G.R. No. 138598 ; June 29, 2001
ASSET PRIVATIZATION TRUST, petitioner, vs. SANDIGANBAYAN (5TH DIVISION) and ROSARIO M. B. OLIVARES, respondents.

FACTS

From 1976 to 1981, Philippine Journalists, Inc. (PJI) obtained U.S. dollar-denominated loans and credit accommodations from the Development Bank of the Philippines (DBP), secured by publishing equipment and an assignment of 67% of PJI’s capital stock. PJI failed to regularly pay its monthly amortizations from 1979 to 1986. Pursuant to Administrative Order No. 14, DBP transferred the delinquent PJI account to the Committee on Privatization (COP), which then turned it over in trust to the Asset Privatization Trust (APT). The Presidential Commission on Good Government (PCGG) sequestered all shares of PJI’s private shareholders in 1987. APT adopted a “Direct Debt Buy Out (DDBO)” settlement scheme and, in a letter dated November 27, 1989, informed PJI that the DDBO price as of October 31, 1989 was P78,551,405.93. No DDBO settlement was reached, and the scheme was not approved by the COP. Under PCGG-nominated management, PJI made partial payments. As of October 31, 1992, based on the loan documents, PJI’s total obligation, after applying payments, was P216,801,156.41, which included principal past due, advances, regular interest, additional interest, and penalty charges. Respondent Rosario M. B. Olivares, a PJI stockholder, filed a motion with the Sandiganbayan praying for an order to pay the PJI account in full from its cash assets and for APT to execute a release of the chattel mortgage and cancel the assignment of voting rights. The Sandiganbayan set a hearing to settle the issue of the actual amount of PJI’s accountability.

ISSUE

Whether the Sandiganbayan correctly disregarded the computation of PJI’s obligation based on the loan documents and instead used the DDBO price as the basis for its own computation.

RULING

No. The Supreme Court ruled that the Sandiganbayan committed grave abuse of discretion. The DDBO letter was merely a proposal for a settlement scheme that was never accepted by PJI nor approved by the COP; it did not novate, modify, or extinguish the original loan obligations. The law and logic require that a contract be the basis for determining the extent and amount of obligations arising therefrom. The Sandiganbayan cannot override the valid provisions of the loan documents by supplanting them with extraneous matters not mutually agreed upon by the parties. The loan contracts between PJI and DBP, which stipulated the payment of regular interest, additional interest, and penalty charges, remained binding. The Sandiganbayan’s unilateral adoption of the DDBO price and its imposition of only 12% annual interest, while disallowing additional interest and penalties, had no legal basis. The original loan agreements governed the relationship between the parties, and their stipulated terms must be followed.