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 Post subject: 1990 -- Philippine Export v. Chuidan
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Philippine Export & Foreign Loan Guarantee Corp. v. Chuidan, 218 Cal.App.3d 1058, 267 Cal.Rptr. 457 (Cal.App., Dist. 6, 1990)

Court of Appeal, Sixth District, California.

PHILIPPINE EXPORT AND FOREIGN LOAN GUARANTEE CORPORATION, Plaintiff/Appellant,

v.

Vicente B. CHUIDIAN, et al., Defendants/Respondents.

PHILIPPINE EXPORT AND FOREIGN LOAN GUARANTEE CORPORATION, Petitioner,

v.

The SUPERIOR COURT of Santa Clara County, Respondent;

Vicente B. CHUIDIAN, et al., Real Parties in Interest.

Nos. H003831, H004275.

March 14, 1990.

As Modified on Denial of Rehearing April 13, 1990.

Review Denied June 7, 1990.

*1067 **460 James P. Kleinberg, Gregory P. Landis, Christine E. Sherry, Patrick A. Broderick, McCutchen, Doyle, Brown & Enersen, San Francisco, for plaintiff/appellant.

*1068 Steven C. Finley, Lee S. Harris, Cartwright, Slobodin, Bokelman, Borowsky, Wartnick, Moore & Harris, Inc., San Francisco, for defendants/respondents.

COTTLE, Associate Justice.

The issues in controversy in this case arise from an attempt by appellant and petitioner Philippine Export and Foreign Loan Guarantee Corporation (“Philguarantee”) to persuade the trial court to set aside a stipulated judgment in favor of respondents and real parties in interest Vicente B. Chuidian and several corporations (collectively “Chuidian”). We here decide together three matters: (1) the appeal of Philguarantee from the trial court's order refusing to set aside the stipulated judgment; (2) Philguarantee's motion for production of additional evidence on appeal or alternatively for a writ of error coram vobis to allow it to present evidence discovered while the matter was pending on appeal which allegedly was deliberately concealed by Chuidian and therefore could not have been obtained earlier; (3) Philguarantee's petition for a writ of mandate (or other extraordinary writ) seeking to stay execution or enforcement on the stipulated judgment. For reasons we shall state, we shall affirm the judgment on appeal and deny the motion to produce new evidence or for a writ of error coram vobis, and grant the writ of mandate in part.

FACTS

Philguarantee was created in 1974 by the decree of former president of the Philippines Ferdinand Marcos as a government owned entity intended to guarantee loans to be used to promote business in the Philippines. Chuidian obtained loan guaranties totalling $25 million from Philguarantee for his company, Asian Reliability Company, Inc. (ARCI), representing that the funds would be invested in Philippine industrial projects. In June, 1985, Philguarantee sued Chuidian in the Santa Clara County Superior Court, contending that he had defaulted on the loans, requiring Philguarantee to pay them, and that the funds had been misused, in violation of the loan terms, for investment in Silicon Valley corporations and for Chuidian's private benefit.

Chuidian and Philguarantee entered into settlement agreements resulting in a stipulated judgment. Philguarantee relinquished all its claims for restitution against Chuidian, and abandoned its security interest in stock which Chuidian pledged on the ARCI loan. Philguarantee further agreed to pay *1069 Chuidian $5.3 million, to be paid by means of an irrevocable letter of credit from a United States Bank. In return, Chuidian agreed to surrender stock in three corporations to Philguarantee-ARCI, Dynetics, Inc. (Dynetics) and Interlek Semiconductor, Inc. (Interlek)-companies that Philguarantee later claimed were debt ridden. (Interlek is allegedly now in bankruptcy; Dynetics is insolvent.) Chuidian also agreed to sign an affidavit denying that the Marcos family had any interest in his companies, and to surrender all copies of his deposition. Pursuant to these agreements, the parties signed a stipulated judgment December 17, 1985.

In February 1986 Marcos was deposed and the government of Corazon Aquino assumed power in the Philippines.

On April 16, 1986, Philguarantee moved to vacate the judgment, contending that it had been compelled by the Marcos government to make the settlement, that it was highly unfavorable to Philguarantee, and further that Chuidian had coerced Marcos into ordering the settlement by threatening to expose the investments of Marcos and his wife, Imelda, in Chuidian's enterprises. Philguarantee contended the agreements were illegal in purpose, coerced, and void, because the purpose of the settlement was to buy Chuidian's silence. On these grounds Philguarantee sought relief from the judgment under Code of Civil Procedure section 473.

Philguarantee also argued that the present government of the Philippines has**461 ordered it not to pay the judgment. It offered in evidence a memorandum dated March 13, 1986, memorializing a directive of the Philippine Commission on Audit, a government agency, ordering Philguarantee to make no further payments to Chuidian in whatever manner out of government funds, as contemplated under the agreements. The memorandum stated that President Aquino has ordered a restudy/reexamination of the agreements “with a view to determining their wisdom and propriety, if not legality, in the face of preliminary findings that the terms, provisions, and conditions stipulated therein, particularly the monetary aspects thereof, are manifestly and grossly disadvantageous to the Government.”

