Western Sales Trading Company, Inc. vs. 7D Food International, Inc.

Pleadings filed in courts outside the Philippines are treated as private documents under Philippine evidentiary rules and must be duly authenticated before they may be given evidentiary weight, and a party's acknowledgment of the existence of foreign proceedings does not constitute a judicial admission of the genuineness, authenticity, or contents of the foreign pleadings sufficient to dispense with the requirement of authentication.

WSTC Guam is a foreign corporation organized under the laws of Guam, U.S.A., engaged in importing products from the Philippines for sale and distribution in Guam, with WSTC Philippines as its wholly-owned subsidiary duly organized under Philippine law. 7D Food International, Inc. is a Philippine corporation engaged in the harvesting and processing of dried mangoes, juices, and candies. The parties were connected through a distributorship agreement for the sale and distribution of 7D Mango Products in Guam and Hawaii, the terms and duration of which became the subject of conflicting accounts and parallel litigation in multiple jurisdictions.

In 2012, 7D Food International, Inc. filed a Complaint for Breach of Contract, Judicial Confirmation of Rescission, Nullity of Instrument, and Damages against Western Sales Trading Company, Inc. (WSTC Guam), Western Sales Trading Company Philippines, Inc. (WSTC Philippines), and several John Does before the RTC of Mandaue City. 7D alleged that petitioners violated their verbal exclusive distributorship agreement for the sale and distribution of 7D Mango Products in Guam and Hawaii. Specifically, 7D claimed that WSTC Guam purchased Star Sand Quality dried green mango products from ECJ Farms, a competitor, and distributed them in Hawaii and Guam, and that petitioners tortiously interfered with 7D's new distributor in those territories by filing suits against them abroad.

Petitioners entered a special appearance ad cautelam and questioned the service of summons on Bello Lumintigar, contending that he was not an officer or agent of WSTC Guam but the treasurer of WSTC Philippines. In their Answer Ad Cautelam, petitioners asserted that WSTC Guam could not be sued in the Philippines because it was not doing business locally, that WSTC Philippines had a distinct and separate legal personality from WSTC Guam and was not its resident agent, and that WSTC Philippines was not privy to the distributorship agreement. On the substantive aspect, petitioners maintained that the arrangement with 7D was merely an isolated written contract for exclusive distributorship in Hawaii for one year from July 2003 to June 2004, that WSTC Guam never sold competitor products, and that there was no prohibition against doing so. Petitioners claimed that it was 7D which terminated the distributorship contract, prompting WSTC Guam to file Civil Case No. 1527-11 in the Superior Court of Guam and Civil Case No. 09-1-000351-02 in the Circuit Court of the First Circuit of the State of Hawaii against 7D and others. They also pointed out 7D's failure to disclose the pending cases abroad in its Certificate of Non-Forum Shopping and sought dismissal on the principle of forum non conveniens.

The RTC, in its Order dated April 10, 2013, dismissed the complaint on the grounds of forum shopping and litis pendentia, finding that the main issue in both the local and foreign cases was the alleged breach of the distributorship agreement and that a judgment in the Hawaii court would constitute res judicata in the local case or vice versa. The RTC also ruled that petitioners' filing of a motion for extension of time ad cautelam constituted voluntary appearance. Both parties moved for reconsideration, which the RTC denied on April 13, 2015. 7D appealed to the CA, which reversed the RTC Orders and ordered remand, holding that the unverified allegations and machine copies of foreign pleadings were insufficient to prove their existence and authenticity under the rules on authentication and proof, and that the RTC should not abdicate its fact-finding function through mere allegations of the parties. Petitioners' motion for reconsideration was denied, prompting the present petition.

• Timeliness of Appeal: Petitioners argued that the RTC Order dated April 10, 2013 had already become final and executory because 7D filed its Motion for Reconsideration beyond the reglementary period of 15 days from receipt, as service upon one of 7D's several counsels (Atty. Flores-Balagtas, who received the Order on May 6, 2013) was binding on the party and all its counsel under Section 2, Rule 13 of the Rules, making the filing on May 31, 2013 late if reckoned from May 6, 2013.
• Defect in Appellant's Brief: Petitioners averred that 7D's Appellant's Brief was fatally defective because it did not make proper references to the records of the case as required under the Rules, warranting outright dismissal of the appeal.
• Authentication Dispensed With: Petitioners maintained that the requirement of authentication of the foreign pleadings could be dispensed with because 7D had made judicial admissions of the existence of the cases before the Guam and Hawaii courts in its Comment and Opposition dated April 30, 2012 before the RTC, as well as in its Appellant's Brief and Reply before the CA, and that 7D was bound by these admissions in the absence of any showing that they were made through palpable mistake.
• Litis Pendentia and Forum Shopping: Petitioners harped on the RTC's dismissal of the complaint on account of litis pendentia, arguing that the CA erred in ruling that the existence and authenticity of the documents relating to the pending foreign cases were not sufficiently established.

