NY court junks petition of Marcos victims

Posted at 06/20/2011 9:37 AM

MANILA, Philippines - A New York appeals court has dismissed a petition of human rights victims of the Marcos administration to get $35 million previously with the fallen New York securities firm Merrill Lynch after the Philippine government refused to take part in the proceedings.

The New York Supreme Court Appellate Division ruled that the claim of the human rights victims must be dismissed in view of the Philippine government’s failure to submit itself to the proceedings.

Chairman Andres Bautista of the Presidential Commission on Good Government (PCGG) said the ruling was a victory for the Philippine government.

“The New York Supreme Court Appellate Division has thrown out the claim and upheld again the Philippine government’s sovereign immunity,” he said.

The appellate court said the Philippine government, having sovereign immunity, has the right to refuse to be made a party in the suit.

“Because the foreign sovereign declines to waive its immunity from suit, we are required to dismiss the proceeding based on nonjoinder of an indispensable party,” read the the appellate court’s decision.

“For the reasons discussed below, we reverse and dismiss the petition without prejudice on the ground that the proceeding should not proceed in the absence of the Republic.

“Under CPLR 1001, the Republic should be a party to this proceeding but, by virtue of its sovereign immunity, cannot be made a party without its consent.”

“Given that the Republic has to date refused to participate in this proceeding (as is its right), we conclude, as did the United States Supreme Court in an earlier proceeding concerning ownership of the same assets (Republic of the Philippines v Pimentel, 553 US 851 [2008]), that respect for the principles of sovereign immunity and international comity mandates dismissal pursuant to CPLR 1003 and 3211(a)(10).

“The Republic’s claim to the Arelma assets is based on its position, taken in proceedings against the Marcos estate in the Philippines, that the Arelma assets are the proceeds of property Marcos acquired corruptly in the Philippines through the misuse of his office. As noted by the Supreme Court in Pimentel, ‘a 1955 Philippine law provid[es] that property derived from the misuse of public office is forfeited to the Republic from the moment of misappropriation.’”

Under the Constitution, all recovered ill-gotten wealth of Marcos and his cronies should go to the Comprehensive Agrarian Reform Program (CARP).

On November 2009, New York State Supreme Court Justice Charles Ramos ruled that the human rights victims can make a claim on the Arelma deposit, since the US Supreme Court ruled in 2007 that the Philippine government’s sovereignty immunity and right to claim all confiscated ill-gotten wealth of the Marcoses, was merely “informative” and does not bind the New York State Supreme Court.

“The Supreme Court’s interpretation of federal procedure, while informative, is not binding on New York courts,” read the decision.

Ramos ruled that the human rights victims can seek the turnover to them of the funds held by Merrill Lynch although they have failed to join the action of the Philippine government, which has a competing claim on the deposits.

The Arelma account is a securities trading account in Merrill Lynch set up by Marcos with the assistance of Filipino businessman Jose Yao Campos and Swiss banker Jean Luis Sunier in September 1972.

The $2-million initial deposit Marcos posted to create the account was to have been taken from one of his Swiss dollar accounts.

The account was put in the name of Arelma, Inc., a Panamanian company formed by Sunier to hide the real ownership of the account.

 In 1987, a New York federal court, ruling in favor of the Philippine government petition, froze the Arelma account at Merrill Lynch.

The Swiss Federal Supreme Court has twice held that Marcos controlled Arelma and that he had the power of disposition over Arelma.