FACTS:

The case involves a complaint for breach of contract filed by Luis G. Gemudiano, Jr. (petitioner) against Naess Shipping Philippines, Inc. (Naess Shipping) and/or Royal Dragon Ocean Transport, Inc. (Royal Dragon) and/or Pedro Miguel F. Oca (respondents). Petitioner applied for possible employment as a seaman with Naess Shipping and completed the required training and medical examination. He signed an Embarkation Order and a Contract of Employment for Marine Crew on Board Domestic Vessels. However, before his deployment, respondents cancelled his embarkation.

The Labor Arbiter found in favor of the petitioner and ordered respondents to pay him damages. The Court of Appeals (CA), however, dismissed the complaint, setting aside the decision of the National Labor Relations Commission (NLRC). The respondents filed a motion for reconsideration, which was denied by the NLRC. On appeal, the CA annulled and set aside the NLRC's decision, stating that the Labor Arbiter did not acquire jurisdiction over the case due to the absence of an employer-employee relationship.

The petitioner filed a petition before the Supreme Court, arguing that the Labor Arbiter has jurisdiction over the case because of the existence of an employer-employee relationship and the respondents' breach of the employment contract. The respondents, on the other hand, argued that the Labor Arbiter has no jurisdiction due to the absence of an employer-employee relationship and that the non-deployment was a valid exercise of management prerogative due to the petitioner's misrepresentation of his health condition.

ISSUES:

1. Whether or not the Labor Arbiter has jurisdiction over the complaint for breach of contract filed by the petitioner.

2. Whether or not the respondents' failure to deploy the petitioner constitutes a breach of his employment contract.

RULING:

1. The Court of Appeals held that the Labor Arbiter did not have jurisdiction over the complaint because there was no employer-employee relationship between the parties. The court emphasized that the petitioner's services were engaged for local employment, and he did not fall within the definition of a "migrant worker" or "seafarer" under Republic Act No. 8042.

2. The Court of Appeals did not sustain the petitioner's claim for damages against the respondents. The court ruled that since there was no employer-employee relationship, the respondents' failure to deploy the petitioner did not constitute a breach of the employment contract.

PRINCIPLES:

• The jurisdiction of labor arbiters is limited to claims arising out of an employer-employee relationship or by virtue of any law or contract involving Filipino workers for overseas deployment, as provided for in Republic Act No. 8042.

• For the labor arbiter to have jurisdiction, there must be an existing employer-employee relationship between the parties.

• The failure to deploy an employee does not automatically constitute breach of an employment contract. The circumstances surrounding the non-deployment and the existence of an employer-employee relationship must be considered.