FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

In re: PHILIPPINE NATIONAL BANK,

PHILIPPINE NATIONAL BANK,

Petitioner,

v.

No. 04-71843

UNITED STATES DISTRICT

D.C. No.

COURT FOR THE DISTRICT OF

MDL-00840-MLR

HAWAII,

OPINION

Respondent,

MAXIMO HILAO; ESTATE OF

FERDINAND MARCOS; IMELDA R.

MARCOS; FERDINAND R. MARCOS,

JR.,

Real Parties in Interest.

Petition for Writ of Mandamus to the

United States District Court for the

District of Hawaii

Argued and Submitted

June 16, 2004--San Francisco, California

Filed February 4, 2005

Before: Alfred T. Goodwin, William C. Canby, Jr., and

Richard C. Tallman, Circuit Judges.

Opinion by Judge Canby

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COUNSEL

Jay R. Ziegler, Buchalter, Nemer, Fields & Younger, Los

Angeles, California, for the petitioner.

Robert A. Swift, Kohn, Swift & Graf, PC, Philadelphia, Pennsylvania; John J. Bartko, William I. Edlund, Bartko, Zankel,

Tarrant & Miller, San Francisco, California; for real parties in

interest.

_________________________________________________________________

OPINION

CANBY, Circuit Judge:

The Philippine National Bank petitions this court 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.1 We

conclude that the district court's orders violated the act of

state doctrine, and we accordingly issue the writ.

_________________________________________________________________

1 We have jurisdiction pursuant to 28 U.S.C. § 1651(a).

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BACKGROUND

This mandamus petition represents one more chapter in a

long-running dispute over the right to the assets of the estate

of former Philippine President Ferdinand E. Marcos. On one

side is a class of plaintiffs who obtained a large judgment in

the federal district court in Hawaii against the Marcos estate

for human rights violations by the Marcos regime. The judgment included an injunction restraining the estate and its

agents or aiders and abettors from transferring any of the

estate's assets.2 On the other side is the Republic of the Philippines, which independently has sought forfeiture of the Marcos estate's assets on the ground that they were stolen by

Marcos from the Philippine government and its people.

In an earlier case, we dealt with the attempt of class plaintiffs to reach assets of the Marcos estate located in Swiss

banks. Credit Suisse v. U.S. Dist. Ct. for the Cent. Dist. of

Cal., 130 F.3d 1342, 1347-48 (9th Cir. 1997). 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 the benefit of the

class plaintiffs. We held that the injunction violated the act of

state doctrine, which precludes our courts from declaring "invalid" a foreign sovereign's official act -- in this case the

freeze order of the Swiss government. Id. We accordingly

granted a writ of mandamus directing dismissal of the district

court's order, and ordering the district court:

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2 The district court's injunction included a finding of fact that the

Republic of the Philippines, which was not a party to the litigation, was

an agent or aider and abettor of the Estate. On appeal by the Republic, we

vacated the injunction to the extent that it purported to restrain the Republic, because sovereign immunity precluded district court jurisdiction over

the Republic. In re Estate of Ferdinand Marcos Human Rights Litig., 94

F.3d 539, 548 (9th Cir. 1996).

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to refrain from taking any further action in [this]

action or any other case involving any or all of the

[class plaintiffs] and any assets of the Estate of Ferdinand E. Marcos held or claimed to be held by the

Banks.

Id. at 1348.3

Thereafter, the Swiss government released the funds frozen

in Switzerland for transfer to the Philippine National Bank in

escrow pending a 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.

The district court then issued the orders that precipitated

the present petition for mandamus. 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. It ordered reinstatement of an earlier settlement agreement in the district court litigation that had been rejected

when the Philippine courts refused to approve it and the

Republic failed to give its consent to the agreement.4 The district court further stated in an Order Directing Compliance:

The Court's Special Master has brought to the

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3 We subsequently clarified that the mandate did not preclude the district

court from participating in settlement discussions or otherwise performing

its duties under Fed. R. Civ. P. 23, "so long as such duties do not involve

an attempt to reach Marcos assets held or claimed to be held by the

[Swiss] banks . . . ." Unpub. Order, No. 97-70193 (9th Cir. Dec. 23, 1997).

4 The Republic of the Philippines appealed the order reinstating the settlement and the Order Directing Compliance, but we dismissed the appeal

on the ground that the Republic lacked standing because it was neither a

party to the litigation nor a person or banking institution bound by the

Order Directing Compliance. Hilao v. Estate of Marcos, _______ F.3d _______,

2004 WL 2985245 (9th Cir. Dec. 28, 2004).

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Court's attention that there is an imminent threat that

the monies transferred from Swiss banks to Singapore, pursuant to a "certain escrow agreement[,"]

may be released by the banking officials pursuant to

claims filed by the Philippine Commission on Good

Government.

