G.R. No. 139448 October 11, 2005
Jacinto Galang, Gregoria Galang and Marissa Galang, Petitioners, vs. Hon. Court of Appeals, Ines Camaganakan, Antonio Camaganakan, Marita Camaganakan and Belinda Camaganakan, Respondents.

FACTS

The dispute originated from the sale by the Galang family of their 50% shareholding in CGP Transportation and Services Corp. to Lamberto Camaganakan, Jr. in 1992. Subsequent disagreements over payment led to SEC Case No. 02-94-4697, which was settled via a Compromise Agreement dated May 3, 1995, approved by the SEC. Lamberto was authorized for this by a Special Power of Attorney from other Camaganakan family members. A later Memorandum of Agreement in 1996 revised payment terms. Upon Lamberto’s default, the SEC issued a writ of execution. CGP filed SEC EB Case No. 550, contesting its inclusion in the compromise. The SEC, in its February 5, 1998 decision, ruled the compromise was enforceable only against the shareholdings of the parties, not corporate assets, and ordered execution against the Camaganakan family’s shares. This decision became final.
The Camaganakan family members (Ines, Antonio, Marita, and Belinda) then filed a petition for annulment of judgment with the Court of Appeals. They argued the SEC decision in EB Case No. 550, which specifically ordered the levy of their shares, was void as to them because they were not parties to that case, violating their right to due process. The Court of Appeals granted the petition, annulling the SEC decision. The Galangs elevated the case to the Supreme Court.

ISSUE

Whether the Court of Appeals correctly annulled the final and executory decision of the Securities and Exchange Commission in SEC EB Case No. 550.

RULING

No, the Court of Appeals erred in annulling the SEC decision. The Supreme Court reversed the CA and reinstated the SEC ruling. The legal logic is anchored on the nature of a final judgment and the limited grounds for its annulment. A judgment can be annulled only for extrinsic fraud or lack of jurisdiction. The Camaganakans failed to prove either ground. Jurisdiction over the subject matter—the enforcement of the compromise agreement—was vested in the SEC. The Camaganakans’ claim of lack of jurisdiction over their persons is unavailing because the SEC EB Case No. 550 was filed by CGP, not against them individually. The SEC decision, which became final, correctly interpreted the compromise as a personal obligation of Lamberto Camaganakan, enforceable against the shares he represented. The Camaganakans, as principals who authorized Lamberto via a Special Power of Attorney, are bound by the acts of their agent within the scope of his authority. Their remedy was a timely appeal from the SEC decision, not a collateral attack via annulment after finality. The Court of Appeals’ annulment improperly disturbed a final judgment on the merits.