On its motion to vacate the judgment, Philguarantee presented evidence susceptible of the inference that Marcos ordered Philguarantee to execute the settlement because he feared that otherwise Chuidian would expose the Marcoses' alleged financial interests in Chuidian's American companies. This evidence included, first, newspaper articles, particularly a series of articles published in the San Jose Mercury News in June 1985 stating that a serious financial problem for the Philippine government during the last years of the Marcos regime was the diversion of money out of the country *1070 by wealthy Philippine residents, particularly powerful persons in the government or in business, who invested this money in businesses and real estate in the United States. Marcos was also accused of this practice, although because he and his wife did not make investments directly in their names it was difficult to trace their investments. Also there were articles in both the American and the Philippine press suggesting that the Marcoses were part owners of Chuidian's enterprise, ARCI, or were trying to gain control of it. These articles suggested that direct evidence that Marcos had invested in foreign property would seriously embarrass him at home.

Against this background, Philguarantee attempted to show that Chuidian exploited Marcos's vulnerability on the question of diversion of Philippine monies abroad, by threatening to inform American journalists of Marcos's investments, or offers to invest, in Chuidian's enterprises here, unless Marcos agreed to order the governmental corporation, Philguarantee, to settle its lawsuit with Chuidian on terms favorable to Chuidian. It offered evidence that Chuidian had told persons that he had evidence that Marcos had invested money in ARCI and that he intended to use this evidence to his advantage. For example, one Steve Psinakis, a Marcos opponent and a paralegal employed in a United States law firm, testified Chuidian told him that the Marcoses were 50 percent owners of ARCI. He also testified Chuidian told him he had proof that Marcos had been given funds from the company.

Further, Chuidian told Psinakis that he possessed tape recordings of some 40 hours of telephone conversations about the lawsuit with Philguarantee, touching on settlement negotiations, Marcos's links with ARCI, and related matters. According to Psinakis, Chuidian played some of these tapes for him and they were “valuable hard evidence” of Marcos's involvement in the lawsuit.

A former chairman of Philguarantee, Cesar Virata, testified Marcos expressed concerns about these tapes to Virata in a conversation in September 1985. Marcos was then facing impeachment and acknowledged concern about what Chuidian might reveal of these tapes.

A handwritten letter dated July 23, 1985, from Rosendo Bondoc (a former official of Philguarantee, who however allegedly acted on behalf of Marcos personally during settlement negotiations) to the Marcoses' personal lawyer, Ronaldo Zamora, reveals that Marcos told Bondoc to participate in secret negotiations in the lawsuit with Chuidian, with Zamora to be the vocal negotiator. Bondoc was then an employee of an agency run by Imelda Marcos, Home Financing Corporation (HFC). Bondoc and Zamora corresponded*1071 regarding a proposed stipulated judgment during July and August 1985, and one settlement draft submitted by Bondoc to Zamora included (1) a proposed assurance from Marcos to Chuidian**462 that no criminal charges would be filed against Chuidian in the Philippines and (2) a proposed promise by Chuidian that he would at “all times refrain from any further comment of any matter whatsoever or to entice commentaries relating to the ARCI controversy and any of the legal cases that have arisen therefrom. Chuidian will, separate to this agreement, execute a letter addressed to the president of the Philippines stating the true and exact nature of the stockholdings in ARCI and Dynetics. This letter shall not be publicly disseminated except in case of breach by Chuidian of his warranty of silence in paragraph ___ herein. This letter shall confirm the fact of the matter that Vicente B. Chuidian is the only substantial stockholder in ARCI Inc.” The August draft of the settlement agreement used the phrase “warranty of silence.” Letters passed between Chuidian and Marcos reiterating Chuidian's promises (1) to turn over copies of his deposition transcript in a related case where he had testified about Marcos's involvement and (2) not to disclose information of Marcos's involvement to anyone. Chuidian was to disavow Marcos's financial interests in his companies in order to clarify allegations which had been made in the press to the contrary. Philguarantee asserted that these various commitments amounted to a “warranty of silence” which was illegal and was basic to the settlement which followed.

Between the end of August and mid-September 1985, telexes containing further drafts of the settlement agreement were exchanged among Zamora, Marcos, Chuidian and Chuidian's lawyers. Philguarantee alleges its officials and counsel did not participate in these negotiations. However, the declaration of Gregory Landis, one of Philguarantee's counsel, stated that the Philguarantee consulted with its California lawyers, McCutchen, Doyle, Brown & Enersen (McCutchen) before signing, although disputing whether there was sufficient time for meaningful consultation. Landis made suggestions and changes.

Futhermore, there were also some private dealings. A telex dated September 17 marked strictly private and confidential and for Marcos's eyes alone was sent from Hector Donato, Bondoc's lawyer, to Marcos, showing that Marcos was eager to get a quick and private settlement agreement signed because of a growing political scandal involving his administration; Donato wrote that a secret signing would take place in Tokyo. According to Donato, Chuidian would receive a clearance from criminal prosecution and would do these things: (1) withdraw his sealed deposition in one of the pending cases in Santa Clara County Superior Court (one of the cases resolved by the settlement we now review); (2) deliver a letter disavowing *1072the Marcoses' involvement in his companies; (3) deliver certain journal entries and receipts and statements of account about which Donato expressed great concern. Psinakis testified that Chuidian discussed with him the existence of cancelled checks, journal entries and accounts detailing Marcos's link to Chuidian's companies, but Chuidian denies the existence of such material.

