IN THE

UNITED STATES COURT OF APPEALS

DEc
2or993
flU!!
FOR THE THIRD CIRCUIT

No. 93-5672

THE REPUBLIC OF THE PHILIPPINES and

NATIONAL POWER CORPORATION,

Appellants,

r" • v.

WESTINGHOUSE ELECTRIC CORPORATION, WESTINGHOUSE

INTERNATIONAL PROJECTS COMPANY, and
BURNS & ROE ENTERPRISES, INC.,

Appellees.

On Appeal from the

United States District Court for the District of New Jersey
Honorable Dickinson R. Debevoise, Jr.

BRIEF OF APPELLANTS

Mark Augenblick, PC.

Of Counsel David J. Cynamon
Ira H. Raphaelson
Reichler, Milton & Medel Edward J. Reed
1747 Pennsylvania Avenue, N.W. Shaw, Pittman, Ports & Trowbridge
Suite 1200 2300 N Street, N.W.
Washington, D.C. 20006 Washington, D.C. 20037
(202) 663-8000

Paul C. Warnke Paul & Rowe

1299 Pennsylvania Avenue, N.W. Alan S. Naar
Washington, D.C. 20004 Greenbaum, Rowe, Smith, Ravin
& Davis
PO. Box 5600
Woodbridge, N.J. 07095
(908) 549-5600
 %,,

SHAW, PITTMAN, POTTS & TROWBRI

& PArTNeRSHIP INCLUOIN G p_O_SSIONA_ CO_AT_ONS

2300 N STREET. N. W,

WASHINGTON, D, C. _OO37 aOl LIBEI_Ty ST_-EET, S.W, r

15OI _'ARM CREDIT DRIVE
(202) 663-8000 LE_SBU_G, VIRGINIA _2075
MCLEAN, VIRGINIA _210Z
{703) 777,O004
(703) 790-7900
METRO 478-8989
FACSIMILE
(202) 663-8007
F-ACSI_ILE
fACSIMILE
(703) 821-23_'7
(70311777-93_*O

December 20, 1993

DAVID d. CYNAMON

(202} 663-8492

BY FEDERAL EXPRESS

Mr. P. Douglas Sisk

Clerk, U.S. Court of Appeals
21400 U.S. Courthouse
601 Market Street
Philadelphia, PA 19106-1790

Re: Republic of the Philippines v.

Westinqhouse Electric Corp., 93-5672

Dear Mr. Sisk:

Pursuant to my telephone discussion with a member of your

office today, I am writing to confirm that the Brief of Appel-
lants filed in the above-captioned action incorporates the
statement of facts within the Statement of the Case, beginning at
page 4.

DJC/slh

cc: All Counsel of Record

 TABLE OF CONTENTS

STATEMENT OF THE ISSUES PRESENTED FOR REVIEW

AND STANDARD OF REVIEW ..................................... 1

STATEMENT OF SUBJECT MATTER AND APPELLATE

JURISDICTION ............................................... 2

RELATED CASES .............................................. 3

STATEMENT OF THE CASE ...................................... 4

ARGUMENT .................................................. 18

I, THE DISTRICT COURT EXCEEDED ITS

AUTHORITY BY ENTERING A VAGUE AND
COERCIVE INJUNCTION RESTRICTING THE
ONGOING AND FUTURE LAW ENFORCEMENT
ACTIVITIES OF A FOREIGN SOVEREIGN
REPUBLIC ........................................ 18

II. THE DISTRICT COURT COMMITTED CLEAR

LEGAL ERROR BY REFUSING TO CERTIFY
THE REPUBLIC'S MERITORIOUS RULE
54(b) APPEAL AS A SANCTION FOR THE
ACTIONS OF A CONSTITUTIONALLY INDE-
PENDENT GOVERNMENT OFFICIAL IN
ENFORCING THE REPUBLIC'S LAWS ................... 31

III. THE DISTRICT COURT EXCEEDED ITS

AUTHORITY BY REQUIRING THE REPUBLIC
TO SUBMIT TO THE CONTINUING JURIS-
DICTION OF THE COURT AS A CONDITION
OF SETTLEMENT OF THIS PRIVATE CIVIL
ACTION .......................................... 35

CONCLUSION ................................................ 36

CERTIFICATION ............................................. 38

ADDENDA

opinion of October 4, 1993 ................... Addendum A

Order of October 4, 1993 ..................... Addendum B

- i -
 TABLE OF AUTHORITIES

Pa__se

Cases

Allis-Chalmers Corp. v. Philadelphia Elec.

Co____.,521 F.2d 360 (3d Cir. 1975) ..................... 31

Anthuis v. Colt Indus. Operating Corp., 971

F.2d 999 (3d cir. 1992) .............................. 31

Calvin Klein Cosmetics Corp. v. Parfums de

Coeur r Ltd., 824 F.2d 665 (8th Cir.
1987) ............................................ 27, 30

City of Mishawaka t Indiana v. American Elec-

tric Power Co., 616 F.2d 976 (7th Cir.
1980), cert. denied, 449 U.S. 1096
(1981) ............................................... 27

Cohen v. Beneficial Indus. Loan Corp., 337

u.s. 541 (1949) ....................................... 2

Compagnie des Bauxites de Guinea v. Insurance

Co. of North America, 651 F.2d 877 (3d
Cir. 1981), aff'd on other grounds, 456
U.S. 694 (1982) ...................... 16, 22, 23, 24, 33

Consumer Party v. Davis, 778 F.2d 140

(3d cir. 1985) ....................................... 30

Deloso v. Domingo, 191 S.C.R.A. 545 (1990) ................ 33

First National Bank v. Marine City r Inc., 411

F.2d 674 (3d Cir. 1969) .............................. 35

First National city Bank v. Banco Nacional de

Cuba, 406 U.S. 759 (1972) ............................ 24

Frumkin v. Mayo Clinic, 965 F.2d 620 (8th

Cir. 1992) ........................................... 20

Gardiner v. A.H. Robins Co., 747 F.2d 1180

(8th Cir. 1984) ...................................... 35

I.J.A. Inc. v. Marine Holdings Ltd. t Inc.,

546 F. Supp. 608 (E.D. Pa. 1981) ................. 23, 24

- ii -
In re Raul M. Gonzalez, 160 S.C.R.A. 771
(1988) ............................................... 33

In re Wolf, 842 F.2d 464 (D.C. cir. 1988) ................. 35

International Longshoremen's Ass'n v. Phila-

delphia Marine Trade Ass'n, 389 U.S. 64
(1967) ........................................... 26, 29

Maggio v. Zeitz, 333 U.S. 56 (1948) ....................... 33

Republic of the Philippines v. Westinghouse

Elec. Corp., 714 F. Supp. 1362 (D.N.J.
1989) ................................................. 5

Republic of the Philippines v. Westinghouse

Elec. Corp., 774 F. Supp. 1438 (D.N.J.
1991) .............................................. 5, 6

Rizzo v. Goode, 423 U.S. 362 (1976) ....................... 23

Sampson v. Murray, 415 U.S. 61 (1974) ..................... 23

Schmidt v. Lessard, 414 U.S. 473 (1974) (per

curiam) .......................................... 26, 27

SECv. Ormot Drug & Chemical Co. t Inc., 739

F.2d 654 (D.C. Cir. 1984) ........................ 33, 34

spiegel v. City of Houston, 636 F.2d 997 (Sth

Cir. 1981) ........................................... 29

Trister v. university of Mississippi, 420

F.2d 499 (5th Cir. 1969) ............................. 21

Underhill v. Hernandez, 168 U.S. 250 (1897) ............... 24

united States v. Baird, 778 F. Supp. 534

(D.D.C. 1990) ........................................ 21

Philippines, Elec. 951 F.2d 1414 (3d Cir.

Westinghouse Corp.._v. Republic of the
1991) ............................................ 3

Statutes and Rules

18 U.S.C. § 203 (Supp. 1993) .............................. I0

- iii -
 Page

18 U.S.C. § 209 (1969 & Supp. 1993) ....................... i0

28 U.S.C. § 1291 (1993) .................................... 2

28 U.S.C. § 1292(a) (i) (1993) .............................. 2

28 U.S.C. § 1332(a) (4) (Supp. 1993) ........................ 2

28 U.S.C. §1602-11 (Supp. 1993) ........................... 24

28 U.S.C. § 1651 (1966) .................................... 2

Fed. R. Civ. P. 41(a) (i) (ii) .......................... 35, 36

Fed. R. Civ. P. 54(b) ................................. passim

Fed. R. Civ. P. 65(d) ..................................... 26

Other Authorities

1987 Constitution of the Philippines,

Art. XI ....................................... 9, 32, 33

Republic of the Philippines Act No. 6713 .................. I0

Republic of the Philippines Act No. 6770 .................. 33

Treaty of General Relations Between the

United States and the Republic of the
Philippines, July 4, 1946, U.S.-Phil.,
art. i, 61 Stat. 1174 ................................ 25

Restatement (Third) of the Foreign Relations

Law of the United States S 443,
comment d (1986) ..................................... 24

9 C. Wright & A. Miller, Federal Practice &

Procedure, § 2366, p. 176 (1971) ..................... 35

- iv -
 STATEMENT OF THE ISSUES PRESENTED
FOR REVIEW AND STANDARD OF REVIEW

i. Whether the district court exceeded its authority by

issuing a permanent injunction that on its face would preclude

the Republic of the Philippines ("the Republic") from enforcing

existing laws against its own citizens in its own country,

thereby asserting perpetual supervisory jurisdiction over the

executive functions of a foreign nation. The district court's

ruling presents a question of law subject to plenary review by

this Court.

2. Whether the district court, after finding that the

Republic was otherwise entitled to appeal under Federal Rule of

civil Procedure 54(b), committed a clear error of law by refusing

to certify the appeal unless the Republic effected the termina-

tion of an administrative complaint filed against a Philippine

citizen by a constitutionally independent prosecutor in the Phil-

ippines. The district court's ruling presents a question of law

subject to plenary review by this Court.

3. Whether the district court exceeded its authority by

prohibiting the Republic from settling the case unless it submits

to the continuing jurisdiction of the court. The district

court's ruling presents a question of law subject to plenary

review by this Court.

 Each of the issues presented for review was raised in the

proceedings below on Westinghouse's Motion for the Court to Take

Curative Action Regarding Plaintiff's Harassment and Intimidation

of Witnesses and the Republic's opposition thereto, Joint Appen-

dix ("JA") 34, 48-84; and the Republic's Renewed Motion for Rule

54(b) Certification and Westinghouse's opposition thereto. JA

36, 85-106. The issues were ruled upon in the district court's

Opinion dated October 4, 1993, and Order of the same date. l/

STATEMENT OF SUBJECT MATTER AND APPELLATE JURISDICTION

The district court has jurisdiction over this case pursuant

to 28 U.S.C. § 1332(a) (4) (Supp. 1993). This Court has appellate

jurisdiction pursuant to 28 U.S.C. § 1291 (1993) because the

Order appealed from is a final decision within the meaning of the

collateral order doctrine established in Cohen v. Beneficial

Indus. Loan Corp., 337 U.S. 541 (1949). This Court also has

jurisdiction pursuant to 28 U.S.C. § 1292(a) (i) (1993) because

the Order appealed from is an injunction within the meaning of

that provision.

In the alternative, this Court has jurisdiction to treat

this appeal as a petition both for a writ of prohibition and a

writ of mandamus pursuant to 28 U.S.C. § 1651 (1966). The

l/ The Opinion and Order are attached hereto as Addenda A

and B, respectively.

- 2 -
Republic has no other adequate means to attain relief from the

Order, and the district court committed clear errors of law. See

Westinghouse Elec. Corp. v. Republic of the Philippines, 951 F.2d

1414, 1423 (3d Cir. 1991).

The Order appealed from was entered on October 4, 1993, and

the Republic filed a timely notice of appeal on November i, 1993.

JA 36, 671-73.

RELATED CASES

This case has come before the Court twice before, resulting

in the following opinions:

Westinghouse Elec. Corp. v. Republic of the Philippines, No.

90-5920, 951 F.2d 1414 (3d Cir. 1991);

Republic of the Philippines v. Westinghouse Elec. Corp., No.

91-5860, 949 F.2d 653 (3d Cir. 1991).

In addition, the case was before the Court on the Republic's

protective appeal from a judgment entered on May 19, 1993.

Republic of the Philippines v. Westinghouse Elec. Corp., No.

93-5372. The district court vacated that judgment on July 16,

1993, and by order dated September 24, 1993, this Court dismissed

the appeal without prejudice for lack of appellate jurisdiction.

- 3 -
 STATEMENT OF THE CASE

The underlying action was commenced on December i, 1988, by

the Republic and its government-owned electric utility, National

Power Corporation ("NPC") against Westinghouse Electric Corpora-

tion, Westinghouse International Projects Company (collectively,

"Westinghouse") and Burns & Roe Enterprises, Inc. ("Burns &

Roe"). JA 1-2. The complaint alleged that Westinghouse and

Burns & Roe bribed former President Ferdinand Marcos to obtain

contracts to design and construct a nuclear power plant, known as

the Bataan Nuclear Power Plant ("BNPP"), and that they carried

out the project in a deficient and fraudulent manner, leaving the

plant incomplete, unsafe and inoperable. Opinion ("Op.") at 4.

The complaint contained fifteen counts stating claims of breach

of contract, recision, negligence, fraud, tortious interference

with fiduciary duties, civil conspiracy, and violations of the

federal and New Jersey RICO statutes, the Robinson-Patman Act and

the New Jersey Consumer Fraud Act. Id____.

