G.R. No. 106858 September 5, 1997
PHILIPPINE BANK OF COMMUNICATIONS, petitioner, vs. COURT OF APPEALS and GAW LE JA CHUA, respondents.

FACTS

In 1984, Philippine Bank of Communications (PBCom) filed collection suits against Joseph L.G. Chua, husband of private respondent Gaw Le Ja Chua, who acted as a surety. After filing, PBCom discovered Joseph Chua’s property in Dasmarinas, Makati had been transferred to Jaleco Development Corporation via a Deed of Exchange dated October 24, 1983, executed by Joseph Chua with the conformity of private respondent. PBCom sought the annulment of this transfer as fraudulent in Civil Case No. 7889, and a notice of lis pendens was registered. The collection suits were decided in favor of PBCom and became final, but execution awaited the finality of the annulment case. On March 22, 1991, the Supreme Court in G.R. No. 92067 declared the Deed of Exchange null and void for being in fraud of PBCom. After this decision became final, the property was levied, and an auction sale was set for July 30, 1991. On July 24, 1991, private respondent filed a Third Party Claim with the Sheriffs and initiated two separate reinvindicatory actions. PBCom filed an Urgent Motion to Direct the Sheriff to Enforce the Writ of Execution/Auction Sale, which the RTC denied. The Court of Appeals dismissed PBCom’s petition, ruling it was premature to resolve whether private respondent was a “stranger” entitled to file a third-party claim under Section 17, Rule 39, as the issue was pending in the reinvindicatory actions.

ISSUE

Whether or not private respondent Gaw Le Ja Chua is considered a “stranger” within the meaning of Section 17, Rule 39 of the Rules of Court, as to entitle her to the remedy of a third-party claim or reinvindicatory actions over the subject property.

RULING

No. The Supreme Court ruled that private respondent is not a stranger within the purview of Section 17, Rule 39. A stranger is a third party who is any person other than the judgment debtor or his agent. The Court found that private respondent cannot be considered a stranger because she gave her marital consent to the Deed of Exchange, which was declared a sham transaction designed to defraud her husband’s creditor, PBCom. The Court cited Vda. de Nabong v. Sadang, noting that as the wife of the judgment debtor who shares a common interest in the litigation, she is as much a judgment debtor or agent and not a third party. The Court also ruled that private respondent is estopped from claiming the property for the conjugal partnership, as she remained silent and did not assert such claim during the annulment proceedings, thereby leading PBCom to believe she had no interest. The Court emphasized the need to end litigation and prevent deprivation of the fruits of a final judgment. The petition was GRANTED, the Decision of the Court of Appeals was SET ASIDE, and the case was REMANDED to the RTC for execution.