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327 Phil. 191
FIRST DIVISION
[ G.R. Nos. 117018-19, June 17, 1996 ]
BENJAMIN D. YNSON, PETITIONER-APPELLANT, VS. THE HON. COURT OF APPEALS, FELIPE YULIENCO AND EMERITO M. SALVA, RESPONDENTS-APPELLEES.
[G.R. NO. 117327. JUNE 17, 1996]
FELIPE YULIENCO AND EMERITO M. SALVA, PETITIONERS, VS. THE HONORABLE COURT OF APPEALS AND BENJAMIN D. YNSON, RESPONDENTS.
D E C I S I O N
HERMOSISIMA, JR., J.:
Before us are two petitions to review the Amended Decision of respondent Court of Appeals in two consolidated cases, (CA-G.R SP. No. 30734 and CA-G.R. SP No. 31571), promulgated on September 6. 1994.
The relevant antecedents:
Petitioner Benjamin D. Ynson is the controlling stockholder and the President and Chief Executive Officer of PHESCO, Incorporated, a construction corporation duly organized and existing under the laws of the Philippines, while private respondent Felipe Yulienco, the elder brother of petitioner's wife, is a registered stockholder and had been the Vice-President and Treasurer of the said corporation.
Prior to 1986, petitioner Ynson, as President and Chief Executive Officer of the firm, and in order to cut down on what he thought was excessive overhead expenses of the corporation, issued a memorandum circular to the effect that henceforth only expenses for entertainment, fuel and motor vehicle repairs expenses, salaries and wages directly connected with actual business operations of the company shall be allowed. The circular was vehemently objected to by private respondent Felipe Yulienco who, feeling that the retrenchment actions of the petitioner President were directed at him, started opposing the management decisions of the petitioner with the help of respondent lawyer Emerito Salva
On June 16, 1987, private respondents Yulienco and Salva filed a petition before the Securities and Exchange Commission (SEC) alleging mismanagement of the corporation by petitioner Ynson and praying for damages, supposed unaccounted profits, and attorney's fees and litigation expenses.
Before the petitioner could file his answer, herein private respondents sent to the petitioner written proposals for a compromise, which included payment to private respondent Yulienco of various amounts like profit-sharing, bonuses, and an offer to leave PHESCO by selling all the shares of stock in the firm registered in the names of private respondents Yulienco and Salva at a price to be determined and fixed by a mutually designated appraiser, AEA Development Corporation.
This proposal was accepted by petitioner Ynson. On October 15, 1987, both parties submitted to the SEC a JOINT MOTION FOR JUDGMENT BY COMPROMISE, the salient portions of which read:
Immediately thereafter, private respondents were paid by petitioner the amount of P4,045,782.42, while Felipe Yulienco resigned from the position of Senior Vice-President and Treasurer of PHESCO, Inc. effective October 31, 1987, pursuant to the said Compromise Judgment.
On February 5, 1988, the third-party appraiser, AEA Development Corporation, submitted a report to the SEC and to the contending parties fixing the fair market value of the private respondents' shares of stock in PHESCO, Inc. at Three Hundred Eleven Pesos and Thirty-Two Centavos (P311.32) per share.
On February 22, 1988, petitioner Ynson filed with the SEC a Motion for Execution of the Compromise Judgment with a tender of the checks to pay for the private respondents' shares of stock in accordance with the agreement.
Surprisingly, the private respondents opposed the Motion for Execution alleging that fraud was employed in the preparation of the 1986-1987 Financial Statement of PHESCO, since various assets were not included therein, assets which could probably increase the value of PHESCO's shares of stock. This posture inevitably called for the setting aside of the appraisal report submitted by AEA Development Corporation and the appointment of a new audit team to prepare a new financial statement for fiscal year 1986- 1987. On August 29, 1988, the Panel of Hearing Officers organized by the SEC for the purpose and before which the motion was submitted, issued an OMNIBUS ORDER, dated August 29, 1988, granting the Motion for Execution filed by petitioner Ynson.
On September 30, 1988, private respondents appealed to the SEC En Banc from said Omnibus Order.
After four years of protracted hearing, the SEC En Banc rendered a Resolution, dated December 1, 1992, dismissing the private respondents' appeal and affirming the issuance of the Writ of Execution by the Panel of Hearing Officers.
Strangely, however, the SEC Resolution contained an "obiter" in the opinion portion thereof that legal interest on the said appraised fair market value of the private respondents' shares of stock in PHESCO, Incorporated shall be paid from the time the Compromise Judgment became final until paid, viz:
Considering that the payment of legal interest was not in the dispositive part of the SEC Resolution, petitioner Ynson filed on December 14, 1993 a Motion for Clarification of the aforementioned resolution of December 1, 1992 and, in effect, contested the payment of interest. On April 12, 1993, the SEC En Banc denied the Motion for Clarification of the herein petitioner and affirmed the award of legal interest in favor of the private respondents.
On July 30, 1993, petitioner Ynson filed before the respondent Court of Appeals a Petition for Review, docketed as CA-G.R. SP No. 31571, assailing as contrary to jurisprudence and law the Resolutions of the SEC En Banc, dated December 1, 1992 and April 12, 1993, in regard to the payment of interest.
