GR 182013; (December, 2009) (Digest)
G.R. No. 182013 ; December 4, 2009
Quasha Ancheta Peña & Nolasco Law Office and Legend International Resorts, Limited, petitioners, vs. The Special Sixth Division of the Court of Appeals, Khoo Boo Boon and the Law Firm of Picazo Buyco Tan Fider & Santos, Respondents.
FACTS
Legend International Resorts, Limited (LIRL), a Hong Kong corporation operating in Subic Bay, filed a civil case against PAGCOR and SBMA. The Regional Trial Court ruled in LIRL’s favor. PAGCOR appealed to the Court of Appeals, docketed as CA-G.R. CV No. 87281. During the pendency of this appeal, the Hong Kong Court of First Instance, in a winding-up proceeding, appointed joint liquidators for LIRL. These liquidators terminated the services of LIRL’s former counsel, the Picazo Law Office, and engaged the Quasha Law Office as new counsel. Quasha Law Office filed its Entry of Appearance in the appellate case, attaching the liquidators’ termination letter.
The Special Sixth Division of the Court of Appeals refused to recognize Quasha Law Office’s entry of appearance. It ruled that the Hong Kong court order appointing the liquidators was a foreign judgment requiring prior recognition in a separate Philippine proceeding before it could be given effect. It held that until such recognition, Picazo Law Office remained LIRL’s counsel of record. Petitioners filed a special civil action for certiorari before the Supreme Court.
ISSUE
Whether the Court of Appeals committed grave abuse of discretion in refusing to recognize the change of LIRL’s counsel from Picazo Law Office to Quasha Law Office on the ground that the Hong Kong order appointing the liquidators who effected the change required prior judicial recognition.
RULING
Yes, the Court of Appeals committed grave abuse of discretion. The Supreme Court clarified that the act of the liquidators in changing legal counsel was an exercise of LIRL’s corporate prerogative through its duly appointed managers, which is an internal affair of the corporation. This act did not constitute an enforcement of a foreign judgment requiring a separate recognition proceeding. The foreign court order appointing the liquidators was merely being presented as evidence of their authority to act on behalf of the corporation, not to enforce the foreign judgment itself. The appellate court’s insistence on a separate recognition proceeding was a misapplication of the rules on foreign judgments, which apply when a party seeks to enforce the foreign judgment’s dispositive portion to claim a right or impose a liability. Here, the liquidators were merely managing the corporation’s affairs, including engaging legal services, an act that did not necessitate a prior local validation of the foreign order appointing them. The refusal to acknowledge the change of counsel based on this erroneous legal premise constituted a capricious and whimsical exercise of judgment amounting to grave abuse of discretion.