petitioner Tocano was private respondent’s employer, it is difficult to believe that they shall receive thesame income in the business. In a partnership, each partner must share in the profits and losses of theventure, except that the industrial partner shall not be liable for losses. As an industrial partner, privaterespondent had the right to demand for a formal accounting of the business and to receive her share inthe profit. (Tocao vs. CA [G.R. No. 127405, 04 October 2000])The barbershop claims it had no control over its barbers. The power to control refers to theexistence of the power and not necessarily to the actual exercise thereof, nor is it essential for theemployer to actually supervise the performance of duties of the employee. It is enough that theemployer has the right to exercise the power. As to the “control test,” the following facts indubitablyreveal that the respondent company wielded control over the work performance of petitioners; in that(1) they worked in the barber shop owned and operated by the respondents; (2) that they were requiredto report daily and observe definite hours of work; (3) they were not free to accept other employmentelsewhere but devoted their full time working at the New Looks Barber Shop for all the fifteen (15) yearsthey have worked until April 15, 1995; (4) that some have worker with respondent’s since the early1960’s; (5) that petitioner Patricia Nas was instructed by the respondents to watch the other six (6)petitioners in their daily task. Certainly, respondent company was clothed with the power to dismiss anyor all of them for just and vald cause. Petitioners were unarguably performing work necessary anddesiriable in the business of respondent company. (Corporal vs. NLRC [G.R. No. 129315, 02 October 2000])
Labor Only Contractor vis-à-vis an Independent Contractor
In LEGITIMATE JOB CONTRACTING, no employer-employee relationship exists between theemployees of the job contractor and the principal employer. Even then, the principal employer becomes jointly and severally liable with the job contractor for the payment of the employees' wages whenever the contractor fails to pay the same. In such case, the law creates an employer-employee relationshipbetween the principal employer and the job contractor's employees for a limited purpose, that is, toensure that the employees are paid their wages. Other than the payment of wages, the principalemployer is not responsible for any claim made by the employees.On the other hand, in LABOR-ONLY CONTRACTING, an employer-employee relationship iscreated by law between the principal employer and the employees of the labor-only contractor. In thiscase, the labor-only contractor is considered merely an agent of the principal employer. The principalemployer is responsible to the employees of the labor-only contractor as if such employees had beendirectly employed by the principal employer. The principal employer therefore becomes solidarily liablewith the labor-only contractor for all the rightful claims of the employees. (PCI Automation vs. NLRC[GR No. 115920, 1996]
Basis of Liability
The distinction between Articles 106 and 107 was in the fact that Article 106 deals with "labor-only"contracting. Here, by operation of law, the contractor is merely considered as an agent of the employer,who is deemed "responsible to the workers to the same extent as if the latter were directly employed byhim." On the other hand, Article 107 deals with "job contracting." In the latter situation, while thecontractor himself is the direct employer of the employees, the employer is deemed, by operation of law, as an indirect employer.In other words, the phrase "not an employer" found in Article 107 must be read in conjunction withArticle 106. A contrary interpretation would render the provisions of Article 107 meaningless consideringthat everytime an employer engages a contractor, the latter is always acting in the interest of theformer, whether directly or indirectly, in relation to his employees.It should be recalled that a finding that a contractor is a "labor-only" contractor is equivalent todeclaring that there is an employer-employee relationship between the owner of the project and theemployees of the "labor-only" contractor (Associated Anglo-American Tobacco Corp. v. Clave, G.R. No.50915, 30 August 1990, 189 SCRA 127; Industrial Timber Corp. v. NLRC, G.R. No. 83616, 20 January1989, 169 SCRA 341). This is evidently because, as heretofore stated, the "labor-only" contractor isconsidered as a mere agent of an employer. In contrast, in "job contracting," no employer-employeerelationship exists between the owner and the employees of his contractor. The owner of the project isnot the direct employer but merely an indirect employer, by operation of law, of his contractor'semployees.