Navarro vs. Escobido
Navarro vs. Escobido
153788 : November 27, 2009] supposedly in payment of the agreed rentals; that when the
fifth and sixth checks, i.e. PHILIPPINE BANK OF
ROGER V. NAVARRO, Petitioner, v. HON. JOSE L. COMMUNICATIONS - CAGAYAN DE ORO BRANCH
ESCOBIDO, Presiding Judge, RTC Branch 37, Cagayan CHECKS NOS. 017112 and 017113, respectively dated
de Oro City, and KAREN T. GO, doing business under the January 8, 1998 and February 8, 1998, were presented for
name KARGO ENTERPRISES, Respondents. payment and/or credit, the same were dishonored and/or
returned by the drawee bank for the common reason that the
current deposit account against which the said checks were
DECISION
issued did not have sufficient funds to cover the amounts
thereof; that the total amount of the two (2) checks, i.e. the
BRION, J.: sum of ONE HUNDRED THIRTY-TWO THOUSAND SIX
HUNDRED SIXTY-SIX & 66/100 PESOS (P132,666.66)
This is a Petition for Review on Certiorari 1 that seeks to set therefore represents the principal liability of defendant
aside the Court of Appeals (CA) Decision2 dated October 16, ROGER NAVARRO unto plaintiff on the basis of the
2001 and Resolution3 dated May 29, 2002 in CA-G.R. SP. No. provisions of the above LEASE AGREEMENT WITH
64701. These CA rulings affirmed the July 26, 2000 4 and RIGHT TO PURCHASE; that demands, written and oral,
March 7, 20015 orders of the Regional Trial Court (RTC), were made of defendant ROGER NAVARRO to pay the
Misamis Oriental, Cagayan de Oro City, denying petitioner amount of ONE HUNDRED THIRTY-TWO THOUSAND
Roger V. Navarro's (Navarro) motion to dismiss. SIX HUNDRED SIXTY-SIX & 66/100 PESOS
(P132,666.66), or to return the subject motor vehicle as also
BACKGROUND FACTS provided for in the LEASE AGREEMENT WITH RIGHT TO
PURCHASE, but said demands were, and still are, in vain to
On September 12, 1998, respondent Karen T. Go filed two the great damage and injury of herein plaintiff; xxx
complaints, docketed as Civil Case Nos. 98-599 (first
complaint)6 and 98-598 (second complaint),7 before the RTC 4. That the aforedescribed motor vehicle has not been the
for replevin and/or sum of money with damages against subject of any tax assessment and/or fine pursuant to law, or
Navarro. In these complaints, Karen Go prayed that the RTC seized under an execution or an attachment as against herein
issue writs of replevin for the seizure of two (2) motor plaintiff;
vehicles in Navarro's possession.
xxx
The first complaint stated:
8. That plaintiff hereby respectfully applies for an order of the
1. That plaintiff KAREN T. GO is a Filipino, of legal age, Honorable Court for the immediate delivery of the above-
married to GLENN O. GO, a resident of Cagayan de Oro City described motor vehicle from defendants unto plaintiff
and doing business under the trade name KARGO pending the final determination of this case on the merits and,
ENTERPRISES, an entity duly registered and existing under for that purpose, there is attached hereto an affidavit duly
and by virtue of the laws of the Republic of the Philippines, executed and bond double the value of the personal property
which has its business address at Bulua, Cagayan de Oro City; subject matter hereof to answer for damages and costs which
that defendant ROGER NAVARRO is a Filipino, of legal age, defendants may suffer in the event that the order for replevin
a resident of 62 Dolores Street, Nazareth, Cagayan de Oro prayed for may be found out to having not been properly
City, where he may be served with summons and other issued.
