G.R. No. 140889, 9 May 2002, 382 SCRA 130


Cayco Marine Service is engaged in the business of hauling oil. It is owned and operated by Iluminada Cayco 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. Accordingly, CAYCO and Olizon are directed to pay the complainants the following: 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


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 Olizons motor tanker was seized, to be sold at public auction on August 19, 1997.

However, on August 15, 1997, a certain Dorotea Tanongon 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 P1,100,000.00.0

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 and the execution of the third party claimants subject property be lifted and its sale restrained.

CA’s ruling: 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. Hence, this Petition.


1. Whether or not Petitioner Dorotea M. Tanongon is a buyer in good faith and for value[;]
2. Whether or not the Court of Appeals acted with grave abuse of discretion amounting to lack or in excess of jurisdiction in deciding against the herein petitioner as per its decision dated August 31, 1999[; and]
3. Whether or not petitioner is entitled to equal protection under the Constitution and the law.


The Petition has no merit.

First Issue: Good Faith of Petitioner

There is sufficient basis to affirm the CA finding that petitioner was a buyer in bad faith. The judgment favoring respondents against CAYCO and Olizon (for back wages, separation pay and service incentive leave pay) was rendered on July 18, 1996, and affirmed by the Second Division of this Court via its January 15, 1997 Resolution. The Writ of Execution was issued by the labor arbiter on July 24, 1997. The sale of the levied tanker, however, was made only on July 29, 1997. Hence, the CA correctly ruled that the act of Olizon was a cavalier attempt to evade payment of the judgment debt. She obviously got word of the issuance of the Writ and disposed of the tanker to prevent its sale on execution. Despite knowledge of these antecedents, petitioner bought the tanker barely ten days before it was levied upon on August 8, 1997. We stress that in the present case, the Writ of Attachment has been issued, the levy already made and the property still in the name of Olizon and CAYCO. Under Article 1387 of the Civil Code, alienations by onerous title are presumed to be fraudulent when done by persons against whom some judgment has been rendered or some writ of attachment issued in any instance. A purchaser in good faith or an innocent purchaser for value is one who buys property and pays a full and fair price for it at the time of the purchase or before any notice of some other persons claim on or interest in it. We emphasize that one cannot close ones eyes to facts that should put a reasonable person on guard and still claim to have acted in good faith. Petitioner should have inquired whether Olizon had other unsettled obligations and encumbrances that could burden the subject property. Any person engaged in business would be wary of buying from a company that is closing shop, because it may be dissipating its assets to defraud its creditors.

Second Issue: Necessity of Judicial Rescission

The CA held, in overruling the NLRC, that the Commission possessed, under Article 224 (a and b), powers necessary to implement and enforce the latters final judgments, decisions, orders and awards. The appellate court ruled further that the disputed contract was not merely rescissible; it was simulated or fictitious and, thus, void ab initio.

We agree with the Court of Appeals. A third-party claim on a levied property does not automatically prevent execution. Under Rule 39 of the Revised Rules of Court, execution is a remedy afforded by law for the enforcement of a judgment, its object being to obtain satisfaction of the decision on which the writ is issued. Further, judicial rescission is not necessary in the case at bar. The NLRC lifted the levy on the subject property, ruling that its sheriff could execute its judgments only on properties unquestionably belonging to the judgment debtor. It observed that the Certificate of Ownership over the disputed vessel was in the name of the third-party claimant, herein petitioner.

Petitioners claim of ownership over the disputed tanker is not supported by the evidence on record. The Maritime Industry Authority (Marina) administrator wrote the parties in two separate letters, which said that the registration of the disputed vessel under petitioners name had not been effected, and that the Certificates of Ownership and Vessel Registry covering the motor tanker M/T Petron 7-C had not been released. The reasons were Marinas receipt of the Entry of Judgment issued by the Supreme Court on April 29, 1997, and the Notice of Levy/Sale on Execution of Personal Property covering the subject vessel. Under Article 573 of the Code of Commerce, the acquisition of a vessel must appear on a written instrument, which shall not produce any effect with respect to third persons if not inscribed in the Registry of Vessels. Insofar as third persons like herein respondents were concerned, the ownership of the disputed vessel remained with Olizon and CAYCO; thus, the CA correctly held that the NLRC could proceed with the levy and the sale on execution.

Third Issue: Equal Protection of the Law

Petitioner protests that the CA gave undue importance to respondent laborers by invoking the protection of labor mandated by Article II, Section 18 of the 1987 Constitution, and Articles 4 and 221 of the Labor Code. Claiming violation of her right to equal protection of the law, she argues that she deserves social justice, as held by this Court in Guido v. Rural Progress Administration and Cabatan v. Court of Appeals which ruled that capital, too, was entitled to protection. The contention of petitioner is untenable. She cannot be given the mantle granted to capital or management, because she does not appear to be connected in any way to the ownership or the management of CAYCO or Olizon. She is impleaded here merely as the alleged buyer of the M/T Petron 7-C. If this contention is an admission that she is a dummy for CAYCO or Olizon, then the charge of a fictitious sale to defraud judgment creditors becomes even more evident and credible.

*Case digest by Paul C. Gandola, JD – 4, Andres Bonifacio College, SY 2019 – 2020