FACTS:

The petitioner in this case is seeking a review of the decision of the Court of Appeals which reversed and set aside the resolution of the NLRC and reinstated the decision of the Labor Arbiter with modification. The respondent, Wilmer D. Genovia, filed a complaint against the petitioner for illegal dismissal, non-payment of commission, and award of moral and exemplary damages. The respondent alleged that he was hired as a studio manager by the petitioner and was employed to manage and operate the recording studio. He received a monthly salary and an additional commission whenever a client used the studio for recording. The respondent also claimed that he was tasked with composing and arranging songs for the petitioner's daughter's album, and that he was promised compensation for these services. However, the petitioner refused to compensate the respondent for his work and eventually terminated his services. The respondent argued that he was illegally dismissed and prayed for reinstatement or payment of separation pay, backwages, overtime pay, unpaid commission, and damages. The respondent presented evidence such as payroll records and petty cash vouchers to support his claims. The petitioner denied hiring the respondent in any capacity and refuted the allegations made against him.

Petitioner Cesar C. Lirio established Celkor Ad Sonicmix Recording Studio to produce an album for his daughter. In July 2001, respondent, who claimed to be an amateur composer, was introduced to petitioner by his son-in-­law. They verbally agreed to co-produce the album with petitioner providing financing, equipment, and the recording studio, while respondent acted as composer and arranger. They agreed to a profit-sharing arrangement, and respondent was entitled to draw advances from his share. They started production in August 2002. Petitioner contends that an informal partnership existed between them and there was no employer-employee relationship. The Labor Arbiter found an employer-employee relationship and ruled that respondent was illegally dismissed. Petitioner appealed to the NLRC, which reversed the decision for lack of proof of employment.

ISSUES:

1. Whether or not there was an employer-employee relationship between the petitioner Cesar Lirio and respondent Wilmer D. Genovia.

2. Whether or not the respondent was illegally dismissed.

RULING:

1. Existence of Employer-Employee Relationship

   The Supreme Court affirmed that there was an employer-employee relationship between the petitioner and respondent. The evidence submitted by the respondent, such as payroll and petty cash vouchers, indicated that he was an employee of the petitioner. The Labor Arbiter and the Court of Appeals found these documents substantial enough to prove employment, while the petitioner's claim of a partnership was unsubstantiated.

2. Illegal Dismissal

   The Supreme Court affirmed the ruling of the Court of Appeals that respondent was illegally dismissed. The petitioner did not comply with the procedural requirements of due process in terminating the respondent, such as providing written notices and the opportunity to respond, which rendered the dismissal unlawful.

PRINCIPLES:

1. Employer-Employee Relationship Elements

   • Selection and engagement of the employee.

   • Payment of wages.

   • Power of dismissal.

   • Employer's power to control the employee's conduct.

2. Control Test

   The most crucial element in determining the existence of an employer-employee relationship is the control the employer has over the means and methods by which the employee's work is performed.

3. Burden of Proof in Termination Cases

   The burden of proving that the dismissal of an employee was for a valid or authorized cause rests on the employer.

4. Due Process in Dismissal

   Procedural due process entails furnishing the employee with two written notices before dismissal:

   • A notice specifying the particular acts or omissions.

   • A notice of dismissal issued after the employee has had a reasonable opportunity to respond.

5. Resolution of Doubts

   When doubts exist between the evidence presented by the employer and the employee, such doubts should be resolved in favor of the employee, in line with the policy of providing maximum aid and protection to labor.