Further drafts of the proposed settlement communicated by telex in September 1985 similarly contained provisions that Chuidian would swear to the fact that the Marcos family owned no interests or stockholdings in ARCI or Dynetics. Psinakis testified that he discussed the subject with Chuidian and that the latter feared he might be guilty of perjury in signing such a statement.

The agreement was signed on October 5, 1985, under these circumstances: Philguarantee's board of directors had discussed Chuidian's proposed settlement agreement on September 30, 1985, and concluded that it was unfavorable, particularly as it did not provide restitution to Philguarantee for the $25 million in loans which Philguarantee had guaranteed for Chuidian. The board resolved on that date to recommend the filing of criminal charges against Chuidian and Bondoc. It further authorized Cesar Macuja (executive vice-president of Philguarantee and a director and chief executive officer of Dynetics) to travel to the United States to discuss the agreement, but he had no authority to sign a final agreement without board approval.

**463 On October 3, 1985, Macuja departed for the United States along with Zamora. Thereafter, for two days, Zamora and Chuidian met privately without Macuja. At that point Philguarantee's American attorneys were still not aware of the settlement proposal and had not been consulted for advice. According to Chuidian, Zamora at first balked at the signing of the agreement, and wanted to see Chuidian's “evidence” before signing. Chuidian then played for Zamora portions of two tapes he had of conversations among Marcos, Bondoc and Donato, as well as between Bondoc and Zamora, regarding the secret settlement negotiations and Chuidian's evidence. After hearing the tapes, Zamora agreed to sign. Psinakis testified that in his opinion playing the tapes was a “key factor” in the signing. Macuja signed the agreement on October 5, informing Chuidian, however, that the board of Philguarantee would still have to approve it.

The agreement did not provide restitution for Chuidian's loans. It required Philguarantee to give up all its claims against Chuidian; guaranteed payment to Chuidian under an irrevocable letter of credit the sum of $5.3 *1073 million; and gave Philguarantee in return Chuidian's stockholdings in three companies, namely, ARCI, Dynetics and Interlek. Marcos received consideration as follows: Chuidian promised to sign a sworn affidavit denying the Marcos family link to ARCI, Dynetics or any of Chuidian's companies, and also denying that any member of the Marcos family had ever attempted, directly or indirectly, to take control of any of the named corporations. In addition it was agreed that the settlement would be kept confidential, that the United States companies would execute specified sworn statements, and that Chuidian would receive “an official opinion from the pertinent agencies of the Republic of the Philippines which shall substantially state that Vicente B. Chuidian is not criminally liable for any acts arising from ARCI/Dynetics transactions.”

There is evidence in the record that at the time of the settlement, the value of the stocks transferred was up to $10 million. This evidence is the testimony of Mr. Macalincag, Philguarantee's officer in charge, a certified public accountant experienced in analyzing the financial condition of companies and projecting their income.

The Philguarantee board initially rejected the settlement agreement. However, under orders from Marcos it eventually approved a final settlement virtually identical to the October 5 agreement, which was finally signed on November 27, 1985. The final agreement was incorporated into a stipulated judgment filed with the Court. A separate agreement was signed but not filed with the Court or made public; in it the parties agreed not to comment on the case, and Chuidian agreed to execute the sworn statement discussed above regarding Marcos's non-involvement with Chuidian's companies. Zamora in turn promised to sign a clearance of Chuidian from criminal prosecution.

Philguarantee maintains that the evidence incontrovertibly shows that Chuidian not only agreed to keep silent about Marcos's involvement with his companies, but agreed to lie, by promising to sign a sworn affidavit saying there was no connection between Marcos and the companies when Chuidian had previously testified under oath, in other litigation, that Marcos and his children were trying to take over Dynetics and ARCI and that Marcos was attempting to wrest control of these companies or pressure Chuidian into paying him some of their profits. Knowing that he would be guilty of perjury if he signed such a statement, Chuidian directed a subordinate, Josue Camba, chief financial officer of Interlek, to sign the statement instead.

Chuidian made no secret of the fact that in his opinion Marcos had been trying to take over Chuidian's companies or extort profits from them since *1074 shortly after ARCI's incorporation in 1980, and he testified that he came to this country in late 1984 to escape efforts of the Marcos family to expropriate property from him and his family. In a lawsuit related to this one and involved in the final settlement (namely, Interlek's lawsuit against Dynetics, Philguarantee officials and others for misappropriation**464 of trade secrets, interference with economic advantage and contractual relations, and related causes), Chuidian testified in a deposition sealed by agreement (“For Attorneys' Eyes Only”) to his fear that Marcos or his family were in the process of taking over Dynetics and ARCI.