Likewise, herein private respondents Yulienco and Salva filed a petition before the Court of Appeals, docketed as CA-G.R. SP No. 30734, for a review of the SEC En Banc's Resolution of December 1, 1992 which dismissed their appeal from the Omnibus Order of August 29, 1988, insisting that the Compromise Judgment dated October 20, 1987 has not yet attained finality, and therefore the appraisal made by AEA Development Corporation can still be set aside on the ground of fraud and a new audit team be appointed.
These two petitions for review of the herein petitioner and that of the private respondents were ordered consolidated by the respondent Court of Appeals.
After hearing, the court a quo rendered judgment on November 29, 1993, to wit:
On December 20, 1993, petitioner Ynson filed with the respondent Court, a Motion for Reconsideration of the said appellate court's decision.
After oral argument, respondent appellate court rendered an Amended Decision, dated September 6, 1994, affirming in all respects its earlier decision dated November 29, 1993, except that the last paragraph of the dispositive portion thereof now reads:
Both parties filed respective Petitions for Review before us assailing the Amended Decision of respondent Court of Appeals.
Petitioner Ynson assigns the following errors committed by the appellate court insofar as it ruled that the Compromise Judgment dated October 20, 1987 has not attained finality and therefore can still be set aside.
Private respondents Yulienco and Salva, on the other hand, submit that respondent Court of Appeals erred:
Stripped of non-essentials, two issues need to be resolved in this case: (1) Whether or not the Compromise Judgment, dated October 20, 1987, had already attained finality and can no longer be set aside on the ground of fraud; and (2) Whether or not the balance of the purchase price, or the remaining 85% of the total consideration, should be paid with interest.
We uphold the affirmative as regards the first issue.
The court a quo in ruling that the Compromise Agreement did not attain finality ratiocinated:
This reasoning does not jibe well with Paragraph Three of the Compromise Agreement which expressly provides:
This stipulation is so couched in simple and unambiguous language that it need not require any interpretation. The plain import of this clause is that the determination of the fair market value of the subject shares of stock held by private respondents is solely the function of the mutually chosen appraiser, the AEA Development Corporation, which determination shall be "final irrevocable, binding and non-appealable." There is nothing in this clause which indicates that the parties could interfere with the duty of the appraiser nor is the determination of the fair market value of the shares in question made subject to the approval of the parties and of the Court. Since the parties entered into this agreement freely without any vice of consent, the same must govern the relations of the parties. A judicial compromise has the force of law and is conclusive between the parties.[10] In Republic vs. Sandiganbayan,[11] we even held that a compromise upon its perfection become binding upon the parties and has the effect and authority of res judicata even if not judicially approved. Hence, the moment petitioner Ynson and private respondents Yulienco and Salva affixed their corresponding signatures to the Compromise Agreement, the same became res judicata among the parties.[12]
Private respondents maintain nevertheless that the Compromise Agreement has not attained finality and must be set aside because there was fraud in the preparation of the 1986-1987 Financial Statements of PHESCO, thus resulting in the undervaluation of PHESCO's shares of stock, 96,534 of which are held by the private respondents.
Touching on this point with authority, the Securities and Exchange Commission En Banc issued the following Resolution on December 1, 1992.
We sustain this finding of the SEC En Banc which has satisfactorily refuted private respondents' allegations as to fraud in the preparation of PHESCO's financial statements for 1986-1987. Well-settled is the rule in our jurisdiction that the findings of fact of an administrative agency must be respected, as long as such findings are supported by substantial evidence, even if such evidence might not be overwhelming or preponderant. It is not the task of an appellate court to weigh once more the evidence submitted before the administrative body and to substitute its own judgment for that of the administrative agency in respect of sufficiency of evidence.[14] In fact, under Section 8 of Supreme Court Circular No. 1-91, Prescribing the Rules Governing Appeals to the Court of Appeals from a Final Order or Decision of the Court of Tax Appeals to the Court of Appeals and Quasi-Judicial Agencies [like the SEC], such findings are accorded not only respect but also finality, as long as these findings are backed up by substantial evidence, or that amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion.[15] In the present case, after a careful examination of the records, we conclude that the SEC, in finding that no fraud was employed in the preparation of the 1986-1987 Financial Statements of PHESCO, has more than met this quantum of evidence.
In regard to the second issue, private respondents Yulienco and Salva aver that they are entitled to the payment of legal interest which the installments could have earned from due date until fully paid on grounds of justice and fairness. According to them, petitioner Ynson, instead of depositing the installments with the SEC as they became due, fraudulently kept the money and used the same in his business and/or in money market placements thereby earning interest thereon to enrich himself by investing money which were due them.[16]
This is pure speculation. Private respondents Yulienco and Salva, in their Petition in G.R. No. 117327, did not present any scintilla of evidence to substantiate the claim that Ynson, indeed, invested these funds for his own profit. What is stark clear, however, is Paragraph 2.b of the Compromise Agreement signed by both parties which provides in unequivocal terms that:
This clinches the matter at issue. As aptly observed by the respondent Court of Appeals in its Amended Decision:
WHEREFORE, the instant petition docketed as G.R. Nos. 117018-19 is GRANTED and, thus, the Amended Decision of the Court of Appeals, dated September 6, 1994, is hereby set aside.
Paragraph 5 of the dispositive part thereof which reads:
"xxx xxx xxx
is, however, hereby AFFIRMED.
The petition of Felipe Yulienco and Emerito Salva in G.R. No. 117327 is hereby DISMISSED, with costs.
SO ORDERED.
Bellosillo, and Kapunan, JJ., concur.
Padilla, J., joins Mr. Justice Vitug in his concurring and dissenting opinion.
