Guardex Enterprises and/or Marcelina A. Escandor vs. National Labor Relations Commission and Jumbee Orbeta

A claim for unpaid commissions arising from an alleged agency relationship falls outside the jurisdiction of the Labor Arbiter and the NLRC, whose jurisdiction generally extends only to cases arising from employer-employee relationships; and a sales commission contingent on the agent's being instrumental in bringing about the sale is not due where the agent had nothing to do with the consummated sale.

Marcelina A. Escandor, doing business as Guardex Enterprises, manufactured and sold fire-fighting equipment and occasionally fabricated fire trucks. Jumbee Orbeta was a freelance salesman. The legal backdrop was the distinction between a contract of agency under the Civil Code and an employer-employee relationship or lease of services under the Labor Code, which determines the jurisdiction of the Labor Arbiter and the National Labor Relations Commission.

Marcelina A. Escandor, doing business as Guardex Enterprises, manufactured and sold fire-fighting equipment and occasionally fabricated fire trucks. Jumbee Orbeta was a freelance salesman. Orbeta learned that Escandor had offered to fabricate a fire truck for Rubberworld (Phil.) Inc. He wrote to Escandor inquiring about the commission for the sale of a fire truck. Escandor replied on the same day that the commission was P15,000.00 per unit. Four days later, Orbeta offered to follow up Escandor's pending proposal to sell a fire truck to Rubberworld and asked for P250.00 as representation expenses. Escandor agreed and gave him the money. Orbeta later relied on a letter of Escandor dated August 14, 1978 as an alleged written authority to sell the truck.

When Escandor received no word from Orbeta after three days, she herself inquired in writing from Rubberworld about her offer of sale. Having apparently received an encouraging response, she sent Rubberworld a revised price quotation about ten days later. In the meantime, Orbeta sold some of Escandor's fire extinguishers to other individuals, receiving traveling expenses and corresponding commissions. He then dropped out of sight.

About seven months afterwards, Escandor herself concluded a contract with Rubberworld for the purchase of a fire truck. The transaction was consummated with the delivery of the truck and full payment by Rubberworld. Orbeta then reappeared and asked for his commission for the sale. Escandor refused, saying that he had had nothing to do with the offer, negotiation, and consummation of the sale.

Orbeta insisted that he was entitled to the commission and filed a complaint against Escandor with the Ministry of Labor.

• Lack of Jurisdiction: Petitioner sought annulment of the Labor Arbiter and NLRC judgments as rendered with grave abuse of discretion if not without or in excess of jurisdiction, the issue being agency rather than an employer-employee relationship.
• No Implied Agency: Petitioner denied giving Orbeta verbal authority to offer the fire truck; she had already made a written offer to Rubberworld months before, and only consented to a follow-up of that pending offer.
• No Performance or Abandonment: Petitioner maintained that Orbeta did not undertake the promised follow-up, reported nothing, and dropped out of sight; the P250 representation allowance was for follow-up expenses and did not establish agency.
• No Entitlement to Commission: Petitioner argued that even if agency existed, Orbeta did not carry out its terms or attempt to do so; the commission was contingent on a customer's purchase and the agent's being instrumental in bringing the sale about, and Orbeta had nothing to do with the sale.
• Revocation: Petitioner argued that even if Orbeta was an agent, the agency was deemed revoked upon the resumption of direct negotiations between Escandor and Rubberworld, Orbeta having abandoned all efforts.

• Implied Agency: Respondent claimed an implied agency was created by the alleged verbal authority to offer the fire truck to Rubberworld, the alleged written authority to sell in Escandor's letter dated August 14, 1978, Escandor's giving of P250 as representation expenses, and Orbeta's submission of a price quotation to Rubberworld and arrangement of a meeting between Escandor and Rubberworld's Purchasing Manager.
• Entitlement to Commission: Respondent insisted he was entitled to the P15,000 commission for the sale of the fire truck to Rubberworld.