• Timeliness of Appeal: 7D expounded that the appeal was timely filed because the period to file it was correctly reckoned from the date of receipt of the RTC Order by its main counsel, the Law Office (which received it on May 17, 2013), and not by its other counsel, Atty. Flores-Balagtas.
• Sufficiency of Appellant's Brief: 7D denied noncompliance with the required contents of an appellant's brief, claiming it contained proper references to the record.
• Authentication Required: 7D emphasized the need for authentication of documents under the Rules and the exigency of further presentation of evidence to resolve the presence or absence of forum shopping, litis pendentia, and forum non conveniens.
• No Judicial Admission: 7D contradicted petitioners' claim that its allegations constituted judicial admission, asserting that the statements were taken out of context and were made to show that the elements of litis pendentia were not present — namely, that there was no identity of parties, the cases were not founded on the same facts, the rights and reliefs asserted were not identical, and the resolution of the foreign cases would not amount to res judicata.

• Procedural — Timeliness of Appeal: Whether 7D's Motion for Reconsideration and subsequent appeal before the CA were filed within the reglementary period, considering that 7D was represented by multiple counsels who received the RTC Order on different dates.
• Procedural — Defect in Appellant's Brief: Whether the alleged lack of proper references to the records in 7D's Appellant's Brief warranted the outright dismissal of its appeal.
• Authentication of Foreign Pleadings: Whether the requirement of authentication of pleadings filed in the Guam and Hawaii courts could be dispensed with in view of 7D's alleged judicial admissions of the existence of the foreign cases.
• Remand: Whether the CA correctly ordered the remand of the case to the RTC for the reception of evidence relative to the parties' allegations on the cases pending before the Guam and Hawaii courts.

• Procedural — Timeliness of Appeal: Yes, the appeal was timely. Under the old Rules, receipt by one of several counsels of record is notice to all, but the Court relaxed the procedural rules in the interest of substantial justice, noting that the cause was not entirely attributable to 7D's fault or negligence.
• Procedural — Defect in Appellant's Brief: No, the defect did not warrant dismissal. The grounds for dismissal of an appeal under Section 1, Rule 50 are discretionary upon the CA, and the failure to cite page references is a minor and negligible defect, not jurisdictional in character.
• Authentication of Foreign Pleadings: No, authentication could not be dispensed with. Pleadings filed in foreign courts are treated as private documents whose due execution and authenticity must be proven as a fact, and 7D's acknowledgment of the existence of the foreign cases did not amount to a judicial admission of the genuineness and contents of the foreign pleadings.
• Remand: Yes, the CA correctly ordered remand. The determination of litis pendentia, res judicata, and forum non conveniens requires a factual determination that necessitates the presentation and authentication of evidence, including the foreign pleadings, which the RTC prematurely foreclosed by its outright dismissal.

• Procedural — Timeliness of Appeal: Under the old Rules applicable to this case, when a party is represented by several counsels of record, service upon one of them is notice to all, and the period to appeal commences from the date of receipt by the first-served counsel. Atty. Flores-Balagtas, a counsel of record for 7D, received the RTC Order on May 6, 2013, so the 15-day period to file a motion for reconsideration started to run from that date. The Motion for Reconsideration filed on May 31, 2013 would have been late if reckoned from May 6, 2013. However, without Atty. Flores-Balagtas' formal withdrawal as counsel, the situation created confusion as to which counsel's receipt should be controlling, especially since it was the Law Office — which received the Order on May 17, 2013 — that filed both the Motion for Reconsideration and the Appellant's Brief. The Court deemed a relaxation of the procedural rules more prudent, citing the principle that technicalities should not stand in the way of equitably resolving the rights and obligations of the parties, and that the cause was not entirely attributable to 7D's fault or negligence.

• Procedural — Defect in Appellant's Brief: Citing De Leon vs. Court of Appeals, the Court elucidated that the grounds for dismissal of an appeal under Section 1, Rule 50 are discretionary upon the CA, as evidenced by the use of the word "may" instead of "shall." The failure to cite page references to the records is a minor and negligible defect, not jurisdictional in character. The CA rightly exercised its discretion in brushing aside this technicality. Moreover, the content of the RTC Order dated October 1, 2012 — which 7D cited without proper page references to show that the Law Office was recognized as main counsel — was immaterial, since receipt by Atty. Flores-Balagtas on May 6, 2013 was already sufficient notice to all of 7D's counsel.