Chuidian also admits that the Marcos family was concerned in the summer of 1985 about allegations in the press that they owned financial interests in Dynetics, ARCI or other affiliates, and that the settlement drafts from the beginning contained requirements that Chuidian swear that they did not. The statement that Chuidian actually signed was precisely to this effect. However, the settlement agreement signed on October 5, 1985, in addition to that statement also contained the statement that the Marcos family had never attempted, directly or indirectly, to take control over even a limited financial interest in these corporations. Chuidian was not willing to commit perjury, as this statement would have been. He could state truthfully only that Marcos and his family had no direct shareholdings in the companies. Therefore, as discussed above, he had Camba make the second part of the required sworn statement “[b]ased on his knowledge of the circumstances.” Camba testified that at the time the statement was true to the best of his knowledge.

Psinakis was an anti-Marcos activist who was in regular contact with Chuidian and who assisted him in preparing a political asylum application to enable him to stay in the United States. Psinakis testified that Chuidian told him he felt that Marcos had illegally been attempting to take possession of his properties and assets and that Chuidian intended to resist that through the United States courts. Psinakis also testified that Chuidian told him the Marcoses were 50 percent owners of ARCI but that Chuidian had no documents evidencing that ownership, that they were not stockholders of record and Psinakis had never seen any evidence of their stockholdings. Chuidian's testimony, however, was slightly different. He said he had no evidence that any of the Marcos family held stock in his corporations. He himself owned 98 percent of ARCI when this litigation commenced. He did say he had made an agreement with Mrs. Betty Benitez, an officer of ARCI and a friend of Imelda Marcos, allowing her to purchase up to 50 percent of the ARCI stock upon contribution of $9.25 million to ARCI's capital. He did not know whether she would offer any part of this option to the Marcos family. Chuidian now argues that Psinakis must have assumed in his testimony*1075 that monies given to Mrs. Benitez as a director and officer of ARCI were passed on to Marcos, and he therefore testified that Chuidian had told him Marcos was a partner in the enterprise. Chuidian testified that he did not know whether Mrs. Benitez offered any of this money to the Marcoses before her death, which occurred in an automobile accident.

As stated above, Marcos fled the Philippines some three months after execution of the settlement agreement, and after the Aquino government came to power, Philguarantee moved to set aside the settlement April 16, 1986. That motion produced a full evidentiary hearing followed by the instant appeal. The trial court denied the motion, stating that Philguarantee had not sustained its burden of proof on the motion to vacate.

Chuidian previously petitioned this court for a writ of mandate, arguing that the act of state doctrine precludes judicial inquiry into the alleged fraud and coercion which Philguarantee claimed vitiates the settlement. We denied the petition. Chuidian does not raise the issue on the appeal; clearly the doctrine would not apply to Chuidian, a United States resident and businessman, any more than it would apply to shield Marcos himself in litigation between him and the Philippine government involving his alleged diversion of monies into the United States. (SeeRepublic of the Philippines v. Marcos (2nd Cir.1986) 806 F.2d 344, 357-359;Republic of the Philippines v. Marcos (9th Cir.1988) 862 F.2d 1355, 1361.)

The facts comprising Chuidian's attempts to execute on the stipulated judgment will be discussed separately in connection with **465 the part of this opinion concerning the writ petition seeking to stay execution.

DISCUSSION

I. Refusal to Vacate Settlement on Grounds that It was Unjust, Illegal, Coerced, or a Product of Fraud.

* * *

II. Whether the Trial Court's Discovery Orders and Evidentiary Rulings Were an Abuse of Discretion Requiring Reversal of the Judgment

* * *

III. Motion to Take Additional Evidence on Appeal or for Writ of Error Coram Vobis

* * *

IV. Petition for a Writ of Mandate to Prevent Execution on the Judgment

Philguarantee seeks a writ of mandate (or other appropriate writ) to permanently stay the trial court's order compelling it to assign to Chuidian all debts owing or to become owing to Philguarantee. The trial court granted Chuidian's motion under Code of Civil Procedure section 708.510 for an order assigning to Chuidian all Philguarantee's rights to receive monies owing to it. The order was made in aid of execution of the stipulated judgment, as to which a writ of execution in the amount of $4.4 million issued in June 1986. We temporarily stayed the order pending resolution of the appeal.

Philguarantee contends that the order violates the Foreign Sovereign Immunities Act of 1976 (FSIA). (28 U.S.C., §§ 1330, 1332, subds. (a)(2), -(4), 1391, subd. (f),1441, subd. (d), and 1602-1611.) FN1 Under the FSIA, the property of a foreign state located outside the United States is exempt from execution; assets located in the United States and used for a commercial transaction, generally speaking, may be levied on. (§§ 1609-1611.)

FN1. Unless otherwise indicated, all further statutory references are to the United States Code.

Philguarantee says to the best of its knowledge all its debtors are in the Philippines. Therefore it contends that the order will only be levied against assets outside the United States which are immune from execution, and therefore it is void. Chuidian concedes Philguarantee has no assets in the United States, and indeed asserted that fact as part of its showing of need for the order of assignment.