Defendants moved to stay all claims pending arbitration pur-

suant to arbitration clauses in their contracts with NPC. On

May 18, 1989, the district court granted the motion in part,

excepting the Republic's claims that Westinghouse and Burns & Roe

interfered, and conspired to interfere, with President Marcos'

fiduciary duties to the Republic and the people of the

- 4 -
Philippines. Op. at 4-5; Republic of the Philippines v. Westing-

house Elec. Corp., 714 F. Supp. 1362 (D.N.J. 1989). _/

The tortious interference claims were based on allegations

that Westinghouse and Burns & Roe had channeled millions of dol-

lars in bribes to Marcos in the form of "commissions" to a Marcos

"front man" named Herminio T. Disini and to various Disini compa-

nies. Op. at 6-7, ii; Republic of the Philippines v. Westing-

house Elec. Corp., 774 F. Supp. 1438, 1442 (D.N.J. 1991). The

evidence showed that Westinghouse and Burns & Roe paid Disini and

his companies almost $20 million, much of which was sent directly

to numbered swiss bank accounts. 774 F. Supp. at 1444. Disini

had no background in nuclear power or electric energy, but was a

golfing partner of President Marcos and was married to the per-

sonal physician and first cousin of Imelda Marcos. Id____.

at 1442.

Disini arranged to have Marcos personally order NPC to award

the BNPP contracts to Westinghouse and Burns & Roe. Id. at 1442.

As the district court concluded in denying defendants' motion for

summary judgment:

There is ample evidence that Burns & Roe

and Westinghouse retained Disini for the pur-
pose of obtaining President Marcos' favorable
attention and that both companies expected
that the payments to Disini would, in whole

2_/ The arbitration is being conducted in Lausanne, Swit-

zerland under the auspices of the International Chamber
of Commerce.

- 5 -
 or in part, be passed on to or for the bene-
fit of the President.

• I find there is ample evidence to

permit a reasonable jury to find that the
Disini commissions were intended to be paid
in whole or in part to President Marcos and
were in fact paid in whole or in part to him
or upon his direction.

774 F. Supp. at 1445.

A jury trial on the tortious interference claims commenced

on March 15, 1993, and resulted in a verdict for the defendants

on May 18, 1993. JA 34; Op. at i0, 14. The Republic submits
that the court committed several clear legal errors during the

trial and hopes eventually to be able to present those issues for

review by this Court. L/

In order to proceed with an immediate appeal on the merits,

the Republic moved for certification pursuant to Fed. R. Civ.

P. 54(b), on the grounds that there was no just reason for delay
and that an immediate appeal would serve the best interests of

3_/ Primarily, the Republic intends to challenge the dis-

trict court's reversal of itself regarding the elements
of the underlying bribery claim, which the Republic
believes resulted in an erroneous instruction to the
jury on the central issue of the case.

- 6 -
the parties and the court. JA 34; 6/28/93 Tr. at 2-4 (JA
39-41). _/

At the hearing on the Republic's motion, the district court

stated, "[t]o start off with, I personally think there is no case

more appropriate for certification than this one. So you [West-

inghouse] start behind the -- behind." 6/28/93 Tr. at 4 (JA 41).

After hearingWestinghouse's argument in opposition to certifica-

tion, the court concluded:

I think everything I hear you say convinces

me more that we ought to -- . . . All
right, I think clearly it should be certi-
fied. There are many, many difficult issues
involved at law which the Third Circuit is
going to have to look at sometime, and I
think the sooner the better.

I have an order here which was submitted.

Given what I just stated -- and I think the
order summarizes the various criteria set
forth in the applicable cases for certifica-
tion, so I don't think I have to give an
elaborate opinion or finding other than gen-
erally it meets all the criteria for
certification.

Id. at 7-8 (JA 44-45). The district court subsequently

confirmed:

i/ The Republic also moved to alter or amend the judgment

that had been entered generally against the Republic
and NPC on May 19, 1993, so that it would dispose only
of the two claims that were actually tried to the jury.
6/28/93 Tr. at 2 (JA 39). The district court granted
the latter motion on July 15, 1993. JA 35.

- 7 -
 I concluded that there was no just reason for
delay and that it would advance each party's
and the court's interests if the Court of
Appeals were to review at this stage in the
proceedings certain of the difficult legal
issues which had arisen during the course of
pretrial proceedings and trial of this case.

Op. at 14-15.

Immediately upon losing the certification motion, Westing-

house's lawyers alleged that after the jury verdict more than a

month earlier there had been "some statements and some action" by

the Republic in retaliation against several Filipino witnesses.

The alleged retaliation occurred against Pedro Padre and Jerry

orlina, two former Disini employees and associates who had testi-

fied for Westinghouse at trial, and against Perfecto Fernandez,

Professor of Law at the University of the Philippines, who had

been retained by Westinghouse as an expert witness to provide an

interpretation of Philippine law favorable to Westinghouse in an

affidavit used in the litigation. 6/28/93 Tr. at 11-12 (JA

48-49). Westinghouse did not explain why it had waited more than

one month to bring these matters to the court's attention. None-

theless, the district court reacted strongly to the charges,

stating, "[I]f this is all true, [the Republic] ought to lose

their right to appeal." Id. at 12 (JA 49).

The court set a hearing for July 12, 1993, to consider West-

inghouse's allegations and request for relief, and postponed

- 8 -
decision on the Republic's Rule 54(b) request, stating, "I want

to hear this before I lose jurisdiction. I want [the

Republic] to have the right to appeal and I want you to appeal,

but I want to find out the answer to all these questions which

are unresolved. So I'm very anxious that you appeal." 6/28/93

Tr. at 13, 15 (JA 50, 52).

Westinghouse's claims of witness retaliation related prima-

rily to various statements and actions in May 1993 by Francisco

Villa, Deputy Ombudsman of the office of the Ombudsman of the

Philippines. 6/28/93 Tr. at II (JA 48). The Office of the

Ombudsman is an independent entity established by Article XI of

the 1987 Constitution of the Philippines. Its mandate is to

investigate and prosecute wrongdoing by government agencies and

public officials. Villa Aff. ¶¶ 1-2 (JA 385-86). Like special

prosecutors under U.S. federal law, the Ombudsman exercises mana-

gerial and prosecutorial independence from the Executive Branch

of the Republic. Id.; Del Rosario Aff. ¶ 4.5 (JA 456). Although

the Ombudsman is appointed by the President, he may be removed

only by impeachment. The Office enjoys fiscal autonomy in that

its annual appropriations must be automatically released, and the

salaries of the principal officers may not be decreased during

their term in office. Villa Aff. ¶ 2 & Annex A (JA 386,

390-411).

- 9 -
 When Mr. Villa attended the trial in this case in April

1993, he first learned of Professor Fernandez's work as a paid

witness for Westinghouse. Villa Aff. ¶ 3 (JA 386). As an

employee of the University of the Philippines, a government-owned

institution, Professor Fernandez is a public official subject to

Republic Act No. 6713, the Code of Conduct and Ethical Standards

for Public Officials and Employees. Id. ¶ 4 (JA 386-87). That

statute, enacted in 1989, requires public officials at all times

to be loyal to the Republic and the Filipino people and to

refrain from the private practice of their profession. Id. ¶ 4 &

Annex C (JA 386-87, 414-24). _/ Accordingly, upon learning of

Professor Fernandez's apparent violations of the law, Mr. Villa

considered it his constitutional duty to take action. Id. ¶ 5

(JA 387).

Before the jury reached a verdict, the Deputy Ombudsman

announced that he was considering filing charges against Profes-

sor Fernandez for violation of R.A. 67i3. Fernandez Aff. Exs. 4,

5 & 7 (JA 184-88, 209-10). After returning to the Philippines,

Mr. Villa followed through by filing an administrative complaint

against Professor Fernandez with the President of the University

of the Philippines. Villa Aff. ¶ 5 & Annex D (JA 387, 425-33).

Mr. Villa, in keeping with the independence ofhis office, took

_s/ R.A. 6713 is similar to conflict of interest laws in

this country. See 18 U.S.C. §§ 203, 209.

- I0 - o
this action without any directions or instructions from the Exec-

utive Branch. Del Rosario Aff. ¶ 4.5 (JA 456). Professor

Fernandez, for his part, commenced a libel action against both

Mr. Villa and the Philippine Daily Inquirer, and voluntarily

appeared with Mr. Villa on several television programs to debate

issues relating to the case. Villa Aff. 1¶ 5-6 and Annex E (JA

387-88, 434-50). /

With regard to Messrs. Padre and Orlina, Westinghouse

alleged that Mr. Villa had improperly threatened to pursue tax

evasion charges against them. 6/28/93 Tr. at II (JA 48). Sub-

stantial evidence had been developed at trial indicating that

Herminio Disini and his companies, for whom both Padre and Orlina

worked, had committed massive currency and tax violations --

which the court succinctly and accurately described as "ample

evidence . . of financial shenanigans." Op. at ii. _/ However,

_6/ Some of the statements that Westinghouse characterized

as "retaliation" and "intimidation" were made during
these debates. Villa Aff. ¶ 6 (JA 388); Fernandez Aff.
¶ 6 (JA 146); se___ee
JA 307-83.

Z/ The "ample evidence" referred to by the court included

a memorandum from Westinghouse's district manager in
Manila informing his superiors that Disini was evading
Philippine currency and tax laws (PX 2438 [JA 646-56];
see also Tr. 3214-21 [JA 540-47]); admissions by West-
lnghouse's expert accountant, Andrew McMaster, concern-
ing the falsity of required financial reports by Disi-
ni's companies (Tr.3234-3247 [JA 548-61]), one of which
Padre admitted he helped draft (Tr. 3472-75 [JA

Footnote continued on next page.

- ii -
no audit, investigation or tax prosecution was in fact undertaken

against either Padre or Orlina, and the Republic neither initi-

ated nor planned any tax investigations of these witnesses. Del

Rosario Aff. ¶ 4 (JA 453-57). Mr. Villa repudiated his earlier

statements suggesting the contrary. Villa Aff. ¶ 8 (JA

388-89). _/

Footnote continued from previous page.

590-93]) and concerning companies of which Orlina was

treasurer (Tr. 3865-75 [JA 626-36]); Padre's admission
that he only used correct dates on documents "some-
times" (Tr. 3476 [JA 594]); Padre's admission that he
knew Disini was keeping the Westinghouse commissions
"off the books" (Tr. 3485-86 [JA 595-96]); Orlina's
receipt of monies in the U.S. from Disini after ini-
tially denying receipt of the monies (Tr. 3806-09 [JA
619-22]); the use of a backdated deed (PX 2008 [JA
644-45]; Tr. 3268-71 [JA 582-85]) to conceal from
Philippine tax authorities the passage of $4.3 million
through a company in which orlina functioned as trea-
surer to Disini (Tr. 3816-17 [JA 623-24]); $2 million
received in Switzerland in 1976 by Disini from Westing-
house for which neither the Westinghouse nor the Repub-
lic's financial expert could account (Tr. 3534-42 [JA
597(A)-(I)]); Orlina's opening of an account in
Singapore at Disini's direction to move money out of
the Philippines to Switzerland, in which Orlina also
assisted by serving as a courier to Singapore (Tr.
3881-87 [JA 637-43]); and the testimony of both the
Westinghouse and the Republic's expert concerning the
payment of monies to numbered Swiss accounts (Tr.
3248-68 [JA 562-82]; Tr. 2307-2326, 2330 [JA 514-34]).

8_/ Westinghouse also relied on a statement attributed to

Mr. Jesus Sison, Press Secretary, office of the Presi-
dent, who subsequently disavowed the statement. See
Press Release (JA 460).

- 12 -
 Despite the fact that the Republic stated under oath that it

had neither taken nor planned to take any action against Messrs.

Padre and Orlina, and despite Mr. Villa's constitutional indepen-

dence from the Republic's Executive Branch, at the July 12, 1993,

hearing, the court refused to certify the Republic's appeal:

Frankly, I'm very anxious to have the

appeal. I want to find out how much we did
right and how much we did wrong, but we just
can't do it under these circumstances. I
want to keep control of the situation.

So we'll just defer -- in fact I'm going

to deny without prejudice the certification
motion. You can bring it again when things
have clarified themselves.

7/12/93 Tr. at 27 (JA 79).

The Republic filed a renewed motion for certification on

August 6, 1993, which included an unprecedented Press Release and

Policy Statement by the Office of the President of the Philip-

pines, issued in response to the court's concerns and confirming

the Republic's policy of non-retaliation. JA 459-61. The Policy

Statement reads, in part:

There shall be no intimidation, harassment,

retaliation or recrimination against any wit-
ness on account of testimony given or to be
given. This policy applies even where the
testimony is or may be unfavorable to the
position of the government. In particular,
this policy applies to witnesses who testi-
fied (or may testify) in person or by affida-
vit on behalf of Westinghouse or Burns & Roe
in the PNPP court case or arbitration.

JA 461; Op. at 30.

- 13 -
All Executive Branch agencies and employees were directed to com-

ply with the Policy Statement, and all government employees were

prohibited from making public statements suggesting or condoning

any harassment, intimidation or retaliation against witnesses.
Id.

In order to give the Policy Statement wide circulation and

publicity, the Republic disseminated it with a press release

signed by Jesus Sison, Press Secretary to the President. JA 460.

The press release stressed "the government's policy against any

sort of harassment, intimidation or retaliation against any wit-

nesses who come forward to testify truthfully in legal proceed-

ings." The press release also informed the public that "[a]ny

statements by this office that were perceived as condoning such

retaliation were not so intended." Id.

The press release placed on the public record the affidavits

of the Republic's Assistant Solicitor General Cesario del Rosario

and Deputy Ombudsman Villa, both of which had previously been

filed with the district court. JA 462-73. These affidavits,

officially disseminated by the Office of the President, provided

assurances to the Philippine public, and to Westinghouse wit-

nesses in particular, that there was no campaign of harassment

against those who testified for Westinghouse; that there were no

- 14 -
tax or other such investigations planned or in progress with
respect to Messrs. Padre, Orlina, Fernandez or William Godinez; _/

and that there will be no retaliation against anyone who has tes-

tified for Westinghouse or may do so in the future. JA 460-78.

On August 23, 1993, the court forwarded to the parties a

draft opinion and order which served as the basis for much of the

October 4, 1993 Order. JA 107-141. The third and final hearing

on these matters was then held on September 27, 1993. After

reviewing the materials submitted by the Republic, the court

found -substantial compliance with the proposed order as to Mr.