processes of the Honorable Court; that defendant "JOHN
DOE" whose real name and address are at present unknown to The second complaint contained essentially the same
plaintiff is hereby joined as party defendant as he may be the allegations as the first complaint, except that the Lease
person in whose possession and custody the personal property Agreement with Option to Purchase involved is dated October
subject matter of this suit may be found if the same is not in 1, 1997 and the motor vehicle leased is described as follows:
the possession of defendant ROGER NAVARRO;
Make/Type FUSO WITH MOUNTED CRANE
2. That KARGO ENTERPRISES is in the business of, among Serial No. FK416K-510528
others, buying and selling motor vehicles, including hauling Motor No. 6D14-423403
trucks and other heavy equipment;
The second complaint also alleged that Navarro delivered
3. That for the cause of action against defendant ROGER three post-dated checks, each for the amount of P100,000.00,
NAVARRO, it is hereby stated that on August 8, 1997, the to Karen Go in payment of the agreed rentals; however, the
said defendant leased [from] plaintiff a certain motor vehicle third check was dishonored when presented for payment.8
which is more particularly described as follows '
On October 12, 19989 and October 14, 1998,10 the RTC issued
Make/Type FUSO WITH MOUNTED CRANE writs of replevin for both cases; as a result, the Sheriff seized
the two vehicles and delivered them to the possession of
Serial No. FK416K-51680 Karen Go.
Motor No. 6D15-338735
Plate No. GHK-378 In his Answers, Navarro alleged as a special affirmative
defense that the two complaints stated no cause of action,
as evidenced by a LEASE AGREEMENT WITH OPTION since Karen Go was not a party to the Lease Agreements with
TO PURCHASE entered into by and between KARGO Option to Purchase (collectively, the lease agreements) - the
ENTERPRISES, then represented by its Manager, the actionable documents on which the complaints were based.
aforementioned GLENN O. GO, and defendant ROGER
NAVARRO xxx; that in accordance with the provisions of the On Navarro's motion, both cases were duly consolidated on
above LEASE AGREEMENT WITH OPTION TO December 13, 1999.
PURCHASE, defendant ROGER NAVARRO delivered unto
plaintiff six (6) post-dated checks each in the amount of In its May 8, 2000 order, the RTC dismissed the case on the
SIXTY-SIX THOUSAND THREE HUNDRED THIRTY- ground that the complaints did not state a cause of action.
THREE & 33/100 PESOS (P66,333.33) which were
In response to the motion for reconsideration Karen Go filed Karen Go, on the other hand, claims that it is misleading for
dated May 26, 2000,11 the RTC issued another order dated Navarro to state that she has no real interest in the subject of
July 26, 2000 setting aside the order of dismissal. Acting on the complaint, even if the lease agreements were signed only
the presumption that Glenn Go's leasing business is a conjugal by her husband, Glenn Go; she is the owner of Kargo
property, the RTC held that Karen Go had sufficient interest in Enterprises and Glenn Go signed the lease agreements merely
his leasing business to file the action against Navarro. as the manager of Kargo Enterprises. Moreover, Karen Go
However, the RTC held that Karen Go should have included maintains that Navarro's insistence that Kargo Enterprises is
her husband, Glenn Go, in the complaint based on Section 4, Karen Go's paraphernal property is without basis. Based on
Rule 3 of the Rules of Court (Rules).12 Thus, the lower court the law and jurisprudence on the matter, all property acquired
ordered Karen Go to file a motion for the inclusion of Glenn during the marriage is presumed to be conjugal property.
Go as co- Finally, Karen Go insists that her complaints sufficiently
plaintiff.ςηαñrοblεš νιr†υαl lαω lιbrαrÿ established a cause of action against Navarro. Thus, when the
RTC ordered her to include her husband as co-plaintiff, this
When the RTC denied Navarro's motion for reconsideration was merely to comply with the rule that spouses should sue
on March 7, 2001, Navarro filed a petition for certiorari with jointly, and was not meant to cure the complaints' lack of
the CA, essentially contending that the RTC committed grave cause of action.
abuse of discretion when it reconsidered the dismissal of the
case and directed Karen Go to amend her complaints by THE COURT'S RULING
including her husband Glenn Go as co-plaintiff. According to
Navarro, a complaint which failed to state a cause of action We find the petition devoid of merit.
could not be converted into one with a cause of action by mere
amendment or supplemental pleading.
Karen Go is the real party-in-interest
Finally, there is no law authorizing sole proprietorships like Petitioners also overlook Article 160 of the New Civil Code. It
petitioner to bring suit in court. The law merely recognizes the provides that "all property of the marriage is presumed to be
existence of a sole proprietorship as a form of business conjugal partnership, unless it be prove[n] that it pertains
organization conducted for profit by a single individual, and exclusively to the husband or to the wife." This article does
requires the proprietor or owner thereof to secure licenses and not require proof that the property was acquired with
permits, register the business name, and pay taxes to the funds of the partnership. The presumption applies even
national government. It does not vest juridical or legal when the manner in which the property was acquired does not
personality upon the sole proprietorship nor empower it to file appear.23 [Emphasis supplied.]
or defend an action in court.
