FACTS:

The Philippine Journalists, Inc. (PJI) failed to pay the monthly amortization on the various U.S. dollar-denominated loans and credit accommodation obtained from the Development Bank of the Philippines (DBP) to purchase equipment and machineries which were used as collateral to secure the loans. Moreover, sixty seven (67) percent of the total capital stock of PJI was ceded to DBP under certain conditions spelled out in deeds of assignment.

Pursuant to Administrative Order No. 14, DBP transferred the delinquent PJI account in favor of the government through the Committee on Privatization, which then turned it over in trust to the Asset Privatization Trust (APT).

On February 19, 1987 and April 28, 1987, the Presidential Commission on Good Government (PCGG) sequestered all the shares of stock of PJI’s private shareholders on the ground that these shares allegedly constituted ill-gotten wealth of Benjamin "Kokoy" Romualdez.

The "Direct Debt Buy Out (DDBO)" settlement scheme adopted by APT as part of its efforts to dispose the subject transferred PJI account was not reached by the parties and neither said scheme for PJI was approved by the Committee on Privatization as required by law.

The Sandiganbayan disregarded the computation submitted by PJI and made its own computation using as basis the DDBO price as the amount of PJI’s obligation to APT as of October 31, 1989 plus the twelve (12) percent annual interest computed up to October 30, 1992.

ISSUES:

1. Did the Sandiganbayan have jurisdiction over APT?

2. Did the Sandiganbayan commit reversible error in ignoring the loan documents between APT and PJI and in using the so called "DDBO" price as its basis in arriving at its ruling.

RULING:

Anent the first issue, the High Court ruled that Sandiganbayan acquired jurisdiction over APT since it voluntarily entered its appearance and actively participated in the proceedings even without being summoned. In La Naval Drug Corporation v. Court of Appeals, the Court taught that "lack of jurisdiction over the person of the defendant may be waived either expressly or impliedly. When a defendant voluntarily appears, he is deemed to have submitted himself to the jurisdiction of the court. Hence, APT is now estopped from questioning the Sandiganbayan’s jurisdiction over its person.

On the second issue, it was held that the Sandiganbayan’s computation has no legal basis as the DDBO price cannot be considered as the obligation of PJI because said price was not computed on the basis of the loan contracts which constituted the governing law between the parties with respect to the JPI’s loan obligations. Rather, the price was computed on the basis of a possible sale, the terms and conditions of which were yet to be discussed and merely a part of a possible DDBO settlement. The interest rate on PJI’s obligations was not justified since it was not supported by the law or by substantial evidence and in fact, it is contrary to the law and to the evidence on record. The penalties and additional interests should not be disregarded contrary to the finding of the Sandiganbayan as the impossibility of PJI’s fulfillment of its obligation not having been established, the consequent obligation to pay penalties and additional interests cannot be deemed extinguished. The loan contracts are still binding between the parties considering that its obligations under the said contracts have not been terminated by any of the valid modes of extinguishing obligations. Hence, fulfillment thereof should clearly be upheld.

To have a fair settlement, the parties agreed to submit their respective computations to the COA and the latter submit its report to the Court on or before May 15, 2003 copy furnished both parties for them to comment. According to COA, the payments made on its loans amounted to P376,125,912.64 and recommended the possibility of condoning part of the additional interest and penalty charges.

The Supreme Court in its resolution en banc dated November 25, 2003, directed the COA to recompute PJI’s obligations taking into account that all stipulated interests and penalties shall be charged from the date of default up to November 22, 1986 but all penalties thereafter shall not be imposed anymore.

In a resolution en banc dated February 24, 2004, the high court directed the COA to re-compute the PJI’s obligations by removing the additional interest from the computation of the obligation under the Advances on Guarantees Loans and instead compute interest of 12% per annum thereon; use the rate of 10.5% in computing Additional Interest for the obligations under Industrial Loan Foreign Currency and Industrial Loan C-IX and show the application of payments in the total amount of P376,125,916.64.