Vitug, J., with separate (concurring and dissenting) opinion.
[1] Rollo [G.R Nos. 117018-19], pp. 38-41.
[2] Ibid, p. 49.
[3] Ibid, p. 93.
[4] Rollo [G.R. No. 117327], pp. 84-85.
[5] Ibid, p. 103.
[6] Rollo [G.R. Nos. 117018-19], pp. 18-19.
[7] Rollo [G.R. No. 117327], p. 27.
[8] Ibid, p. 90.
[9] Rollo [G.R Nos. 117018-19], p.41.
[10] World Machine Enterprises v. IAC, 192 SCRA 459, 465 [1990] citing United Housing Corporation v. Dayrit, G.R No. 76442, January 22, 1990.
[11] 226 SCRA 314, 320 [1993] citing Mayuga v. Court of Appeals, 154 SCRA 309 [1987].
[12] Article 2037, New Civil Code.
[13] Rollo [G.R. Nos. 117018-19], p. 93.
[14] Rubenecia v. Civil Service Commission, 244 SCRA 640 [1995].
[15] Section 5, Rule 133 of the Revised Rules of Court.
[16] Rollo [G.R No. 117327], p. 38.
[17] Rollo [G.R Nos. 117018-19], p. 40.
[18] Rollo [G.R No. 117327], p. 101.
[19] Supra, note 5.
CONCURRING AND DISSENTING OPINION
VITUG, J.:
In its resolution of 16 November 1994, the Court has denied the petition for review in G.R. No. 117018-19. Therein petitioner's motion and supplemental motion for reconsideration assert substantial compliance with the Rules on service of the petition and requisite statement of material dates, reiterating in the process the five (5) errors of law alleged to have been committed by respondent appellate court; viz:
The first four assigned errors deal, in main, on the proper valuation of the shares of stock of private respondents Yulienco and Salva. Petitioner alleges that the submission of the appraisal report, dated 05 February 1988, by AEA Development Corporation has rendered the judgment by compromise final and executory absent any finding of fraud by either the SEC or by respondent court. Petitioner submits that the remand of the case to the SEC for further proceedings and for undertaking a new appraisal would tantamount to sanctioning a fishing expedition and changing the terms or provisions of the compromise judgment.
The remand of SEC Case No. AC-238 has been explained by respondent court in its questioned decision thusly:
I find no fault on the part of the appellate court in its above disquisition. Clearly, the terms of the compromise judgment have not been altered or amended by respondent court. The remand of the case to the SEC En Banc has been decreed precisely in order to fully and properly implement, and not to set aside, the compromise agreement, particularly stipulation numbered two (2);[3] in respect to the appraisal, determination and fixing of the fair market value (FMV) of the shares of stock of private respondents. The remand of the case with specific instructions to the SEC to closely monitor the appraisal and valuation of the shares ordered by respondent court cannot be considered less than judicious.
Petitioner questions in his final assignment of error the appellate court's order requiring petitioner to deliver the amount of P30,052,984.88 "to the SEC En Banc to be deposited by the latter in a time deposit/money market or CB Securities in the names of Felipe Yulienco and Atty. Emerito Salva but held in trust by the SEC En Banc," for supposedly being contrary to the provisions of Art. 1458, 1477 and 1479 of the Civil Code. These provision have no relevance to this case. It must be pointed out that petitioner is not being ordered to remit payment to private respondents but merely to deposit the amount with the SEC which, in turn, would be placed in interest bearing placements that assures the full implementation of the compromise judgment.
In G.R. No. 117327, I share the ponencia of Mr. Justice Regino Hermosisima, Jr.
Accordingly, I vote to deny both petitions (G.R. Nos. 117018-19 and G.R. No. 117327).
[1] Rollo, pp. 18-19.
[2] Rollo, pp. 190-191
[3] "2. Also, for the complete, full and unconditional settlement of this controversy between the parties, petitioners Felipe Yulienco and Emerito M. Salva shall sell, convey, transfer and deliver to Phesco, Inc., all the shares of stock in the corporation owned by or registered in their names in the books of the corporation numbering ninety six thousand five hundred thirty four (96,534) shares in all, x x x at their fair market value in relation to the 1986-1987 audited financial statement and the assets/properties of Phesco Inc., among which are real estate properties, existing machineries and equipment of the corporation, including the rock crushing plant, receivables including pending claim with NPC, etc. (as per minutes of the Board of the Director's monthly meeting dated April 10, 1987), subsidiary corporations and other investments, the appraisal, determination and/or fixing of which fair market value shall be made by a mutually appointed appraiser, the AEA Development Corporation, in consultation with J.S. Zulueta & Co., but payable and subject to the following conditions: x x x"
The relevant antecedents:
Petitioner Benjamin D. Ynson is the controlling stockholder and the President and Chief Executive Officer of PHESCO, Incorporated, a construction corporation duly organized and existing under the laws of the Philippines, while private respondent Felipe Yulienco, the elder brother of petitioner's wife, is a registered stockholder and had been the Vice-President and Treasurer of the said corporation.
