The Republic of the Philippines v. Ferdinand E. Marcos, Imelda R. Marcos, Ramon Azurin, Diosdado C. Ordonez and Ancor Holdings, N.V.

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.

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.

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.

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 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, requests that the court impose a constructive trust on the disputed assets and require an accounting of the defendants.

The Republic moved for a preliminary injunction to prevent the transfer of property held anywhere in the world by or on behalf of the Marcoses. On June 25, 1986, the district court granted the injunction. It held that RICO established a basis for federal jurisdiction and the pendent causes of action entitled the Republic to an injunction. The court based the preliminary injunction on the pendent claims for constructive trust and accounting, finding that the Republic had a substantial likelihood of prevailing. It also found that the Marcoses' alleged propensity to move assets would irreparably harm the Republic if the injunction were not granted. The Republic had made no attempt to win an attachment of any assets and the district court held that it was not required to do so.

Defendants appeal, raising four major contentions. First, they argue that the district court had no jurisdiction over this action. They contend that the RICO claims are so remote as to be frivolous. Second, they argue that even if plaintiff has made a colorable claim sufficient to establish subject matter jurisdiction, the district court abused its discretion by issuing the injunction. They argue that the plaintiff's case is just too weak, particularly when their likely affirmative defenses are considered, to support a finding that it will probably succeed on the merits. Third, defendants argue that the injunction was improvidently granted because the Republic will not sustain irreparable harm if the injunction is dissolved, the Marcoses having agreed to a freeze of their assets for the Republic to litigate the case in the Philippines. Finally, defendants contend that, in any case, the injunction--covering the Marcoses' property worldwide--is far too broad, sweeping in a multitude of assets that have no connection to the pendent state law claims.

A district court may grant a preliminary injunction when the movant demonstrates probable success on the merits and the possibility of irreparable injury. San Diego Comm. Against Registration & the Draft v. Governing Bd., 790 F.2d 1471, 1473 n. 3 (9th Cir.1986). Where the balance of relative hardships "tips decidedly toward the plaintiff," however, "the plaintiff need not show as robust a likelihood of success on the merits." Benda v. Grand Lodge of the Int'l Ass'n of Machinists, 584 F.2d 308, 315 (9th Cir.1978), cert. dismissed, 441 U.S. 937, 99 S.Ct. 2065, 60 L.Ed.2d 667 (1979). As often noted, preliminary injunctions may be issued at any point on a continuum along which the likelihood of success varies inversely with the potential of harm to the plaintiff. Id. In this case, the district court based its decision to grant a preliminary injunction on its conclusion that the Philippines had a substantial likelihood of success on both its RICO and pendent state claims, and that there was a "substantial danger" of irreparable harm. The court made no findings on the balance of relative hardships necessary to support an injunction at the opposite end of the spectrum.

The grant of a preliminary injunction may be reversed if the district court abused its discretion or based its decision on an erroneous legal standard or on clearly erroneous findings of fact. Sierra On-Line, Inc. v. Phoenix Software, Inc., 739 F.2d 1415, 1421 (9th Cir.1984). Legal issues underlying the preliminary injunction decision are reviewed de novo. International Molders' & Allied Workers' Local Union No. 164 v. Nelson, 799 F.2d 547, 551 (9th Cir.1986).

The defendants contend that the Republic's RICO claims are so frivolous that they cannot form the basis of jurisdiction in the district court. But we view jurisdictional claims under an exceedingly generous standard at this stage of the proceedings. As we stated in Keniston v. Roberts, 717 F.2d 1295, 1298 (9th Cir.1983), "the complaint must fulfill only two criteria: (1) it must 'claim a right to recover under the Constitution and laws of the United States,' and (2) the claim must not be 'wholly insubstantial and frivolous.' Jackson Transit Authority v. Local Division 1285, 457 U.S. 15, 21 n. 6 [102 S.Ct. 2202, 2206 n. 6, 72 L.Ed.2d 639] (1982) (quoting Bell v. Hood, 327 U.S. 678, 681, 682-83 [66 S.Ct. 773, 775, 776, 90 L.Ed. 939] (1946))."

