 605-acre tract is the same one

referred to in Campos’s affidavit. The Court cannot make that

assumption. The Court cannot determine or assume that the 605-acre

tract described through metes and bounds in the complaint is the same

property listed in Attachment A because Attachment A does not contain

a metes-and-bounds description. Second, and assuming that they are

the same tracts, because Campos beneficially owned the tract in 1986

he must still beneficially own it. Such an assumption is unsupported

by the record. Third, that Jason beneficially owns the tract for

Campos. Such an assumption is even more tenuous than with the listed

 

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4 Moreover, the Court notes that:

[t]he act of state doctrine only precludes judicial inquiry into the

legality, validity, and propriety of the acts and motivations of

foreign sovereigns acting in their governmental roles within their

own boundaries; it does not preclude judicial resolution of all

commercial consequences stemming from the occurrence of such public

acts.

Arango, 621 F.2d at 1380-81. 

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defendants because Jason is not one of the Netherlands Antilles

corporations listed in Attachment A as owning property for Campos

in 1986.4 

The PCGG rendered its decision twenty years ago. There is no

evidence connecting Campos’s beneficial ownership of the listed

properties in 1986 with a present ownership of the Seven Properties.

Thus, crucial facts pertaining to the act-of-state defense are not

fully developed in a complete record before the Court. See Ramirez

de Arellano, 745 F.2d at 1534. 

Defendants have therefore failed, at present, to establish that,

because application of the act-of-state doctrine mandates dismissal,

there are no set of facts upon which Pimentel could recover. See

id. The Court must not leap to conclusions regarding the applicability of the PCGG determination to the present suit . “To do otherwise

is to deny the claimant an opportunity to prove his case.” Id.

Finally, the Court notes that it may conclude that the act-ofstate doctrine may apply to this case upon the presentation of the

necessary evidence. Upon the present showing, however, such a

conclusion cannot be made. 

 

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B. Preclusion

 Defendants raise the affirmative defenses of res judicata (claim

preclusion) and collateral estoppel (issue preclusion) as bars to

the present action. Those issues are, however, premature. Generally,

preclusion is an affirmative defense that should not be raised as

part of a 12(b)(6) motion, but should instead be addressed at summary

judgment or at trial. See Am. Realty Trust, Inc. v. Hamilton Lane

Advisors, Inc., 115 Fed. Appx. 662, 664 (5th Cir. 2004) (citing Moch

v. E. Baton Rouge Parish School Bd., 548 F.2d 594, 596 n.3 (5th Cir.

1977)); Talcott, Inc. v. Allahabad Bank, Ltd., 444 F.2d 451, 457 (5th

Cir. 1971) (“as a general rule, actions involving affirmative

defenses such as collateral estoppel, may be more amenable to a

summary adjudication than others.”) (citation omitted). Dismissal

on preclusion grounds is therefore unwarranted.

IV. CONCLUSION

Therefore, Defendants’ Motion to Dismiss [doc. # 21] is DENIED.

Further, Pimentel’s Amended Rule 56(f) Motion to Abate or

Continue Defendant’s Motion to Dismiss [doc. # 30] and Motion to

Strike Affidavits Submitted in Support of Rule 56 Motion [doc. # 41]

are DENIED AS MOOT. 

SIGNED March 9, 2006.

 

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