G.R. No. 93310-12 - University of the East vs. Secretary of Labor and Employment

The controversy arose from the interpretation and application of Presidential Decree No. 451 which mandated that 60% of the incremental tuition fee proceeds be allocated to the increase in salaries and wages of faculty members and school personnel of universities and colleges.
In December 1986, the University of the East Faculty Association (UEFA), through its counsel Atty. Amado R. Fojas, filed a complaint with the Department (then Ministry) of Labor and Employment (DOLE) seeking payment of the faculty’s share of tuition fee increases for the school years 1983 through 1987, along with damages.

The case was referred to Regional Director Luna C. Piezas of DOLE.
Instead of filing a position paper as required by the Regional Office, petitioner University of the East (UE) filed a motion to dismiss on jurisdictional grounds, contending that the money claim, being one arising from an employer-employee relationship, fell exclusively under the jurisdiction of the Labor Arbiter pursuant to paragraph 2, Article 217 of the Labor Code.
On April 28, 1987, Director Piezas denied the motion to dismiss and ruled in favor of UEFA, awarding payments to the faculty members from the incremental proceeds, and ordering that 10% of the attorney’s fee be held in trust from each faculty member’s share.

Including allowances and benefits in the computation of the 60% incremental proceeds.
Recomputing the award according to Article 292 of the Labor Code on prescription of money claims.
Directing that the 10% attorney’s fee be assessed against respondent UE.
Remanding the case for recomputation of the awards.

Subsequent motions for reconsideration by both parties were filed and denied.
Orders were issued on April 6, 1989, and January 18, 1989 among others, recomputing and finalizing money awards to the teachers in favor of UEFA.

On September 15, 1988, UEFA filed another case for additional shares of the tuition fee increases, and by January 18, 1989, Director Piezas had issued orders for payments to the faculty.
On April 13, 1989, Atty. Amado R. Fojas was replaced by Atty. Rogelio de Guzman as UEFA’s counsel.
Negotiations between UE and UEFA led to a Compromise Agreement on December 12, 1989, later amended on December 13, 1989; the agreement involved:

UEFA releasing escrowed funds and withdrawing pending cases in return for a payment by UE.
No provision was made in the agreement for awarding attorney’s fees.

Despite the agreement, on February 26, 1990, Undersecretary Dionisio C. de la Serna, acting by the Secretary’s authority, approved the Compromise Agreement but also awarded attorney’s fees to Atty. Fojas (10% of the compromise amount) and dismissed the cases.
Execution proceedings followed, including writs of execution issued on April 30, 1990 and May 17, 1990, resulting in partial payment of the fees and subsequent motions by UE to quash the execution; these motions were denied, and enforcement actions continued.
The entire matter culminated in a petition by UE challenging the authority of the Secretary of Labor to award attorney’s fees in light of the compromise agreement and the improper issuance of the writs of execution.

Whether the Secretary of Labor had the authority to award attorney’s fees in favor of respondent Atty. Fojas against petitioner UE, despite the fact that the compromise agreement between UE and UEFA was silent on such fees.
Whether a compromise agreement executed by the parties, which omits any provision for attorney’s fees, can bind a non-party (Atty. Fojas) who had already earned his fees through prior final and executory orders.
Whether the issuance of writs of execution based on the orders awarding attorney’s fees is proper and valid, given UE’s contention that the agreement exonerated them from liability regarding the alleged unlawful withholding of wages.