Coca-Cola Bottlers (Phils.), Inc. vs. Social Security Commission

The pendency of NLRC regularization and illegal dismissal cases does not bar a separate SSC petition for compulsory SSS coverage on grounds of prejudicial question, forum shopping, or litis pendentia where no criminal case is pending and the causes of action, reliefs, and governing laws are distinct; nor is such SSC petition “another action” under Rule 16, Section 1(e).

Coca-Cola Bottlers (Phils.), Inc. is a corporation engaged in the manufacture and sale of softdrink beverages, and Eric Montinola was the general manager of its Bacolod City plant. Dr. Dean Climaco was a former retainer physician at that plant, whose engagement was governed by a Retainer Agreement and a Comprehensive Medical Plan. The dispute implicated whether Dr. Climaco was an employee subject to compulsory coverage under the Social Security Law before the Social Security Commission, while separate NLRC cases concerned regularization and illegal dismissal under the Labor Code and pertinent social legislations.

Coca-Cola Bottlers (Phils.), Inc. is a corporation engaged in the manufacture and sale of softdrink beverages, and co-petitioner Eric Montinola was the general manager of its plant in Bacolod City. Respondent Dr. Dean Climaco was a former retainer physician at the company’s Bacolod City plant. In 1988, the company and Dr. Climaco entered into a Retainer Agreement for one year, with a monthly compensation of ₱3,800.00, under which he “may charge professional fees for hospital services rendered in line with his specialization.” The agreement provided that either party may terminate the contract upon giving thirty (30)-day written notice to the other. In consideration of the retainer’s fee, Dr. Climaco agreed to perform the duties and obligations enumerated in the Comprehensive Medical Plan, which was attached and made an integral part of the agreement. The contract explicitly provided that no employee-employer relationship shall exist between the company and Dr. Climaco while the contract was in effect; upon termination, Dr. Climaco “shall be entitled only to such retainer fee as may be due him at the time of termination.”

Dr. Climaco continuously served as the company physician, performing all the duties stipulated in the Retainer Agreement and the Comprehensive Medical Plan. By 1992, his salary was increased to ₱7,500.00 per month. Meantime, Dr. Climaco inquired with the Department of Labor and Employment and the SSS whether he was an employee of the company; both agencies replied in the affirmative. As a result, Dr. Climaco filed a complaint before the National Labor Relations Commission, Bacolod City, seeking recognition as a regular employee of the company and demanding payment of his 13th month pay, cost of living allowance, holiday pay, service incentive leave pay, Christmas bonus, and all other benefits.

During the pendency of that complaint, the company terminated its Retainer Agreement with Dr. Climaco. Dr. Climaco thus filed another complaint for illegal dismissal against the company before the NLRC Bacolod City. He asked that he be reinstated to his former position as company physician of its Bacolod Plant, without loss of seniority rights, with full payment of backwages, other unpaid benefits, and damages.

The Labor Arbiter, in each of the complaints, ruled in favor of petitioner company. The first complaint was dismissed after Labor Arbiter Jesus N. Rodriguez, Jr. found that the company did not have the power of control over Dr. Climaco’s performance of his duties and responsibilities; the validity of the Retainer Agreement was also recognized. Labor Arbiter Benjamin Pelaez likewise dismissed the second complaint in view of the dismissal of the first complaint. On appeal, the NLRC, Fourth Division, Cebu City, affirmed the Arbiter disposition. On petition for review before the Court of Appeals, the NLRC ruling was reversed; the appellate court ruled that, using the four-fold test, an employer-employee relationship existed between the company and Dr. Climaco. Petitioners elevated the case through a petition for review on certiorari before the Supreme Court.

Meantime, on November 9, 1994, while the NLRC cases were pending, Dr. Climaco filed with the SSC in Bacolod City a petition praying, among others, that petitioner Coca-Cola Bottlers (Phils.), Inc. be ordered to report him for compulsory social security coverage. On April 12, 1995, petitioners moved for the dismissal of the petition on the ground of lack of jurisdiction, arguing that there was no employer-employee relationship between the company and Dr. Climaco and that his services were engaged by virtue of a Retainer Agreement. Dr. Climaco opposed the motion; according to him, the fact that he did not enjoy the other benefits of the company was a question being raised in his cases filed with the NLRC, Bacolod City, against the company. On July 24, 1995, the SSC issued an order stating that the resolution of petitioner company’s motion to dismiss was held in abeyance pending reception of evidence of the parties. In view of Dr. Climaco’s statements in his opposition, petitioners again, on March 1, 1996, moved for the dismissal of Dr. Climaco’s complaint, this time on the grounds of forum shopping and litis pendentia. The Labor Arbiter found no power of control and recognized the Retainer Agreement, while the Court of Appeals found an employer-employee relationship under the four-fold test.