While generous, this standard is not toothless. We regularly uphold the dismissal of claims where they are so insubstantial that the district court plainly lacks jurisdiction. See, e.g., Ellis v. Cassidy, 625 F.2d 227 (9th Cir.1980); Standage Ventures, Inc. v. Arizona, 499 F.2d 248 (9th Cir.1974). However, we deem claims insubstantial only where the law is clear or where a plaintiff has persistently failed to allege an essential element. Under this narrow standard, we cannot conclude that all the RICO claims made by plaintiff here are frivolous. The law is neither so clear, nor are the allegations of the complaint so patently and irremediably defective, that we can say with confidence that plaintiff has failed to establish a colorable basis for jurisdiction in the district court. Assuming the truth of the matters alleged in the complaint, as we must, we find all of the elements of a RICO violation: the existence of a criminal enterprise, Complaint paragraphs 28, 29(b); the conduct of its affairs through a pattern of racketeering activity, id. paragraphs 29(a), 29(c), 30; and injury caused thereby, p 32. Plaintiff's complaint seems to allege at least prima facie RICO violations by the Marcoses.1

Where, as here, plaintiff's claim is based upon transactions that take place fully or partly outside the United States, we must make one further inquiry: whether our law was meant to reach the conduct in question insofar as it is extraterritorial in nature. See, e.g., SEC v. United Financial Group, Inc., 474 F.2d 354, 355 (9th Cir.1973); Des Brisay v. Goldfield Corp., 549 F.2d 133, 135 (9th Cir.1977). Here the alleged thefts by Mr. Marcos and his confederates took place in the Philippines and quite probably that conduct cannot be reached by U.S. law. However, plaintiff does not base its claim directly upon the alleged thefts in the Philippines. Its claim is based upon conduct that it charges took place in the United States: mail fraud and transportation of stolen property across international borders in violation of 18 U.S.C. Secs. 1341, 1343, 2314, 2315.

Assuming that the property in question is in fact stolen, the charged acts--all of which took place within the United States--would clearly violate U.S. law. Again, assuming that the allegations of the complaint are true, the violations appear to be sufficient predicate acts under RICO. When all is said and done, it may well prove otherwise. But at this early stage of the proceedings, where predicate acts are alleged to have been committed within the United States, we cannot say that the district court was without jurisdiction to entertain plaintiff's RICO claims.

This is a highly unusual case. The current government of a friendly foreign nation is pursuing that nation's former ruler, seeking to litigate in our courts the legality of his actions during more than 20 years in office. While Mr. Marcos had the title of president he was, in the words of Rafael Fernando, the West Coast representative of the Philippine Commission on Good Government, "the dictator of the Government of the Philippines and personally controlled the said government." Declaration of Rafael Fernando in Support of Temporary Restraining Order and Order to Show Cause (Fernando) p 7. During much of Mr. Marcos' tenure in office, he governed by decree under a regime of martial law. Id. As plaintiff alleges, during this time the Marcoses were able "to conduct the affairs of the Philippines virtually unchecked." Complaint p 59.

A few of Marcos' alleged misdeeds, as charged in the complaint and the Fernando declaration, may amount to nothing more than common fraud or theft accomplished without the exercise of governmental authority. But the vast majority of the allegedly illegal acts are quite different in character; they are activities that Marcos could only have undertaken pursuant to his powers as President of the Philippines: expropriation of private property; creating public monopolies; "grant[ing] government favors, contracts, licenses, loans, and other public benefits." Fernando p 8. In this regard, perhaps the most telling aspect of plaintiff's case is its first claim for relief. Plaintiff there alleges that "the Philippines existed as a sovereign government and thus constituted a RICO 'enterprise' within the meaning of 18 U.S.C. Sec. 1961(4)" and that "[d]efendants conducted, or participated directly or indirectly in the conduct of the affairs of the Philippines through a pattern of racketeering activity...." Complaint paragraphs 28, 29. Plaintiff is thus claiming that the Philippine government headed by Marcos was a criminal enterprise under U.S. law.2

Moreover, plaintiff presents issues that are different in character, not merely in degree, from the normal case brought under RICO and the various state causes of action. Thus, paragraph 72 of the Complaint puts squarely in issue the manner in which Mr. Marcos discharged his responsibilities as President of the Philippines. Citing the oath of office Mr. Marcos took in 1965, plaintiff charges that he "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." Paragraph 73 then charges that "Mr. Marcos breached this contract."

