Heirs of Marcelo Sotto vs. Palicte

A lawyer who files multiple actions founded on the same essential facts and seeking substantially the same reliefs, after a final judgment on the merits, commits willful and deliberate forum shopping punishable by fine for direct contempt; the alleged “hypothetical admission” of facts by a defendant in a motion to dismiss for failure to state a cause of action does not constitute a binding admission for any purpose beyond resolving the motion and cannot be used to evade the preclusive effect of prior judgments.

The intestate estate of the late Don Filemon Y. Sotto included four real properties. Respondent Matilde S. Palicte, one of four declared heirs, redeemed the properties. In a first case decided by the Supreme Court in 1987, her redemption was upheld, and she was declared entitled to have title transferred to her name, subject to the other three heirs’ right to join the redemption within six months. Over the following decades, several other heirs or their successors brought separate actions to undo Palicte’s exclusive right: a civil case to annul a waiver of rights (decided adversely in 1998), an incident in the intestate proceeding wherein the heirs of Miguel Barcelona sought belatedly to be included as co-redemptioners (dismissed with finality in 2002), and a motion filed by the administrator of the Estate to require Palicte to turn over the properties (denied and affirmed by the Supreme Court in 2008). The present action for partition—Civil Case No. CEB-24293 filed by the Heirs of Marcelo Sotto and the heir of Miguel Barcelona—alleged a secret agreement between Palicte and Marcelo Sotto (then administrator) that Palicte would use Estate funds to redeem and would thereafter share equally. The Court of Appeals held the action barred by res judicata; the Supreme Court affirmed, observing that the case was a clear instance of unmitigated forum shopping, and ordered counsel to explain.

• The Prior Litigation: Four real properties belonging to the estate of Don Filemon Y. Sotto were redeemed by respondent Matilde S. Palicte, a declared heir. In Palicte v. Ramolete (G.R. No. L-55076, 1987), the Supreme Court upheld the validity of her redemption and declared her entitled to have title transferred to her name, subject to the right of the three other declared heirs to join as co-redemptioners within six months. Thereafter, Pascuala Sotto (another heir) filed Civil Case No. CEB-19338 to annul her waiver of rights and to be restored as co-redemptioner, which was decided adversely against her. The heirs of Miguel Barcelona filed a belated motion in the intestate proceedings seeking to be included as co-redemptioners; the motion was denied, and the denial was affirmed by the Court of Appeals and ultimately by the Supreme Court in G.R. No. 154585 (2002). The Estate administrator later moved to compel Palicte to turn over the properties; the motion was denied and the denial was affirmed by the Supreme Court in Estate of Don Filemon Y. Sotto v. Palicte (G.R. No. 158642, 2008).

• The Present Action (Civil Case No. CEB-24293): The complaint, filed by the Heirs of Marcelo Sotto and Salvacion Barcelona (heir of Miguel Barcelona), alleged that Palicte had entered into an agreement with Marcelo Sotto (then administrator of the Estate) under which Palicte would redeem the properties using Estate funds and thereafter share the properties equally with the Estate. The complaint sought partition. Palicte moved to dismiss on the ground, among others, that the complaint failed to state a cause of action.

• Dismissal and Forum Shopping Observation: The trial court dismissed the complaint on the ground of res judicata. The Court of Appeals affirmed. In affirming the appellate court, the Supreme Court noted that the action was the fifth suit to reach the Court involving the same parties, subject matter, and essential relief—return of the properties to the Estate for partition. The Court characterized the filing as “unmitigated forum shopping” and directed counsel, Atty. Mahinay, to show cause.

• Counsel’s Compliance: Atty. Mahinay submitted a compliance arguing that: (1) the earlier cases did not resolve the issues in CEB-24293; (2) Palicte’s motion to dismiss (on the ground of failure to state a cause of action) hypothetically admitted the allegation of the agreement, thereby creating a constructive trust and giving rise to a cause of action that arose only upon her violation; (3) he acted in good faith because an associate lawyer prepared the complaint and the law firm was not yet familiar with the prior cases; (4) he filed a motion to refer or consolidate the case with the intestate estate proceedings; and (5) he disclosed the pendency of CEB-24293 in the motion to require turnover filed in the estate case.

N/A — The respondent, Matilde S. Palicte, did not participate in the administrative show-cause proceeding.