• Jurisdiction of Labor Tribunals: Whether the Labor Arbiter and the National Labor Relations Commission had jurisdiction over a claim for unpaid commissions arising from an alleged agency relationship rather than an employer-employee relationship.
• Existence of Agency: Whether an implied agency was created between Escandor and Orbeta for the sale of a fire truck to Rubberworld.
• Entitlement to Commission: Whether Orbeta was entitled to the P15,000 commission for the sale of the fire truck to Rubberworld.
• Revocation of Agency: Whether, assuming an agency existed, it was deemed revoked upon the resumption of direct negotiations between Escandor and Rubberworld and Orbeta's abandonment of efforts.

• Jurisdiction of Labor Tribunals: No. The Labor Arbiter and NLRC lacked jurisdiction because the claim arose from an alleged agency under the Civil Code, not an employer-employee relationship under the Labor Code; the Court nevertheless resolved the merits because the parties accepted the tribunals' jurisdiction and to end the controversy.
• Existence of Agency: No. The circumstances did not establish an implied agency; Escandor denied verbal authority, had already made the written offer, only allowed a follow-up, and the P250 allowance was ambiguous, while Orbeta failed to show he performed or attempted the follow-up.
• Entitlement to Commission: No. The commission was contingent on a customer's purchase and the agent's being instrumental in bringing the sale about, and Orbeta had nothing to do with the sale.
• Revocation of Agency: Yes, assuming an agency existed. It was deemed revoked upon the resumption of direct negotiations between Escandor and Rubberworld, Orbeta having abandoned all efforts to secure the deal.

• Jurisdiction of Labor Tribunals: The Labor Code vests jurisdiction in the Labor Arbiter and NLRC generally only over cases arising from employer-employee relationships. The sole issue raised from inception was whether Orbeta was Escandor's agent for the sale of a fire truck to Rubberworld. That issue concerns a contract of agency under Title X, Book IV, Civil Code (Arts. 1868, et seq.), not employment or lease of services under Civil Code Art. 1700 and Labor Code Art. 217. Agency is based on representation, the agent being the principal's representative, while lease of service is based on employment (Nielson & Company, Inc. vs. Lepanto Consolidated Mining). The labor tribunals therefore had no competence. Nevertheless, because no one questioned their authority until late and all parties accepted the validity of their exercise of jurisdiction, the Court opted to decide the merits to end the controversy (Tijam vs. Sibonghanoy).
• Existence of Agency: The claimed implied agency rested on four circumstances: alleged verbal authority, the August 14, 1978 letter, the P250 representation allowance, and Orbeta's submission of a price quotation and arrangement of a meeting. These circumstances were misread. Escandor denied giving verbal authority. Months before Orbeta approached her, she had already made a written offer of a fire truck to Rubberworld. She consented only to a follow-up of that pending offer. It did not even appear that Orbeta undertook the promised follow-up; he reported nothing, and Escandor herself pushed the Rubberworld deal. The P250 representation allowance was meant to cover follow-up expenses, an ambiguous fact that did not itself suggest agency and was not inconsistent with its absence. Thus no implied agency was established.
• Entitlement to Commission: Even if agency existed, the terms of Escandor's August 14, 1978 letter—assuming it was an authority to sell—made entitlement to the P15,000 commission contingent on the purchase by a customer of a fire truck, with the implicit condition that the agent be instrumental in bringing the sale about. Orbeta had nothing to do with the sale of the fire truck and was not entitled to any commission.
• Revocation of Agency: Even if Orbeta were considered Escandor's agent for the time he was supposed to follow up the offer, the agency would have been deemed revoked upon the resumption of direct negotiations between Escandor and Rubberworld, Orbeta having in the meantime abandoned all efforts (if any were exerted) to secure the deal in Escandor's behalf.