Paragraph 51 of the complaint charges that Mr. and Mrs. Marcos made numerous misrepresentations "to the Philippines and its people," with the result that they were allowed "to remain in power and positions of authority." Paragraph 52 charges that "[p]laintiff relied to its detriment on [these misrepresentations], by permitting them to remain in positions of power and authority for twenty years and by allowing, through ignorance, the plunder of the country." Mr. Fernando, in his declaration, charges that the "amounts purloined by Mr. Marcos are of such significance as to affect the general economic conditions of the Republic of the Philippines and its people." Fernando p 8.

Plaintiff's case is a ringing indictment of Mr. Marcos' conduct as President of the Philippines during his 20 years in office. As such, it challenges not merely individual misdeeds or indiscretions but the very way in which Mr. Marcos wielded governmental power, retained that power and ran the Philippine government. This raises a variety of serious and sensitive questions about the ability of our courts to adjudicate this issue, and the propriety of their doing so. In effect, we must consider whether our courts are the appropriate forum for adjudicating what appears to be at least in part a political dispute between the Philippines' current government and its former ruler.

Our jurisdiction in this case is based solely on RICO, a statute that does not authorize the court to grant injunctive relief. Religious Technology Center v. Wollersheim, 796 F.2d 1076, 1088-89 (9th Cir.1986), cert. denied, --- U.S. ----, 107 S.Ct. 1336, 94 L.Ed.2d 187 (1987). Thus, as the district court properly recognized, if an injunction is to be issued at all, it must be on the basis of the pendent state claims. Nevertheless, probability of success on the RICO claims is not entirely irrelevant. The purpose of a preliminary injunction is to preserve the court's power to render meaningful relief after a trial on the merits. 11 C. Wright & A. Miller, Federal Practice & Procedure Sec. 2947 (1973). If the federal claims are exceedingly weak, or subject to meritorious affirmative defenses, they are likely to succumb to a motion to dismiss or an early motion for summary judgment. In that event, the pendent state claims may well be subject to dismissal also. See, e.g., Kelley v. IBEW, 803 F.2d 516, 519 (9th Cir.1986); Arizona v. Cook Paint & Varnish Co., 541 F.2d 226, 227-28 (9th Cir.1976), cert. denied, 430 U.S. 915, 97 S.Ct. 1327, 51 L.Ed.2d 593 (1977) (court may not reach out to decide state law claims if court and litigants have not already spent considerable time and effort on the case).

For purposes of our discussion, we need not, however, differentiate between the state and federal causes of action because all of plaintiff's claims hinge on certain key allegations of the complaint. See pp. 1474-75, supra. Although these allegations are made in elaborate detail, they have one common nucleus: Plaintiff is claiming that the Marcoses (with the help of their confederates) acquired substantially all of their wealth illegally. Thus, in order to establish the requisite predicate acts in the United States for purposes of RICO--mail fraud, wire fraud, transportation of stolen property--plaintiff must be able to show that the assets in question were in fact stolen or that the transactions involving wire and the mails involved property to which neither the Marcoses nor their confederates were legally entitled. Similarly, to establish a constructive trust under California law, plaintiff must show that the property in question was gained by "fraud, accident, mistake, undue influence, the violation of a trust, or other wrongful act." Cal.Civ.Code Sec. 2224 (West App.1987). To be entitled to an accounting, plaintiff must show that the defendants acquired the assets by fraud. K. King & G. Shuler Corp. v. King, 259 Cal.App.2d 383, 396, 66 Cal.Rptr. 330, 338 (1968). If plaintiff cannot show that the property was obtained illegally, all of its claims--state and federal--will fail.

