G.R. No. 127079 May 7, 2004
AYALA LAND, INC., petitioner, vs. WILLIAM NAVARRO, ISAGANI NAVARRO, ILUMINADA LEGASPI, BELEN DOLLETON, FLORENTINO ARCIAGA, BARTOLOME PATUGA, DIONISIO IGNACIO, BERNARDINO ARGANA, and ERLINDA ARGANA, respondents.

FACTS

Respondents filed a complaint for annulment of titles and recovery of possession against Las Piñas Ventures, Inc. Petitioner Ayala Land, Inc., as the surviving entity of a merger, was substituted as defendant. Respondents filed an amended complaint and a motion to litigate as paupers, which the trial court granted. Petitioner filed consolidated motions to strike the amended complaint for alleged non-payment of docket fees and for production of documents, which were denied. Petitioner then moved for the trial judge’s inhibition, citing alleged bias, which was also denied. Petitioner elevated these orders to the Court of Appeals via certiorari, which dismissed the petition, upholding the grant of pauper status and finding no grave abuse in the denial of the inhibition.
During the pendency of the petition before the Supreme Court, the parties executed a Memorandum of Agreement (MOA) wherein respondents agreed to transfer their rights over the subject land to petitioner for ₱120 Million. A dispute arose between respondents and their counsel, Atty. Hicoblino Catly, regarding his attorney’s fees. An amendatory agreement was executed, and the trial court approved the compromise and directed payment of the fees. Both petitioner and respondents subsequently opposed the fee as excessive and filed respective motions before the Supreme Court.

ISSUE

Whether the petition has been rendered moot and academic by the supervening compromise agreement between the parties.

RULING

Yes, the petition is moot. The core legal principle is that a compromise agreement, once approved by the court, terminates the litigation and renders the original issues academic. A compromise is a contract where parties make reciprocal concessions to avoid or end litigation. The Court of Appeals’ rulings on the propriety of the pauper status and the denial of the motion for inhibition were interlocutory orders incidental to the progress of the main case. The execution of a valid compromise agreement and the rendition of a judgment based upon it effectively superseded and concluded the entire civil action from which these interlocutory orders arose. Consequently, any review of these intermediate orders loses its practical value and legal purpose, as there is no longer any active controversy to resolve. The Supreme Court therefore denied the petition for being moot and academic.
The Court, however, remanded the records to the trial court to resolve with dispatch the separate, factual issue regarding the reasonableness of Atty. Catly’s attorney’s fees, as this ancillary matter was raised for the first time at the Supreme Court and is properly within the trial court’s jurisdiction to determine based on the evidence presented before it.