Prior to 1986, petitioner Ynson, as President and Chief Executive Officer of the firm, and in order to cut down on what he thought was excessive overhead expenses of the corporation, issued a memorandum circular to the effect that henceforth only expenses for entertainment, fuel and motor vehicle repairs expenses, salaries and wages directly connected with actual business operations of the company shall be allowed. The circular was vehemently objected to by private respondent Felipe Yulienco who, feeling that the retrenchment actions of the petitioner President were directed at him, started opposing the management decisions of the petitioner with the help of respondent lawyer Emerito Salva
On June 16, 1987, private respondents Yulienco and Salva filed a petition before the Securities and Exchange Commission (SEC) alleging mismanagement of the corporation by petitioner Ynson and praying for damages, supposed unaccounted profits, and attorney's fees and litigation expenses.
Before the petitioner could file his answer, herein private respondents sent to the petitioner written proposals for a compromise, which included payment to private respondent Yulienco of various amounts like profit-sharing, bonuses, and an offer to leave PHESCO by selling all the shares of stock in the firm registered in the names of private respondents Yulienco and Salva at a price to be determined and fixed by a mutually designated appraiser, AEA Development Corporation.
This proposal was accepted by petitioner Ynson. On October 15, 1987, both parties submitted to the SEC a JOINT MOTION FOR JUDGMENT BY COMPROMISE, the salient portions of which read:
"COMPROMISE AGREEMENT"
"1. In complete and full settlement of petitioner [private respondent herein] Felipe Yulienco's claim for bonuses and profits sharing from Phesco, Incorporated, Phesco shall pay to petitioner Yulienco the sum of PESOS: FOUR MILLION FORTY FIVE THOUSAND SEVEN HUNDRED EIGHTY TWO AND 42/100 (P4,045,782.42), Philippine Currency, broken down as follows:xxx xxx xxx
2. Also, for the complete, full and unconditional settlement of this controversy between the parties, petitioners Felipe Yulienco and Emerito M. Salva shall sell, convey, transfer and deliver to Phesco, Incorporated all the shares of stock in the corporation owned by or registered in their names in the books of the corporation numbering ninety-six thousand five hundred thirty-four (96,534) shares in all, of which ninety-six thousand four hundred twenty (96,420) is owned by or registered in the name of petitioner Felipe Yulienco and one hundred fourteen (114) shares is owned or registered in the name of petitioner Emerito M. Salva, at their fair market value in relation to the 1986-87 audited financial statement and the assets/properties of Phesco, Inc., x x x the appraisal, determination and/or fixing of which fair market value shall be made by a mutually appointed appraiser, the AEA Development Corporation, in consultation with J.S. Zulueta & Co., but payable and subject to the following conditions:a. A downpayment equivalent to fifteen (15%)percent of the sales price of the shares shall be paid to the petitioners Felipe Yulienco and Emerito M. Salva upon the final determination and submission of the appraisal report of AEA Development Corporation;3. It is hereby agreed that the fair market value of the shares of stocks owned by Felipe Yulienco and Emerito M. Salva as determined and/or fixed by AEA Development Corporation shall be final, irrevocable and binding upon the parties and non-appealable.
b. The balance of the purchase price, or the remaining eighty-five (85%) percent, shall be paid without interest by way of postdated checks within five (5) years in ten (10) equal semi-annual amortization, with the first installment commencing one (1) month after the payment of the initial downpayment mentioned herein-above, until the full purchase price of the shares shall have been paid to the petitioners;xxx xxx
xxx xxx xxx"[1]
Subsequently, on October 20, 1987, the SEC rendered judgment approving in toto the said Compromise Agreement submitted by the parties in this manner:
"WHEREFORE, finding the foregoing Compromise Agreement not contrary to law, morals and public policy, judgment is hereby rendered in accordance therewith and the parties are enjoined to comply with the provisions thereof.
SO ORDERED."[2]
Immediately thereafter, private respondents were paid by petitioner the amount of P4,045,782.42, while Felipe Yulienco resigned from the position of Senior Vice-President and Treasurer of PHESCO, Inc. effective October 31, 1987, pursuant to the said Compromise Judgment.
On February 5, 1988, the third-party appraiser, AEA Development Corporation, submitted a report to the SEC and to the contending parties fixing the fair market value of the private respondents' shares of stock in PHESCO, Inc. at Three Hundred Eleven Pesos and Thirty-Two Centavos (P311.32) per share.
On February 22, 1988, petitioner Ynson filed with the SEC a Motion for Execution of the Compromise Judgment with a tender of the checks to pay for the private respondents' shares of stock in accordance with the agreement.
Surprisingly, the private respondents opposed the Motion for Execution alleging that fraud was employed in the preparation of the 1986-1987 Financial Statement of PHESCO, since various assets were not included therein, assets which could probably increase the value of PHESCO's shares of stock. This posture inevitably called for the setting aside of the appraisal report submitted by AEA Development Corporation and the appointment of a new audit team to prepare a new financial statement for fiscal year 1986- 1987. On August 29, 1988, the Panel of Hearing Officers organized by the SEC for the purpose and before which the motion was submitted, issued an OMNIBUS ORDER, dated August 29, 1988, granting the Motion for Execution filed by petitioner Ynson.
On September 30, 1988, private respondents appealed to the SEC En Banc from said Omnibus Order.
After four years of protracted hearing, the SEC En Banc rendered a Resolution, dated December 1, 1992, dismissing the private respondents' appeal and affirming the issuance of the Writ of Execution by the Panel of Hearing Officers.