• Prejudicial Question: Petitioners argued that Dr. Climaco’s previous complaints before the NLRC for regularization and/or illegal dismissal, then pending before the Supreme Court, posed a prejudicial question to the SSC case because the issue of whether he was entitled to employee benefits was closely intertwined with whether he was an employee subject to compulsory SSS coverage.
• Forum Shopping: Petitioners maintained that because the issues before the NLRC and the SSC were the same, the SSC could not rule without directly affecting the NLRC case; Dr. Climaco’s separate SSC petition was patently erroneous, if not malicious, and constituted forum shopping.
• Litis Pendentia: Petitioners contended that the SSC petition should have been dismissed outright on the ground of litis pendentia, as there were other actions pending between the same parties for the same cause of action.
• Lack of Jurisdiction: In their April 12, 1995 motion to dismiss, petitioners argued that the SSC lacked jurisdiction because there was no employer-employee relationship between the company and Dr. Climaco, whose services were engaged by a Retainer Agreement.
• “Another Action” under Rule 16, Section 1(e): Petitioners invoked Rule 16, Section 1(e) of the 1997 Rules of Civil Procedure, contending that Dr. Climaco’s SSC petition was “another action” prohibited by the Rule.

• Dr. Climaco’s Opposition: Dr. Climaco opposed the motion to dismiss, asserting that the fact he did not enjoy the other benefits of the company was a question being raised in his NLRC cases.

• Prejudicial Question: Whether the previous complaint for regularization and/or illegal dismissal, pending before the Supreme Court, posed a prejudicial question to the SSC petition for compulsory SSS coverage.
• Forum Shopping: Whether Dr. Climaco was guilty of forum shopping in filing the SSC petition while the NLRC cases were pending.
• Litis Pendentia: Whether the SSC petition should have been dismissed outright on the ground of litis pendentia.
• “Another Action” under Rule 16, Section 1(e): Whether the SSC petition was “another action” pending between the same parties for the same cause under Rule 16, Section 1(e).

• Prejudicial Question: No. No prejudicial question exists because there is no pending criminal case; the doctrine applies only where a civil action and a criminal action both pend and the civil issue determines whether the criminal action may proceed.
• Forum Shopping: No. Forum shopping was not established because, although the parties were identical, the reliefs sought and causes of action in the NLRC and SSC cases were different, and a ruling in the NLRC cases would not amount to res judicata in the SSC case.
• Litis Pendentia: No. The elements of litis pendentia are absent; the nature of the cases, rights asserted, and reliefs prayed for in the NLRC and SSC were different.
• “Another Action” under Rule 16, Section 1(e): No. There was no “another action” pending between petitioners and Dr. Climaco when the SSC petition was filed, because “action” means an ordinary suit in a court of justice.

