G.R. No. L-15151; January 31, 1963
EDMUNDO GRACELLA, plaintiff-appellant, vs. EL COLEGIO DEL HOSPICIO DE SAN JOSE, INC., defendant-appellee.

FACTS

Edmundo Gracella was employed by El Colegio del Hospicio de San Jose, Inc. from 1952 until his dismissal in 1957. In February 1958, he filed a complaint with Regional Office No. 3 of the Department of Labor, alleging unpaid wages and overtime compensation totaling P5,162.50. The Regional Office dismissed the complaint for lack of jurisdiction, ruling that the Hospicio, as a charitable institution, was not subject to the pertinent labor laws. Gracella’s appeal from this dismissal was not given due course for being filed out of time.
Subsequently, in October 1958, Gracella filed a new complaint in the Court of First Instance of Manila, demanding P4,392.00 as damages for the same unpaid wages and overtime, plus attorney’s fees. The Manila court initially dismissed the complaint for lack of jurisdiction. Upon Gracella’s motion for reconsideration, the court added the ground of res judicata, holding that the prior dismissal by the Regional Office barred the new action. Gracella appealed this order of dismissal to the Supreme Court.

ISSUE

The primary issue is whether the Court of First Instance of Manila correctly dismissed Gracella’s complaint on the grounds of (1) res judicata and (2) lack of jurisdiction over his money claim for unpaid wages and overtime pay.

RULING

The Supreme Court reversed the order of dismissal and remanded the case for further proceedings. On the first ground, the Court held that res judicata did not apply. A dismissal for lack of jurisdiction, such as the one rendered by the Regional Labor Office, does not constitute an adjudication on the merits and therefore cannot operate as res judicata to bar a subsequent action.
On the second ground, the Court clarified the jurisdictional rules governing money claims arising from labor laws. The lower court erroneously concluded that claims under the Minimum Wage Law ( Republic Act No. 602 ) and the Eight-Hour Labor Law ( Commonwealth Act No. 444 ) fell under the exclusive jurisdiction of the Court of Industrial Relations (CIR). The Supreme Court reiterated the established doctrine that for the CIR to have jurisdiction, two circumstances must concur: (1) an employer-employee relationship must still exist between the parties, or the claimant must seek reinstatement; and (2) the controversy must relate to a case certified by the President, involve an unfair labor practice, or arise under the Eight-Hour Labor Law or Minimum Wage Law.
In this case, the employer-employee relationship had already been severed, and Gracella sought neither reinstatement nor raised issues of unfair labor practice or national interest. His action was purely a money claim for a sum of money. Consequently, under Republic Act No. 875 , his claim fell within the jurisdiction of the regular courts, specifically the Court of First Instance. The Manila court therefore had jurisdiction to hear and decide the complaint.