• Agency vs. Lease of Services — The basis of agency is representation, the agent being the representative of the principal; the basis of lease of service is employment. Agency is a preparatory contract empowering the agent to execute juridical acts to bring about contractual relations between the principal and third persons. In this case, the parties' dispute concerned agency, not employment, so the labor tribunals lacked jurisdiction.
• Jurisdiction of Labor Arbiter and NLRC — Under the Labor Code, jurisdiction generally extends only to cases arising from employer-employee relationships. A claim for unpaid commissions based on an alleged agency relationship is not a labor dispute. Applied: the Labor Arbiter and NLRC had no competence over Orbeta's claim, although the Court resolved the merits because the parties accepted jurisdiction.
• Entitlement to Sales Commission — Entitlement to a commission may be made contingent on the purchase by a customer, with the implicit condition that the agent be instrumental in bringing the sale about. Applied: Orbeta had nothing to do with the sale and earned no commission.
• Revocation of Agency by Abandonment and Resumption of Direct Negotiations — Even assuming an agency, it is deemed revoked upon the principal's resumption of direct negotiations with the third party where the agent has abandoned efforts to secure the deal. Applied: Escandor resumed direct negotiations with Rubberworld and Orbeta abandoned his efforts, so no commission was due.
• Implied Agency — Implied agency cannot be established from an ambiguous representation allowance and a mere arrangement to follow up a pending offer where the principal denies granting authority and the alleged agent fails to perform or report on the follow-up. Applied: the Court rejected Orbeta's claim of implied agency.

• "The jurisdiction vested in them by the Labor Code extends, generally speaking, only to cases arising from employer-employee relationships." — States the jurisdictional limitation that excludes claims arising from agency from the Labor Arbiter and NLRC.
• "What has all along been at issue here, as advanced by the parties themselves and as is evident from the facts, is the existence of a contract of agency -- not employment or lease of services." — Distinguishes agency from employment or lease of services and anchors the jurisdictional ruling.
• "The terms of Escandor's letter of August 14, 1978 -- assuming that it was indeed an "authority to sell," as Orbeta insists -- are to the effect that entitlement to the P15,000 commission is contingent on the purchase by a customer of a fire truck, the implicit condition being that the agent would earn the commission if he was instrumental in bringing the sale about." — States the controlling condition for entitlement to the sales commission.
• "Furthermore, even if Orbeta is considered to have been Escandor's agent for the time he was supposed to "follow up" the offer to sell, such agency would have been deemed revoked upon the resumption of direct negotiations between Escandor and Rubberworld, Orbeta having in the meantime abandoned all efforts (if indeed any were exerted) to secure the deal in Escandor's behalf." — States the alternative ground that any agency was revoked by abandonment and direct negotiations.

• Nielson & Company, Inc. vs. Lepanto Consolidated Mining, 26 SCRA 540 — Cited to distinguish agency from lease of services: agency is based on representation; lease of service is based on employment. Applied to hold the labor tribunals lacked jurisdiction over the agency claim.
• Philippine Free Press vs. P. Floro & Sons, Inc., 21 CAR [2s] 601, 606 — Cited in the footnote, through Padilla, for the definition of agency as a preparatory contract empowering the agent to execute juridical acts to bring about contractual relations between the principal and third persons.
• Tijam vs. Sibonghanoy, 23 SCRA 29 — Cited in connection with the Court's decision to resolve the merits despite the jurisdictional defect, given the parties' acceptance of the labor tribunals' jurisdiction.

• Article 217, Labor Code — Cited for the jurisdiction of the Labor Arbiter and NLRC; the Court noted that such jurisdiction generally extends only to cases arising from employer-employee relationships.
• Article 1700, Civil Code — Provides that an employment contract or lease of service is subject to special laws on labor unions, collective bargaining, strikes and lockouts, closed shop, wages, working conditions, hours of labor and similar subjects; cited to distinguish labor jurisdiction from agency.
• Articles 1642 and 1644, Civil Code — Lease of service provisions cited in the footnote to distinguish lease of service from agency.
• Title X, Book IV, Articles 1868, et seq., Civil Code — Governs agency; cited because the issue was the existence of a contract of agency, not employment or lease of services.

Cruz, Gancayco, Grino-Aquino, and Medialdea, JJ., concur.