G.R. No. 190381 ; October 6, 2010
Coca-Cola Bottlers Philippines, Inc., Petitioner, vs. Rodrigo Mercado, et al., Respondents.

FACTS

Respondents, former employees, filed a complaint for illegal dismissal and regularization against petitioner Coca-Cola Bottlers Philippines, Inc. The Labor Arbiter initially dismissed the complaint. On appeal, the National Labor Relations Commission reversed the decision, declaring the respondents as regular employees of Coca-Cola, finding them illegally dismissed, and ordering their reinstatement with full backwages. This decision was affirmed by the Court of Appeals. Coca-Cola subsequently elevated the case to the Supreme Court via a Petition for Review on Certiorari.
While the petition was pending before the Supreme Court, the parties executed a Compromise Agreement dated June 16, 2010. Under this agreement, Coca-Cola agreed to pay each respondent a specified sum of money as financial assistance. In consideration, the respondents agreed that the payment constituted a complete settlement of all their monetary claims and separation pay in lieu of actual reinstatement, thereby fully satisfying the judgment award. Based on this agreement, the parties filed a motion for judgment with the Labor Arbiter, who declared the original case closed and terminated.

ISSUE

Whether the execution of the Compromise Agreement and the satisfaction of the judgment award rendered the pending petition before the Supreme Court moot and academic.

RULING

Yes. The Supreme Court granted the respondents’ motion and dismissed the petition as moot and academic. The Court emphasized the fundamental principle of party autonomy in contracts, enshrined in Article 1306 of the Civil Code, which allows parties to establish such stipulations as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy. A compromise agreement is a contract whereby the parties, by making reciprocal concessions, avoid litigation or put an end to one already commenced.
The Compromise Agreement in this case was found to be validly executed. It represented a mutual concession where the respondents accepted financial assistance in lieu of reinstatement and full backwages, while the petitioner agreed to pay the specified amounts to finally settle all claims. By its terms, the agreement fully satisfied the judgment award from the lower tribunals. Consequently, the very subject of the appeal—the propriety of the reinstatement and monetary awards—had been extinguished by the parties’ own voluntary act. When a compromise agreement, valid on its face, is executed and results in the satisfaction of the judgment, the case loses its justiciable character. There no longer exists any actual controversy between the parties for the court to resolve. The Court therefore affirmed the Compromise Agreement and dismissed the petition.