Padre and Mr. Orlina." 9/27/93 Tr. at 6 (JA 90). 10/ While indi-

cating it was anxious to have the Republic's appeal proceed, the

court nonetheless found, "[W]e have reached an impasse, then on

the ombudsman [with respect to Professor Fernandez]." Id.

_9/ William Godinez is a witness whom Westinghouse claims

it might call during the arbitration proceedings in
this case. Neither the Executive Branch nor Ombudsman
of the Republic has taken or considered any action
against Mr. Godinez. Nonetheless, Westinghouse submit-
ted an affidavit in which Mr. Godinez purported to be
"concerned" about the statements and actions reported
in the newspapers regarding Messrs. Padre, Orlina and
Fernandez. Godinez Aff. ¶¶ 3-4 (JA 236-37).

i0/ In its Opinion, the court found the statements and

affidavits of Mr. Villa and Deputy Solicitor General
Del Rosario to be "persuasive evidence that the Repub-
lic has ceased making retaliatory threats against Padre
and Orlina and that it has committed itself not to
retaliate against them in the future." Op. at 30.

- 15 -
Again, the court denied the Republic's request for Rule 54(b)

certification, stating:

I'm going to complete the work on the

opinion and the order so that that matter
will be resolved and then you can take it
from there. That will be appealable.
You will have something to appeal, if not
what you want to appeal.
But I think that I have to take care of
this problem as an institutional matter
before we get on to the case, immediate prob-
lems with the case.

As I have said, I'm anxious to certify

just as soon as I possibly can.

9/27/93 Tr. at 22 (JA 106).

The court issued its final Opinion and Order on October 4,

1993. In its Opinion, the court referred to the Office of the

Ombudsman as having "attempted to clean up its act" by abandoning

the allegations against Padre and orlina and by desisting "from

the use of inflammatory, highly unprofessional language." Op. at

32. Recognizing that under the principles set forth in Compagnie

des Bauxites de Guinea v. Insurance Co. of North America, 651

F.2d 877 (3d Cir. 1981), aff'd on other grounds, 456 U.S. 694

(1982), it could not directly enjoin the administrative proceed-

ings against Professor Fernandez for his violations of Republic

Act No. 6713, the court stated it would "simply defer granting

the Republic's Rule 54(b) motion until I am satisfied that in one

way or another the proceedings against Professor Fernandez have

- 16 -
been resolved in a manner which cures the retaliatory actions

described above." Op. at 34-35.

The court's Opinion is replete with expressions of displea-

sure with the Republic, not only over the alleged retaliation but

over events entirely unrelated to those allegations. The court

commented critically on the electrical power shortages in the

Philippines, stating, "[i]t appears that the leaders of the

Republic looked to a judgment in this case and in the arbitration

proceedings as the solution to these staggering problems." Op.

at 5. The court characterized a failed settlement of the case as

"one which would have redounded to the benefit of all parties."

Id. at 8. The court then recounted its own efforts to settle the

case just before trial, noting that the Republic rejected a West-

inghouse offer that the court characterized as "generous" and

that the court said it had strongly urged the Republic to accept.

Id. at i0; see also id. at 33.

Despite finding that the Republic had substantially complied

with all of the court's requirements other than with respect to

Professor Fernandez, the court entered a broad injunction pursu-

ant to its Opinion, which: (i) permanently enjoins the Republic

and its agencies from "taking any action against any witness who

has testified or will testify . . where that action is in

retaliation for such testimony or has the intent or effect of

harassing . . or intimidating such witness . ." (Order, ¶ i);

- 17 -
(2) orders the Republic to take "appropriate steps to renounce"

the retaliation the court found had occurred against Padre and

Orlina, including "officially advising" them of the government's

lack of action or intended action regarding their personal income

taxes (Id. ¶ 2); (3) denies the Republic's Rule 54(b) request

until the Republic both "establishes that it is in full compli-

ance" with the first two parts of the Order and "until the court

finds that the proceedings against Professor Perfecto V.

Fernandez have been resolved in a manner which cures the retalia-

tory actions" found by the court (Id. ¶ 3); and (4) requires any

settlement agreement between the parties to "contain a provision

that each party accepts the continuing jurisdiction of this court

to enforce the provisions of this order." Id. ¶ 5.

+ARGUMENT

Im THE DISTRICT COURT EXCEEDED ITS AUTHORITY BY

ENTERING A VAGUE AND COERCIVE INJUNCTION
RESTRICTING THE ONGOING AND FUTURE LAW
ENFORCEMENT ACTIVITIES OF A FOREIGN SOVEREIGN
REPUBLIC

The district court's injunction presents questions of first

impression, implicating fundamental issues of international

comity and foreign relations. The lower court has essentially

established itself as the ultimate arbiter of the law enforcement

activities both of the Executive Branch and the Ombudsman of the

Republic of the Philippines. Such an unprecedented injunction is

- 18 -
an impermissible intrusion on the sovereignty and legal system of

a foreign democratic nation.

At the outset, the Republic strongly disagrees with the

lower court's findings that Philippine government officials

engaged in retaliation against or harassment of witnesses in this

case. The Policy Statement issued by the Office of the President

(JA 461) sets forth the policy and practice of the Philippine

government before, during and after the trial below. Throughout

the course of this litigation, Westinghouse has enjoyed free and

unfettered access to Filipino witnesses residing in the Philip-

pines, and numerous Filipinos have provided Westinghouse with

affidavits or live testimony to be used in the lawsuit and

arbitration. II/ Throughout the litigation, Westinghouse has

repeatedly attempted to cast the Republic in a bad light with

allegations of intimidation and bad faith. Se___ee

Tr. 1736-46 (JA

496-507); Tr. 2700-01, 2719 (JA 536-38). The most recent claims

were based on articles appearing in the Philippine press and on

In addition to Padre, Orlina and Fernandez, the follow-

ing Filipinos have previously provided Westinghouse
with affidavits or live testimony without any interfer-
ence by the Republic: Claudio B. Altura; Napoleon F.
Cristobal; Eleuterio H. Gatus; William S. Godinez;
Angelo Manahan; Ernesto N. Mejia; Demetrio Paz;
Wilfredo C. Perlas; Leopoldo J. Posadas, Jr.; Jose C.
Torres. Messrs. Cristobal, Paz and Torres are former
employees of the Republic or NPC.

- 19 -
affidavits drafted by Westinghouse. 12/ The district court's

reaction to these allegations, even if its factual findings are

accepted at face value, led it to a legally erroneous result.

This is not a case in which the court was exercising its

inherent power to punish a party that has engaged in extralegal

or illegal conduct to intimidate or retaliate against adverse

witnesses. See, e.g., Frumkin v. Mayo Clinic, 965 F.2d 620,

626-27 (Sth Cir. 1992) (threats to kill adverse witnesses).

There is no claim, nor could there b&, that the Republic or any

of its officials has taken or considered taking any extralegal

actions against Westinghouse witnesses. The district court's

findings of "retaliation" and "harassment" of witnesses were

predicated entirely on the taking or consideration of law

enforcement actions in the Philippines against Philippine citi-

zens with adequate basis under Philippine law.

The Orlina and Padre affidavits submitted in support of

Westinghouse's motion were apparently written by the
same person -- presumably Westinghouse counsel. See
Speck Aff. 7 4 (JA 306). The affidavits make substan-
tially the same claims, attach the same newspaper arti-
cles, and contain paragraphs with identical wording.
Compare Orlina Aff. 77 5-6, i0-Ii, 14 (JA 241, 242-45)
with Padre Aff. 77 6-8, ii (JA 277-79). It is, for
example, inconceivable that both witnesses indepen-
dently crafted the very same sentences -- identical
down to the punctuation -- to describe their concern
about the "devastating effect" of tax evasion charges.
orlina Aff. 7 14 (JA 244-45); Padre Aff. 7 ii (JA 279).

- 20 -
 Neither Westinghouse nor the district court has suggested

that the Deputy Ombudsman's charge against Professor Fernandez

for violation of R.A. 6713 is not well-founded. Indeed, a United

States government employee would be subject to criminal penalties

if he acted as Mr. Fernandez did. See United States v. Baird,

778 F. Supp. 534 (D.D.C. 1990); 18 U.S.C. § 209. 13/ Similarly,

the evidence of "financial shenanigans" by Mr. Disini, accom-

plished with the assistance of his associates Padre and Orlina,

provide ample grounds for a government authority to consider

investigating those individuals for possible tax law violations.

Accordingly, although the injunction in paragraph 1 of the

Order is phrased generally, its primary impact is on the initia-

tion of any legal proceedings in the Philippines against wit-

nesses or potential witnesses in this case. Paragraph 2 of the

order effectively compels the Republic to grant two Philippine

citizens, Padre and Orlina, immunity from prosecution for past

tax law violations. Moreover, despite the fact that both indi-

viduals are on notice of the Republic's position as a result of

the publication of the Del Rosario and Villa Affidavits, the dis-

trict court has compelled the Republic to "officially advis[e]"

the witnesses of these facts as well as to take other,

13/ State university professors are likewise subject to

such restrictions on their outside employment activi-
ties. See, e.g., Trister v. University of Mississippi,
420 F.2d 499, 502 (Sth Cir. 1969).

- 21 -
unspecified "appropriate steps." Order, ¶ 2. Whether viewed

individually or in tandem, the injunctions of these paragraphs

represent an unparalleled invasion by a U.S. court into the law

enforcement activities of another nation.

Such an intrusion is contrary to the principles of interna-

tional comity set forth by this Court in Compagnie des Bauxites

de Guinea v. Insurance Co. of North America, 651 F.2d 877 (3d

Cir. 1981), a_fff'd____°n other grounds, 456 U.S. 694 (1982). In that

case, the Court struck down an order enjoining certain of the

parties from maintaining an action in London that the district

court found to be "harassing and vexatious." 651 F.2d at 887.

This Court explained:

The general principle established "[e]arly in

our history," is that one court will not
interfere with or try to restrain proceedings
in another in an ordinary action in personam.
Donovan v. City of Dallas, 377 U.S. 408, 412,
84 S. Ct. 1579, 1582, 12 L.Ed.2d 409
(1964). . This principle has often been
applied in cases similar to the present case
where one of the actions is in a foreign
jurisdiction. See Canadian Filters (Harwich)
Ltd. v. Lear-Siegler r Inc., 412 F.2d 577 (ist
cir. 1969).

In Donovan_ the Supreme Court applied

this general prlnciple notwithstanding the
lower court finding that the second action
was harassing and vexatious. Se___e377 U.S. at
415, 84 S. Ct. at 1583, 1584 (Harlan, J. dis-
senting). Thus, the district court's finding
that the action instituted in the English
courts was duplicative, and therefore harass-
ing and vexatious, does not affect our deci-
sion. Likewise, there is no difference
between addressing an injunction to the

- 22 -
 parties and addressing it to the foreign
court itself. Peck v. Jenness, 48 U.S. (7
How.) 612, 625, 12 L.Ed. 841 (1849); see also
O'Hare International Bank v. Lambert, 459
F.2d 328, 331 (10th Cir. 1972). Enjoining
the parties necessarily affects the court and
compromises "the comity which the federal
courts owe to courts of other jurisdictions."
Canadian Filters (Harwich) Limited v.
Lear-Sieglerf Inc., 412 F.2d at 578.

651 F.2d at 887; accord I.J.A. Inc. v. Marine Holdings Ltd. r

Inc., 546 F. Supp. 608, 610 (E.D. Pa. 1981).

The fundamental respect for the governmental instrumen-

talities of foreign nations central to the decisions in Compagnie

des Bauxites de Guinea and I.J.A. applies with even greater force

in this case. The foreign proceedings in those cases were prose-

cuted by private parties, so the injunctions of the district

courts trespassed only upon the foreign sovereigns' judicial

branches. Here, the court's Order runs against proceedings main-

tained by officers of the foreign sovereign itself, thereby

intruding upon the authority of both the judicial and executive

branches of the Republic. 14/ Consequently, the Order of the

court below has a far greater impact on international comity and

14/ Compare Rizzo v. Goode, 423 U.S. 362, 378 (1976)

("[w]hen a plaintiff seeks to enjoin the activity of a
government agency . . . his case must contend with 'the
well-established rule that the Government has tradi-
tionally been granted the widest latitude in the dis-
patch of its own affairs'"), quoting Sampson v. Murray,
415 U.S. 61, 83 (1974).

- 23 -
foreign relations than was threatened in the Bauxites and I.J.A.

cases.

Similar notions of comity underlie the well-settled rules

that sovereign nations are presumed immune from actions in other

countries, 15/ and that the governmental acts of a foreign nation

within its own territory are not subject to review by this coun-

try's courts under the Act of State Doctrine. 16/ The common

thread that runs through these principles is a respect for the

prerogatives of the executives of other countries to perform

their governmental functions without the instrusive second-guess-

ing of a United States court acting as a judicial special master.

In this case, the lower court violated these principles of defer-

ence and respect by fashioning an injunction that runs roughshod

over the prerogatives of a foreign sovereign to enforce its own

laws on its own soil against its own citizens.

See Foreign Sovereign Immunities Act, 28 U.S.C.

§§ 1602-11 (Supp. 1993).

16/ First National City Bank v. Banco Nacional de Cuba, 406

U.S. 759, 763 (1972) (Act of State Doctrine "precludes
any review whatever of the acts of the government of
one sovereign State done within its own territory by
the courts of another sovereign State"); Underhill v.
Hernandez, 168 U.S. 250, 252 (1897); Restatement
(Third) of the Foreign Relations Law of the United
States § 443, comment d (1986).

- 24 -
 The Order is particularly unwarranted, and its adverse

impact on international comity and foreign relations is particu-

larly acute, because of the special relationship between the

United States and the Republic. The Philippine government is a

tripartite constitutional democracy, modeled on the system of the

United States. The Republic has a vigorous political system and

a free -- and freewheeling -- press. Although once a colony of

this country, it is no longer. The Treaty of General Relations

Between the United States of America and the Republic of the

Philippines, establishing relations between the two nations,

embodies the basic principles of respect for the Republic's

independence:

The United States of America further agrees

to recognize, and does hereby recognize, the
independence of the Republic of the Philip-
pines as a separate self-governing nation and
to acknowledge, and does hereby acknowledge,
the authority and control over the same of
the Government instituted by the people
thereof, under the Constitution of the Repub-
lic of the Philippines.17/

The district court's injunction, which effectively returns the

Republic's Executive Branch to colonial status insofar as BNPP

matters are concerned, contravenes the spirit of the Treaty and

i_/7/ Treaty of General Relations Between the United States

and the Republic of the Philippines, July 4, 1946,
U.S.-PhiI., art. i, 61 Stat. 1174.