No party contests Philguarantee's status as an “agency or instrumentality of a foreign state” under the FSIA, namely, a wholly government *1093 owned corporation formed for a governmental purpose. (See § 1603, subds. (a), (b);Arango v. Guzman Travel Advisors Corp. (5th Cir.1980) 621 F.2d 1371; Barragan v. Banco BCH (1986) 188 Cal.App.3d 283, 293, 232 Cal.Rptr. 758.) Accordingly, it is immune from the jurisdiction of United States courts except as provided in the FSIA. (§ 1604; Letelier v. Republic of Chile (2d Cir.1984) 748 F.2d 790, 793, cert. den, 471 U.S. 1125, 105 S.Ct. 2656, 86 L.Ed.2d 273; Verlinden B.V. v. Central Bank of Nigeria (1983) 461 U.S. 480, 493, 103 S.Ct. 1962, 1971, 76 L.Ed.2d 81.)

The FSIA purports to codify the “restrictive” theory of sovereign immunity pursuant to which immunity is generally restricted to a state's political acts (jure imperii) and is not extended to suits based on commercial or private acts (jure gestionis). (H.R.Rep. No. 94-1487, 94th Cong., 2d Sess. at p. 7 (1976) U.S.Code Cong. & Admin.News 1976 p. 6604, 6605; Comment, The Foreign Sovereign Immunities Act ..., 25 Santa Clara L.Rev. (1985) 105, 108.) As the language of the act makes plain, the act does not create immunities, but rather, creates exceptions to pre-existing immunities in specified cases.FN2 Beyond argument,**477 before enactment of the FSIA in 1976, the law of sovereign immunity prescribed absolute immunity from execution upon assets of a foreign state outside the United States. ( Flota Maritima Browning de Cuba v. Motor Vessel Ciudad (4th Cir.1964) 335 F.2d 619, 626, fn. 20 and accompanying text; Dexter & Carpenter v. Kunglig Jarnvagsstyrelsen (2nd Cir.1930) 43 F.2d 705; Jet Line Services Inc. v. M/V Marsa El Hariga (D.Md.1978) 462 F.Supp. 1165, 1174, fn. 3;H.R.Rep. No. 94-1487, supra, at pp. 26-27, reprinted in 1976 U.S.Code Cong. & Admin.News at 6604, 6626; Rest., Foreign Relations Law 2d (1965) § 69, pp. 215-216, citing Weilamann v. Chase Manhattan Bank (Sup.Ct.N.Y.1959) 21 Misc.2d 1086, 192 N.Y.S.2d 469.)

FN2. Section 1604 provides in relevant part: “[A] foreign state shall be immune from the jurisdiction of the courts of the United States ... except as provided in sections 1605 to 1607 of this chapter.” Section 1609 similarly says “the property in the United States of a foreign state shall be immune from attachment[,] arrest and execution except as provided insections 1610 and 1611 of this chapter.” The legislative history of the FSIA and the cases make plain the act leaves intact those aspects of the law of sovereign immunity not explicitly treated in the statute. (H.R.Rep. No. 94-1487, supra, at p. 27, U.S.Code Cong. & Admin.News 1976, p. 6604, 6626; Carey v. National Oil Corp. (S.D.N.Y.1978) 453 F.Supp 1097, 1102, affd. 592 F.2d 673 (2d Cir.1979); Letelier v. Republic of Chile, supra, 748 F.2d 790, 799, cert. den., 471 U.S. 1125, 105 S.Ct. 2656, 86 L.Ed.2d 273.)

The exceptions created by the FSIA to immunity from execution are contained insections 1610 and 1611. Section 1610, the only arguably relevant provision, speaks only of a foreign state's property in the United States. Accordingly the statute creates no exception to immunity for property outside the United States.

*1094 Chuidian argued below that under the FSIA Philguarantee's property in the Philippines is not immune from execution because the exceptions to immunity,sections 1610 and 1611, do not mention property outside the United States. This argument has no support in the statute, and in his opposition lodged in this writ proceeding, Chuidian abandons that position. He admits there never has been a right to execute against assets of a foreign state or agency located outside the United States and there is no such right now; instead once a United States judgment is obtained the creditor must rely on doctrines of comity in the foreign state to have his judgment enforced there. This is the law in most, if not all, jurisdictions, as well as under the FSIA. (See discussion in Letelier v. Republic of Chile, supra, 748 F.2d at pp. 798-799.)

However, Chuidian argues that the trial court nevertheless has power to make the garnishment order for these reasons: Philguarantee waived immunity from execution; Chuidian is equitably entitled to the garnishment order; and the order is a valid exercise of the court's personal jurisdiction over Philguarantee regardless whether it will be enforceable as a practical matter in the Philippines.

We consider Chuidian's contention that Philguarantee has waived immunity from execution. Chuidian's arguments in support of that theory are as follows: that by subjecting itself to the jurisdiction of respondent court by originally bringing suit against Chuidian here, by agreeing in the stipulated judgment to be subject to suit here, by invoking this court's assistance in appealing the stipulated judgment, and finally by failing to raise the issue of sovereign immunity at the earliest possible opportunity-when the writ of execution first issued-Philguarantee waived immunity.

Philguarantee responds that the immunity goes to subject matter jurisdiction and is not waivable.

Although the FSIA states there may be implied waiver of the immunity from execution, the statute, as we have stated, does not deal with the immunity of property outside the United States. We must look to preexisting law to determine the circumstances under which this immunity may be waived.