• Prejudicial Question: The concept of prejudicial question was lifted from Spain, where civil and criminal cases are tried by separate courts; in the Philippines, courts exercise general jurisdiction, so the element of pendency in a different tribunal was eliminated. The rule is that there is prejudicial question when (a) the previously instituted civil action involves an issue similar or intimately related to the issue raised in the subsequent criminal action, and (b) the resolution of such issue determines whether or not the criminal action may proceed. It generally applies where a civil action and a criminal action both pend and the civil issue must be preemptively resolved before the criminal action may proceed, because its resolution would be determinative juris et de jure of guilt or innocence. Here, no prejudicial question exists because there is no pending criminal case. The consolidated NLRC cases cannot be considered a “previously instituted civil action”; Berbari vs. Concepcion held that a prejudicial question must precede the criminal action. The doctrine cannot be applied by analogy. The SSC issue is whether Dr. Climaco is an employee subject to compulsory SSS coverage; the NLRC cases involved regularization and illegal dismissal, with different reliefs. The NLRC issues are not determinative of whether the SSC should proceed; the question claimed to be prejudicial must be determinative of the case before the court.
• Forum Shopping: Forum shopping is prohibited because it burdens courts, taxes resources, mocks judicial processes, and risks contradictory decisions by two competent tribunals. It originated in private international law and later covered choice of remedies. Rule 7, Section 5 requires certification against forum shopping; failure is cause for dismissal without prejudice, and willful forum shopping may lead to summary dismissal with prejudice and contempt. Forum shopping exists where one party repetitively avails of several judicial remedies in different courts, simultaneously or successively, all substantially founded on the same transactions and essential facts and circumstances, and raising substantially the same issues pending or already resolved adversely by another court. It exists where elements of litis pendentia are present or where final judgment in one case will amount to res judicata in the other. Res judicata requires final judgment, jurisdiction, judgment on the merits, and identity of parties, subject matter, and causes of action. Here, while parties are identical in the NLRC and SSC, reliefs and causes of action are different. Dr. Climaco’s basis is the Retainer Agreement, but causes of action are not the same; different demands may spring from the same contract without making judgment on one a bar to another. Different laws govern: the Labor Code and social legislations for the NLRC; the Social Security Law for the SSC. Thus, a ruling on the NLRC cases would not amount to res judicata in the SSC case.
• Litis Pendentia: The elements are: (1) identity of the parties or at least such as representing the same interests in both actions; (2) identity of the rights asserted and relief prayed for, the relief founded on the same facts; and (3) identity of the two cases such that judgment in one, regardless of which party is successful, would amount to res judicata in the other. Here, there is no litis pendentia. Although the parties in the NLRC and SSC are similar, the nature of the cases, rights asserted, and reliefs prayed for in each tribunal are different.
• “Another Action” under Rule 16, Section 1(e): Petitioners invoked Rule 16, Section 1(e). In Solancio vs. Ramos, the Court construed “another action” in line with Rule 2, Section 1, which defines action as an ordinary suit in a court of justice by which one party prosecutes another for enforcement or protection of a right, or prevention or redress of a wrong; every other remedy is a special proceeding. The pending administrative case in Solancio was not “another action.” Here, there was no “another action” pending between petitioners and Dr. Climaco when the latter filed the SSC petition.

• Prejudicial Question — A prejudicial question exists when (a) the previously instituted civil action involves an issue similar or intimately related to the issue raised in the subsequent criminal action, and (b) the resolution of such issue determines whether or not the criminal action may proceed. It generally applies where a civil action and a criminal action both pend and the civil issue must be preemptively resolved because its resolution would be determinative juris et de jure of guilt or innocence. In this case, no prejudicial question existed because no criminal case was pending, and the doctrine could not be applied by analogy to the NLRC and SSC proceedings.
• Forum Shopping — Forum shopping exists when one party repetitively avails of several judicial remedies in different courts, simultaneously or successively, all substantially founded on the same transactions and essential facts and circumstances, and all raising substantially the same issues either pending in, or already resolved adversely by, some other court. It also exists where the elements of litis pendentia are present or where a final judgment in one case will amount to res judicata in the other. The Court found no forum shopping because the NLRC and SSC cases had different causes of action and reliefs.
• Litis Pendentia — The elements are: (1) identity of the parties or at least such as representing the same interests in both actions; (2) identity of the rights asserted and relief prayed for, the relief founded on the same facts; and (3) 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 found the elements absent because the nature of the cases, rights asserted, and reliefs prayed for in the NLRC and SSC were different.
• Res Judicata — The elements are: (1) a final judgment or order; (2) the court rendering it has jurisdiction over the subject matter and the parties; (3) the judgment or order is on the merits; and (4) there is between the two cases identity of parties, subject matter, and causes of action. The Court held that a ruling on the NLRC cases would not amount to res judicata in the SSC case because the causes of action and governing laws were different.
• “Another Action” under Rule 16, Section 1(e) — The phrase “another action” in the rule on dismissal must be construed in line with the definition of “action” as an ordinary suit in a court of justice by which one party prosecutes another for the enforcement or protection of a right, or the prevention or redress of a wrong; every other remedy is a special proceeding. The SSC petition was not “another action” pending between the parties.

