US appeals court upholds PCGG claim on $35-M Marcos account

Don’t count the government out.

The United States Court of Appeals has reversed an earlier ruling by a lower court and upheld the legality of the Philippine government’s claim to $35 million in hidden Marcos assets being held in escrow by the US government.

This was reported yesterday to the Presidential Commission on Good Government (PCGG) by American lawyer Stephen Bomse, who represented the agency in the litigation proceedings in the US.

"The court holds that the (Philippine) government is immune and that it is an indispensable party," Bomse said.

In his report, Bomse said the US appellate court set aside an earlier decision by a US district court disqualifying the Philippine government as a claimant to the $35 million.

Apart from the government as represented by the PCGG, ownership of the funds was being contested by the Panamanian firm Arelma Inc., the Golden Buddha Corp., the family of treasure hunter Rogelio Roxas and a certain Mariano Pimentel.

In staking its claim to the asset, the PCGG invoked the government’s right to sovereign immunity, but this was opposed by Pimentel.

The district court granted Pimentel’s petition for the disqualification of the PCGG as a claimant.

But the appellate court ruled that the lower court should have addressed first the sovereign immunity issue.

"Before reaching the merits of a claim against a foreign state, the court should determine whether it has jurisdiction under the Foreign Sovereign Immunities Act," the decision stated.

Records of the case showed that in 1972, then President Ferdinand Marcos transferred $2 million to Arelma which he created, although the money was deposited under the account of the New York-based brokerage firm Merryl Lynch.

Merryl Lynch eventually surrendered the asset, which has swelled to $35 million because of interest, to the court.

Roxas accused the Marcoses of stealing his precious find, the Golden Buddha, and his heirs believed that the Arelma fund was part of his fabled discovery.

On the other hand, Pimentel was among over 9,500 victims of human rights abuses during Marcos’ 20-year martial law reign who won a class suit they filed before a US court in Hawaii.

Sometime in 1997, the US court awarded the victims a total compensation of $1.9 billion, but so far no settlement has been made. The complainants have sought the disqualification of the PCGG from contesting the Arelma assets, and that the money be used for their compensation.