The principles

§ Existence of employer-employee relationship

§ Jurisdiction of Labor Arbiters and the Commission

FIRST DIVISION
G.R. No. 223825, January 20, 2020
LUIS G. GEMUDIANO, JR.
v. NAESS SHIPPING PHILIPPINES, INC.
REYES, J. JR., J.
In December 2012, petitioner Gemudiano applied with respondent Naess Shipping for
possible employment as seaman. Petitioner underwent mandatory pre-employment medical
examination where he was declared fit for sea service. In February 2013, Naess Shipping, for and
in behalf of its principal Royal Dragon, executed a contract engaging the services of petitioner as
Second Officer aboard the vessel M/V Meiling 11 for a period of six months.
In March 2013, petitioner was advised by the crewing manager that Royal Dragon cancelled
his embarkation. Thus, petitioner filed a complaint for breach of contract against respondents
before the Arbitration Branch of the National Labor Relations Commission.
The Labor Arbiter ruled in favor of petitioner. The NLRC affirmed the decision of the Labor
Arbiter.
The Court of Appeals annulled and set aside the decision of the and resolution of the NLRC. It
declared that the LA did not acquire jurisdiction over the petitioner's complaint because of the non-
existence of an employer-employee relationship between the parties. It emphasized that the
perfected contract of employment did not commence since petitioner’s deployment to his vessel of
assignment did not materialize.
Hence, this petition.

§ Existence of employer-employee relationship

Q. When can a contract of employment be said to be perfected?
In the instant case, there is no doubt that there was already a perfected contract of
employment between petitioner and respondents. The contract had passed the negotiation stage or
"the time the prospective contracting parties manifest their interest in the contract." It had reached
the perfection stage or the so-called " birth of the contract" as it was clearly shown that the essential
elements of a contract, i.e., consent, object, and cause, were all present at the time of its
constitution. Petitioner and Fetero, respondents' Crewing Manager, freely entered into the contract
of employment, affixed their signatures thereto and assented to the terms and conditions of the
contract (consent), under which petitioner binds himself to render service (object) to respondents on
board the domestic vessel " M/V Meiling 11" for the gross monthly salary of P30,000.00 (cause). An
examination of the terms and conditions agreed upon by the parties will show that their relationship
as employer and employee is encapsulated in the perfected contract of employment. Thus, by virtue
of said contract, respondents and petitioner as s u m ed obligations which pertain to those of an
employer and an employee.
Under Section D of the Addendum, " the employment relationship between the Employer on
one hand and the Seaman on the other shall commence once the Master has issued boarding
confirmation to the seaman." Relying on this provision, the respondents insist that there is no
employer employee relationship between them and petitioner and that the labor arbiter had no
jurisdiction over the petitioner's complaint. True, the parties to a contract are free to adopt such
stipulations, clauses, terms and conditions as they may deem convenient provided such contractual
stipulations should not be contrary to law, morals, good customs, public order or public policy.12 But
such is not the case here.
The stipulation contained in Section D of the Addendum is a condition which holds in
suspense the performance of the respective obligations of petitioner and respondents under the
contract of employment, or the onset of their employment relations. It is a condition solely
dependent on the will or whim of respondents since the commencement of the employment
relations is at the discretion or prerogative of the latter's master of the ship through the issuance of a
boarding confirmation to the petitioner. The Court in Naga Telephone Co., Inc. v. Court of Appeals
referred to this kind of condition as a "potestative condition," the fulfillment of which depends
exclusively upon the will of the debtor, in which case, the conditional obligation is void. Article 1182
of the Civil Code of the Philippines reads:
Art. 1182. When the fulfillment of the condition depends upon the sole will of the debtor, the
conditional obligation shall be void. If it depends upon chance or upon the will of a third person, the
obligations hall take effect in conformity with the provisions of this Code.
§ Jurisdiction of Labor Arbiters and the Commission
Q. What is the jurisdiction of the Labor Arbiters and the Commission?
Article 224 (now Art. 217) of the Labor Code provides:
ART. 217. Jurisdiction of Labor Arbiters and the Commission. - (a) Except as otherwise
provided under this Code, the Labor Arbiter shall have original and exclusive jurisdiction to hear
and decide, within thirty (30) calendar days after the submission of the case by the parties for
decision without extension, even in the absence of stenographic notes, the following cases
involving all workers, whether agricultural or nonagricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with acclaim for reinstatement, those cases that workers may file
involving wages, rate[s] of pay, hours of work and other terms and conditions of employment;
4. Claims for actual, moral, exemplary and other forms of damages arising from the
employer-employee relations;
5. Cases arising from any violation of Article 264 of this Code, including questions
involving the legality of strikes and lockouts; and
6. Except claims for employees compensation, social security, medicare and maternity
benefits, all other claims arising from employer-employee relations, including those of persons
in domestic or house hold service ,involving an amount exceeding five thousand pesos
(P5,000.00), whether accompanied with a claim for reinstatement. (Emphasis supplied)
Based on this provision, it is clear that claims for actual, moral, exemplary and other forms
of damages arising from employer-employee relations are under the original and exclusive
jurisdiction of labor arbiters.
While there are cases which hold that the existence of an employer-employee relationship
does not negate the civil jurisdiction of the trial courts,16 in this particular case, we find that
jurisdiction properly lies with the Labor Arbiter.
 Not only are the terms under Article 224, above quoted, clear and unequivocal, practical
considerations bolster the Court 's resolve that jurisdiction of the instant case falls under the
labor tribunals and not with the civil courts.
The determination of propriety of petitioner's non-deployment necessarily involves the
interpretation and application of labor laws, which are within the expertise of labor tribunals. The
question of whether respondents are justified in cancelling the deployment of petitioner requires
determination of whether a subsequent advice from the same medical provider as to the health
of petitioner could validly supersede its initial finding during the required PEME that petitioner is
fit to work.