Strangely, however, the SEC Resolution contained an "obiter" in the opinion portion thereof that legal interest on the said appraised fair market value of the private respondents' shares of stock in PHESCO, Incorporated shall be paid from the time the Compromise Judgment became final until paid, viz:
"However, petitioners are entitled to the total amount of P 30,052,964.88 plus the legal interest the same might have earned from the time the compromise agreement became final until paid, since said amount is due to them pursuant to the appraisal made in accordance with the compromise agreement."[3]
Considering that the payment of legal interest was not in the dispositive part of the SEC Resolution, petitioner Ynson filed on December 14, 1993 a Motion for Clarification of the aforementioned resolution of December 1, 1992 and, in effect, contested the payment of interest. On April 12, 1993, the SEC En Banc denied the Motion for Clarification of the herein petitioner and affirmed the award of legal interest in favor of the private respondents.
On July 30, 1993, petitioner Ynson filed before the respondent Court of Appeals a Petition for Review, docketed as CA-G.R. SP No. 31571, assailing as contrary to jurisprudence and law the Resolutions of the SEC En Banc, dated December 1, 1992 and April 12, 1993, in regard to the payment of interest.
Likewise, herein private respondents Yulienco and Salva filed a petition before the Court of Appeals, docketed as CA-G.R. SP No. 30734, for a review of the SEC En Banc's Resolution of December 1, 1992 which dismissed their appeal from the Omnibus Order of August 29, 1988, insisting that the Compromise Judgment dated October 20, 1987 has not yet attained finality, and therefore the appraisal made by AEA Development Corporation can still be set aside on the ground of fraud and a new audit team be appointed.
These two petitions for review of the herein petitioner and that of the private respondents were ordered consolidated by the respondent Court of Appeals.
After hearing, the court a quo rendered judgment on November 29, 1993, to wit:
"WHEREFORE, we find the Petition for Review filed by Felipe Yulienco and Attorney M. Salva to be with merit and accordingly, we rule that:
1. The compromise judgment dated October 20, 1987 has not attained finality upon the submission of the AEA Development Corporation's Appraisal Report dated February 5, 1988.
2. The instant case is remanded to the Securities and Exchange Commission En Banc for the determination of the fair market value of the shares of stock of Felipe Yulienco and Attorney Emerito M. Salva in relation to the audited financial statements of PHESCO, Inc. for fiscal year 1986-1987. Accordingly, the SEC En Banc is hereby ordered to create a new audit team to examine the books of accounts and other records and documents of PHESCO, Inc. and pursuant thereto, prepare a new audited financial statements for fiscal year 1986-1987.
xxx xxx xxx
On the other hand, the petition for review filed by respondent Ynson [petitioner herein] docketed as CA-G.R. SP No. 31571 is hereby DISMISSED.
SO ORDERED."[4]
On December 20, 1993, petitioner Ynson filed with the respondent Court, a Motion for Reconsideration of the said appellate court's decision.
After oral argument, respondent appellate court rendered an Amended Decision, dated September 6, 1994, affirming in all respects its earlier decision dated November 29, 1993, except that the last paragraph of the dispositive portion thereof now reads:
"xxx xxx xxx
5. The petition filed by Benjamin Ynson in CA-G.R. SP. No. 31572, is also GRANTED. The Order dated April 12, 1993 and the Resolution dated July 22, 1993 are hereby ANNULLED and SET ASIDE. Consequently, the total amount of the shares of stocks which petitioners under the compromise agreement are bound to convey and transfer to PHESCO, Inc. shall be paid without interest."[5]
Both parties filed respective Petitions for Review before us assailing the Amended Decision of respondent Court of Appeals.
Petitioner Ynson assigns the following errors committed by the appellate court insofar as it ruled that the Compromise Judgment dated October 20, 1987 has not attained finality and therefore can still be set aside.
I
"The Honorable Court of Appeals Erred in Ruling that the determination of the fair market value of the shares by the appraiser mutually appointed by the parties required approval by the parties and the Court.II
The Honorable Court of Appeals erred in disregarding the provision in section 8 of Supreme Court Circular No. 1-91 that the finding of fact of the Court, Commission, Board, Office or Agency concerned when supported by substantial evidence shall be final.III
The Honorable Court of Appeals erred and exceeded its jurisdiction in remanding the case to the SEC; ordering it to create a new audit team which would submit the new Audited Financial Statements to the SEC; and ordering it to furnish the said statements to the AEA Development Corporation for the purpose of making a new appraisal to be submitted to both Parties and to the SEC for approval.IV
The Honorable Court of Appeals erred in admitting the Cuervo Appraisers Inc.'s report as part of the records to be studied by the SEC and included among the documents that should be considered and evaluated by the AEA Development Corporation in the process of determining the fair market value of the shares of stock.V
The Honorable Court of Appeals erred in granting the Urgent Amended/Supplemental Motion to deposit P30,052,964.88 filed by the petitioners (now private respondents) and ordering the private respondent (now petitioner) to deliver the said amount to the SEC EN BANC to be deposited by the latter in a time deposit/money market or CB securities in the names of the petitioners Felipe Yulienco and Atty. Emerito M. Salva but held in trust by the SEC EN BANC."[6]
Private respondents Yulienco and Salva, on the other hand, submit that respondent Court of Appeals erred:
I
"xxx IN REVERSING THE DISMISSAL OF THE PETITION FOR REVIEW OF RESPONDENT YNSON IN CA-G.R. SP. NO. 31571 AS HELD IN ITS DECISION DATED NOVEMBER 29, 1993 FOR THE REASON THAT FROM THE UNDISPUTED FACTS SAID PETITION FOR REVIEW WAS FILED OUT OF TIME THEREBY DECIDING THE INTEREST AWARD OF THE SEC EN BANC IN FAVOR OF PETITIONERS WITH FINALITY; ANDII
xxx IN ANNULLING AND SETTING ASIDE THE DECISION DATED NOVEMBER 29, 1993 INSOFAR AS IT AFFIRMS THE AWARD OF INTEREST TO PETITIONERS TO WHICH THEY ARE UNDER THE FACTS AND THE LAW ENTITLED AS WELL AS IN SETTING ASIDE THE SEC EN BANC ORDERS DATED APRIL 12, 1993 AND JULY 22, 1993 BECAUSE THE INTEREST AWARD TO PETITIONER IN SAID SEC EN BANC DECISION DATED DECEMBER 1, 1992 AND THE ORDER DATED APRIL 12, 1993 HAVE BECOME FINAL."[7]
Stripped of non-essentials, two issues need to be resolved in this case: (1) Whether or not the Compromise Judgment, dated October 20, 1987, had already attained finality and can no longer be set aside on the ground of fraud; and (2) Whether or not the balance of the purchase price, or the remaining 85% of the total consideration, should be paid with interest.
