G.R. No. 140889 ; May 9, 2002
DOROTEA TANONGON, petitioner, vs. FELICIDAD SAMSON, CASINO OSIN, ALBERTO BERBES and LUISITO VENUS, respondents.

FACTS

Respondents, former employees of Cayco Marine Service (CAYCO) owned by Iluminada Cayco Olizon, secured a final and executory NLRC Decision for illegal dismissal, awarding them monetary claims. To satisfy the judgment, the NLRC sheriff levied a motor tanker owned by CAYCO. However, before the scheduled auction, petitioner Dorotea Tanongon filed a third-party claim, asserting ownership by virtue of a Deed of Absolute Sale executed by Olizon in her favor on July 29, 1997. This date was after the NLRC decision became final on April 29, 1997. The labor arbiter dismissed the third-party claim, finding the sale fraudulent, and ordered the execution to proceed.
The NLRC reversed the labor arbiter, ruling that the sheriff’s power extended only to properties unquestionably belonging to the judgment debtor and that the sale, being merely rescissible under Article 1387 of the Civil Code, required a separate judicial action for rescission before execution could proceed against the property. The Court of Appeals subsequently reinstated the labor arbiter’s order, prompting Tanongon’s petition to the Supreme Court.

ISSUE

Whether the NLRC can proceed with the execution by disregarding the third-party claim based on a sale executed after the finality of the judgment.

RULING

The Supreme Court denied the petition and affirmed the Court of Appeals. The NLRC possesses ample authority under the Labor Code to execute its final judgments. A third-party claim does not automatically suspend execution, especially when the claim is fraudulent. The legal logic is twofold. First, the circumstances—the sale’s timing immediately after the final judgment, the immediate transfer of possession and documents, and Olizon’s financial distress—clearly indicated the transaction was simulated or fictitious to defraud creditors. A simulated sale is void ab initio, not merely rescissible; thus, no separate judicial action for rescission is required to nullify it. The property is deemed never to have left the judgment debtor’s patrimony and is leviable.
Second, petitioner could not be considered a buyer in good faith. A purchaser cannot ignore facts that should induce caution, such as the levy and the debtor’s pending obligation. The NLRC’s execution powers are broad and analogous to those under the Rules of Court, allowing the sheriff to proceed unless an indemnity bond is filed, which petitioner did not do. Therefore, the NLRC correctly executed on the property, as the fraudulent sale could not shield it from the claims of the rightful judgment creditors.