Rogelio Benamira et al were security guards who worked for PSI (People’s Security, Inc.). PSI was the security agency contracted by MERALCO (Manila Electric Company). The contract between PSI and MERALCO expired. MERALCO subsequently contracted ASDAI (Armed Security and Detective Agency, Inc.) as its new security agency. ASDAI absorbed Benamira et al upon MERALCO’s advice. After two years, the contract between ASDAI and MERALCO expired. MERALCO subsequently contracted AFSISI (Advance Forces Security and Investigation Services, Inc.). AFSISI did not schedule any work for Benamira et al. It was interpreted as a constructive dismissal. Benamira sued MERALO, ASDAI, and AFSISI.
The Labor Arbiter ruled that ASDAI should reinstate Benamira et al and that MERALCO is solidarily liable. No liability for AFSISI. NLRC affirmed LA. The CA reversed the lower courts. The CA ruled that the employer is actually MERALCO.
ISSUE: Whether or not MERALCO is the employer of the fired security guards.
HELD: No. Under the contract between ASDAI and MERALCO, it can be seen that ASDAI is indeed the employer of the guards. Applying the 4 Fold Test: ASDAI employed the guards when it absorbed them from PSI. ASDAI provided the salaries of the guards (MERALCO merely pays ASDAI for providing the guards). ASDAI has control over the guards because they are being inspected (MERALCO has the right to conduct its own inspection as per contract with ASDAI only). ASDAI has the power to terminate the guards, as when they did not provide any tours or schedules to them.
Further, the services offered by the guards is not necessary to the principal business of MERALCO which is to provide electricity.
AFSISI is not the employer of the guards as well (as claimed by the guards) because AFSISI never absorbed them nor was there any evidence showing otherwise.
These security agencies are not Labor Only agencies (unlike HR agencies) because they have their own equipments, machineries and in general they carry their own business.