We uphold the affirmative as regards the first issue.
The court a quo in ruling that the Compromise Agreement did not attain finality ratiocinated:
"It is well worth to state that the Compromise Agreement, notwithstanding the fact that the SEC has approved the same, cannot be considered as entirely final and immediately executory, because there is that stipulation number two, providing for the transfer of shares from petitioners to PHESCO, Inc. at a value which is to be determined by a mutually designated appraiser. And though the designation of the appraiser is valid, binding, final, irrevocable and non-appealable, the work of the appraiser which is to determine the value of the shares in question, is needed to complete the terms of the compromise agreement and is evidently a qualifying condition, if not a condition sine qua non, before that stipulation number two of the compromise agreement can be considered as entirely final and ripe for execution."[8]
This reasoning does not jibe well with Paragraph Three of the Compromise Agreement which expressly provides:
"3. It is hereby agreed that the fair market value of the shares of stocks owned by Felipe Yulienco and Emerito M. Salva as determined and/or fixed by AEA Development Corporation shall be final, irrevocable and binding upon the parties and non-appealable."[9]
This stipulation is so couched in simple and unambiguous language that it need not require any interpretation. The plain import of this clause is that the determination of the fair market value of the subject shares of stock held by private respondents is solely the function of the mutually chosen appraiser, the AEA Development Corporation, which determination shall be "final irrevocable, binding and non-appealable." There is nothing in this clause which indicates that the parties could interfere with the duty of the appraiser nor is the determination of the fair market value of the shares in question made subject to the approval of the parties and of the Court. Since the parties entered into this agreement freely without any vice of consent, the same must govern the relations of the parties. A judicial compromise has the force of law and is conclusive between the parties.[10] In Republic vs. Sandiganbayan,[11] we even held that a compromise upon its perfection become binding upon the parties and has the effect and authority of res judicata even if not judicially approved. Hence, the moment petitioner Ynson and private respondents Yulienco and Salva affixed their corresponding signatures to the Compromise Agreement, the same became res judicata among the parties.[12]
Private respondents maintain nevertheless that the Compromise Agreement has not attained finality and must be set aside because there was fraud in the preparation of the 1986-1987 Financial Statements of PHESCO, thus resulting in the undervaluation of PHESCO's shares of stock, 96,534 of which are held by the private respondents.
Touching on this point with authority, the Securities and Exchange Commission En Banc issued the following Resolution on December 1, 1992.
"Finally, on the allegation that J.S. Zulueta & Co. prepared two (2) sets of financial statements, this was vehemently denied by the firm. However, they reasoned out that they prepared various drafts of financial statements incorporating certain adjustments which cropped up during their audit. Said drafts were used in their preliminary discussion with the appraiser and a notation on these drafts indicates that these are 'for discussion purposes only.' That no copy was given to any officer/director and upon submission of the final audited financial statements the drafts were all retrieved by the firm. The apparent discrepancies alleged in the petition are the results of reclassification of entries which normally arise after an audit has been completed.
The explanation of the auditing firm J.S. Zulueta & Co., through Mr. E. A. Fernandez, is given more credit for the reason that they were able to actually examine the books of accounts and other pertinent records and documents. The auditing firm was employed way back in 1979 and during that time up to the time of his resignation, petitioner [private respondent herein] Yulienco was the then Treasurer of said corporation.
Based on the foregoing, we find that there are sufficient bases for excluding the various assets contained in the memorandum of appeal. Therefore, fraud was not employed in the preparation of the financial statements that would warrant the setting aside of the appraisal report. Likewise, we agree with the ruling of the Hearing Panel that the judgment had become final and executory by the submission of the appraisal report. Hence, the issuance of the writ of execution was proper."[13]
We sustain this finding of the SEC En Banc which has satisfactorily refuted private respondents' allegations as to fraud in the preparation of PHESCO's financial statements for 1986-1987. Well-settled is the rule in our jurisdiction that the findings of fact of an administrative agency must be respected, as long as such findings are supported by substantial evidence, even if such evidence might not be overwhelming or preponderant. It is not the task of an appellate court to weigh once more the evidence submitted before the administrative body and to substitute its own judgment for that of the administrative agency in respect of sufficiency of evidence.[14] In fact, under Section 8 of Supreme Court Circular No. 1-91, Prescribing the Rules Governing Appeals to the Court of Appeals from a Final Order or Decision of the Court of Tax Appeals to the Court of Appeals and Quasi-Judicial Agencies [like the SEC], such findings are accorded not only respect but also finality, as long as these findings are backed up by substantial evidence, or that amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion.[15] In the present case, after a careful examination of the records, we conclude that the SEC, in finding that no fraud was employed in the preparation of the 1986-1987 Financial Statements of PHESCO, has more than met this quantum of evidence.
