G.R. No. L-17934 - Allied Free Workers' Union vs. Estipona

On November 5, 1960, the Court of First Instance of Lanao del Norte in Civil Case No. 577 rendered a decision declaring the arrastre contract between plaintiff Compania Maritima and defendant Allied Free Workers’ Union terminated as of August 31, 1954.

The decision ordered the union to pay joint and several damages amounting to P520,000.00 and enjoined the union, including its members, agents, or representatives, from enforcing the annulled contract.

It also required that should the defendant union appeal, a supersedeas bond in the same amount be posted to stay the execution of the judgment.

Defendants filed a motion for reconsideration, arguing that the decision was contrary to law and evidence and contending that the case was already subject to pending labor disputes before the Court of Industrial Relations.

On December 21, 1960, while the motion for reconsideration was pending, plaintiff Compania Maritima filed an urgent motion for the issuance of a writ of execution, citing imminent irreparable damage to its business and vessels.

The urgent motion was grounded on Sections 2 and 4 of Rule 39 and Section 10 of Rule 60 of the Rules of Court, with the contention that the defendants’ appeal was frivolous and merely intended to cause delay.

On the same day, December 21, 1960, due to the absence of the district judge, the plaintiff’s counsel submitted the motion for execution to the Municipal Court of Iligan City, the capital of the province, as permitted by the Judiciary Act.

Despite objections from the defendants, the municipal judge granted an order on January 6, 1961, specifically enjoining the defendant union from enforcing the arrastre contract.

Within an hour, defendants filed a motion for reconsideration alleging that the municipal court lacked jurisdiction over what was a final decision matter, not a merely interlocutory order.

Under Section 88 of the Judiciary Act of 1948, as amended, a municipal judge may exercise interlocutory jurisdiction in the absence of the district judge for orders not final in character, such as temporary injunctions or receivership appointments.

The issue arose whether the municipal judge’s order, which enforced a substantive decision on the merits, was final in nature and thus beyond his jurisdiction.

The Supreme Court found that the municipal judge’s order was final because it effectively enforced a portion of the decision, thereby ending that part of the litigation.

The order was also deficient procedurally as it did not state the special reasons required under Section 2 of Rule 39, which is essential when issuing an order of execution before the expiration of the appeal period.

As a result, the execution order and related judicial actions were deemed legally ineffective.

Whether the municipal judge had jurisdiction to issue an order of execution that was final in character when he was only authorized to handle interlocutory orders in the district judge’s absence.
Whether the order of execution issued by the municipal judge should be considered final due to its effect on enforcing a decision on the merits, despite covering only a portion of the original decision.
Whether the municipal judge’s failure to state special reasons mandated by Section 2 of Rule 39 invalidated the order of execution.
Whether the issuance of the order in the municipal court prejudiced the rights of the defendant union involved in pending labor disputes under the exclusive jurisdiction of the Court of Industrial Relations.