Thus, for purposes solely of this case and of resolving the
Thus, the complaint in the court below should have been filed issue of whether Kargo Enterprises as a sole proprietorship is
in the name of the owner of Juasing Hardware. The allegation conjugal or paraphernal property, we hold that it is conjugal
in the body of the complaint would show that the suit is property.
brought by such person as proprietor or owner of the business
conducted under the name and style Juasing Hardware. The Article 124 of the Family Code, on the administration of the
descriptive words "doing business as Juasing Hardware" may conjugal property, provides:
be added to the title of the case, as is customarily done.18
[Emphasis supplied.] Art. 124. The administration and enjoyment of the
conjugal partnership property shall belong to both spouses
This conclusion should be read in relation with Section 2, Rule jointly. In case of disagreement, the husband's decision shall
3 of the Rules, which states: prevail, subject to recourse to the court by the wife for proper
remedy, which must be availed of within five years from the
SEC. 2. Parties in interest. - A real party in interest is the date of the contract implementing such decision.
party who stands to be benefited or injured by the judgment in
the suit, or the party entitled to the avails of the suit. Unless xxx
otherwise authorized by law or these Rules, every action must
be prosecuted or defended in the name of the real party in This provision, by its terms, allows either Karen or Glenn Go
interest. to speak and act with authority in managing their conjugal
property, i.e., Kargo Enterprises. No need exists, therefore, for
As the registered owner of Kargo Enterprises, Karen Go is the one to obtain the consent of the other before performing an act
party who will directly benefit from or be injured by a of administration or any act that does not dispose of or
judgment in this case. Thus, contrary to Navarro's contention, encumber their conjugal property.
Karen Go is the real party-in-interest, and it is legally incorrect
to say that her Complaint does not state a cause of action Under Article 108 of the Family Code, the conjugal
because her name did not appear in the Lease Agreement that partnership is governed by the rules on the contract of
her husband signed in behalf of Kargo Enterprises. Whether partnership in all that is not in conflict with what is expressly
Glenn Go can legally sign the Lease Agreement in his determined in this Chapter or by the spouses in their marriage
capacity as a manager of Kargo Enterprises, a sole settlements. In other words, the property relations of the
proprietorship, is a question we do not decide, as this is a husband and wife shall be governed primarily by Chapter 4 on
matter for the trial court to consider in a trial on the merits. Conjugal Partnership of Gains of the Family Code and,
suppletorily, by the spouses' marriage settlement and by the
Glenn Go's Role in the Case rules on partnership under the Civil Code. In the absence of
any evidence of a marriage settlement between the spouses
Go, we look at the Civil Code provision on partnership for property without the necessity of joining all the other co-
guidance. owners as co-plaintiffs because the suit is presumed to have
been filed for the benefit of his co-owners. In the latter case
A rule on partnership applicable to the spouses' circumstances and in that of De Guia v. Court of Appeals, we also held that
is Article 1811 of the Civil Code, which states: Article 487 of the Civil Code, which provides that any of the
co-owners may bring an action for ejectment, covers all kinds
of action for the recovery of possession.
Art. 1811. A partner is a co-owner with the other partners of
specific partnership property.
In sum, in suits to recover properties, all co-owners are real
parties in interest. However, pursuant to Article 487 of the
The incidents of this co-ownership are such that:
Civil Code and relevant jurisprudence, any one of them may
bring an action, any kind of action, for the recovery of co-
(1) A partner, subject to the provisions of this Title and to any owned properties. Therefore, only one of the co-owners,
agreement between the partners, has an equal right with his namely the co-owner who filed the suit for the recovery of the
partners to possess specific partnership property for co-owned property, is an indispensable party thereto. The
partnership purposes; xxx other co-owners are not indispensable parties. They are not
even necessary parties, for a complete relief can be accorded
Under this provision, Glenn and Karen Go are effectively co- in the suit even without their participation, since the suit is
owners of Kargo Enterprises and the properties registered presumed to have been filed for the benefit of all co-owners.25
under this name; hence, both have an equal right to seek [Emphasis supplied.]