While plaintiff has made sweeping allegations of illegality, it has not attempted to match particular illegal acts with specific property in California or elsewhere. Instead, plaintiff relies on what it calls a "net worth" analysis to show that virtually all of the Marcoses' wealth was acquired illegally. Plaintiff asserts that Marcos had a net worth of $60,000 in 1966, a year after taking office; it claims that he now has a net worth over $1.5 billion. In the meantime, Marcos earned (and declared on his tax returns) income of some $337,000 from his salary as President of the Philippines. Plaintiff therefore argues that practically everything the Marcoses own must have been stolen and therefore belongs to the Philippines.

Plaintiff seeks to bolster this net worth analysis with the Fernando declaration. In his declaration, Mr. Fernando asserts that the Marcos presidency was marked by "widespread purloining of funds and properties which were and are the property of the Philippine government." Fernando p 8. Describing the illegal activity, Mr. Fernando states:

The said taking of Government properties was effected by a range of techniques, including but not limited to 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; expropriating outright private property for the benefit of persons beholden to or fronting for Mr. Marcos, the said expropriation being at times effected by violence or the threat of violence or incarceration; arranging loans by the Philippine Government to private parties beholden to and fronting for Mr. Marcos; direct raiding of the public treasury; diverting loans, credits and advances from other governments intended for use by the Philippine Government; creating public monopolies placed in the hands of persons beholden to and fronting for Mr. Marcos. The said actions of the defendants were in violation of the laws of the Republic prohibiting malversation and corrupt practices.

Fernando p 8. Mr. Fernando provides no direct evidence to support this litany of offenses; his only knowledge of these "facts" comes from "countless newspaper and firsthand accounts" relating them. Id.

In order to succeed under its "net worth" theory, plaintiff must show that tracing is unnecessary because practically all of the Marcoses' wealth was obtained illegally. Plaintiff's theory breaks down if Marcos can show that he acquired a substantial portion of his wealth legally or if the court is unable to adjudicate the legality or illegality of a substantial portion of Marcos' acquisitions. In that case, plaintiff would have the burden of linking up specific acts of illegality with specific property, something plaintiff has not attempted.

We note, without addressing them, defendants' numerous challenges to the sufficiency of plaintiff's prima facie case.3 We turn instead to what we consider to be the heart of this case: plaintiff's assertion, and the district court's assumption, that all of the Marcoses' wealth must have been stolen. Specifically, we consider whether plaintiff's multitudinous claims of illegality can all be adjudicated by the district court or whether, as Marcos strenuously contends, they are subject to dismissal under the related act of state and political question doctrines. If we determine that a substantial portion of Marcos' conduct is likely to be shielded by one or both of these doctrines, plaintiff's net worth theory would collapse, and with it its probability of success on the merits, at least insofar as its case is now framed.

In Underhill v. Hernandez, 168 U.S. 250, 252, 18 S.Ct. 83, 84, 42 L.Ed. 456 (1897), the Court pronounced concisely 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." See also Hatch v. Baez, 7 Hun. 596, 599 (N.Y.App.Div.1876) ("by the universal comity of nations and the established rules of international law, the courts of one country are bound to abstain from sitting in judgment on the acts of another government done within its own territory"). Although the doctrine has been modified in the intervening years, Underhill still expresses its essence as it is applied in our courts today.4

As the Court explained in Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, 423, 84 S.Ct. 923, 938, 11 L.Ed.2d 804 (1964), the doctrine has " 'constitutional' underpinnings. It arises out of the basic relationships between branches of government in a system of separation of powers. It concerns the competency of dissimilar institutions to make and implement particular kinds of decisions in the area of international relations." The doctrine, as developed by precedent, expresses a strong sense that in questioning the validity of foreign acts of state the judiciary may hinder this country's international diplomacy and "embarrass the United States in the eyes of the world." International Ass'n of Machinists & Aerospace Workers v. OPEC, 649 F.2d 1354, 1358 (9th Cir.1981), cert. denied, 454 U.S. 1163, 102 S.Ct. 1036, 71 L.Ed.2d 319 (1982).5