- 25 -
has serious implications for this country's relations with the

Republic.

The impropriety and intrusiveness of the Order are exacer-

bated by the vagueness and overbreadth of its injunctive provi-

sions. Fed. R. Civ. P. 65(d) requires that an injunction be

"specific in terms" and "describe in reasonable detail . . the

act or acts sought to be restrained . ." The Supreme Court

has emphasized that these specificity provisions are no mere

technical requirements:

The Rule was designed to prevent uncertainty

and confusion on the part of those faced with
injunctive orders, and to avoid the possible
founding of a contempt citation on a decree
too vague to be understood. [Citations omit-
ted.] Since an injunctive order prohibits
conduct under threat of judicial punishment,
basic fairness requires that those enjoined
receive explicit notice of precisely what
conduct is outlawed.

Schmidt v. Lessard, 414 U.S. 473, 476 (1974) (per curiam); see

also International Longshoremen's Ass'n v. Philadelphia Marine

Trade Ass'n, 389 U.S. 64, 74-76 (1967).

The Order here is too broad and vague to meet this test of

basic fairness. In light of the Policy Statement issued by the

Office of the President on July 30, 1993, expressly reaffirming

that the Republic does not permit or condone any form of harass-

ment, intimidation or retaliation against witnesses, the use of

- 26 -
these terms in paragraph 1 of the Order is nothing more than

broad language requiring the Republic to obey the law in the

future. Courts routinely recognize that such "obey the law"

injunctions are improper because they fail to provide those

against whom an injunction is issued with fair and precisely

drawn notice of what the injunctions actually prohibit. Schmidt,

414 U.S. at 476; Calvin Klein Cosmetics Corp. v. Parfums de

Coeur I Ltd., 824 F.2d 665, 669 (8th Cir. 1987); City of

Mishawaka r Indiana v. American Electric Power Co., 616 F.2d 976,

991 (7th Cir. 1980), cert. denied, 449 U.S. 1096 (1981).

Together, paragraphs 1 and 2 of the Order create more ambi-

guities than certainties. Because the district court has con-

cluded that the timing of a law enforcement action can be a

determining factor in whether the court deems the action to be

retaliatory, the Republic must guess at how long it will have to

wait before it can take action against any existing or potential

witness for past crimes without risking the institution of con-

tempt proceedings for violating paragraph i. If the Republic

seeks to pursue an investigation or legal action against a wit-

ness for wrongful conduct that has occurred since the jury ver-

dict, or that will occur in the future, the Republic may be

required to prove to the district court that its motive is to

protect the people of the Philippines through dutiful enforcement

- 27 -
of their laws rather than retaliation. I-_8/ At the same time, the

district court has effectively immunized Padre, Orlina and every

other actual or potential Westinghouse witness from investiga-

tions or prosecutions by the Republic based on acts that occurred

before the jury verdict.

Under the broad terms of the injunction, the Republic would

be subject to the district court's second guessing of its law

enforcement actions with respect to virtually any of the almost

ten thousand Philippine citizens who were involved with construc-

tion of the BNPP project, all of whom can claim to be potential

witnesses. Furthermore, because the Order enjoins any action

that has the "effect" of intimidating or harassing a witness, the

Republic risks violating the injunction by taking good faith

actions against a witness that the witness subjectively considers

"intimidating." Thus, the Order is defective because its terms

effectively "forbid[] good faith as well as bad faith law

18/ The district court indicated at the September 27, 1993,

hearing that it was "unlikely" to find prosecutions for
acts occurring after the jury verdict retaliatory.
9/27/93 Tr. at 9 (JA 93). Absent certainty, however,
this pronouncement does not remove the threat of con-
tempt, nor does it eliminate the burden of hearings on
such charges. On the contrary, the court indicated
that it intended to hear and resolve such charges on a
case by case basis if brought. Id.

- 28 -
enforcement activities." Spiegel v. City of Houston, 636 F.2d

997, 1002 (5th Cir. 1981). 19/

The unnecessary breadth of the injunction also invites spu-

rious allegations of intimidation and harassment. Any Philippine

citizen with some connection to BNPP could claim to be a poten-

tial witness. Any such "witness" could then assert that adverse

action by the Philippine government -- from tax audits to traffic

tickets -- had the "effect" of "intimidating" them from testify-

ing for Westinghouse and could seek the district court's involve-

ment and protection. The district court has already made clear

that whenever such charges are brought, "I'll have to make a

finding." 9/27/93 Tr. at 9 (JA 93). Westinghouse and Burns

& Roe -- which have an obvious interest in fomenting such charges

as long as this litigation continues -- could invoke the district

court's jurisdiction whenever a potential witness is subject to a

tax audit or any other legal action by the government.

19/ Given that the Republic has not and will not intimi-
date, harass or retaliate against any witness, the
likelihood of the district court citing it for contempt
should be remote. Nevertheless, spurious allegations
are easily made, judicial fact-finding is not infalli-
ble, and the sanction of contempt is undeniably a
grievous one. International Longshoremen's Ass'n, 389
U.S. at 76 ("[t]he judicial contempt power is a potent
weapon" -- "[w]hen it is founded upon a decree too
vague to be understood, it can be a deadly one").
Moreover, even subjecting the Republic to contempt pro-
ceedings for good faith actions would unduly burden the
Republic's law enforcement function and represent an
impermissible infringement on its sovereignty.

- 29 -
Westinghouse and Burns & Roe also could make a claim of "intimi-

dation" whenever a witness does not want to testify for them for

whatever reason. Se___ee

Calvin Klein, 824 F.2d at 669 ("the very

harm that the specificity requirement is designed to protect

against has occurred here in the form of repeated contempt

motions . . all of which . . have been denied"). The injunc-

tion is simply a recipe for mischief. 20/

In sum, the district court's intrusion into the domestic

affairs of the Republic is both severe and unwarranted. Consumer

Party v. Davis, 778 F.2d 140, 146-48 (3d Cir. 1985). The acts

deemed by the court to constitute retaliation involved

well-founded law enforcement activities of an independent prose-

cutor. The Republic's Executive Branch has expressed a clear and

2O/ The timing of Westinghouse's charges of witness retali-

ation and request for "curative action" by the court
strongly suggests that Westinghouse was acting for tac-
tical advantage. The various statements and actions
about which Westinghouse and its witnesses complained
were all publicly reported shortly before or after the
jury verdict on May 18, 1993. Padre Aff. Exs. 1-4 (JA
281-92). Indeed, both Padre and Orlina claim in their
affidavits that they remained in the United States for
a while after the jury verdict because of warnings from
their friends and relatives about the retaliation they
would face upon their return. Padre Aff. ¶ 3 (JA 276);
Orlina Aff., ¶¶ 5-7 (JA 241-42). Westinghouse could
have brought these concerns to the court's attention
immediately, and Padre and Orlina could have appeared
before the court to testify in person. Instead, as has
been seen, Westinghouse waited for more than a month to
raise its charges of "retaliation," and did so only
after the court had indicated its intention to rule in
the Republic's favor on the Rule 54(b) certification.

- 30 -
unequivocal policy against retaliation or harassment of wit-

nesses. There is no justification in these circumstances for the

court to supervise future law enforcement actions of the

Philippine Government. The court's injunction therefore should

be reversed.

II. THE DISTRICT COURT COMMITTED CLEAR LEGAL

ERROR BY REFUSING TO CERTIFY THE REPUBLICtS
MERITORIOUS RULE 54(b) APPEAL AS A SANCTION
FOR THE ACTIONS OF A CONSTITUTIONALLY INDE-
PENDENT GOVERNMENT OFFICIAL IN ENFORCING THE
REPUBLICtS LAWS

All of the factors applied in this Circuit favor 54(b) cer-

tification of the Republic's tortious interference claims.

Anthuis v. Colt Indus. Operating Corp., 971 F.2d 999, 1003 (3d

Cir. 1992); Allis-Chalmers Corp. v. Philadelphia Elec. Co., 521

F.2d 360, 364 (3d Cir. 1975). 21/ Indeed, that is precisely what

21/ First, the factual and legal theories underlying the

tortious interference claims are entirely separate and
distinct from the unadjudicated claims. Moreover, the
Republic was the only party asserting the tortious
interference claims; NPC is the party involved in the
arbitration, and the Republic is not a party to the
unadjudicated claims. Second, there is no possibility
that future developments _-n the trial court will moot
the appeal of the tortious interference claims, so
judicial economy is not served by delay. Third, the
legal and factual differences between the adjudicated
and unadjudicated claims ensure that this Court will
not have to consider the same issue twice. Fourth,
since the trial judgment favored defendants, the issue
of a possible set-off against the judgment does not
arise. Finally, the Republic, whose remedy upon suc-
cessful appeal will be a new trial, will be prejudiced

Footnote continued on next page.

- 31 -
the lower court found. Op. 14-15. Having made the appropriate

finding under Rule 54(b), there was nothing remaining for the
district court to do but to certify the appeal on the merits.

Instead, the court refused to certify the appeal for the

stated purpose of achieving indirectly what it could not properly

do directly. As has been seen, at the time of the court's Order,

all that remained of the conduct challenged by Westinghouse was

an administrative complaint by the independent Office of the

Ombudsman against a government employee who hired himself out to

Westinghouse in violation of his statutory responsibilities to

his employer. The Republic's Executive Branch, which is the

plaintiff in this case, has no authority to withdraw or intervene

in that action by the Ombudsman, whose constitutional mandate,

inter ali____aa,
is to "[i]nvestigate on its own or on complaint by

any person, any act or omission of any public official, employee,

office or agency, when such act or omission appears to be ille-

gal, unjust, improper, or inefficient." 1987 Constitution, Art.

Footnote continued from previous page.

by delay if appeal must await completion of the arbi-

tration, which may take another year or more to com-
plete. As memories fade and witnesses become unavail-
able in the interim, the Republic loses the ability to
prove its case on retrial.

- 32 -
XI, § 13(1) (emphasis added) (JA 393); R.A. No. 6770, § 15(1) (JA
400) .22/

After determining that it could not enjoin the Ombudsman's

action under the standards of Compagnie des Bauxites de Guinea,

the district court crafted an order that had the same result. In

fact, Paragraph 3 of the court's Order is even more onerous and

unfair than the injunctive provisions of paragraphs 1 and 2,

because it holds the Executive Branch of the Republic hostage to

the actions of the Office of the Ombudsman, an independent con-

stitutional authority. In essence, the district court has fash-

ioned a coercive sanction with which the Republic is not able to

comply. See, e.g., Maggio v. Zeitz, 333 U.S. 56, 72-77, (1948)

(the sound discretion of an equity court does not embrace

enforcement through contempt of a party's duty to comply with an

order that calls for him "to do an impossibility"); SECv. Ormot

22/ As noted earlier, Article XI, § 5 of the 1987 Constitu-

tion of the Philippines establishes the Office of the
Ombudsman as an independent office. See Deloso v.
Domingo, 191 S.C.R.A. 545, 550-51 (1990) (JA 491, 494).
Its annual appropriations must be automatically and
regularly released. 1987 Const., Art. XI, § 14 (JA
393). Salaries of the Ombudsman and its deputies may
not be decreased during service. Id., § i0 (JA 392).
Though appointed by the President, the Ombudsman and
its deputies may be removed only through impeachment in
Congress for "culpable violation of the Constitution,
treason, bribery, graft and corruption, other high
crimes, or betrayal of public trust." R.A. No. 6770,
§ 8 (JA 397); In re Raul M. Gonzalez, 160 S.C.R.A. 771,
775 (1988) (JA 486, 488).

- 33 -
Drug & Chemical Co. r Inc., 739 F.2d 654, 655 (D.C. Cir. 1984)

(district court committed reversible error by failing to consider

party's inability to comply with injunction). Even if the Repub-

lic can satisfy the court that it is in compliance with the first

two intrusions on its sovereignty, it will not be able to effect

compliance with the third provision regarding the complaint

against Professor Fernandez. The Executive Branch simply has no

constitutional or legal authority to order the Ombudsman to dis-

miss the complaint or take other steps that the district court

might find appropriate under paragraph 3 of the Order. This

dilemma underscores the unfairness and impropriety of the sanc-

tion imposed by the district court.

The result is that the Republic has been unfairly deprived

of its right to seek prompt review by this Court on the merits of

its underlying claim. Westinghouse's allegations of witness

harassment had nothing to do with the merits of the Republic's

case or of its appeal of that case to this Court. The district

court clearly erred by withholding the Republic's Rule 54(b) cer-

tification, which it found to be meritorious, to accomplish indi-

rectly what the court acknowledged it could not require directly.

The Order should be vacated, and the district court should be

ordered to certify the Republic's appeal without further delay.

- 34 -
 III. THE DISTRICT COURT EXCEEDED ITS AUTHORITY BY
REQUIRING THE REPUBLIC TO SUBMIT TO THE CON-
TINUING JURISDICTION OF THE COURT AS A CONDI-
TION OF SETTLEMENT OF THIS PRIVATE CIVIL
ACTION

The district court exceeded its authority under Fed. R. Civ.

P. 41 by requiring the parties to submit to its continuing juris-

diction as part of any settlement. Order, ¶ 5. As Rule

41(a)(1)(ii) makes clear, parties to a private civil action may

stipulate to a dismissal of the action at any time. A court has

no authority to disapprove or set conditions on such a dismissal.