In regard to the second issue, private respondents Yulienco and Salva aver that they are entitled to the payment of legal interest which the installments could have earned from due date until fully paid on grounds of justice and fairness. According to them, petitioner Ynson, instead of depositing the installments with the SEC as they became due, fraudulently kept the money and used the same in his business and/or in money market placements thereby earning interest thereon to enrich himself by investing money which were due them.[16]
This is pure speculation. Private respondents Yulienco and Salva, in their Petition in G.R. No. 117327, did not present any scintilla of evidence to substantiate the claim that Ynson, indeed, invested these funds for his own profit. What is stark clear, however, is Paragraph 2.b of the Compromise Agreement signed by both parties which provides in unequivocal terms that:
"The balance of the purchase price, or the remaining eighty-five (85%) per cent, shall be paid without interest by way of postdated checks within five (5) years in ten (10) equal semi-annual amortization xxx.[17]
This clinches the matter at issue. As aptly observed by the respondent Court of Appeals in its Amended Decision:
"This part of the compromise agreement is final and binding. That the semi-annual amortization 'shall be paid without interest,' has the force of law between the contracting parties and should thus be complied with in good faith. Accordingly, since the SEC En Banc has no right to make contracts for the parties, (cf. Tolentino and Mario v. Gonzales Sy Chian, 80 Phil. 577), and, therefore, to declare in its December 1, 1992 Resolution as well as in its April 12, 1993 order, that such mode of payment/amortization should earn 'legal interest x x x,' respondent (herein petitioner) Ynson, therefore, is not obliged to pay legal interest on the balance of 85%."[18]
WHEREFORE, the instant petition docketed as G.R. Nos. 117018-19 is GRANTED and, thus, the Amended Decision of the Court of Appeals, dated September 6, 1994, is hereby set aside.
Paragraph 5 of the dispositive part thereof which reads:
"xxx xxx xxx
5. The petition filed by Benjamin Ynson in CA-G.R. SP. No. 31572, is also GRANTED. The Order dated April 12, 1993 and the Resolution dated July 22, 1993 are hereby ANNULLED and SET ASIDE. Consequently, the total amount of the shares of stocks which petitioners under the compromise agreement are bound to convey and transfer to PHESCO, Inc. shall be paid without interest."[19]
is, however, hereby AFFIRMED.
The petition of Felipe Yulienco and Emerito Salva in G.R. No. 117327 is hereby DISMISSED, with costs.
SO ORDERED.
Bellosillo, and Kapunan, JJ., concur.
Padilla, J., joins Mr. Justice Vitug in his concurring and dissenting opinion.
Vitug, J., with separate (concurring and dissenting) opinion.
[1] Rollo [G.R Nos. 117018-19], pp. 38-41.
[2] Ibid, p. 49.
[3] Ibid, p. 93.
[4] Rollo [G.R. No. 117327], pp. 84-85.
[5] Ibid, p. 103.
[6] Rollo [G.R. Nos. 117018-19], pp. 18-19.
[7] Rollo [G.R. No. 117327], p. 27.
[8] Ibid, p. 90.
[9] Rollo [G.R Nos. 117018-19], p.41.
[10] World Machine Enterprises v. IAC, 192 SCRA 459, 465 [1990] citing United Housing Corporation v. Dayrit, G.R No. 76442, January 22, 1990.
[11] 226 SCRA 314, 320 [1993] citing Mayuga v. Court of Appeals, 154 SCRA 309 [1987].
[12] Article 2037, New Civil Code.
[13] Rollo [G.R. Nos. 117018-19], p. 93.
[14] Rubenecia v. Civil Service Commission, 244 SCRA 640 [1995].
[15] Section 5, Rule 133 of the Revised Rules of Court.
[16] Rollo [G.R No. 117327], p. 38.
[17] Rollo [G.R Nos. 117018-19], p. 40.
[18] Rollo [G.R No. 117327], p. 101.
[19] Supra, note 5.
VITUG, J.:
In its resolution of 16 November 1994, the Court has denied the petition for review in G.R. No. 117018-19. Therein petitioner's motion and supplemental motion for reconsideration assert substantial compliance with the Rules on service of the petition and requisite statement of material dates, reiterating in the process the five (5) errors of law alleged to have been committed by respondent appellate court; viz:
"I. The Honorable Court of Appeals erred in ruling that the determination of the fair market value of the shares by the appraiser mutually appointed by the parties required approval by the parties and the court.
"II. The Honorable Court of Appeals erred in disregarding the provision in Section 8 of Supreme Court Circular No. 1-91 that the finding of fact of the Court, Commission, Board, Office or Agency concerned when supported by substantial evidence shall be final.
"III. The Honorable Court of Appeals erred and exceeded its jurisdiction in remanding the case to the SEC; ordering it to create a new audit team which would submit the new Audited Financial Statements to the SEC; and ordering it to furnish the said statements to the AEA Development Corporation for the purpose of making a new appraisal to be submitted to both parties and to the SEC for approval.