[19] [20] The immunity of a foreign state creates a lack of subject matter jurisdiction ( Verlinden, supra, 461 U.S. at p. 493, 103 S.Ct. at p. 1971; see 28 U.S.C., § 1330, subd. (a)), a jurisdictional defect not normally subject to waiver. Further, immunity from suit and immunity from execution are distinct matters, and waiver of the former does not necessarily waive the *1095 latter. (Rest., Foreign Relations Law 2d, supra, § 69 at p. 215-216; Dexter and Carpenter, supra 43 F.2d 705; **478 United States v. Crawford Enterprises, Inc., 643 F.Supp. 370, 382 (S.D.Texas 1986), affd. sub nom. Petroleos Mexicanos v. Crawford Enterprises, Inc.(5th Cir.1987) 826 F.2d 392; Canadian Overseas Ores Ltd. v. Compania, etc.(S.D.N.Y.1982) 528 F.Supp. 1337, affd. (2d Cir.1984) 727 F.2d 274; Letelier v. Republic of Chile, supra, 748 F.2d at p. 798; see also United States of Mexico v. Rask (1931) 118 Cal.App. 21, 33, 4 P.2d 981.) Although immunity from personal jurisdiction may be waived by not objecting at the first available opportunity (Barragan v. Banco BCH, supra, 188 Cal.App.3d at p. 293, 232 Cal.Rptr. 758),sovereign immunity from execution, unlike immunity from personal jurisdiction, is in the nature of an objection to subject matter jurisdiction and is ordinarily not waivable. ( Raji v. Bank Sepah-Iran (1985) 131 Misc.2d 158, 495 N.Y.S.2d 576, 581.) It has been observed that subject matter jurisdiction under the FSIA is not waived by untimeliness, delay, or dilatory conduct. ( Ohntrup v. Firearms Center Inc. (E.D.Pa.1981) 516 F.Supp. 1281, 1284, affd. (3d Cir.1985) 760 F.2d 259.)

We conclude the immunity in question is not waivable and therefore we need not consider whether Philguarantee's conduct in this litigation amounts to waiver.

Chuidian next argues there can be no right without a remedy; there would be no point in holding that personal jurisdiction exists (because immunity has been waived, or for other reasons) and then finding that immunity to execution nevertheless existed. However, that equitable argument has been rejected inLetelier v. Republic of Chile, supra, 748 F.2d 790, a decision pointing out that the FSIA, and the House Report containing its legislative history, emphasize the two kinds of immunity are not co-extensive, even though as in the Letelier case itself that interpretation can result in the existence of a right without a remedy.

In Letelier, it was held plaintiffs had a right to obtain a judgment against Chile and its national airline for the assassination of an ambassador, but no right to execute that judgment against assets of the airline because the exception to jurisdictional immunity based on the commission of a tort here did not parallel the exception to immunity from execution. The immunity from execution required that the property to be levied on be used in a commercial activity relevant to the claim. Assassination was held not a commercial activity for these purposes. The Leteliercourt pointed out that although the particular remedy of execution was unavailable, that did not necessarily mean there was no remedy, since enforcement in an international court, appeal to the courts of Chile, or similar possible avenues might *1096 exist; but even if there were indeed no remedy, that result was a congressional choice which binds the courts.

Similarly, in Crawford Enterprises, supra, 643 F.Supp. 370, although Pemex had waived foreign sovereign immunity from suit, and was in contempt of court for disobeying discovery orders, it was nevertheless agreed a judgment could not be executed against Pemex in Mexico, because the FSIA provides only for execution against property of a foreign state in the United States. ( Id. at p. 382.) (Other sanctions were, however, imposed against Pemex in connection with litigation it had brought in the court.) Raji, supra, is to the same effect: a judgment under the FSIA cannot be enforced against property outside the United States. The court said any unfairness in this scheme has been congressionally determined to be outweighed by national and foreign policy considerations.

[21] Although Philguarantee says none of its property is subject to execution, we disagree and hold that there may be execution on Philguarantee's property located in the United States and related to commercial activity here. Philguarantee says it is a governmental corporation created to assist the development of Philippine business and is not engaged in commercial activity. It says the essential nature of its activity is governmental-to promote growth in the Philippine economy by providing guarantees of export industry loans. None of the loan proceeds were ever intended to leave **479 the Philippines. Particularly, it says it is not engaged in commercial activity in the United States, as the statute requires. All it has done in the United States is to bring suit against Chuidian.

In this respect, however, Chuidian properly points out the test of whether activity is commercial is broad and does not depend on whether a governmental purpose motivates the activity. Rather, if the activity is of the sort normally undertaken by private persons, and is not permeated with a political purpose, it will be deemed commercial. (See extensive discussion in Letelier v. Republic of Chile, supra, 748 F.2d at p. 796-797.) The Senate Report referring to the FSIA stated that an activity would be characterized commercial when it “is customarily carried on for profit.” (Sen.Rep. No. 94-1310, 94th Cong. 2d Sess. (1976), U.S.Code Cong. & Admin.News 1976 p. 6604 [cited in Letelier at p. 796].) That Report gave as examples of commercial activities “Activities such as a foreign government's sale of a service or product, its leasing of property, its borrowing of money, its employment or engagement of laborers, clerical staff or public relations or marketing agents or its investment in a security of an American corporation....” (Ibid.) Under these principles, Philguarantee's activity in guaranteeing loans to help start up semi-conductor businesses would most properly be classified as commercial activity.

