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November 23, 2011 | Peralta, J. | Four-Fold Test
Digester: Chua, Gian Angelo
SUMMARY: Wilmer was hired by Cesar as studio manager of Celkor. Later, Wilmer
was additionally tasked with composing and promoting songs for Cesars daughter and
Wilmer was promised to be compensated accordingly. When Wilmer finished the songs,
he asked for his compensation but he was only given 20% share of net profits. Also, his
salary as studio manager was to be deducted from that 20% share. He objected and he
was terminated. He filed a complaint for illegal dismissal. The SC found that an
employer-employee relationship existed and that he was illegally dismissed for lack of
due process.
DOCTRINE: The elements to determine the existence of an employment relationship
are: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the
power of dismissal; and (d) the employers power to control the employees conduct.
Wilmer Genovia filed a complaint against Cesar Lirio and/or Celkor Ad Sonicmix
Recording Studio for illegal dismissal, non-payment of commission and award of
moral and exemplary damages.
Wilmers Position Paper:
He was hired as studio manager by Cesar, the owner of Celkor. His task was to
manage and operate Celkor and to promote Celkors services to prospective clients.
He received a monthly salary of P7,000 and an additional P100/hour as recording
technician whenever a client uses the studio for recording.
He was required to work from Monday-Friday from 9AM-6PM. On Saturdays, he
was required to work half-day but usually he still worked 8 hours or more.
A few days after he started working, Cesar told him about his project to produce an
album for his 15 year old daughter, Celine Mei Lirio, a former talent of ABS-CBN
Star Record. Cesar asked Wilmer to compose and arrange songs for Celine and
promised that he would be compensated accordingly.
Later, Wilmer reminded Cesar about his compensation and Cesar verbally assured
him that he would be duly compensated.
When Wilmer finally finished the compositions and the recording of the songs, he
was then tasked to establish contacts and negotiated with radio stations, malls, etc.
for the promotion of such album.
When the album was finally aired, Wilmer again reminded Cesar about his
compensation. Cesar told Wilmer that since he was practically a nobody, he didnt
deserve a high compensation and entitled on to 20% of the net profit and not of
the gross sales, and that the salaries he received as studio manager of Celkor would
be deducted from said 20%. Of course, Wilmer objected.
Cesar verbally terminated Wilmers services and instructed him not to report for
work anymore. Wilmer insists he was illegally terminated and that he was a regular

employee since although he was called studio manager he had no managerial

Wilmers evidence consisted of the Payroll which was certified correct by Cesar,
and Petty Cash Vouchers evidencing receipt of payroll payments from Celkor.

Cesars Position Paper

Wilmer was not hired as studio manager composer, technician or as an employee in
any other capacity of Celkor since the recording studio has no personnel except
He looked for a composer/arranger who would compose the songs for the said
album and Bob Santiago, his son-in-law, introduced him to Wilmer, who claimed to
be an amateur composer.
Nevertheless, after some discussion, Wilmer verbally agreed with Cesar to coproduce the album based on the following terms and conditions:
o Cesar shall provide all the financing, equipment and recording studio;
o Celine Mei Lirio shall sing all the songs;
o Wilmer shall act as composer and arranger of all the lyrics and the
music of the five songs he already composed and the revival songs;
o Cesar shall have exclusive right to market the album;
o Cesar was entitled to 60% of the net profit, while Wilmer and Celine
Mei Lirio were each entitled to 20% of the net profit; and
o Wilmer shall be entitled to draw advances of P7,000 a month, which
shall be deductible from his share of the net profits and only until
such time that the album has been produced.
Cesar asserted that from the aforesaid terms and conditions, his relationship with
Wilmer is one of an informal partnership under Article 1767 of the New Civil
Code, since they agreed to contribute money, property or industry to a common
fund with the intention of dividing the profits among themselves.
Cesar had no control over the time and manner by which Wilmer composed or
arranged the songs, except on the result thereof. Wilmer reported to the recording
studio between 10AM and 12PM. Hence, Cesar contended that no employeremployee relationship existed between him and the Wilmer, and there was no illegal
dismissal to speak of.
Lower Court Rulings:
LA: Wilmer was illegally terminated. There was employer-employee relationship.
NLRC: Reversed LA. Wilmer failed to prove his employment with substantial
evidence. Wilmers MFR was denied.
CA: Reversed NLRC, reinstated LA. Cesars MFR denied.
RULING: Petition denied. CA decision is affimed.
Whether there was an employer-employee relationship - YES

The elements to determine the existence of an employment relationship are: (a) the
selection and engagement of the employee; (b) the payment of wages; (c) the power
of dismissal; and (d) the employers power to control the employees conduct.
The most important element is the employers control of the employees conduct,
not only as to the result of the work to be done, but also as to the means and
methods to accomplish it.
It is settled that no particular form of evidence is required to prove the existence of
an employer-employee relationship. Any competent and relevant evidence to prove
the relationship may be admitted.
In this case, the documentary evidence presented by Wilmer (Payroll & Petty Cash
Vouchers) showed that he was hired as an employee and was paid monthly wages
of P7,000.
Cesar wielded the power to dismiss as Wilmer stated that he was verbally dismissed
by Cesar, and respondent, thereafter, filed an action for illegal dismissal against
The power of control refers merely to the existence of the power. It is not essential
for the employer to actually supervise the performance of duties of the employee,
as it is sufficient that the former has a right to wield the power. In Cesars position
paper, he stated that it was agreed that he would help and teach respondent how to
use the studio equipment. In such case, Cesar certainly had the power to check on
the progress and work of Wilmer.
On the other hand, petitioner failed to prove that his relationship with respondent
was one of partnership. Hence, the Court agrees with the Court of Appeals that the
evidence presented by the parties showed that an employer-employee relationship
existed between petitioner and respondent.

Whether Wilmer was validly terminated - NO

In termination cases, the burden is upon the employer to show by substantial
evidence that the termination was for lawful cause and validly made.
For an employees dismissal to be valid, (a) the dismissal must be for a valid cause,
and (b) the employee must be afforded due process.
Procedural due process requires the employer to furnish an employee with two
written notices before the latter is dismissed: (1) the notice to apprise the employee
of the particular acts or omissions for which his dismissal is sought, which is the
equivalent of a charge; and (2) the notice informing the employee of his dismissal,
to be issued after the employee has been given reasonable opportunity to answer
and to be heard on his defense.
Cesar failed to comply with these legal requirements. Hence, Wilmer was illegally
dismissed and is entitled to the payment of backwages, and separation pay in lieu of