• Authentication of Foreign Pleadings: Pleadings filed in courts within Philippine jurisdiction are public documents covered by the judicial notice rule under Section 1, Rule 129, requiring no further proof of authenticity if certified by the proper officer. In contrast, pleadings filed in courts abroad cannot be the subject of judicial notice; they must be proven as a fact under the rules on evidence, as Philippine courts cannot take judicial cognizance of proceedings and judgments of foreign courts. Foreign pleadings are akin to private documents under Section 20, Rule 132 of the Revised Rules on Evidence, whose due execution and authenticity must first be proven before they may be admitted as evidence. Petitioners argued that 7D's acknowledgment of the existence of the Guam and Hawaii cases constituted a judicial admission dispensing with authentication. A judicial admission is a deliberate, clear, unequivocal statement of a party about a concrete fact within that party's peculiar knowledge. The Court found that while 7D admitted the existence of the foreign cases, it did so in the context of refuting the application of litis pendentia and forum shopping, arguing the absence of identity of parties, rights asserted, and facts. Nowhere did 7D categorically admit that the pendency of the foreign cases constituted litis pendentia or forum shopping, nor did it admit the veracity, authenticity, or correctness of the contents of the foreign pleadings attached by petitioners. The mere admission of existence could not be deemed a blanket admission of the contents of the foreign pleadings.

• Remand: The determination of whether forum shopping exists requires a determination of the presence of the elements of litis pendentia or res judicata, which necessarily demands a review of the matters taken up in the foreign cases, including the foreign pleadings. The three requisites of litis pendentia are: (a) identity of parties or interests represented; (b) identity of rights asserted and relief prayed for, founded on the same facts; and (c) identity of the two cases such that judgment in one would amount to res judicata in the other. Without proper authentication of the foreign pleadings, the Court cannot exhaustively discuss or properly decide on the existence of these elements. The RTC prematurely dismissed the complaint, depriving petitioners of the opportunity to authenticate and prove the foreign pleadings and depriving 7D of the chance to contest their contents. Additionally, the application of the principle of forum non conveniens — which petitioners raised in their Answer below — requires a factual determination of private and public factors, and the trial court should abstain from assuming jurisdiction on this ground only after vital facts are established. The remand was therefore proper to afford both parties the full opportunity to substantiate their allegations.

• Authentication of Foreign Pleadings — Pleadings filed in courts outside the Philippines are treated as private documents under Philippine evidentiary rules. Their due execution and authenticity must be proven as a fact before they may be admitted as evidence, unlike pleadings filed in Philippine courts which are public documents subject to judicial notice. The Court applied this doctrine by holding that the machine copies of pleadings from the Guam and Hawaii courts attached by petitioners were insufficient without proper authentication under Sections 19–33, Rule 132 of the Rules.

• Judicial Admissions — A judicial admission is a formal, deliberate, clear, and unequivocal statement by a party or counsel in the course of judicial proceedings about a concrete fact within that party's peculiar knowledge, which removes the admitted fact from the field of controversy and dispenses with the production of evidence. The Court held that 7D's acknowledgment of the existence of the foreign cases did not qualify as a judicial admission of the genuineness, authenticity, or contents of the foreign pleadings, as 7D made those statements to refute the elements of litis pendentia and forum shopping, not to concede the veracity of the foreign documents.

• Litis Pendentia — Three requisites must concur: (a) identity of parties or at least such as representing the same interests in both actions; (b) identity of rights asserted and relief prayed for, the relief being founded on the same facts; and (c) identity of the two cases such that judgment in one, regardless of which party is successful, would amount to res judicata in the other. The Court held that these elements cannot be determined without reference to the authenticated contents of the foreign pleadings.

• Forum Non Conveniens — The application of the principle of forum non conveniens as a ground for dismissal requires a factual determination and is properly considered a matter of defense. While the trial court has discretion to abstain from assuming jurisdiction on this ground, it should do so only after vital facts are established to determine whether special circumstances require the court's desistance.

• Service on Multiple Counsel — Under the old Rules (prior to the 2019 amendment), when a party is represented by several counsels of record, service upon one of them is notice to all, and the period to appeal commences from the date of receipt by the first-served counsel. The 2019 amendment now specifies service upon the designated lead counsel.