• Willful Forum Shopping: Whether Atty. Mahinay committed willful and deliberate forum shopping by filing Civil Case No. CEB-24293 despite final judgments in earlier cases involving the same parties, subject matter, and ultimate relief.

• Sufficiency of Explanations: Whether the explanations offered—hypothetical admission, good faith reliance on an associate, motion to consolidate, and disclosure of pendency—sufficiently rebutted the charge of forum shopping.

• Willful Forum Shopping: Forum shopping was established. The elements of res judicata were present: identity of parties (or their successors-in-interest), identity of subject matter (the four properties), and identity of causes of action (the ultimate objective of returning the properties to the Estate for partition). Civil Case No. CEB-24293 merely replicated settled claims already decided with finality. The filing constituted deliberate forum shopping of the res judicata variety.

• Sufficiency of Explanations: None of the explanations negated the finding of forum shopping.

• Hypothetical Admission: The rule that a motion to dismiss for failure to state a cause of action hypothetically admits the truth of the complaint’s allegations applies only for the purpose of resolving the motion. It does not extend beyond the resolution of the motion and cannot bind the defendant for any other purpose. A plaintiff may not rely on that procedural device to establish the existence of an agreement or to create a cause of action where none otherwise exists; the insufficiency of the complaint is tested on its face, and the hypothetical admission does not convert into a binding judicial admission. Thus, the alleged agreement could not avoid the preclusive effect of the earlier judgments.

• Good Faith / Reliance on Associate: The claim of good faith was baseless. A lawyer is required to conduct adequate preparation before handling any legal matter. Blaming an associate lawyer is unavailing; a client who employs a law firm engages the entire firm, and Atty. Mahinay subsequently handled the case personally, giving him ample time to learn of the prior litigation. His continued pursuit of the case despite knowing its repetitive nature manifested professional irresponsibility, not good faith.

• Motion to Consolidate and Disclosure: The filing of a motion to consolidate and the disclosure of the pendency of the case did not disprove forum shopping. Instead, those acts indicated an obsession to relitigate and a strategy to transfer the case to another forum in hope of a favorable resolution. The motion to require turnover, filed a day after the denial of the motion for reconsideration in CEB-24293, reiterated the same allegations and was itself the subject of a separate petition previously decided adversely against his clients. Disclosure alone does not cure willful forum shopping.

  The totality of Atty. Mahinay’s acts constituted willful and deliberate forum shopping, which is ground for summary dismissal of the action with prejudice and constitutes direct contempt, as well as a cause for administrative sanction.

• Doctrine of Forum Shopping — Forum shopping is the act of a party who repetitively avails of several judicial remedies in different courts, simultaneously or successively, all substantially founded on the same transactions and the same essential facts and circumstances, and all raising substantially the same issues, either pending in or already resolved adversely by some other court. It is prohibited because it trifles with the courts, abuses their processes, degrades the administration of justice, and congests dockets. An important factor in determining its existence is the vexation caused to the courts and the parties-litigants.

• Test for Forum Shopping — The test is whether the elements of litis pendentia are present or whether a final judgment in one case amounts to res judicata in another. The elements are: (a) identity of parties, or at least parties representing the same interests; (b) identity of rights asserted and reliefs prayed for, founded on the same facts; and (c) such identity of the two preceding particulars that any judgment in one action will, regardless of which party prevails, constitute res judicata in the other.

• Three Modes of Forum Shopping — Forum shopping may be committed in three ways: (1) filing multiple cases based on the same cause of action with the same prayer while the previous case is unresolved (litis pendentia); (2) filing multiple cases based on the same cause of action and prayer after the previous case has been finally resolved (res judicata); and (3) filing multiple cases based on the same cause of action but with different prayers (splitting of causes of action), where dismissal is also grounded on litis pendentia or res judicata. Willful and deliberate forum shopping results in dismissal of all actions with prejudice and sanctions against the party and counsel.

• Hypothetical Admission Rule (Motion to Dismiss for Failure to State a Cause of Action) — In resolving a motion to dismiss on the ground that the complaint fails to state a cause of action, the court hypothetically admits the truth of the facts alleged in the complaint solely to determine whether, accepting those facts as true, a valid judgment could be rendered in accordance with the prayer. The admission is confined to the resolution of the motion; it does not bind the defendant beyond that purpose and cannot be invoked to create a cause of action or to establish a fact for purposes of trial or appeal. The sufficiency of the cause of action must appear on the face of the complaint; extrinsic matters may not be considered.