First National Bank v. Marine City t Inc., 411 F.2d 674, 677 (3d

Cir. 1969); Gardiner v. A.H. Robins Co., 747 F.2d 1180, 1189-90

(8th Cir. 1984); 9 C. Wright & A. Miller, Federal Practice & Pro-

cedure § 2366, p. 176 (1971). A court's attempt to impose a con-

dition on settlement of a civil action "deprive[s] the parties of

their unconditional right to a Rule 41(a) (I) (ii) dismissal by

stipulation." Gardiner, 747 F.2d at 1190 (emphasis added);

accord In re Wolf, 842 F.2d 464, 466 (D.C. Cir. 1988).

Settlement of this action has been discussed in the past

and, as in all cases, remains a possibility. The terms on which

the Republic, Westinghouse and Burns & Roe may agree to settle,

however, are solely in their hands. Gardiner, 747 F.2d at 1189.

The district court's attempt to set conditions on such a settle-

ment -- particularly a condition requiring the Republic's perma-

nent submission to the court's control -- not only violates the

- 35 -
Republic's rights as a party pursuant to Rule 41 but further

infringes upon its sovereignty. Paragraph 5 of the Order there-

fore should be vacated.

CONCLUSION

The Republic of the Philippines respectfully requests that

this Court vacate the district court's Order of October 4, 1993,

and remand this case with directions to the district court to

enter its Rule 54(b) certification without further delay.

Dated: December 17, 1993 Respectfully submitted,

SHAW, PITTMAN, POTTS &

TROWBRIDGE
2300 N Street, N.W.
Washington, D.C. 20037
Tel.: (202) 663-8000

"-'Mark Augenblic_,JP. C.
David J. Cynamo_T
Ira H. Raphaelson
Edward J. Reed

- 36 -
 and

Of Counsel GREENBAUM, ROWE, SMITH,

RAVIN & DAVIS
Reichler, Milton & Medel P.O. Box 5600
1747 Pennsylvania Ave., N.W. Woodbridge, N.J. 07095
Suite 1200 Tel.: _(908) 549-5600
Washington, D.C. 20006

and Paul A. Rowe

Alan S. Naar
Paul C. Warnke
1299 Pennsylvania Ave., N.W. Attorneys for Appellants
Washington, D.C. 20004

- 37 -
 CERTIFICATION

Pursuant to Third Circuit LAR 28.3(d), I hereby certify that

I am admitted to practice before the United States Court of

Appeals for the Third circuit. I further certify that additional

counsel appearing on behalf of Appellants, Mark Augenblick and

Alan S. Naar, are also admitted to practice before this Court.

_j_. !amo_n__M_
y ©

- 38 -
 CERTIFICATION

Pursuant to Third Circuit LAR 28.3(d), I hereby certify that

I am admitted to practice before the United States Court of

Appeals for the Third circuit. I further certify that additional

counsel appearing on behalf of Appellants, Mark Augenblick and

Alan S. Naar, are also admitted to practice before this Court.

_j_. !amo_n__M_
y ©

- 38 -
NOT FOR PUBLICATION

UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY
Civil Action No. 88-5150

THE REPUBLIC OF THE PHILIPPINES

and THE NATIONAL POWER CORPORATION,

Plaintiffs,
OPINION
V°

WESTINGHOUSE ELECTRIC CORPORATION,

WESTINGHOUSE INTERNATIONAL
PROJECTS COMPANY and BURNS AND ROE
ENTERPRISES, INC.,
-ORIGINAL FILED
Defendants.

OCT 4 1993

Counsel: WiLLiAM T WALSH. CLERK

Greenbaum, Rowe, Smith, Ravin & Davis

BY: Paul A. Rowe, Esq.
Alan S. Naar, Esq.
P.O. Box 5600
Woodbridge, NJ 07095

Shaw, Pittman, Potts & Trowbridge

BY: Mark Augenblick, Esq.
James B. Hamlin, Esq.
Michael L. Stern, Esq.
2300 N Street, NW
Washington, DC 20037

Of Counsel:

Reichler, Milton & Medel

1747 Pennsylvania Avenue, NW
Suite 200
Washington, DC 20006

Paul C. Warnke, Esq.

1299 Pennsylvania Avenue
Washington, DC 20004

Attorneys for Plaintiffs

Shanley & Fisher
BY: Raymond M. _Tierney, Jr., Esq.
131 Madison Avenue
Morristown, NJ 07962

Cravath, Swaine & Moore

BY: David Boies, Esq.
Richard W. Clary, Esq.
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019

Donovan Leisure, Rogovin & Schiller

BY: Jonathan D. Schiller, Esq.
Randall L. Speck, Esq.
1250 24th Street, NW
Washington, DC 20037

A£_61-ney61 for Defendants Westinghouse Electric Corporation

and Westinghouse International Projects Company

"McCafter &' English

BY: George W. C. McCarter, Esq.
4 Gateway Center
i00 Mulberry Street
Newark, NJ 07102-4096

Stein, Mitchell & Mezines

BY: Glenn A. Mitchell, Esq.
David U. Fierst, Esq.
ii00 Connecticut Avenue, NW
Washington, DC 20036

Attorneys for Defendant Burns and Roe Enterprises, Inc.

DEBEVOISE, Dist=i=t Judge.

After a two months' trial, a jury returned a verdict in favor

of defendants Westinghouse Electric Corporation, Westinghouse

International Projects Company and Burns and Roe Enterprises, Inc.,

on the claims of plaintiff, The Republic of the Philippines, that

defendants interfered with President Ferdinand Marcos' fiduciary

duty to the Republic by bribing him and that defendants conspired

to interfere with that fiduciary duty. Westinghouse now alleges

that, after it became apparent that the Republic had lost the case,

officials of the Republic commenced a retaliatory campaign of

harassment and intimidation of persons who had testified or

provided affidavits on Westinghouse's behalf. Westinghouse moved

for curative relief, including (i) enjoining the Republic from

engaging in further harassment of witnesses who have testified or

will testify in the future in this action, (ii) sanctioning the

Republic for the harassment that has occurred to date by enjoining

it from any further prosecution of its claims in this cou_rt,

particularly from filing a notice of appeal from the judgment-on

Counts 3 and 8 of the complaint and (iii) awarding Westinghouse

attorneys' fees incurred on this motion.

I heard oral argument on the motion on July 12, 1993, and

reserved decision in order to permit the attorneys for the Republic

to communicate with officials of the Republic and to provide

further information.

On August 6, 1993, the Republic filed a renewed motion for

Rule 54(b) certification. Affidavits and exhibits supporting the

motion recited actions which the Republic had taken in response to

the charges of retaliation against Westinghouse witnesses.

 I. Backqround

Before setting forth the facts which precipitated the present

motion, it will be useful to describe the proceedings which have

taken place in this case.

The Republic and The [Philippines] National Power Corporation

filed this case in 1988. It arose out of the construction of the

600 megawatt Philippines Nuclear Power Plant Unit i in Bagac,

Bataan, during a ten-year period commencing in 1976. The fifteen-

count complaint alleged breach of contract, fraud, tortious

interference with fiduciary duties, negligence, civil conspiracy,

RICO violations, antitrust violations and various pendent state law

claims.

At the outset of the proceedings, I concluded that all of the

claims against Westinghouse were subject to contractual arbitration

clauses except the claims of the Republic that Westinghouse had

tortiously interfered with the fiduciary duties owed by President

Marcos to the Philippine people. The interference consisted of

bribes which each of the defendants was alleged to have paid to

President Marcos in order to obtain the nuclear power plant

contract and to obtain favorable administration of the contract.

Those claims were set forth in Count 3 (interference with fiduciary

duty) and Count 8 (conspiracy to commit the tort). I concluded

that the only claim against Burns and Roe which was subject to an

arbitration clause was Count 2 for rescission of a consulting

agreement, but that, in the interest of judicial economy, all other

non-bribery claims against it should be stayed also. As a result,

I stayed proceedings on all claims except those advanced in Counts

3 and 8 (to the_ extent Count 8 set forth a conspiracy claim for

interference with fiduciary duties). Republic of the Philippines

v. Westinuhouse Elec., 714 F. Supp. 1362 (D.N.J. 1989).

Thereafter, the litigation proceeded on two fronts. The

National Power Corporation's claims against Westinghouse arising

out of the nuclear power plant contract proceeded before three

arbitrators in Geneva. The Republic's Count 3 and Count 8 claims

against Westinghouse and Burns and Roe proceeded in this Court.

From all accounts in the Philippine press, these actions

assumed enormous importance in the eyes of Philippine leaders.

Corstruction of the power plant had been undertaken to help solve

the desperate electrical power shortage in the Philippines. Huge

foreign loans were incurred to pay for the project. When President

Aquino's government halted construction of the power plant, the

Republic found itself with a partially completed plant which was

producing no electricity, an ever worsening shortage of electrical

power, and a hugh foreign debt burden on which, it is said,

interest alone amounts to $300,000 each day. It appears that the

leaders of the Republic looked to a judgment in this case and in

the arbitration proceedings as the solution to these staggering

problems. I mention this because it may provide some explanation

of the untoward events which transpired after the jury rendered a

verdict against the Republic.

To return to a brief description of the proceedings in this

case: Throughout, the Republic was represented by attorneys whose

abilities, aggressiveness, ingenuity and integrity were exceeded by
q'.

none in the United States. Were that not enough, at trial the

services of these attorneys were augmented by those of a former

United States Attorney for the Northern District of Illinois, a

highly skilled cross-examiner of opposing witnesses.

During pretrial proceedings, the Republic was accorded every

courtesy and presumption which the law allows. It obtained the

widest discovery, often over the vigorous opposition of defendants.

All inferences were drawn in its favor on defense motions to

dismiss and for summary judgment. Neither the district court nor

the Court of Appeals spared themselves when dealing with this

matter. I

Early in the case, it became apparent that a critical factual

question would be whether any money or thing of value ever passed,

directly or indirectly, from Westinghouse and Burns and Roe to

President Marcos. There was no question that Burns and Roe and

Westinghouse hired Herminio Disini as their special sales

representative in order to acquire influence with the Republic's

then final decision maker - President Marcos. There was no

question that Disini's wife was a cousin and physician of President

I. Unreported opinions are too numerous to count. Reported

opinions include RePublic of the PhiliPDines V. Westinahouse Elec.
CorD., 821 F. Supp. 292 (D.N.J. 1993); PhiliDDines V. Westinahouse
Electric CorD., 782 F. Supp. 972 (D.N.J. 1992); Philippines v.
westinqho_se Electric CorD., 139 F.R.D. 50 (D.N.J.), stay d@nied,
949 F.2d 653 (3d Cir. 1991); PhiliDP_@ V. Westinahouse Electric
CorD., 774 F. Supp. 1438 (D.N.J. 1991); PhiliDDines Westinahouse
Electric CorD., 132 F.R.D. 384 (D.N.J. 1990), mandamus denied, 951
F.2d 1414 (3d Cir. 1991); Philippines v. Westinahouse Electric
CorD., 714 F. Supp. 1362 (D.N.J. 1989).
Marcos' wife, that Disini played golf with President Marcos daily

and at that time was one of his "cronies," and that upon the

requests of Disini, President Marcos directed the National Power

Corporation to award contracts to Westinghouse and Burns and Roe

and to accord them favorable treatment in the negotiation and

subsequent administration of the Westinghouse contract. Similarly,

there was little dispute about the amounts and the often devious

means of payment of enormous special sales representative

commissions to Disini and his companies.

Unattractive as this way of doing business may be, the United

States Department of State recognizes the retention of special

sales representatives as a necessary and legitimate way to _do

business in certain foreign countries, provided that the

commissions are not in fact bribes. One rule of thumb was that

such commissions not exceed 5% of the contract price.

The arbitrators in Geneva were three eminent persons of

international renown. They addressed the bribery issue in the

context of the Republic's challenge of the validity of the

arbitration clause. After reviewing the evidence that Burns and

Roe and Westinghouse bribed President Marcos, the arbitrators found

(i) that the National Power Corporation and the Republic had failed

to prove either that Burns and Roe intended to provide a payment to

President Marcos or that President Marcos agreed to accept payments

from Burns and Roe through Disini and (ii) that, although there was

some evidence that Westinghouse intended to provide payments to

President Marcos, there was no evidence of any agreement between

President Marcos and Westinghouse or that Disini acted as agent for
President Marcos or shared any commissions with him. In

particular, the arbitrators found that, although Westinghouse paid

commissions to Disini's company Herdis, there was no evidence that

the commissions were disbursed to any entity in which President

Marcos had an interest.

The arbitrators issued their preliminary award that addressed,

among other things, the bribery issue, on December 19, 1991.

Thereafter, Westinghouse and Burns and Roe moved for summary

judgment on the ground that the Republic was collaterally estopped

by the preliminary award from litigating the issues of breach of

fiduciary duty and conspiracy to bribe. I denied the motion.

I scheduled the case for trial in February 1992. The date was

adjourned until March 3. Long prior to March 3 (in December 1990,

to be precise), the United States Magistrate Judge assigned to this

case began settlement discussions with the parties. He devoted

major efforts to this endeavor as the representatives of the

parties sought to hammer out an agreement. Agreement was not

reached by the March 3 trial date, and trial commenced with the

selection of a jury. After the jury had been selected, the parties

advised me that a settlement had been reached. When the terms of

the settlement were placed upon the record, I discharged the jury.

The settlement which had been arrived at with extensive

assistance from the Magistrate Judge was complex, but one which

would have redounded to the benefit of all parties. The settlement

had three major components: (i) Westinghouse was to pay the

Republic $i0,000,000 in cash and provide $90,000,000 in credits and
-o

discounts; (ii) _estinghouse would undertake to repair, refurbish

and upgrade the Philippine Nuclear Power Plant to current nuclear

safety standards; and (iii) Westinghouse would operate the plant

for a term of 30 years.

Only the broad outlines of the settlement could be placed on

the record on March 3, 1992. Complex agreements had to be drawn to

implement each aspect of the settlement. Much depended on the good

faith of the parties.

One highly constructive development took place during the

negotiation of the final agreements.