* * *

IT IS HEREBY ORDERED that any such transfer,

without first appearing and showing cause in this

court as to how such transfer might occur without

violating the Court's injunction shall be considered

contempt of the Court's earlier order. Any and all

persons and banking institutions participating in such

transfers . . . are hereby notified that such transfer

would be considered in contempt of this Court's

injunction[.]

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. A hearing on the Order

to Show Cause was held, but not concluded because the district court ruled that a Bank officer's declaration could not be

considered unless the officer was deposed. The district court

set a time and place for the deposition.

The Bank then filed the present petition for mandamus in

this court, seeking to restrain the district court from enforcing

its Order to Show Cause and from pursuing discovery against

the Bank officer. The Bank asserts that it has transferred

nearly all of the funds in issue to the Republic pursuant to the

judgment of the Philippine courts.5 The Bank contends that

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5 Certain of the funds held in another bank in Singapore were not transferred because the bank refused to release the funds and instead filed an

interpleader action in Singapore.

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the officer's deposition would violate Philippine bank secrecy

laws. More important, the Bank contends that the entire proceeding against the Bank for its transfer of funds violated the

act of state doctrine. We stayed the proceedings in district

court pending our ruling on the mandamus petition.

DISCUSSION

1. The act of state doctrine.

[1] 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.

Underhill v. Hernandez, 168 U.S. 250, 252 (1897). The act of

state doctrine originally was deemed to arise from international law, but more recently has been viewed as a function

of our constitutional separation of powers. W.S. Kirkpatrick &

Co. v. Envtl. Tectonics Corp., Int'l, 493 U.S. 400, 404 (1990).

So viewed, the doctrine reflects " `the strong sense of the

Judicial Branch that its engagement in the task of passing on

the validity of foreign acts of state may hinder' the conduct

of foreign affairs." Id. (quoting Banco Nacional de Cuba v.

Sabbatino, 376 U.S. 398, 423 (1964)).

The district court's orders in issue violated this principle.

In order to obtain assets from the Philippine Bank, or to hold

the Bank in contempt for the transfer of those assets to the

Republic, the district court necessarily (and expressly) held

invalid the forfeiture judgment of the Philippine Supreme

Court. We conclude that this action of the district court violated the act of state doctrine.

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The class plaintiffs in the district court argue that the act

of state doctrine is directed at the executive and legislative

branches of foreign governments, and does not apply to judicial decisions. Although the act of state doctrine is 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. See Liu

v. Republic of China, 892 F.2d 1419, 1433-34 & n.2 (9th Cir.

1989) (citing RESTATEMENT (SECOND) OF FOREIGN RELATIONS

OF THE UNITED STATES § 41 cmt. d (1965)) ("A judgment of a

court may be an act of state."). There is no question that the

judgment of the Philippine Supreme Court gave effect to the

public interest of the Philippine government. The forfeiture

action was not a mere dispute between private parties; it was

an action initiated by the Philippine government pursuant to

its "statutory mandate to recover property allegedly stolen

from the treasury."6 In re Estate of Ferdinand Marcos Human

Rights Litig., 94 F.3d at 546. We have earlier characterized

the collection efforts of the Republic to be governmental. Id.

The subject matter of the forfeiture action thus qualifies for

treatment as an act of state.

The class plaintiffs next argue that the act of state doctrine is inapplicable because the judgment of the Philippine

Supreme Court did not concern matters within its own territory. Generally, the act of state doctrine applies to official acts

of foreign sovereigns "performed within [their ] own territory." Credit Suisse, 130 F.3d at 1346 (internal quotations omitted). The act of the Philippine Supreme Court was not wholly

external, however. Its judgment, which the district court

declared invalid, was issued in the Philippines and much of its

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6 The Philippine judgment is therefore distinguishable from the foreign

judgment in Timberlane Lumber Co. v. Bank of America, 549 F.2d 597

(9th Cir. 1976), relied on by the class plaintiffs here. Timberlane refused

to consider the foreign judgment an act of state in part because the "judicial proceedings [ ] were initiated by Caminals, a private party and one of

the alleged co-conspirators, not by the Honduran government itself." Id.

at 608.

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force upon the Philippine Bank arose from the fact that the

Bank is a Philippine corporation. It is also arguable whether

the bank accounts have a specific locus in Singapore,

although they apparently were carried on the books of bank

branches there.7 See Callejo v. Bancomer, S.A, 764 F.2d 1101,

1121-25 (5th Cir. 1985) (discussing differing theories of situs

of intangibles). Even if we assume for purposes of decision

that the assets were located in Singapore, we conclude that

this fact does not preclude treatment of the Philippine judgment as an act of state in the extraordinary circumstances of

this case. "[T]he [act of state] doctrine is to be applied pragmatically and flexibly, with reference to its underlying considerations." Tchacosh Co. v. Rockwell Int'l Corp., 766 F.2d

1333, 1337 (9th Cir. 1985). Thus, even when an act of a foreign state affects property outside of its territory, "the considerations underlying the act of state doctrine may still be

present." Callejo, 764 F.2d at 1121 n.29. Because the Republic's "interest in the enforcement of its laws does not [ ] end

at its borders," id., the fact that the escrow funds were deposited in Singapore does not preclude the application of the act

of state doctrine. The underlying governmental interest of the

Republic supports treatment of the judgment as an act of state.