• Professional Responsibility of Counsel — A lawyer shall not handle any legal matter without adequate preparation. An attorney who files a complaint without a thorough study and independent assessment of the legal and factual background commits professional irresponsibility. Engaging a law firm engages the entire firm, and the signing partner may not disclaim responsibility by attributing the drafting to an associate, particularly when he later personally handles the case.

• “There is forum shopping when a party repetitively avails of several judicial remedies in different courts, simultaneously or successively, all substantially founded on the same transactions and the same essential facts and circumstances, and all raising substantially the same issues either pending in or already resolved adversely by some other court.”

• “Forum shopping is an act of malpractice that is prohibited and condemned because it trifles with the courts and abuses their processes. It degrades the administration of justice and adds to the already congested court dockets.”

• “The test to determine the existence of forum shopping is whether the elements of litis pendentia are present, or whether a final judgment in one case amounts to res judicata in the other.”

• “Such hypothetical admission is only for the purpose of resolving the merits of the ground of insufficiency of the complaint. … the admission of the veracity of the facts alleged in the complaint, being only hypothetical, does not extend beyond the resolution of the motion to dismiss, because a defending party may effectively traverse the factual averments of the complaint or other initiatory pleading only through the authorized responsive pleadings like the answer.”

• “Rather than prove good faith, the filing of the complaint, ‘simply guided by the facts as narrated and the documentary evidence submitted by petitioners,’ smacked of professional irresponsibility. It is axiomatic that a lawyer shall not handle any legal matter without adequate preparation.”

• “The disclosure alone of the pendency of a similar case does not negate actual forum shopping.”

• Chua v. Metropolitan Bank & Trust Company, G.R. No. 182311, August 19, 2009 — Cited for the definition and elements of forum shopping.

• Executive Secretary v. Gordon, G.R. No. 134171, November 18, 1998 — Cited for the principle that forum shopping trifles with courts and abuses their processes.

• Foronda v. Guerrero, A.C. No. 5469, August 10, 2004 — Cited on vexation to courts and parties as an important factor in forum shopping.

• Heirs of Juliana Clavano v. Judge Genato, G.R. No. L-45837, October 28, 1977 — Applied to explain the proper scope of the hypothetical admission rule and to disapprove the consideration of extraneous matter in a motion to dismiss for insufficiency of the complaint.

• Tan v. Director of Forestry, No. L-24548, October 27, 1983 — Cited for exceptions to the hypothetical admission rule: the rule does not apply to facts of which the court takes judicial notice to be untrue, legally impossible facts, facts inadmissible in evidence, or facts belied by the record.

• Ao-as v. Court of Appeals, G.R. No. 128464, June 20, 2006 — Enumerated the three modes of committing forum shopping and the consequences of willful and deliberate forum shopping.

• Rilloraza, Africa, De Ocampo and Africa v. Eastern Telecommunication Philippines, Inc., G.R. No. 104600, July 2, 1999 — Cited for the rule that a client who engages a law firm engages the entire firm, not merely a particular member.

• Section 5, Rule 7, Rules of Court — Mandates the certification against forum shopping and provides that willful and deliberate forum shopping is a ground for summary dismissal of the case with prejudice and constitutes direct contempt, as well as a cause for administrative sanctions against the lawyer.

• Canon 18, Rule 18.02, Code of Professional Responsibility — A lawyer shall not handle any legal matter without adequate preparation. Applied to hold Atty. Mahinay’s filing of the complaint without familiarity with prior cases as professional irresponsibility.

• Section 1, Rule 71, Rules of Court — Prescribes the penalty for direct contempt, including a fine not exceeding P2,000.00. Applied as the basis for the fine imposed.

• Revised Circular No. 28-91 (Additional Requisites for Petitions Filed with the Supreme Court and the Court of Appeals to Prevent Forum Shopping or Multiple Filing of Petitions and Complaints) — Provided the regulatory framework against forum shopping and the certification requirement.

Chief Justice Maria Lourdes P.A. Sereno, Justice Teresita J. Leonardo-De Castro, Justice Martin S. Villarama, Jr., and Justice Jose Catral Mendoza (vice Associate Justice Bienvenido L. Reyes, who penned the main decision). No separate concurring opinions were registered.

None. The resolution was unanimous.