A neutral third party panel composed of three internationally-

recognized experts on nuclear energy was retained. The panel

worked closely with Westinghouse technical experts and with plant

staff of the Philippines National Power Corporation. The panel

reviewed the proposed Upgrade-Pre-Op Work Program as described in

the Westinghouse Technical Proposal dated August 28, 1991. This

included the refurbishment and upgrade of the physical plant, the

design of its safety features, the operational program for the

plant and the availability of international support for the plant.

A July ll, 1992 letter to President Ramos concluded with the

statement: "In summary, the Panel concludes that the proposed

Program, if carried out with diligence and care, and with due

consideration to the comments above, will result in a plant that

fully meets current U.S. licensing standards and will operate

safely and reliably."

 Unfortunately, the parties were unable to reach final
L.

agreement on a multitude of financial aspects of the project and

upon allocation of responsibility for many functions which had to

be performed. On December 24, 1992, I received a letter from the

attorneys for the Republic informing me of the failure to reach

final agreement and requesting that the case be rescheduled for

trial.

Westinghouse charged the Republic with breach of the

settlement agreement and sought dismissal of the action and

damages. After an evidentiary hearing, I concluded that the

original settlement agreement unavoidably left so many open matters

"that it was hardly an enforceable agreement at all."

I rescheduled the case for trial on March 15, 1993. During

the weeks preceding that date, I conducted extensive settlement

sessions with the parties. Westinghouse made what seemed to me to

be a generous offer of generating equipment. The Republic's

negotiators took the offer back to the responsible officials in the

Philippines with my strong urging that it be accepted. It was

rejected.

The trial commenced on March 15, 1993. It was skillfully and

vigorously tried by both sides. There was extensive testimony and

an immenme amount of documentary evidence. I exercised such

discretion as I had in favor of admitting evidence offered by both

sides so that the jury would have before it everything that the

parties wished to present.

i0
 Is soon became evident that there remained one critical

factual issue - whether President Marcos received either directly

or indirectly any of the money which Westinghouse and Burns and Roe

paid to Disini or his companies as commissions. There was no

evidence that any of the money was paid to President Marcos

directly. There was ample evidence that Disini and his Herdis

companies were engaged in all sorts of financial shenanigans with

the commission payments. The Republic sought to show through that
and other evidence that Disini was simply President Marcos' front
man and that President Marcos was the true owner of the Herdis

companies. If so, the commission payments would have been for his

benefit and, thus, the basis of a bribery charge.

But the Republic's evidence that President Marcos was the true

owner of the Disini companies was gossamer thin, and Westinghouse

presented substantial evidence to the contrary. Nevertheless, I

denied Westinghouse's and Burns and Roe's motions for judgment both

at the close of the Republic's evidence and at the close of all the
evidence.

During the trial, there were two episodes which foreshadowed

the serious problems which have now arisen in this case.

On one occasion during the trial, Westinghouse's attorneys

advised me that two of the persons whom they wished to call as

witnesses, citizens of the Philippines, expressed fear of possible

government harassment after the trial. These persons were Mr.

Jerry R. Orlina and Mr. Pedro A. Padre, Jr. With the attorneys for

all parties present, I conducted a telephone conference call with

ii
the attorney for Mr. Jerry R. Orlina, one of the prospective
-o

witnesses. I assured the attorney "that I would have an obligation

to look into and take curative action in the event any witness was

intimidated or tampered with in any way by any party .... I think

probably this duty would run beyond the formal termination of the

trial .... this can be communicated to all clients .... "

Both Mr. Orlina and Mr. Padre testified, probably as a result

of the assurances I had given them. Each had held officer

positions in the Herdis companies and each was a close associate of

Disini during the period of the nuclear power plant negotiation and

construction. They were able to provide details concerning a

number of the payments, transactions and events which were [the

subject of testimony and documents in evidence. Their testimony

added details not provided by other witnesses, but I don't recall

that any of their testimony was in conflict with the testimony of

any of the Republic's witnesses. There was nothing that suggested

to me that they testified untruthfully.

The second episode which foreshadowed post trial events in the

Philippines occurred after Mr. Padre testified. Mr. Padre reported

to Westinghouse counsel that he and his wife had interpreted as

threatening conduct of former Philippine Senator Rene Saguisag, who

had been sent to observe the trial at the expense of the Philippine

government and at the request of President Ramos. I called Mr.

Saguisag to the witness stand and inquired about these allegations.

He testified that his intentions were entirely benign, and I let

the matter rest with a general admonition that nothing be done

12
which would appear to be an attempt to praise or condemn a witness

or which would in any way suggest to a witness that he cannot

testify fully and truthfully in the case. I could not help but

observe, however, the animosity which Mr. Saguisag exhibited

towards Westinghouse. If this represents the attitude of

Philippine officials, one can understand why settlement was not

achieved and why a mutually advantageous resolution of the

controversy eluded the parties.

In addition to those disturbing episodes, the evidence

suggested that the Republic was not above rewarding persons who

cooperated with it. Jesus Vergara (whose deposition was read at

the trial) played an important role in the events leading to the

award of the contracts. The Republic froze his assets and

restricted his ability to leave the country without formal charges

being filed, but he subsequently decided to cooperate with the

Republic in exchange for a grant of immunity. The Republic's trial

witness, Jesus Disini, was granted immunity from the Philippine

Bureau of Internal Revenue in exchange for his testimony.

The trial continued and the presentation of evidence was

completed. Each party's attorney delivered comprehensive and

beautifully organized closing arguments. After being charged, the

jury retired to deliberate.

On May 16, 1993, after deliberating for several days, the jury

announced that it had reached a verdict. After assembling the

parties, it developed that one of the twelve jurors was not in

accord with the proposed verdict and the jury was instructed to

13
continue deliberating. It was impossible to tell what the proposed
verdict was to have been, but there was a sense in the courthouse

that this was not a favorable development for the Republic.

On May 19, 1993, the jury again announced that it had arrived

at a verdict. The verdict was the answer "No" to the question:

"Did Burns & Roe bribe President Marcos to award it a contract or

contracts for work on the Philippine Nuclear Power Plant?", and the

answer "No" to the question: "Did Westinghouse bribe President

Marcos to award it a contract or contracts for work on the

Philippine Nuclear Power Plant?" In light of those answers, it was

unnecessary for the jury to address the other questions on the

verdict sheet.

Judgment was entered on the verdict. It was not a final

judgment 2 since the National Power Corporation's claims against

Westinghouse and certain of its claims against Burns and Roe were

still being pursued in the arbitration proceedings, and certain of

NPC's claims against Burns and Roe had been stayed.

On June 28, 1993, the Republic argued its motion pursuant to

Fed. R. Civ. P. 54(b) to direct the entry of a final judgment as to

the Count 3 and 8 claims which the jury verdict had decided. This

would have permitted an immediate appeal. I concluded that there

was no just reason for delay and that it would advance each party's

and the court's interests if the Court of Appealswere to review at

2. The judgment which was originally filed appeared to resolve the

whole case. That was an obvious error and it was later corrected
to reflect that judgment was entered only on Count 3 and a portion
of the Count 8 claims.

14
this stage in the proceedings certain of the difficult legal issues

which had arisen during the course of pretrial proceedings and

trial of this case.

After I had announced my conclusion from the bench, however,

the Westinghouse attorneys advised me that they had received

information that persons who had testified on behalf of

Westinghouse were being subjected to retaliation by Philippine

officials. If true, that would have represented an impermissible

assault upon the integrity of the judicial process. Therefore, I

put everything else in the case on hold until the facts concerning

the possible retaliation could be developed.

Affidavits and other materials submitted by both the Republic

and Westinghouse establish that, notwithstanding my admonitfons

during trial, government officials have indeed retaliated against

Westinghouse witnesses.

II. Retaliation Aaainst Westinahouse Witnesses

As recited above, Jerry Orlina and Pedro Padre testified as

Westinghouse witnesses at the trial. Early in the case, in 1991,

Professor Perfecto V. Fernandez, a faculty member of the University

of the Philippines, provided an affidavit on Westinghouse's behalf

that set forth his expert opinion about Philippine law relevant to

the issues raised on a motion. Since the verdict, each of these

three persons has been the target of vilification in the public

press inspired by officials in the Philippines government and each

has become the target of actual or threatened government action.

It is impossible not to conclude that these actions are being taken

15
in retaliation for their having testified or submitted an affidavit

on Westinghouse's behalf.

The attack on the three witnesses has been spearheaded by

Francisco A. Villa, Overall Deputy Ombudsman of the Republic of the

Philippines. The Ombudsman and his deputies, including Mr. Villa,

are appointed by the President of the Republic. He has the power

to initiate investigations, to direct any public official to

perform any act required by law and to request assistance from any

governmental agency. The attacks on the witnesses commenced when

it appeared that the jury might return a verdict against the

Republic. Statements of other officials make it clear that the

conduct of Mr. Villa had the support of the President and the

highest levels of government. _

Pedro A. Padre, Jr., appeared as a witness on April 28 and 29,

1993, at the request of Westinghouse. He did so voluntarily and

accepted no payment other than reimbursement of expenses. He had

been concerned about the possibility of government retaliation but

elected to testify nevertheless.

Shortly after he testified, while he was still in the United

States, he was warned by friends and relatives that newspaper

reports reflected that government officials were making serious

accusations and threats about his role in the trial. Deputy

Ombudsman Villa was reported to have told reporters that the

decision of three Filipinos to "turn their backs on the republic"

may have wrecked the Republic's bid to win its bribery suit against

Westinghouse and Burns and Roe. President Ramos had authorized

16
Deputy Ombudsman Villa and Special Prosecutor Aniano Desierto to
observe the trial. Deputy Ombudsman Villa referred to Padre,

Orlina and Professor Fernandez as "economic enemies and traitors to

the Republic."
The press reports recited that the Office of the Ombudsman was

considering filing charges against Professor Fernandez and was

building up a criminal complaint against Padre and Orlina for

possible violation of the internal revenue laws. One headline

read: "Tax raps poised on bribery witnesses." Deputy Ombudsman

Villa was quoted as saying that Professor Fernandez, a noted labor

and libel law expert, could be held liable for disloyalty because

as a public official "he must at all times be loyal to the

Republic." Other press reports quoted President Ramos' spokesman

as stating that the government would investigate three Filipino

witnesses who gave testimony inimical to the government's position.

A Philippines Senator urged that the government study the

"culpability" of the three Filipinos who testified as Westinghouse

witnesses. The vitriolic nature of press response to government

charges of treachery by the three Witnesses is suggested by a

column of J. V. Cruz entitled "Shocking Westinghouse Verdict." It

stated, in part:

These embittered, frustrated joy-riders [Filipino

officials who attended the trial] were thirsting for
blood, and didn't have to look far to find it. The
villains were those three Filipinos who had submitted
statements clearing Westinghouse, Marcos and Disini.
Perfecto Fernandez, Pete Padre and Gerry Orlina.
Goddamned traitors. Benedict Arnolds.

Fernandez, a University of the Philippines law

professor, has explained that all he did, when asked for

17
 his legal opinion, was to assert that President Marcos
had the legal and constitutional powers to authorize and
approve the contract between the Philippine government
and Westinghouse. This was his honest, well-studied
opinion. Well, if this is his alibi it won't hold up.

The point is he opposed his own government's

position and for this he should be fired as a UP
professor. In fact, Fernandez and those two others who
also filed depositions disputing the government's case
should be hanged in public at the courtyard of the
nuclear plant in Morong, Bataan. At least we, ll finally
have found some useful purpose for the installation.

As a result of the reports of governmental retaliation against

him and the climate of opinion created by those reports, Padre

delayed his return to the Philippines. His reputation has been

tarnished, and he has lost business opportunities. If tax evasion

charges are brought against him, he will be financially ruined,

because he cannot afford the services of lawyers and other expenses

required to defend himself.

Jerry R. Orlina testified as a Westinghouse witness on May 3

and 4, 1993, receiving no payments other than reimbursement of

expenses. He, too, had been hesitant to testify because of fear of

government retaliation against himself, his family and business.

He has set forth his reasons for testifying.

Despite these concerns, I decided to testify at the trial

for several reasons. First, I wanted to keep my name
untarnished. I might be considered a co-conspirator with
Herminio Disini, who the government accused of being a
"front man," "bagman," and "tax evader," and I wanted to
be sure that these charges were rebutted with the facts.
Second, as a former executive of Herdis Management and
Investment Corporation, I knew the facts about Herdis'
ownership and believed that the truth should be told.
Third, I believed that my testimony could contribute to
eventual operation of the Philippines Nuclear Power Plant
and alleviation of our country's severe power crisis and
the resulting economic decline. For these reasons (and
because Westinghouse's attorneys told me that the Court

18
 had warned the parties not to intimidate witnesses, even
after _hey-had testified) I decided to testify, despi_e
my concerns about possible government retaliation.

After testifying and before returning to the Philippines,

Orlina, like Padre, received reports of government action against

him. Even though friends and relatives advised him that it was not

safe to return to the Philippines, Orlina returned in mid-June. He,

too, has faced public censure, loss of a contract and loss of a

business opportunity. He, too, would be financially ruined if tax

evasion charges are brought against him.

Both Padre and Orlina had cooperated fully with the Republic's

investigators during the pretrial period, giving them the same

information that they had given Westinghouse's attorneys. Prio r to

their testifying at the trial, the Philippines government had never

threatened to bring tax charges against them or suggested that they

had ever violated any law. It is significant that Jesus Disini,

who, like Padre and Orlina, had been actively associated with the

Herdis companies, testified as a witness for the Republic and was

granted tax immunity, while Padre and Orlina testified for

Westinghouse and were immediately threatened with a tax evasion

investigation.

Professor Perfecto V. Fernandez is the Roberto Sabido

Professor of Law and Development at the University of the

Philippines College of Law. He did not testify at the 1993 trial.

Rather, in March 1991, at the request of Westinghouse's counsel, he

prepared an affidavit expressing his opinion about matters of

19
Philippines law as they related to Westinghouse's motion for

summary judgment_.

