CONSOLIDATED WORKERS UNION, PETITIONER, VS. COURT OF INDUSTRIAL RELATIONS, ET AL., RESPONDENTS.

Consolidated Workers Union versus Court of Industrial Relations

The Case

This is a petition for review brought by the Consolidated Workers Union against the Court of Industrial Relations and the Coto Labor Union. The dispute began as a complaint for unfair labor practice filed by the Coto Labor Union against Benguet Consolidated, Incorporated and the Consolidated Workers Union, in which the complainant asked that the Consolidated Workers Union be declared a company union or company dominated and be disestablished, and that union properties and records be delivered to the complainant. The case matters because it fixes two rules a reviewee must know: the standard for issuing a preliminary injunction that impounds contested union dues, and the mandatory character of the injunction bond.

Procedural History

The Coto Labor Union filed its complaint for unfair labor practice with the Court of Industrial Relations. The respondents moved to dismiss on the ground of lack of legal capacity to sue, and upon denial of that motion they filed their answers. Almost a year later, the complainant filed an urgent motion for preliminary injunction. At the scheduled hearing the movant did not appear and offered no evidence, and the Consolidated Workers Union moved that the motion be deemed submitted, reserving the right to file supporting documents. The labor court then issued an order refusing to restrain the negotiation and conclusion of a new collective bargaining agreement, but directing the Consolidated Workers Union to deposit in court the full amount of union dues it had received from the company, and directing the company to submit accountings. The union failed to obtain reconsideration from the court en banc, and so it came to the Supreme Court by petition for review, limited to the matter of the union dues it was ordered to deposit.

Facts

The Coto Labor Union was composed of workers in the mines operated by Benguet Consolidated, Incorporated in Coto, Masinloc, Zambales. Its complaint alleged that a liaison officer of the company repeatedly told Marciano Cruz, then a candidate for union president, not to proceed with the union election, to join the other union instead, and promised him special benefits; that a department supervisor asked him to stop his union activities with the same promise; that the company's general superintendent refused to deliver union compensation to the complainant union despite demands and instead turned the amounts over to the Consolidated Workers Union; and that the company's treasurer refused to turn over union properties and records.

The Consolidated Workers Union secured its own registration as a labor organization on 20 August 1963, while the registration of the Coto Labor Union was cancelled by the Department of Labor only on 22 November 1963. On 28 September 1964 the two unions and the company executed a consent election agreement, and in the election held on 3 October 1964 the majority of the votes cast favored the Consolidated Workers Union. A new collective bargaining agreement between that union and the company was signed on 12 March 1965.

The Consolidated Workers Union claimed to be the successor of the Coto Labor Union and therefore entitled to receive the payroll deductions. It admitted in its answer in the main case that deductions made under the previous agreement between the company and the Coto Labor Union were turned over to it from the time the company learned of the cancellation of the Coto union's registration.

Issues

• Whether or not the Court of Industrial Relations acted with grave abuse of discretion in ordering the deposit in court of the union dues received by the Consolidated Workers Union.
• Whether or not that order deprived the Consolidated Workers Union of property without due process of law.
• Whether or not the labor court erred in not requiring the complainant union to post an injunction bond.

Applicable Provisions

Section 4 of Rule 58 of the Rules of Court, as invoked by the petitioner, provides:

No preliminary injunction shall be granted without notice to the defendant and without hearing, and unless the plaintiff shall file with the court a bond executed to the defendant in an amount to be fixed by the court, conditioned upon the payment of all damages which may be caused to the defendant by reason of the injunction if the court should finally decide that the plaintiff was not entitled thereto.

This provision governs the third issue, because the labor court issued the injunctive relief without requiring the complainant to post a bond.

Ruling

On the first issue, the Court held that the motion for preliminary injunction made out a prima facie showing of a right to the final relief, which is necessary to preserve the right asserted by the movant. The petitioner itself admitted in its answer that the deductions were turned over to it after the company learned of the cancellation of the Coto union's registration. Hence the lower court had sufficient basis on record even without the evidence the petitioner demanded, and it acted reasonably and fairly, not abusively, in ordering the deposit, considering that the complaint asked that the petitioner be declared a company union or company dominated.

On the second issue, the Court held that there was no denial of due process, because the petitioner assumed that the union dues were its property, which is precisely in issue in the main case. The Court explained that if the Industrial Court should ultimately find the petitioner company dominated or a company union and order it disestablished, the petitioner would have to return all moneys and dues collected, since the union would have had no authority to represent the workers. Because the moneys might be improperly spent before the disestablishment order, it was logical to order their deposit in the meantime. If the petitioner needed funds to continue its existence and operations, its remedy was to apply to the Industrial Court to release, after due hearing, so much of the impounded funds as may be strictly necessary.

On the third issue, the Court held that it was error for the labor court not to require the complainant to file a bond, because the posting of a bond is a condition sine qua non, that is, an indispensable condition, for the issuance of a preliminary injunction. The Court quoted with approval:

The justice of this requirement of bond as a condition to the issuance of the preliminary injunction is beyond question and the Rules of Court makes its compliance necessary whether the injunction sought is the main objective or merely an auxiliary thereto.

Considering its other conclusions, however, the Court found that this error caused no substantial prejudice warranting reversal.

Doctrine

A preliminary injunction may issue upon a prima facie showing of a right to the final relief, which is necessary to preserve the right asserted by the movant; the absence of the opposing party's demanded evidence does not make the order abusive where the record supplies sufficient basis. Funds whose ownership is precisely in issue in the main case may be impounded by deposit without violating due process, since the party ordered to deposit assumes the very matter in litigation. The posting of a bond under Section 4 of Rule 58 is a condition sine qua non for the issuance of a preliminary injunction, whether the injunction is the main objective or merely auxiliary.

Disposition

The order under review was affirmed, with the modification that a bond, in such amount as the court below shall determine to be proper, shall be required for the maintenance of the injunctive writ, with no pronouncement as to costs.

Remember This

Memorize the line that the injunction bond is the price of the injunction, a condition sine qua non under Section 4 of Rule 58. Examiners use this case to test the bond requirement for preliminary injunction and the propriety of impounding contested union dues pending a disestablishment proceeding.