*1097 Chuidian's argument in the trial court was mistakenly based on the statute controlling immunity from personal jurisdiction, section 1605, subdivision (a)(2), which applies an “effects” test and finds a jurisdictional basis in commercial acts outside the United States which cause a direct effect here. However, the “effects” test does not apply to execution under section 1610. That statute provides an exception to execution immunity for property in the United States of an agency of a foreign state engaged in commercial activity in the United States. (§ 1610, subd. (b).) Nevertheless, as stated, under a proper analysis Philguarantee's activity relevant to this lawsuit is commercial, and therefore there is a legal basis for execution against property in the United States. It is the property located in the Philippines which presents a problem.

Philguarantee contends that the very settlement agreement Chuidian is trying to enforce here has international implications, implying that the act of state doctrine or a related principle precludes interference by an American court. Chuidian's ties to the Marcos regime are being investigated by the present Philippine government. Philguarantee attempted to vacate the settlement on the basis it was compelled by Marcos to enter into it. Further, the Philippine Commission on Audit, an agency of the government, on March 13, 1986, ordered that no payments be made to Chuidian on the settlement agreement. It was found that agreement was “manifestly and grossly disadvantageous to the Government.” Any violation of that order is punishable by administrative and criminal sanctions. Accordingly Philguarantee claims to be in the untenable position of being in contempt of its own government if it obeys this court; in contempt of the Santa Clara County Superior Court if it does not. Principles of international comity militate against placing foreign nationals in such a dilemma. ( Volkswagenwerk Aktiengesellschaft v. Superior Court (1981) 123 Cal.App.3d 840, 857, 176 Cal.Rptr. 874; see Rest., Foreign Relations Law (Revised), Tent. Draft No. 3, § 419, subd. (1) (1982).)

[22] [23] The act of state doctrine is a judicially created doctrine treating as non-justiciable claims that challenge certain acts of foreign sovereigns, where judicial resolution of such claims may embarrass United States foreign policy or otherwise intrude upon the legitimate domain of the executive branch of government. ( Allied Bank Intern. v. Banco Credito Agricola (2d Cir. 1985) 757 F.2d 516, 520; Banco Nacional de Cuba v. Sabbatino (1964) 376 U.S. 398, 428, 84 S.Ct. 923, 940, 11 L.Ed.2d 804.) Normally the doctrine does not bar inquiry as to the validity of extraterritorial takings. ( Ibid; Banco Nacional de Cuba v. Chemical Bank New York (2d Cir.1981) 658 F.2d 903, 908; see also the cases denying sovereign immunity **480 to the Marcoses in connection with their business investments here, cited ante, page 464.) Here, Chuidian argues, he is attempting*1098 to collect on a United States judgment, based on an underlying obligation owing in this jurisdiction; hence the act of state doctrine does not prevent examination of the validity of his claim. We inferentially accepted this argument when we denied a writ to Philguarantee in an earlier proceeding in which it challenged on the basis of the act of state doctrine the court's power to compel its obedience to the judgment. In that matter, we also sought the advice of the Department of State as to whether it had a position; it did not respond, a factor relevant to our determination. (See First Nat. City Bk. v. Banco Nacional de Cuba (1972) 406 U.S. 759, 767-770, 92 S.Ct. 1808, 1813-1815, 32 L.Ed.2d 466.) We agree with Chuidian that the act of state doctrine does not provide immunity for Philguarantee regarding any United States assets it may have.

Regarding Philguarantee's claim of governmental compulsion, we have already addressed that point in considering the claim of duress, and have observed that precedent holds one in Philguarantee's position cannot claim to be coerced by the very government of which it is a part, because such a claim is essentially a claim of self-coercion and if accepted leads to governmental repudiation of its just debts because of a change of political power. (See Alfred Dunhill of London, Inc. v. Cuba, supra, 425 U.S. 682, 695, 96 S.Ct. 1854, 1861.)

We turn to Chuidian's argument that the garnishment order is a valid exercise of personal jurisdiction over Philguarantee and that he is entitled to it regardless of its practical effect. The heart of Chuidian's position is that the trial court concededly has personal jurisdiction over Philguarantee. One of its powers is to order Philguarantee to obey its valid commands; such orders may be enforced in any legitimate manner, although execution against Philguarantee's Philippine assets is not such a manner. Here, the trial court has ordered Philguarantee to assign debts to Chuidian; that order, Chuidian argues, is not execution on any assets, but simply an exercise of personal jurisdiction. If Philguarantee disobeys, sanctions may be imposed against it even though execution is unavailable, as in the Pemex litigation discussed above.