Plaintiff's case implicates the act of state doctrine in its most fundamental sense. In order to resolve plaintiff's various claims against Marcos, the court will have to adjudicate whether Marcos' actions as President were lawful under Philippine law. A number of the acts plaintiff challenges are purely governmental ones, such as expropriation of property and creation of public monopolies. These were not merely the acts of Ferdinand Marcos, private citizen, while he happened to be president; they were an exercise of his authority as the country's head of state and, as such, were the sovereign acts of the Philippines. As the Second Circuit recently noted, to the extent that "Marcos's wealth was obtained through official expropriation decrees or public monopolies," they were public acts. Marcos, 806 F.2d at 359.6

Moreover, resolution of various issues raised by plaintiff could interfere with the conduct of foreign relations by the political branches of our government or otherwise entangle the judiciary in foreign affairs. Thus, it could well embarrass the United States for the court to hold, as plaintiff would have us do, that a foreign government that the United States recognized and considered its ally for many years, with which it entered into various treaties and otherwise had extensive dealings, was actually a criminal enterprise under our law. Also, this litigation may not be concluded for years. It is, therefore, difficult to predict what effects the court's ruling will have on the political situation in the Philippines or on our relations with that country at that time. Our decision will be relatively innocuous only if it is in favor of the plaintiff, if our government's attitude toward the Philippines is unchanged and if the current Philippine government is still in power.

Plaintiff nevertheless advances a variety of arguments to the effect that this doctrine is not applicable. We consider each of its contentions in turn.

1. Plaintiff first argues that, in the words of the district judge, "the court is [not] going to be asked to decide anything about the affairs of the government of the Philippines. The question is what did Mr. Marcos do with the assets and the property and the money that he shouldn't have done." Trans. June 16, 1986, at 19, E.R. at 84. In support of this argument, plaintiff cites DeRoburt v. Gannett Co., 733 F.2d 701 (9th Cir.1984), cert. denied, 469 U.S. 1159, 105 S.Ct. 909, 83 L.Ed.2d 923 (1985); and Sharon v. Time, Inc., 599 F.Supp. 538, 546 (S.D.N.Y.1985). Both cases were libel suits by officials of foreign governments challenging news reports alleging that they had engaged in misconduct in the course of doing their jobs. Both officials denied committing the misconduct and the only question presented was whether they had in fact done so. In holding that the act of state doctrine was inapplicable, the DeRoburt and Sharon courts noted that validity of the acts was not at issue since everyone agreed that the acts, if committed, were illegal.7 The cases therefore resolved themselves into a simple dispute about whether DeRoburt and Sharon in fact did what they were reported to have done. As the court noted in Sharon, "[t]he issue in this litigation is not whether such acts are valid, but whether they occurred." 599 F.Supp. at 546.

Our case is quite different. At issue is not merely whether Marcos did what he is alleged to have done, but whether it was legal for him to do so as the country's dictator. Or, to put the matter somewhat differently, plaintiff cannot establish that the Marcoses obtained all of their wealth illegally without calling into question the legality of many of Mr. Marcos' acts as President of the Philippines. Unlike the DeRoburt and Sharon courts, the district court here would have to pass on the validity of Mr. Marcos' acts, not merely determine whether he committed them.8

Plaintiff next argues that the act of state doctrine is inapplicable because Marcos' acts, to the extent they were illegal under Philippine law, were ultra vires and therefore not "public acts ... [undertaken] in the exercise of governmental authority." Alfred Dunhill of London, Inc. v. Republic of Cuba, 425 U.S. 682, 706, 96 S.Ct. 1854, 1867, 48 L.Ed.2d 301 (1976) (opinion of White, Powell and Rehnquist, JJ., and Burger, C.J.) (emphasis in original).9 This argument proves too much. Since the act of state doctrine prohibits inquiry into the legality of official governmental acts, such acts surely cannot be official only if they are legal. This theory, if accepted, would emasculate the act of state doctrine.

In Banco de Espana v. Federal Reserve Bank, 114 F.2d 438 (2d Cir.1940), the court rejected a similar request by a Spanish bank, backed by Spain's current government, seeking to set aside a transfer of silver bullion by an official of the country's prior government. Banco de Espana argued that the former Minister of Finance had been selling the silver in violation of Spanish law. The court refused to second-guess the legality of the Finance Minister's action, noting as follows: