THIRD DIVISION

[G.R. No. 140889. May 9, 2002]

DOROTEA TANONGON,[1] petitioner, vs. FELICIDAD SAMSON, CASINO OSIN, ALBERTO BERBES and LUISITO VENUS, respondents.

D E C I S I O N

PANGANIBAN, J.:

The Labor Code grants the National Labor Relations Commission (NLRC) sufficient authority and power to execute final judgments and awards. Thus, a third-party claim of ownership on a levied property should not necessarily prevent execution, particularly where -- as in the present case -- the surrounding circumstances point to a fraudulent claim. In fact, the disputed contract of sale here is not merely rescissible; it is simulated or fictitious and, hence, void ab initio.

The Case

Before us is a Petition for Review on Certiorari challenging the August 31, 1999 Decision[2] and the November 19, 1999 Resolution[3] of the Court of Appeals[4] (CA) in CA-GR No. 51128. The assailed Decision disposed as follows:

“WHEREFORE, the petition is GRANTED. The decision dated March 9, 1998 of the NLRC, including its resolution dated March 31, 1998 and May 18, 1998 are hereby REVERSED and SET ASIDE. No pronouncement as to costs.”[5]

The challenged Resolution denied the Motion for Reconsideration.

The Facts

The facts of this case are summarized by the CA in this wise:

“Cayco Marine Service [“CAYCO” hereafter] is engaged in the business of hauling oil. It is owned and operated by Iluminada Cayco Olizon (Olizon). Both are [respondents in the NLRC case]. [Respondents] Felicidad Samson, Casiano A. Osin, Alberto Belbes and Luisito Venus were among the employees of [CAYCO and/or Olizon].

“On March 9, 1994, [respondents] filed a complaint against [CAYCO and Olizon] for illegal dismissal, [underpayment] of wages, non-payment of holiday pay, rest day pay and leave pay. The labor arbiter dismissed the complaint for lack of merit. On appeal, it was reversed by the NLRC. It ruled:

‘PREMISES CONSIDERED, the appeal is hereby GRANTED and the decision of the labor arbiter dated 17 April 1995 is hereby SET ASIDE.

‘Accordingly, [CAYCO and Olizon are] directed to pay the complainants the following:

(a) Separation pay equivalent to one (1) month salary for every year of service computed from the dates of hiring of complainants Luisito Venus, Felicidad Samson, Alberto Belbes and Casiano Osin on the various dates of 01 June 1989, 10 March 1962, 01 January 1982, and 01 February 1980, respectively, up to the date of this Decision;

(b) Backwages from the dates of dismissal of complainants Luisito Venus, Felicidad Samson, Alberto Belbes and Casiano Osin on 23 June 1991, 31 March 1992, 20 September 1991 and 20 September 1991, respectively, up to the date of this Decision, less earnings elsewhere;

(c) Five (5) days service incentive leave pay limited to the three (3) years back from the filing of the complaint.

SO RESOLVED.’

“[CAYCO and Olizon] sought reconsideration of the NLRC’s decision but it proved futile. On appeal to the Supreme Court, via a petition for certiorari under Rule 65 of the Rules of Court, the Court resolved to deny the petition for non-compliance with par. 4, Supreme Court Circular 1-88, x x x and also for the failure of [CAYCO and Olizon] to establish grave abuse of discretion on the part of the NLRC. Accordingly, the decision of the NLRC became final and executory on April 29, 1997.

“On June 25, 1997, the NLRC Research and Investigation Unit submitted to the labor arbiter the judgment award for each [respondent], computed as follows:

1. F. Samson - P 401,931.41

2. L. Venus - P 259,912.80

3. A. Belbes - P 258,854.17

4. C. Osin - - P 271,724.17

P1,192,422.55

“On June 24, a writ of execution was issued directing the NLRC sheriff to collect from [CAYCO and Olizon] the aforementioned amount.

“On August 8, 1997, after the notice of levy/sale on execution of personal property was issued, [CAYCO and/or Olizon’s] motor tanker was [seized], to be sold at public auction on August 19, 1997.

“However, on August 15, 1997, a certain Dorotea Tanongon (Tanongon), x x x [petitioner] herein, filed a third party claim before the labor arbiter, alleging that she was the owner of the subject motor tanker, having acquired the same from Olizon on July 29, 1997, for and in consideration of P1,100,000.00.

“On October 15, 1997, the labor arbiter issued an order dismissing the third party claim for lack of merit. Tanongon, in collaboration with Olizon, appealed to the NLRC. In a decision dated March 9, 1998, the NLRC reversed that of the labor arbiter. The NLRC ruled:

‘WHEREFORE, the order appealed from is hereby REVERSED. Let the execution of the third party claimant’s subject property be lifted and its sale restrained.

SO ORDERED.’”[6]

Ruling of the Labor Arbiter

In his October 15, 1997 Order,[7] the labor arbiter dismissed petitioner’s third-party claim, because the Deed of Absolute Sale between Olizon and Tanongon had been executed only on July 29, 1997, after the NLRC Decision became final and executory on April 29, 1997. The labor arbiter agreed with private respondents that the sale had been entered into to defraud them as judgment creditors of the Cayco Marine Service (CAYCO). Hence, he directed the sheriff to proceed with the execution and the sale of the subject property.

Ruling of the NLRC

Upon appeal by petitioner, the NLRC reversed the labor arbiter on two grounds. First, the power of the NLRC sheriff to execute judgments extended only to properties unquestionably belonging to the judgment debtor. Here, the Certificate of Ownership over the subject vessel was in petitioner’s name. Hence, the vessel was not unquestionably the property of CAYCO. Second, under Article 1387 of the Civil Code, alienations of property in the fraud of creditors would give rise only to rescissible contracts. Thus, judicial rescission was required before the third-party claim could be disregarded. Thus, in its March 9, 1998 Decision,[8] the NLRC lifted the Writ of Execution previously imposed on the subject vessel and restrained its sale.

Ruling of the Court of Appeals

The CA ruled that a judicial rescission was not necessary to determine the legitimacy of the sale between Olizon and Tanongon. It opined that the Deed of Sale was evidently conceived and executed for the purpose of placing the subject motor tanker beyond the reach of the Writ of Execution. Based on the circumstances surrounding the sale and considering Olizon’s financial difficulties, the purported transfer of ownership was dubious. It was akin to a simulated or fictitious transfer, in which no independent judicial action was necessary to invalidate the sale.[9]

The claim of petitioner that she was a buyer in good faith was debunked by the CA on the ground that purchasers could not close their eyes to facts that should put reasonable persons on guard. The records show that the sale was hastily concluded; the tanker and the necessary documents were immediately delivered to the new owner. These facts confirmed respondents’ suspicion that Olizon had intended to overcome the enforcement of the Writ of Execution. They also revealed