PETROPHIL CORPORATION, PETITIONER, VS. HON. BLAS OPLE, IN HIS CAPACITY AS MINISTER OF LABOR AND EMPLOYMENT, AND MALAYANG MANGGAGAWA SA ESSO, RESPONDENTS.

Petrophil Corporation versus Ople

The Case

This is a petition to review an order of the Minister of Labor, filed by Petrophil Corporation against the Minister of Labor and Employment and the Malayang Manggagawa sa Esso. The petitioner asked the Supreme Court to set aside the Minister's order on the ground that he exceeded his jurisdiction in ordering the reinstatement of workers terminated by Esso, and that he abused his discretion in finding that the later bargaining agreements did not validly supersede the earlier one. The case matters less for its labor-law holding than for how it ends: the parties settled, and the Supreme Court approved their compromise as its judgment. It is therefore a working lesson on compromise agreements as a mode of terminating litigation, and on the finality that such a judgment carries.

Procedural History

The dispute began in the labor arena, in a case before the Minister of Labor. The Minister issued an order on March 16, 1981, ordering the reinstatement of the workers belonging to the Malayang Manggagawa sa Esso who had been terminated by Esso on December 8, 1967, and further ordering the reinstatement of assistant tank truck drivers and helpers and fillers, and the restoration of meal and transportation allowances to workers assigned to the MIA and JOCASP units. Petrophil Corporation then came to the Supreme Court by a petition to review that order, arguing that the Minister had exceeded his jurisdiction and abused his discretion. The Minister filed his comment. Before the Court could rule on the merits, the petitioner and the private respondent submitted a compromise agreement, and the Court rendered judgment in accordance with it.

Facts

Esso Standard Eastern, Incorporated, later Petrophil Corporation, terminated on December 8, 1967 the workers who belonged to the Malayang Manggagawa sa Esso. The union and its federation brought the matter to the Minister of Labor, and in the case that followed the Minister ruled in favor of the workers. His order of March 16, 1981 directed the reinstatement of the terminated union members, the reinstatement of assistant tank truck drivers and helpers and fillers, and the restoration of meal and transportation allowances to workers assigned to the MIA and JOCASP units.

Petrophil challenged that order before the Supreme Court. While the petition was pending, the corporation and the union negotiated a settlement covering not only this case but all the disputes that had arisen from the employment and termination of the workers by the corporation's predecessor in interest. The parties executed a compromise agreement in Manila on July 27, 1981.

Under the agreement, the corporation undertook to pay to the National Labor Relations Commission the amount of 750,000 pesos, for distribution to the employees involved, as full settlement of any and all claims arising from this case and the other cases. The union and its members waived and relinquished forever all claims against the corporation. The parties agreed to consider withdrawn and dismissed all cases filed by one against the other, including the contempt petitions and this petition for certiorari, and agreed that the compromise would serve as the basis for the dismissal with prejudice of this case and bar any other claim. The agreement also provided that it would not prejudice the employment status of any member or former member of the union who might then be employed in the corporation. The parties asked the Court to approve the compromise as its judgment.

Issues

• Whether or not the compromise agreement submitted by Petrophil Corporation and the Malayang Manggagawa sa Esso is contrary to law, public policy, or good morals, and may therefore be approved as the judgment of the Court.
• Whether or not the approval of the compromise agreement warrants the dismissal of this petition and of the related cases pending in the Supreme Court.

Applicable Provisions

The decision does not quote any statute. It rests on the settled rule that a compromise is a contract, and that a judgment upon compromise is valid where the agreement is not contrary to law, public policy, or good morals. The Court's own formulation of that standard, taken from the decision itself, is this:

The foregoing compromise agreement is not contrary to law, public policy or good morals. The same is hereby approved.

That sentence is the whole test the Court applied: once the agreement passes it, the Court renders judgment in accordance with the agreement and orders the parties to comply with its terms.

Ruling

On the first issue, the Court held that the compromise agreement is not contrary to law, public policy, or good morals, and approved it. The Court did not reach the merits of the petition, that is, it did not pass upon whether the Minister of Labor exceeded his jurisdiction or abused his discretion. The settlement displaced the controversy. The agreement recited that the parties had the necessary authority and power to enter into it, that the corporation would pay 750,000 pesos to the National Labor Relations Commission for distribution to the employees, and that the union and its members waived and relinquished forever all claims against the corporation. The Court accepted these terms as the basis of its judgment.

On the second issue, the Court rendered judgment in accordance with the compromise agreement and ordered the parties to comply with its terms and conditions. It then ordered dismissed the cases pending in the Supreme Court that were mentioned in the agreement, namely the contempt petitions and this petition for certiorari. The dismissal followed from the parties' own stipulation that the compromise would serve as the basis for the dismissal with prejudice of this case and bar any other claim.

Doctrine

A compromise agreement that is not contrary to law, public policy, or good morals may be approved by the Court and rendered as its judgment, and the parties are bound to comply with its terms. When the Court renders judgment in accordance with a compromise, it does not resolve the merits of the underlying controversy; the settlement itself becomes the law between the parties. A compromise may validly cover not only the case before the Court but all related claims and pending cases between the parties, and a stipulation that it bars any other claim, present, future, or contingent, is given effect through the dismissal of those cases. The standard the Court applies is stated in the decision itself: the agreement must not be contrary to law, public policy, or good morals. Once that standard is met, approval follows, and the litigation ends by judgment on the compromise rather than by adjudication of the petition.

Disposition

The Court approved the compromise agreement, rendered judgment in accordance with its terms, ordered the parties to comply with them, and dismissed this petition and the related cases pending in the Supreme Court.

Remember This

The one line to memorize is that a compromise agreement not contrary to law, public policy, or good morals is approved and rendered as the judgment of the Court, which then orders the parties to comply with its terms. Examiners use this case to test compromise as a mode of terminating litigation and the effect of a judgment on compromise, including its power to bar other claims and to close related pending cases.