G.R. Nos. 117018-19 and G.R. No. 117327, August 8, 2002.
BENJAMIN D. YNSON, petitioner, vs. COURT OF APPEALS, FELIPE YULIENCO and EMERITO M. SALVA, respondents. (G.R. Nos. 117018-19)

FELIPE YULIENCO and EMERITO M. SALVA, petitioners, vs. COURT OF APPEALS and BENJAMIN D. YNSON, respondents. (G.R. No. 117327)

FACTS

The controversy originated from a petition filed before the Securities and Exchange Commission (SEC) by stockholders Felipe Yulienco and Emerito M. Salva against Benjamin D. Ynson, as president and CEO of Phesco, Inc., for alleged mismanagement. On October 15, 1987, the parties submitted a Joint Motion for Judgment by Compromise. The SEC rendered judgment on October 20, 1987, approving the Compromise Agreement in toto. The agreement stipulated the sale of Yulienco’s 96,420 shares and Salva’s 114 shares to Phesco, Inc. at their fair market value, to be determined by a mutually appointed appraiser, AEA Development Corporation, in consultation with J.S. Zulueta & Co. The parties agreed that this valuation would be final, irrevocable, binding, and non-appealable. On February 5, 1988, AEA Development Corporation fixed the fair market value at P311.32 per share. Ynson moved for execution of the agreement and tendered payment via checks. Yulienco and Salva opposed execution, alleging fraud in the preparation of the 1986-87 Financial Statements of Phesco, Inc., claiming some assets were omitted, and moved to set aside the appraisal report and appoint a new audit team. The SEC Hearing Panel granted the motion for execution on September 30, 1988. Yulienco and Salva appealed to the SEC En Banc, which dismissed the appeal and affirmed the writ of execution on December 1, 1992, but included an obiter dictum stating Yulienco and Salva were entitled to P30,052,964.88 plus legal interest from the time the compromise agreement became final until paid. Ynson filed a motion for clarification, which was denied. Ynson then filed a petition for review with the Court of Appeals (CA-G.R. SP No. 31571) assailing the payment of legal interest, while Yulienco and Salva filed their own petition (CA-G.R. SP No. 30734) seeking review of the SEC En Banc’s dismissal. The CA consolidated the petitions. On November 29, 1993, the CA ruled in favor of Yulienco and Salva, holding the compromise judgment had not attained finality upon submission of the appraisal report and remanded the case to the SEC En Banc for determination of fair market value and creation of a new audit team, while dismissing Ynson’s petition. On September 6, 1994, the CA rendered an Amended Decision, affirming its earlier decision except it granted Ynson’s petition and annulled the SEC orders, ruling the shares shall be paid without interest. Ynson filed a petition for review before the Supreme Court (G.R. Nos. 117018-19), arguing the Compromise Agreement had attained finality. Yulienco and Salva also filed a petition (G.R. No. 117327), alleging the award of interest had become final. The petitions were consolidated. On June 17, 1996, the Supreme Court rendered a Decision granting Ynson’s petition and setting aside the CA Amended Decision, but affirming paragraph 5 thereof (payment without interest), and dismissing Yulienco and Salva’s petition. On May 13, 1997, the Supreme Court issued a Resolution recalling and setting aside the June 17, 1996 Decision and reinstating Ynson’s petition.

ISSUE

The primary issue is whether the Compromise Agreement, particularly the appraisal of share value by AEA Development Corporation, is final and binding upon the parties, and whether the purchase price should be paid with or without interest.

RULING

The Supreme Court reversed and set aside its Resolution dated May 13, 1997 and reinstated its Decision dated June 17, 1996. It held that the SEC En Banc found no fraud in the preparation of the financial statements to warrant setting aside the appraisal report, and such factual findings, supported by substantial evidence, must be respected. The compromise agreement, once approved by the court, has the force and effect of a judgment and is conclusive between the parties. The parties unequivocally stipulated that the fair market value determined by AEA Development Corporation would be final, irrevocable, binding, and non-appealable. In the absence of fraud in the appraisal, the valuation is binding and conclusive. For the same reason, the parties are bound by their stipulation that the purchase price “shall be paid without interest.” Thus, the Compromise Agreement had attained finality, and no interest was due on the purchase price.