possession of these properties. Applying Article 484 of the
Civil Code, which states that "in default of contracts, or Under this ruling, either of the spouses Go may bring an
special provisions, co-ownership shall be governed by the action against Navarro to recover possession of the Kargo
provisions of this Title," we find further support in Article 487 Enterprises-leased vehicles which they co-own. This
of the Civil Code that allows any of the co-owners to bring an conclusion is consistent with Article 124 of the Family Code,
action in ejectment with respect to the co-owned property. supporting as it does the position that either spouse may act on
behalf of the conjugal partnership, so long as they do not
While ejectment is normally associated with actions involving dispose of or encumber the property in question without the
real property, we find that this rule can be applied to the other spouse's consent.
circumstances of the present case, following our ruling in
Carandang v. Heirs of De Guzman.24 In this case, one spouse On this basis, we hold that since Glenn Go is not strictly an
filed an action for the recovery of credit, a personal property indispensable party in the action to recover possession of the
considered conjugal property, without including the other leased vehicles, he only needs to be impleaded as a pro-forma
spouse in the action. In resolving the issue of whether the party to the suit, based on Section 4, Rule 4 of the Rules,
other spouse was required to be included as a co-plaintiff in which states:
the action for the recovery of the credit, we said:
Section 4. Spouses as parties. - Husband and wife shall sue or
Milagros de Guzman, being presumed to be a co-owner of the be sued jointly, except as provided by law.
credits allegedly extended to the spouses Carandang, seems to
be either an indispensable or a necessary party. If she is an
indispensable party, dismissal would be proper. If she is Non-joinder of indispensable parties not ground to dismiss
action
merely a necessary party, dismissal is not warranted, whether
or not there was an order for her inclusion in the complaint
pursuant to Section 9, Rule 3. Even assuming that Glenn Go is an indispensable party to the
action, we have held in a number of cases26 that the misjoinder
or non-joinder of indispensable parties in a complaint is not a
Article 108 of the Family Code provides:
ground for dismissal of action. As we stated in Macababbad v.
Masirag:27
Art. 108. The conjugal partnership shall be governed by the
rules on the contract of partnership in all that is not in conflict
with what is expressly determined in this Chapter or by the Rule 3, Section 11 of the Rules of Court provides that neither
misjoinder nor nonjoinder of parties is a ground for the
spouses in their marriage settlements.
dismissal of an action, thus:
This provision is practically the same as the Civil Code
provision it superseded: Sec. 11. Misjoinder and non-joinder of parties. Neither
misjoinder nor non-joinder of parties is ground for dismissal
of an action. Parties may be dropped or added by order of the
Art. 147. The conjugal partnership shall be governed by the court on motion of any party or on its own initiative at any
rules on the contract of partnership in all that is not in conflict stage of the action and on such terms as are just. Any claim
with what is expressly determined in this Chapter. against a misjoined party may be severed and proceeded with
separately.
In this connection, Article 1811 of the Civil Code provides
that "[a] partner is a co-owner with the other partners of In Domingo v. Scheer, this Court held that the proper remedy
specific partnership property." Taken with the presumption of when a party is left out is to implead the indispensable party at
the conjugal nature of the funds used to finance the four any stage of the action. The court, either motu proprio or upon
checks used to pay for petitioners' stock subscriptions, and the motion of a party, may order the inclusion of the
with the presumption that the credits themselves are part of indispensable party or give the plaintiff opportunity to amend
conjugal funds, Article 1811 makes Quirino and Milagros de his complaint in order to include indispensable parties. If the
Guzman co-owners of the alleged credit. plaintiff to whom the order to include the indispensable party
is directed refuses to comply with the order of the court, the
Being co-owners of the alleged credit, Quirino and Milagros complaint may be dismissed upon motion of the defendant or
de Guzman may separately bring an action for the recovery upon the court's own motion. Only upon unjustified failure or
thereof. In the fairly recent cases of Baloloy v. Hular and refusal to obey the order to include or to amend is the action
Adlawan v. Adlawan, we held that, in a co-ownership, co- dismissed.
owners may bring actions for the recovery of co-owned
In these lights, the RTC Order of July 26, 2000 requiring
plaintiff Karen Go to join her husband as a party plaintiff is
fully in order.
(c) That the property has not been distrained or taken for a tax
assessment or a fine pursuant to law, or seized under a writ of
execution or preliminary attachment, or otherwise placed
under custodia legis, or if so seized, that it is exempt from
such seizure or custody; andcralawlibrary
SO ORDERED.