It is most important to keep in mind that 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 our decision

in Credit Suisse. There we upheld as an act of state a freeze

order by the Swiss government, enacted in anticipation of the

request of the Philippine government, to preserve the Philippine government's claims against the very assets in issue

_________________________________________________________________

7 The class plaintiffs cite Hilao v. Estate of Marcos, 95 F.3d 848, 851

(9th Cir. 1996), for the proposition that the locus of a bank deposit is the

branch where the deposit is made. Hilao, however, was applying a California statute that specified the place and manner of levying execution; it did

not purport to state a general rule for determining the locus of bank

accounts.

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today. Credit Suisse, 130 F.3d at 1346-47. Indeed, the Philippine National Bank argues that the district court's orders violated our mandate in Credit Suisse "directing the district court

to refrain from taking any further action" with regard to assets

of the Marcos estate "held or claimed to be held by the

[Swiss] Banks." Id. at 1348. The district court held that our

mandate did not apply to the assets once they left the hands

of the Swiss banks. We need not decide the correctness of that

ruling because we conclude that, in these circumstances, the

Philippine forfeiture judgment is an act of state. The Swiss

government did not repudiate its freeze order, and the Swiss

banks did not transfer the funds in the ordinary course of business. They delivered the funds into escrow with the approval

of the Swiss courts in order to permit the very adjudication of

the Philippine courts that the district court considered invalid.

To permit the district court to frustrate the procedure chosen

by the Swiss and Philippine governments to adjudicate the

entitlement of the Republic to these assets would largely nullify the effect of our decision in Credit Suisse. In these

unusual circumstances, we do not view the choice of a Singapore locus for the escrow of funds to be fatal to the treatment

of the Philippine Supreme Court's judgment as an act of state.

2. The mandamus remedy.

We also conclude that the district court's error qualifies for

correction by a writ of mandamus. In so ruling, we consider

the factors set forth in Bauman v. U.S. Dist. Ct., 557 F.2d 650

(9th Cir. 1977):

(1) The party seeking the writ has no other adequate

means, such as a direct appeal, to attain the relief he

or she desires. (2) The petitioner will be damaged or

prejudiced in a way not correctable on appeal. (This

guideline is closely related to the first.) (3) The district court's order is clearly erroneous as a matter of

law. (4) The district court's order is an oft-repeated

error, or manifests a persistent disregard of the fed-

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eral rules. (5) The district court's order raises new

and important problems, or issues of law of first

impression.

Id. at 654-55. "None of these guidelines is determinative and

all five guidelines need not be satisfied at once for a writ to

issue." Credit Suisse, 130 F.3d at 1345. Rarely will all five

"guidelines point in the same direction" or even be relevant

to the particular inquiry. See id.

With regard to the first two factors, we conclude that

the district court's error is not sufficiently correctable on

appeal. No appeal will lie unless a contempt order is issued

and sanctions have been imposed. See Estate of Domingo v.

Republic of the Philippines, 808 F.2d 1349, 1350 (9th Cir.

1987). The Bank has made a sufficient showing that subjecting its officer to cross-examination will place the officer and

the Bank in danger of violating Philippine bank secrecy laws.

Requiring the Bank "to choose between being in contempt of

court and violating [Philippine] law clearly constitutes severe

prejudice that could not be remedied on direct appeal." Credit

Suisse, 130 F.3d at 1346.

As for the third Bauman factor, our discussion of the act

of state doctrine makes clear that the district court's orders are

erroneous as a matter of law. In addition, the district court is

attempting to apply its injunction against transfer of assets to

the Philippine National Bank as an aider and abettor or agent

of the estate of Marcos. But the Bank can hardly have been

acting as an aider and abettor or agent of the estate when it

transferred assets to the Republic pursuant to the forfeiture

judgment of the Philippine Supreme Court, entered over the

opposition of the Marcos estate. The error in the district

court's orders is apparent.

With regard to the fourth Bauman factor, we cannot say

that the district court's error is "oft-repeated. " The fifth factor,

however, favors mandamus because the district court's ruling

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raises new and important problems regarding the act of state

doctrine.

Four of the five Bauman factors thus favor issuance of

the writ. We therefore grant the Bank's petition. The district

court's order, dated February 25, 2004, to the Philippine

National Bank to show cause, and its order, dated April 8,

2004, to the Bank to produce its employee, Rogel L.

Zenarosa, for a deposition are vacated. The district court is

directed to refrain from any further action against the Philippine National Bank in this action or any other action involving any of the funds that were the subject of the decision of

the Philippine Supreme Court dated July 15, 2003. This court

retains jurisdiction over the district court litigation, MDL No.

840, to the extent that it involves any action against the Philippine National Bank.

WRIT OF MANDAMUS ISSUED.

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