"IV. The Honorable Court of Appeals erred in admitting the Cuervo Appraisers, Inc.'s report as part of the records to be studied by the SEC and included among the documents that should be considered and evaluated by the AEA Development Corporation in the process of determining the fair market value of the shares of stock.
"V. The Honorable Court of Appeals erred in granting the Urgent Amended/Supplemental Motion to deposit P30,052,964.88 filed by the petitioners (now private respondents and ordering the private respondent (now petitioner) to deliver the said amount to the SEC EN BANC to be deposited by the latter in a time deposit/money market or CB securities in the names of the petitioners Felipe Yulienco (SIC) and Atty. Emerito M. Salva but held in trust by the SEC EN BANC."[1]
The first four assigned errors deal, in main, on the proper valuation of the shares of stock of private respondents Yulienco and Salva. Petitioner alleges that the submission of the appraisal report, dated 05 February 1988, by AEA Development Corporation has rendered the judgment by compromise final and executory absent any finding of fraud by either the SEC or by respondent court. Petitioner submits that the remand of the case to the SEC for further proceedings and for undertaking a new appraisal would tantamount to sanctioning a fishing expedition and changing the terms or provisions of the compromise judgment.
The remand of SEC Case No. AC-238 has been explained by respondent court in its questioned decision thusly:
"It is Our firm resolution to remand the case to the SEC, cognizant of the powers vested in that body under PD 902-A, Section 5(b), of its original and exclusive jurisdiction to hear and decide cases involving controversies between and among stockholders, members or associates, and for the SEC to closely supervise and control the appraisal to be undertaken by the appraiser, most importantly, on the question as to what should be considered the best documentary evidence to come up with an accurate basis in the evaluation and preparation of an appraisal report which should first be 'approved by the parties' and afterwards by the SEC.
"Considering, however, that the compromise agreement is final, irrevocable, binding and unappealable with respect to the designation of the AEA as such appraiser, as the parties have mutually selected and appointed as their appraiser, as correctly pointed out by movant, We resolved to retain the AEA Development Corporation as such appraiser.
"We would like to make it clear that the remand of the case to the SEC has nothing to do with the other portions of the compromise judgment which are deemed final. Our resolution does not infringe upon, is not different from and not in conflict with the other terms and conditions of the compromise agreement, precisely because petitioners' disagreement is gleaned from the records before this Court refers only to the valuation of the shares. The case records is replete with petitions and motions which petitioners filed before the SEC En Banc, requesting for the production of those documents to support their claim that such and such assets should be included or that the SEC should inspect and verify the figures that should be included in the 1986-1987 financial statements of PHESCO, Inc. which after all formed the basis for the valuation of its shares. But they were not favorably considered by the SEC. While AEA and Zulueta made explanations as to how the result of the valuation was derived at, but in a controversy such as the case at bar, where the very conflict involves the ascertainment" in arriving at some figures, which calls for actual computation," the same cannot be based on mere explanations. The very documents and the financial statements of PHESCO, Inc., among others, should be considered as the best and substantive basis for such computation even if the same conclusion/computation may later on be reached."[2]
I find no fault on the part of the appellate court in its above disquisition. Clearly, the terms of the compromise judgment have not been altered or amended by respondent court. The remand of the case to the SEC En Banc has been decreed precisely in order to fully and properly implement, and not to set aside, the compromise agreement, particularly stipulation numbered two (2);[3] in respect to the appraisal, determination and fixing of the fair market value (FMV) of the shares of stock of private respondents. The remand of the case with specific instructions to the SEC to closely monitor the appraisal and valuation of the shares ordered by respondent court cannot be considered less than judicious.
Petitioner questions in his final assignment of error the appellate court's order requiring petitioner to deliver the amount of P30,052,984.88 "to the SEC En Banc to be deposited by the latter in a time deposit/money market or CB Securities in the names of Felipe Yulienco and Atty. Emerito Salva but held in trust by the SEC En Banc," for supposedly being contrary to the provisions of Art. 1458, 1477 and 1479 of the Civil Code. These provision have no relevance to this case. It must be pointed out that petitioner is not being ordered to remit payment to private respondents but merely to deposit the amount with the SEC which, in turn, would be placed in interest bearing placements that assures the full implementation of the compromise judgment.
In G.R. No. 117327, I share the ponencia of Mr. Justice Regino Hermosisima, Jr.
Accordingly, I vote to deny both petitions (G.R. Nos. 117018-19 and G.R. No. 117327).
[1] Rollo, pp. 18-19.
[2] Rollo, pp. 190-191
[3] "2. Also, for the complete, full and unconditional settlement of this controversy between the parties, petitioners Felipe Yulienco and Emerito M. Salva shall sell, convey, transfer and deliver to Phesco, Inc., all the shares of stock in the corporation owned by or registered in their names in the books of the corporation numbering ninety six thousand five hundred thirty four (96,534) shares in all, x x x at their fair market value in relation to the 1986-1987 audited financial statement and the assets/properties of Phesco Inc., among which are real estate properties, existing machineries and equipment of the corporation, including the rock crushing plant, receivables including pending claim with NPC, etc. (as per minutes of the Board of the Director's monthly meeting dated April 10, 1987), subsidiary corporations and other investments, the appraisal, determination and/or fixing of which fair market value shall be made by a mutually appointed appraiser, the AEA Development Corporation, in consultation with J.S. Zulueta & Co., but payable and subject to the following conditions: x x x"