[24] The parties cite no case considering, in the context of international law principles, the issue whether an order to assign assets in a judgment debtor proceeding is an exercise of the court's personal jurisdiction over the debtor or is an execution upon the judgment. Examined narrowly in a vacuum, the court's order under Code of Civil Procedure section 708.510 to assign debts to the judgment creditor is a simple exercise of power over the debtor, an injunction or command, presupposing personal jurisdiction. It is not an action in rem, as a levy of execution of a judgment against a tangible *1099 asset. However, to examine the order thus narrowly is unrealistic because the order is authorized under a statutory scheme in aid of execution, and its sole purpose is to permit execution upon the debtor's property. For that reason, the limits which generally exist upon the right to execute-most notably the exemptions of certain assets from execution-apply in a judgment debtor proceeding such as this and prevent the court, for instance, from ordering the debtor to assign exempt property to the judgment creditor. (See legis. committee com., Assembly, 1982 Addition, to West's Ann.Code Civ.Proc. (1987 ed.) § 708.510: “This section does not make any property assignable that is not already assignable.... [¶] Subdivisions (e) and (f) recognize limitations on theassignment order procedure imposed by exemption laws”; see also 30 Cal.Jur.3d, Enforcement of Judgments, § 262, p. 286, stating a debtor may claim all exemptions in judgment debtor proceedings, citing § 708.120, subd. (d); see also Code Civ.Proc., § 278, p. 304.) If the debtor may not be ordered to assign exempt property, should not assets which are immune from execution under international law, such as property of a foreign state located outside the United States, be similarly immune? To hold otherwise would be to ignore a longstanding immunity of international law **481 and under the FSIA and to provide the creditor that which he could not straightforwardly achieve through ordinary creditors' remedies, namely, execution upon foreign property; for once he is armed with Philguarantee's signature assigning over the latter's debts, the creditor may simply go into the Philippines and collect from these people. Unless a debtor refuses to pay, collection will result immediately without the creditor having to submit his claim to a Philippine court. Such a result evades the rule of international law, and does so on the basis of the technical circumstance that the order to assign debts is not itself a levy, even though to levy on the debtor's property is indeed its only purpose.

From these principles we deduce the following rules of law. First, Philguarantee's assets located in the Philippines are immune from execution. Second, its assets located in the United States, if any, are not immune because they relate to commercial transactions within the FSIA. Third, the court in aid of execution of this judgment may order Philguarantee to assign only such assets as Chuidian may legally execute upon in satisfaction of the judgment. It follows, therefore, that the trial court's order is too broad because it is not restricted to debtors who reside in the United States. Accordingly the order should be modified, and we do modify it, by issuing the writ of mandate to limit the order in aid of execution to an order compelling Philguarantee to assign to Chuidian all debts owing or to become*1100owing to Philguarantee from individuals or entities located in the United States. Any broader order would not be justified under the FSIA.

DISPOSITION

The judgment of the trial court denying the motion to vacate the judgment is affirmed. The motion to produce additional evidence on appeal or for a writ of errorcoram vobis is denied. The petition for a writ of mandate is granted and a writ is issued commanding the trial court to modify its order in aid of execution to an order compelling Philguarantee to assign to Chuidian all debts owing or to become owing to Philguarantee from individuals or entities located in the United States. Our temporary stay of the original order in aid of execution shall remain and become permanent. All parties shall bear their own costs in all matters here decided.

AGLIANO, P.J., and FOGEL, J.FN*, concur.

FN* Under assignment by the Chairperson of the Judicial Council.

FOGEL, Associate Justice FN**, concurring:

FN** Assigned by the Chairperson of the Judicial Council.

I concur fully with Justice Cottle's thorough and well-reasoned opinion. I write separately only for the purpose of acknowledging the larger context in which this matter has arisen.

There is an injustice in this case: the Philippine people have lost $25 million because of the questionable business dealings of their government under former President Marcos. It is understandable that the present government of the Philippines is seeking to recover what it can of that loss.

However, for the reasons set forth in the lead opinion, appellant's motion to set aside the stipulated judgment cannot be the vehicle for accomplishing that result. The Philippine government, under orders from Marcos, entered into a contract to resolve a dispute. That contract was merged into a judgment, raising the standard required to set it aside. (See In re Marriage of Stevenot (1984) 154 Cal.App.3d 1051, 1071, 202 Cal.Rptr. 116.) A conscientious and experienced trial judge heard numerous witnesses and reviewed voluminous documentary evidence as to the circumstances under which that contract and judgment were obtained and determined that appellant had not met its burden of proof for setting the judgment aside. We are bound by the trial court's factual determinations because they are supported by substantial evidence.

Changes in government occur almost daily in these turbulent and historic times. Some states and nations have been blessed **482 with a succession of *1101leaders who are basically honest and ethical; most have not been so fortunate. In the Philippines, Eastern Europe and elsewhere, people have demanded democratic and accountable leadership. One can only applaud a new government for attempting to undo the wrongs of the corrupt one it has replaced.

But a change of government, even a salutary one, in and of itself cannot be the basis for abrogating contracts and judgments, however unwise or unfortunate, to which a state or nation has become a party, any more than a corporation can abrogate agreements made by a deposed board of directors acting within its actual or apparent authority. ( Alfred Dunhill of London, Inc. v. Cuba (1976) 425 U.S. 682, 695, 96 S.Ct. 1854, 1861, 48 L.Ed.2d 301; Corp.Code, § 208, subds. (b) and (c).) If there is to be a remedy for the injustice this case reveals, it must be through whatever actions remain available against Marcos' estate here and in the Philippines, not in discarding established principles of contract law, the law of judgments and appellate review.

_________________
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