The government and the press were fully aware of the fact that

Professor Fernandez had provided this evidence in connection with

the summary judgment motion. Senator Rene Saguisag 3 stated on the

Senate floor that Professor Fernandez was giving aid and comfort to

the enemy by testifying for Westinghouse. Continuing on another

occasion, Saguisag said, "... that what distressed him was the fact

that the lawyer executed an affidavit in favor of the other side,

which, he opined, is unethical because one has the duty to be loyal

to his country. He added that on matters of opinion, if one cannot

help his Motherland, he just has to get out of the way, especially

if he is paid with the taxpayers' money." The Philippines press

gave Senator Saguisag's remarks wide coverage.

After the jury verdict in this case, Professor Fernandez was

subjected to the government threats as reported in the press which

are described above. In particular, Deputy Ombudsman Villa filed

an administrative complaint with the President of the University of

the Philippines accusing Professor Fernandez of disloyalty to the

Republic and to the Filipino people.

The charges were transmitted to the University President on

May 31, 1993, twelve days after the verdict. Deputy Ombudsman

Villa's affidavit which accompanied the charge recited that on

3. Then Senator, now newspaper reporter, Rene Saguisag, is the

person who, at the trial of the case, was accused of having engaged
in conduct threatening to Pedro A. Padre, Jr., after he testified
as a Westinghouse witness.

2O
March 15, 1991, Professor Fernandez executed an affidavit, for

which he was paid, and for the purpose of using the affidavit as

evidence of Westinghouse against the Republic in the instant case.

The charges recite that "As a public officer, [Professor Fernandez]

was mandated by law to be loyal at all times to the Republic and to

the Filipino people and to uphold the Constitution and put loyalty

to country above loyalty to persons or party." The charges assert

that Professor Fernandez' legal opinions contained in the affidavit

were wrong. That the charges were motivated by rage at the jury
verdict rather than considered judgment is suggested by the

concluding paragraphs of the charges:

Ii. State University Professor Fernandez, in a

cowardly attempt to escape the clutches of the law,
whimpered "I'm not even a government official. I'm just
a lowly college professor." (Philippines Daily Inquirer,
May 20, 1993, marked as Annex "A") and he repeated the
same disclaimer in the talk show VIEWPOINT on May 25,
1993 when he and I were among the guests;

12. For his acts of betrayal of his government and

people, J.V. Cruz, former Press Secretary of the late
President Ramon Magsaysay, angrily wrote in his column in
the Malaya dated May 29, 1993 that Professor Fernandez
should not only be fired from the State University but
should be hanged in public at the courtyard of the
Nuclear Plant in Morong, Bataan, copy of J.V. Cruz's
column is hereto attached as Annex "B";

13. In view of the foregoing, it is respectfully

prayed that State University Professor Perfecto V.
Fernandez be dismissed from the public service for
Disloyalty to the Republic and the Filipino People;

Deputy Ombudsman Villa characterized Professor Fernandez as a

traitor on a number of occasions, including a television show, and

this characterization was repeated in the Philippine press.

21
 It is apparent that Deputy Ombudsman Villa was acting in
%-

accordance with_ the policies of the Office of the Executive,

President Ramos. During a break in the television show Firinq Line

where both he and Professor Fernandez appeared, he stated that he

had been authorized by the legal panel appointed by President Ramos

to pursue accusations against the three Filipino witnesses who

testified on behalf of Westinghouse.

In an affidavit which he submitted in the libel action which

Professor Fernandez has filed against him, Deputy Ombudsman Villa

stated: "The publication in the Philippine Daily Inquirer which is

made the basis of the instant complaint is a fair and true report

made in good faith by the official act of the Overall Deputy

Ombudsman Francisco A. Villa in the performance of his official

duties." (emphasis added). The article which Deputy Ombudsman

Villa characterized as "fair and true" stated, among other things:

"villa Calls Trio Traitors to ReDubliq," May 18, 1993,

PhiliDDine Daily Inuuire_ (Orlina Aff Ex. 2).

President Ramos had earlier authorized Villa and

Special Prosecutor Aniano Desierto to observe the
hearing, which started on March 16, in order to determine
the culpability of FiliPino citizens _nvolv@4 in the
bribery case.

Villa identified the three Filipinos, whom he

described as the state's "economic enemies and traitors
to the republic." as University of the Philippines Prof.
Perfecto Fernandez, and former Disini associates Pedro
Padre and Gerry Orlina. (Id., emphasis added) ...

Villa said the Philippines had "a very strong case, (but)
we were unfortunate that three of our fellow (Filipinos)
turned their backs on the republic and our people."

President Ramos' press secretary, Jesus Sison, is quoted in

the press as having made several statements which demonstrate that

22
the action against the three witnesses represents government policy

and is not an unauthorized frolic on the part of Deputy Ombudsman

Villa:

Sison said the government also planned to file

charges against Disini and three Filipino witnesses who
gave testimonies against the government position. (May
20, 1993, The Nation, Orlina Aff. Ex. 5.)

Malacanang, meanwhile, said it would not stop the

Ombudsman from filing charges against the three Filipinos
who testified in favor of the Westinghouse and the Burns
and Roe.

"Why should we?" Press Secretary Jesus Sison said.

"If they (Ombudsman) have a good case then they should
file it." (May 19, 1993, PhiliDDine Daily Inquirer,
Orlina Aff. Ex. 6.)

A spokesman for Philippine President Fidel Ramos

said the government respects the decision of the jury but
will investigate three Filipino witnesses who made
statements inimical to the government position. (May 20,
1993, The Philippine Star, Orlina Aff. Ex. 7.)

These statements attributed to Press Secreta_ I Sison are

evidenced simply by newspaper accounts. Such accounts are not

usually admissible for the purpose of establishing the truth of the

matter stated, e.g., May v. Cooperman, 780 F.2d 240, 252 Fn.9 (3d

Cir. 1985), appeal dismissed, sub num. Karcher v. May, 484 U.S. 72

(1987). However, at the most recent hearing on the issues raised

by Westinghouse's motion, I invited the Republic to submit an

affidavit of the Press Secretary disavowing the statements

attributed to him or else, if it be the case, saying he was

incorrect in his statement of government policy. He is an employee

of the Republic, the plaintiff in this case, and there is no reason

why he could not be asked to correct whatever error is reflected in

23
the newspaper accounts. He has not done so, justifying an

inference that _he newspaper articles correctly quoted him.

The Republic has submitted an affidavit of Deputy Ombudsman

Villa. In it he seeks to create the impression that (i) he

instituted proceedings against Professor Fernandez not because he

provided an affidavit on Westinghouse's behalf in the law suit but

because he accepted compensation in violation of Republic Act No.

6713, (ii) the fears and apprehensions of Padre and Orlina are

unfounded; they are free to testify for or against Westinghouse in

this case or any other legal proceeding, and (iii) the Ombudsman's

Office has not intimidated, harassed or retaliated against any

witness and has no intention of doing so.

Nowhere in his affidavit does Deputy Ombudsman Villa deny-or

disavow the statements attributed to him in the plethora of

newspaper articles which are in the record. Nor could he do so as

a practical matter. He has characterized much of the substance of

the article as "fair and true" in an affidavit he submitted in the

libel action which Professor Fernandez filed against him, and he

has made statements confirming the truth of the articles.

This and other evidence establishes beyond any doubt that

Deputy Ombudsman Villa has spearheaded a retaliatory campaign

against all three Westinghouse witnesses. He has actually filed a

complaint against Professor Fernandez. He has tarred all three

witnesses in the media as traitors responsible for the Republic's

loss. Whatever his statutory and constitutional authority may be,

he has broadcast threats to instigate an income tax investigation

24
of Padre and Orlina. Thus, for him to state that "their fears and
%-

apprehensions ate unfounded" is poppycock. His statement that "the

Ombudsman's Office has not intimidated, harassed or retaliated

against any witness" is simply not true.

Similarly, untrue is Deputy Ombudsman Villa's suggestion that

the complaint filed against Professor Fernandez was not in

retaliation for his giving the affidavit but, rather, only because

he violated Republic Act No. 6713. If Professor Fernandez did, in

fact, violate any Philippines law when he gave the affidavit, he

did so in 1991. His action was discussed and criticized in the

Senate and reported widely in the press at that time. The

Ombudsman's Office took no action. Only when the jury rendered a

verdict in this case did the Ombudsman's Office take action.-If

the timing of these events leaves any doubt about the true motives

for filing the complaint seeking Professor Fernandez' removal, one

need only read Deputy Ombudsman Villa's affidavit which accompanied

the complaint. Both the tone and the content of the affidavit

reflect the Republic's rage at losing the case and its intent to

strike out at one of the three persons seized upon as scapegoats

for that loss.

The affidavit of Cesario L. Del Rosario, an Assistant

Solicitor General of the Republic of the Philippines, asserts that

"It]he Government has absolutely not taken any action nor initiated

one that may constitute a government "campaign" to harass,

intimidate, coerce or retaliate against Messrs. Pedro Padre, Jr.,

25
Jerry Orlina, Perfecto Fernandez and William Godinez. ''4 The
-°

affidavit addresses none of the specific statements and actions set

forth in the Westinghouse affidavits and does nothing to dispel the

effect which those statements had and were intended to have upon

three persons who had the temerity to give evidence at

Westinghouse's request.

The affidavit refers to a Philippine press which "is vigorous

and many times freewheeling," and asserts that "[m]ost often,

statements are taken out of context and blown out of proportion."

While these observations undoubtedly have some truth, and while the

Republic cannot and should not be held responsible for the actions

of a free press, in the present case independent evidence

establishes that the press reported actions which government

officials had taken or encouraged.

The affidavit does reflect an effort by the Republic to

forestall the potentially disastrous consequences which confront

the Republic in this case as a result of the post trial retaliatory

events in the Philippines. Assistant Solicitor General Del Rosario

states that "there have been no investigations, complaints or

prosecutions by any part of the government, nor is any such action

4. William Godinez was formerly resident manager for Power

Contractors, Inc., the civil subcontractor for the work on the
Philippines Nuclear Power Plant. He did not testify in the present
case, although he executed an affidavit at Westinghouse's request
in late 1991 or early 1992. In early June 1993, Westinghouse filed
his affidavit as part of the evidence in the arbitration
proceedings. Godinez fears retaliation for having permitted his
affidavit to be used and fear of retaliation will affect his
decision whether to testify in that proceeding if Westinghouse asks
him to do so.

26
planned or initiated by the government against Messrs. Padre,
L.

Orlfna, Fernandez and Godinez by reason of their testimonies before

the District Court of New Jersey."

The Assistant Solicitor General proceeds to state that "the

President has not directed, instructed, requested or authorized any

government agency or instrumentality to conduct any investigation

of Messrs. Padre, Orlina, Fernandez or Godinez, nor has the Bureau

of Internal Revenue conducted or initiated nor is it planning any

tax investigation or probe into personal income taxes of Messrs.

Padre, Orlina, Fernandez or Godinez."

Further, the affidavit states "[a]s a consequence of the

inquiries made by my Office at the Senate Foreign Relatibns

Committee, I have been informed that it is not conducting any

hearings on the testimonies of Messrs. Padre, Orlina, Fernandez and

Godinez nor expect to conduct any in the future. Neither any

committee in both the House of Representatives or the Senate is

conducting any hearing in relation to the testimonies of Messrs.

Padre, Orlina, Fernandez or Godinez."

In support of its renewed motion for Rule 54(b) certification,

the Republic filed additional certifications and documents

purporting to Show (i) no actions by government officials were

taken in retaliation against Westinghouse witnesses; (ii) Deputy

Ombudsman Villa's actions against Professor Fernandez were taken

solely to enforce Philippine laws which Professor Fernandez had

violated by submitting an affidavit in this case; (iii) Deputy

Ombudsman Villa acted completely independently of the Executive

27
Office, which has no control over the performance of his official
L'.

responsibilities; and (iv) the government has taken effective steps

to cure any misapprehension that it sought to and intends in the

future to retaliate against the three Westinghouse witnesses.

For the reasons I shall set forth below, I conclude that the

new material evidences a partial retreat from the retaliatory

conduct which I described above and indicates an intent not to

pursue the retaliatory conduct further against Padre and Orlina.

The new material in no way requires revision of the findings set

forth above; in fact, by its omissions, it buttresses these

findings.

Accompanying the renewed motion is a copy of a July 30, 1993

press release issued by the Office of the Press Secretary and

signed by Jesus Sison, Press Secretary, Office of the President.

It read:

PRESS RELEASE

On July 12, 1993 a hearing was held before Judge

Debevoise in the New Jersey bribery case against
Westinghouse and Burns & Roe concerning the Bataan
Nuclear Power Plant. Judge Debevoise expressed concern
about media reports which suggested government action was
being taken in retaliation against witnesses who
testified or supplied affidavits for Westinghouse in the
case.

In response to these concerns, Executive Secretary

Teofisto T. Guingona, Jr., by order of the President, has
issued a Policy Statement attached as Annex A. The
Policy Statement reiterates the government's policy
against any sort of harassment, intimidation or
retaliation against witnesses who come forward to testify
truthfully in legal proceedings. Any statements by this
office that were perceived as condoning such retaliation
were not so intended.

28
 Attached as Annexes B and C are the affidavits of
Assistant Solicitor General Cesario L. Del Rosario and
Deputy Ombudsman Francisco A. Villa which were submitted
to Judge Debevoise. The affidavits confirm that the
government has not initiated any investigations, tax
audits or other action against the private citizens who
testified in the BNPP matter. These affidavits, together
with the Policy Statement, provide assurance to any
private citizen that he or she may testify truthfully
without fear of any sort of retaliatory action by the
government. Those who have testified in the past may
likewise rest assured that they will not be subjected to
any retaliatory action. Obviously, however, no citizen
is above the law and our government must reserve the
right to enforce the laws neutrally against anyone who
violates them.

Public officials have greater duties and

restrictions because of their stature, and they come
within the jurisdiction of the Ombudsman's office. The
constitutional independence of the Ombudsman's Office is
recognized, as is the importance of its function in
safeguarding the integrity of the government and its
employees. The Office of the President nevertheless does
not support any statement or action by the Ombudsman
Office or anyone else which have the purpose of
intimidating witnesses through public threats,
accusations or recriminations.