• “The rule is that there is prejudicial question when (a) the previously instituted civil action involves an issue similar or intimately related to the issue raised in the subsequent criminal action, and (b) the resolution of such issue determines whether or not the criminal action may proceed.” — States the two elements of prejudicial question, which the Court applied to hold that no prejudicial question existed absent a pending criminal case.
• “There is forum shopping when one 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.” — Defines forum shopping, the Court’s basis for finding that Dr. Climaco’s SSC petition did not constitute the prohibited practice.
• “For litis pendentia to exist, there must be (1) identity of the parties or at least such as representing the same interests in both actions; (2) identity of the rights asserted and relief prayed for, the relief founded on the same facts; and (3) identity of the two cases such that judgment in one, regardless of which party is successful, would amount to res judicata in the other.” — Sets out the elements of litis pendentia, which the Court found absent.
• “Evidently, there is no "another action" pending between petitioners and Dr. Climaco at the time when the latter filed a petition before the SSC.” — Concludes the Rule 16, Section 1(e) issue, applying the definition of “action” as an ordinary suit in a court of justice.

• Berbari vs. Concepcion, 40 Phil. 837 (1920) — Cited for the rule that a prejudicial question is understood in law to be that which must precede the criminal action; used to reject the application of the doctrine to the NLRC cases.
• Flordelis vs. Castillo, G.R. No. L-36703, July 31, 1974, 58 SCRA 301, 305 — Cited for the principle that prejudicial question generally arises where a civil action and a criminal action both pend and the issue in the civil action is determinative juris et de jure of guilt or innocence in the criminal case.
• Ocampo vs. Buenaventura, G.R. No. L-32293, January 24, 1974, 55 SCRA 267, 271 — Cited for the holding that no prejudicial question exists where there is no pending criminal case.
• People vs. Aragon, 94 Phil. 357 (1954) — Cited for the requirement that the question claimed to be prejudicial must be determinative of the case before the court.
• First Philippine International Bank vs. Court of Appeals, G.R. No. 115849, January 24, 1996, 252 SCRA 259 — Cited for the origin and development of forum shopping from private international law and choice of remedies.
• Maricalum Mining Corporation vs. Drilon, G.R. Nos. 157696-97, February 9, 2006, 482 SCRA 87, 106 — Cited for the definition of forum shopping and the evils it seeks to avoid.
• Guaranteed Hotels, Inc. vs. Baltao, G.R. No. 164338, January 17, 2005, 448 SCRA 738, 744 — Cited for the rule that forum shopping exists where the elements of litis pendentia are present or where a final judgment in one case will amount to res judicata in the other.
• Romero vs. Tan, G.R. No. 147570, February 27, 2004, 424 SCRA 108 — Cited for the elements of res judicata.
• Solancio vs. Ramos, G.R. No. L-20408, April 27, 1967, 19 SCRA 848 — Cited for the construction of “another action” under Rule 16, Section 1(e), and for the definition of “action” as an ordinary suit in a court of justice.
• Olayvar vs. Olayvar, 98 Phil. 52 (1955) — Cited for the elements of litis pendentia.

• Rule 111, Section 7, Rules of Court — Cited as the rule on prejudicial question; the Court applied its elements and held that no prejudicial question existed because there was no pending criminal case.
• Rule 7, Section 5, 1997 Rules of Civil Procedure — Cited for the certification against forum shopping, its requirements, and the consequences of non-compliance; the Court discussed it in rejecting the forum shopping charge.
• Rule 16, Section 1(e), 1997 Rules of Civil Procedure — Cited as the ground for dismissal based on another action pending between the same parties for the same cause; the Court held the SSC petition was not “another action.”
• Rule 2, Section 1, Rules of Court — Cited through Solancio vs. Ramos for the definition of “action” as an ordinary suit in a court of justice; every other remedy is a special proceeding.
• Social Security Law — Cited as the law governing the SSC petition for compulsory coverage, distinct from the Labor Code and pertinent social legislations governing the NLRC cases.
• Labor Code and pertinent social legislations — Cited as governing the NLRC cases, distinct from the Social Security Law governing the SSC case.

Reynato S. Puno (Chief Justice), Consuelo Ynares-Santiago, Ma. Alicia Austria-Martinez, and Minita V. Chico-Nazario.