• Relaxation of Procedural Rules — Technicalities should not be permitted to stand in the way of equitably and completely resolving the rights and obligations of the parties. Where the ends of substantial justice would be better served, the application of technical rules of procedure may be relaxed, particularly where the cause is not entirely attributable to the fault or negligence of the party in whose favor the rules will be suspended.

• "Pleadings filed in courts outside of the Philippines are akin to private documents as defined under Section 20 of Rule 132 of the Revised Rules on Evidence. Even if they were attached by the parties in the proceedings below, their due execution and authenticity must first be proven as a fact which the adverse party could dispute before they could be admitted as evidence." — This passage articulates the ratio decidendi on the treatment of foreign pleadings as private documents requiring authentication, the central holding of the case.

• "Although the Court agrees that 7D admitted the existence of the cases filed in the Guam and Hawaii courts, this could not be deemed as a blanket admission of the contents of the subject foreign pleadings. 7D neither admitted the veracity and authenticity of the foreign pleadings attached by petitioners in their Answer. Nor was there any admission made by 7D as to the correctness of petitioners' version of the contents of these attachments." — This distinguishes admission of the existence of foreign proceedings from admission of the authenticity and contents of the foreign pleadings, a critical nuance in the judicial admission analysis.

• "Technicalities should not be permitted to stand in the way of equitably and completely resolving the rights and obligations of the parties. Where the ends of substantial justice would be better served, the application of technical rules of procedure may be relaxed." — This is the canonical formulation relied upon by the Court in justifying the relaxation of procedural rules on timeliness of appeal and defects in the appellant's brief.

• Albano vs. Court of Appeals, 415 Phil. 76 (2001) — Followed for the rule that under the old Rules, receipt of a copy of an order or decision by one of several counsels of record is notice to all, and the period to appeal commences on such date even if the other counsel has not yet received a copy.

• De Leon vs. Court of Appeals, 432 Phil. 775 (2002) — Followed for the doctrine that the grounds for dismissal of an appeal under Section 1, Rule 50 are discretionary upon the CA, as indicated by the use of "may" instead of "shall," and are directory rather than mandatory.

• Zamora vs. Quinan, 821 Phil. 1009 (2017) — Followed for the settled formulation of the requisites of litis pendentia and res judicata, and the principle that the vexation caused to courts and parties is the core concern in determining forum shopping.

• Arreza vs. Toyo, G.R. No. 213198, July 1, 2019 — Followed for the rule that Philippine courts cannot take judicial notice of foreign judgments and laws, and that pleadings filed in foreign jurisdictions must be proven as a fact under the rules on evidence.

• Agbayani vs. Lupa Realty Holding Corp., G.R. No. 201193, June 10, 2019 — Followed for the definition and elements of a judicial admission as a deliberate, clear, and unequivocal statement of a party about a concrete fact within that party's peculiar knowledge.

• Philsec Investment Corp. vs. CA, 340 Phil. 232 (1997) — Followed for the rule that the application of forum non conveniens requires a factual determination and is properly considered a matter of defense.

• Section 2, Rule 13, Rules of Court (old version) — Provides that when a party has appeared by counsel, service shall be made upon counsel or one of them. Applied to determine that receipt by Atty. Flores-Balagtas on May 6, 2013 was binding on 7D and all its counsel, though the Court ultimately relaxed the rules.

• Section 2, Rule 13, 2019 Revised Rules (A.M. No. 19-10-20-SC) — Amended the rule to specify that where several counsels appear for one party, service shall be made upon the lead counsel if designated, or upon any one of them if none is designated. Noted as not applicable to this case since the RTC Order was served prior to the amendment.

• Section 1, Rule 129, Rules of Court — Mandates judicial notice of official acts of the legislative, executive, and judicial departments of the National Government of the Philippines. Distinguished to show that foreign pleadings, not being official acts of Philippine government departments, fall outside mandatory judicial notice.

• Sections 19–33, Rule 132, Revised Rules on Evidence — Governs authentication and proof of documents. Applied to hold that the foreign pleadings failed to meet the requirements of authentication and proof, as they were mere machine copies.

• Section 20, Rule 132, Revised Rules on Evidence (A.M. No. 19-08-15-SC) — Governs proof of private documents, requiring that before any private document offered as authentic is received in evidence, its due execution and authenticity must be proved. Applied to classify foreign pleadings as private documents requiring authentication.

• Section 1, Rule 50, Rules of Court — Enumerates the grounds for dismissal of appeal by the CA. Applied through De Leon vs. Court of Appeals to establish that dismissal is discretionary, not mandatory.

Perlas-Bernabe, S.A.J. (Chairperson), Hernando, Gaerlan, and Rosario, JJ., concurred.