The Policy Statement to which the press release referred was

signed by Teofisto T. Guingona, Jr., Executive Secretary, "By order

of the President." It was on the letterhead of the Office of the

President of the Philippines, Maiacanang, and read:

POLICy STATEMENT

The lawsuit in Newark, New Jersey involving the

Bataan Nuclear Power Plant has attracted wide media
coverage and public interest. The disappointment over
the jury verdict intensified public debate and has led to
public statements, press accounts and editorials
containing accusations and recrimination against those
perceived to have contributed to the unfavorable jury
verdict. Notwithstanding the disappointment, the
Republic is committed to the principles of Justice and
Due Process which must be adhered to because they
transcend the result in any particular case and are
essential to the integrity of the judicial system. It is
vital to the administration of justice that litigants be

29
 able to obtain the testimony of witnesses who feel free
to come into the courts and testify truthfully without
fear of retaliation, recrimination or harassment of any
kind.

It is the policy of the Executive Branch of the

Philippine Government that there shall be no interference
with the right of any citizen to testify truthfully in a
court of law or other legal proceeding in this country or
elsewhere. There shall be no intimidation, harassment,
retaliation or recrimination against any witness on
account of testimony given or to be given. This policy
applied even where the testimony is or may be unfavorable
to the position of the government. In particular, this
policy applies to witnesses who testified (or may
testify) in person or by affidavit on behalf of
Westinghouse or Burns & Roe in the PNPP court case or
arbitration.

The Executive Branch of the Philippine Government

and all its department, agencies, instrumentalities,
offices and employees are hereby directed to comply with
this Policy Statement. There shall be no harassment,
intimidation or retaliation against any witness who has
testified or may testify against the government in any
legal proceeding. No investigations or tax audits shall
be initiated nor any other actions taken against any
witnesses merely because they gave or will give testimony
in a legal proceeding. No public statements shall be
made by any government employee suggesting or condoning
any such action.

The press release and the Policy Statement, together with the

affidavit of Assistant Solicitor General Cesario L. Del Rosario

referred to above, are persuasive evidence that the Republic has

ceased making retaliatory threats against Padre and Orlina and that

it has committed itself not to retaliate against them in the

future. Deputy Ombudsman Villa's proceedings against Professor

Fernandez continue unabated.

The press release and the Policy Statement do not, as the

Republic contends, negate in any way my findings that the actions

of the Deputy Ombudsman against Padre, Orlina and Professor

3O
Fernandez were retaliatory in nature and originally had the support
of the President and the highest levels of government. I will not

repeat the recitation of the evidence which establishes that Deputy

Ombudsman Villa acted in a retaliatory manner not only against

Professor Fernandez but also against Padre and Orlina.

Deputy Ombudsman Villa himself stated during a break in a

television program on which he appeared with Professor Fernandez

that he had been authorized by the legal panel appointed by

President Ramos to pursue accusations against the _hree Filipino
witnesses who testified on behalf of Westinghouse.

The Deputy Ombudsman sent a copy of his complaint against

Professor Fernandez directly to President Ramos, with the note, "We

stand behind you in your sincere and determined drive to suppress,

if not eliminate, graftand corruption in public service."

Though requested to do so if he could, Press Secretary Sison,

President Ramos' spokesman, does not deny either in his press

release or by affidavit that in May 1993 he stated that the

government planned to file charges against Disini and the three

Filipino witnesses who testified against the government position

and that although the government respected the jury's decision, it

would investigate Filipino witnesses who made statements inimical

to the government position.

At the outset, the Deputy Ombudsman pursued retaliatory action

against all three Filipinos who assisted Westinghouse in this case,

and he did so with the approval, if not urging, of the Republic's

executive branch. The new material filed in support of the

31
Republic's renewed Rule 54(b) motion establishes that the executive
branch has disassociated itself from the Office of the Ombudsman

and has committed the executive branch to refrain from any future

acts of retaliation against Padre and Orlina. The new material

also establishes that the Office of the Ombudsman has attempted to

clean up its act. It has abandoned its accusations against Padre

and Orlina; it has desisted from use of inflammatory, highly

unprofessional language; it has tied its charges against Professor

Fernandez to a specific Philippine statute - Republic Act 6713.

Had the Deputy Ombudsman preceded in that manner against

Professor Fernandez in 1991 when he submitted his affidavit, or

even if he had proceeded in that manner against Professor Fernandez

alone in 1993 when he alleges he first learned of the Fernandez

affidavit, there might well have been a situation requiring no

intervention by this Court. However, that is not what happened.

The charges against Professor Fernandez were part of a campaign of

governmental harassment against each of those persons who assisted

Westinghouse in this case -- Padre, Orlina and Professor Fernandez.

While the campaign against the first two persons has been dropped,

the origin of and motivation for the charges against Professor

Fernandez remain the same.

III. Disposition of the Motion

I am faced with a situation which threatens both the integrity

of a United States District Court and the foundations of our system

of justice. The Republic, a foreign nation, sought relief in our

courts against two domestic corporations. The Republic was

32
accorded every benefit of our judicial facilitles and procedures.

It may be that sQme of my rulings were incorrect, but the avenue of

appeal lies open to the Republic.

The outcome of the case was never certain; yet in its

considered judgment, the Republic elected to reject generous

settlement proposals and proceed to trial. After a trial in which

the Republic was able to develop and present its case fully and

effectively, a jury decided that the Republic had failed to

establish a vital element of its case; namely, that the substantial

sales representation fees paid to Herminio Disini were transmitted

directly or indirectly to President Marcos or his companies.

Instead of simply either recognizing defeat or pursuing_ an

appeal and continuing to press its claims in the arbitration

proceeding, the Republic pounced upon three persons who gave

evidence on behalf of Westinghouse as scapegoats and commenced the

campaign of retaliation and harassment described in Part II of this

opinion.

This had a doubly subversive effect. First, witnesses, who

should have been able to rely upon both the implicit and explicit

assurances of this court that they could testify fully and freely

without fear o_ any retaliatory actions, have been betrayed.

Second, witnesses from the Philippines will fear to testify for

Westinghouse and against the Republic in the arbitration

proceedings and in any future proceedings in this court, preventing

each tribunal from receiving all the facts.

33
 This is a situation no court can tolerate, and effective
L"

relief must be granted.

It is apparent that the Republic has already taken some steps

to cure the effects of the retaliatory actions against Padre and

Orlina, and any additional steps which may be required can be taken

readily. However, the executive branch of the Republic asserts

that under Philippine law it cannot control the actions of the

Ombudsman and that it is powerless to require the Ombudsman to

abandon his complaint against Professor Fernandez.

I will accept for present purposes the Republic's argument

that the Ombudsman's Office is independent of the executive branch

and that under normal circumstances it could file a charge that

Professor Fernandez's acceptance of compensation for providing an

affidavit in this case was a violation of Republic Act 6713. The

filing of the charge in the present case, however, was part of a

retaliatory campaign against witnesses.

The necessity of providing a remedy which will preserve the

integrity of the proceedings in this Court runs up against limits

which United States courts impose upon themselves when asked to

enjoin proceedings in other nations. CQmpaq_i_ des Bauxites de

Guinea v. Insurance Co. of North America, 651 F.2d 877 (3d Cir.

1981), aff'd on other qrQund@, 456 U.S. 694 (1982). For the time

being, I can deal with the Professor Fernandez situation without

enjoining the proceedings against him. I will slmply defer

granting the Republic's Rule 54(b) motion until I am satisfied that

in one way or another the proceedings against Professor Fernandez

34
have been resolved in a manner which cures the retaliatory actions

described above._

It is premature to gran t Westinghouse's request that the case,

including the arbitration proceeding, be dismissed at this time.

Instead, I shall enter an order providing for interim relief, with

final relief to abide future events. The order disposing of

Westinghouse's motion and the Republic's renewed Rule 54(b) motion

will include the following provisions:

i. The Republic and its various agencies will be enjoined

from taking retaliatory action against any person who has given

evidence or will give evidence in this proceeding or the

arbitration proceeding. _

2. The Republic will be directed to take appropriate steps

to renounce the retaliatory action which this opinion finds to have

taken place including officially advising Padre and Orlina of the

Republic's actions and intended actions with respect to their

personal income taxes as set forth in Assistant Solicitor General

Del Rosario's affidavit referred to above.

3. Although otherwise entitled to a determination and

certification pursuant to Fed. R. Civ. P. 54(b), the Republic's

motion for such determination and certification will not be granted

until it establishes that it is in full compliance with paragraphs

1 and 2 above and until the court finds that the proceedings

against Professor Fernandez have been resolved in a manner which

cures the retaliatory actions described above.

35
 4. Westinghouse's motion to enjoin the Republic from any
L',

further prosecution in the court of the claims alleged in the

complaint will be denied without prejudice; the court will review

the Republic's compliance with this order and decide at each future

stage in the proceedings whether it is appropriate to go forward.

5. Should wisdom and common sense prevail and the parties

reach a settlement of this case, the agreement of settlement and

any judgment implementing it shall contain a provision that the

parties accept the continuing jurisdiction of this court to enforce

the provisions of the order.

6. Westinghouse's motion for costs and attorneys' fees

incurred in connection with this motion will be denied witliOut

prejudice to renewal at the conclusion of this case.

I have prepared and have filed an order implementing this

opinion. _ ___._ ___

DICKINSON R. DEBEVOISE, U.S.D.J.

DATED: October_ , 1993

36
 4. Westinghouse's motion to enjoin the Republic from any
L',

further prosecution in the court of the claims alleged in the

complaint will be denied without prejudice; the court will review

the Republic's compliance with this order and decide at each future

stage in the proceedings whether it is appropriate to go forward.

5. Should wisdom and common sense prevail and the parties

reach a settlement of this case, the agreement of settlement and

any judgment implementing it shall contain a provision that the

parties accept the continuing jurisdiction of this court to enforce

the provisions of the order.

6. Westinghouse's motion for costs and attorneys' fees

incurred in connection with this motion will be denied witliOut

prejudice to renewal at the conclusion of this case.

I have prepared and have filed an order implementing this

opinion. _ ___._ ___

DICKINSON R. DEBEVOISE, U.S.D.J.

DATED: October_ , 1993

36
 UNITED STATES DISTRICT COURT
DISTRICT OF NEWJERSEY
Civil Action No. 88-5150

THE REPUBLIC OF THE PHILIPPINES

and THE NATIONAL POWERCORPORATION,

Plaintiffs,
ORDER
V0

WESTINGHOUSE ELECTRIC CORPORATION,

WESTINGHOUSE INTERNATIONAL
PROJECTS COMPANY and BUR_S AND ROE ORIGINAL FILED
ENTERPRISES, INC.,
OCT 4 1993
Defendants.

WILLIAM T WALSH. CLERK

This matter having been brought before the Court by defendants

Westinghouse Electric Corporation and Westinghouse International

Projects Company ("Westinghouse") on Westinghouse's motion, dated

July 6, 1993, for curative action regarding plaintiff's harassment

and intimidation of witnesses, and by the Republic of the

Philippines on its renewed motion for Rule 54(b) certification, and

the Court having considered the papers in support of and the papers

in opposition to these motions, and having heard the arguments of

counsel for the respective parties, and upon all the prior

pleadings and proceedings herein, and for the reasons set forth in

an opinion of even date;

IT IS ON THIS L _ day of October 1993 ORDERED that:

!

I. Plaintiff, Republic of the Philippines, its officers,

agents, agencies, servants, employees and attorneys, are hereby

permanently enjoined from taking any action against any witness who
 has testified or will testify (whether live, by affidavit or by
deposition) in this action or in the pending related arbitration

between these parties, where that action is in retaliation for such

testimony or has the intent or effect of harassing such a witness

for his or her testimony or intimidating such a witness to change

or withhold his or her testimony.

2. Plaintiff is directed to take appropriate steps to

renounce and abandon the retaliatory actions which the court has

found to have taken place, which steps shall include officially

advising Pedro A. Padre, Jr. and Jerry R. Orlina of the Republic's

actionsand intended actions with respect to their personal income

taxes as set forth in Assistant Solicitor General Del Rosario's

affidavit submitted in opposition to Westinghouse's motion.

3. Plaintiff's motion for a determination and certification

pursuant to Fed. R. Civ. P. 54(b) will not be granted until it

establishes that it is in full compliance with paragraphs 1 and 2

above and until the Court finds that the proceedings against

Professor Perfecto V. Fernandez have been resolved in a manner

which cures the retaliatory actions described above.

4. Westinghouse's motion to enjoin plaintiff from any

further prosecution in this court of the claims alleged in the

complaint will be denied without prejudice; the court will review

plaintiff's compliance with this order and decide at each future

stage in the proceedings whether it is appropriate to go forward.

 5. Should the parties settle this case, the agreement of
\-.

settlement and ;any jud_ent implementing it shall contain a

provision that each party accepts the continuing jurisdiction of

this court to enforce the provisions of this order.

6. Westinghouse's motion for costs and attorney's fees

incurred in connection with this motion will be denied without

prejudice to renewal at the _CI___. c__ /l

DICKINSON R. _EBEVOISE, U.S.D.J.
 CERTIFICATE OF SERVICE

I hereby certify that on December 17, 1993, I caused to be

served in the manner indicated copies of the Brief of Appellants
and Joint Appendix upon the following:

Raymond Tierney, Jr., Esq.

Shanley & Fisher
131 Madison Avenue
CN-1979
Morristown, NJ 07960-1979 (By U.S. Mail)

Richard W. Clary, Esq.

Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019 (Two copies by
Federal Express)

Jonathan D. Schiller, Esq.

Kaye, Scholer, Fierman, Hays & Handler
901 15th Street, N.W.
Suite ii00
Washington, D.C. 20006 (By Hand Delivery)

Attorneys for Westinghouse Electric Corporation

and Westinghouse International Projects Company

Glenn A. Mitchell, Esq.

Stein, Mitchell & Mezines
ii00 Connecticut Avenue
llth Floor
Washington, D.C. 20036 (Two copies by
Hand Delivery)

Attorney for Burns & Roe Enterprises, Inc.