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Companies intending to hire workers for any length of time are advised to deal only with legitimate service providers, not manpower cooperatives, to avoid being penalized for violations of the Labor Code and other laws.

This was the advice given yesterday by lawyer Giovanni H. Melgar, president of the 57-member Philippine Association of Local Service Contractors (PALSCON), following the promulgation of court decisions ordering companies hiring workers from so-called "manpower cooperatives" to pay damages to the concerned workers for violations of the Labor Code.

Melgar said such circumvention of the law can prove "very costly" to a company hiring workers from a "manpower cooperative" which is into labor-only business that lacks the authority and capacity to supply workers to a client firm.

To avoid inconvenience and costly litigation, Melgar said, companies should hire workers only from legitimate service providers complying with the Labor Code and other measures protecting workers, and not from manpower cooperatives.

He cited the "landmark decision" of the Supreme Court in G.R. No. 149011, San Miguel Corp. vs. Aballa et al., which ruled that the 97 workers supplied by the Sunflower Multi-Purpose Cooperative to the SMC Bacolod Shrimp Processing Plant were SMC employees and as such are entitled to corresponding damages, amounting to at least P100,000 each.