TRAVEL WIDE ASSOCIATED SALES (PHILS.), INC., AND TRANS WORLD AIRLINES, INC., PETITIONERS, VS. COURT OF APPEALS, DECISION SYSTEMS CORPORATION AND MANUEL A. ALCUAZ, JR., RESPONDENTS.

What started out as an ordinary complaint for damages has
developed into a controversy on
procedure over which the Regional Trial Court and the Court of Appeals have not
agreed.  The petitioners are now before
us and ask that the issue be resolved.

The material facts are briefly related.

Sometime in March 1975, Decision Systems Corporation and its
President, Manuel A. Alcuaz, Jr., filed a complaint in the Regional Trial
Court of Manila alleging that defendants Travel Wide Associated Sales (Phils.), Inc. and Trans World Airlines, Inc. had failed to
comply with their obligations under Travel Pass ‘73 U.S.A., a package deal
consisting of a TWA ticket to Los Angeles, New York and Boston, in the United
States, and hotel accommodations, for which the plaintiffs had made the
corresponding payment in Manila.

Acting on a motion to dismiss filed by TWA on May 16, 1975,
on the ground that the complaint did not state a cause of action, the trial
court ordered the plaintiffs to amend their complaint and particularize their
averments.  The plaintiffs complied on June 27, 1975.  On July
7, 1975, and July 11, 1975,
respectively, TWA and Travel Wide filed separate motions to dismiss on the
ground that the amended complaint still did not state a cause of action.  Both
motions were denied on July 11, 1975,
the trial court holding that the allegations were now “sufficiently
particular.”

On September 5, 1975,
the defendants filed a joint answer in which they alleged the special defense
that they were not the real parties-in-interest because they had acted only as
agents of a disclosed principal.  They
reiterated this argument at the pre-trial held on October 27, 1975. 
Subsequently, they filed a Joint Motion for Preliminary Hearing of
Special Defense, which was opposed by the plaintiffs on the ground that the
special defense was barred, not having been raised in the two motions to
dismiss the amended complaint.  The joint
motion was nevertheless granted.

After the preliminary hearing, Judge Bernardo P. Fernandez issued
his order dated September 13, 1976,
dismissing the complaint.^[1]
His finding was that Travel Wide was wily the general agent of TWA and that the
latter was only an agent of a disclosed principal, namely, Tour Services,
Inc.  As neither of the defendants was a
real party-in-interest, there could be no cause of action against them.

The motion for its reconsideration having been denied, the order
was elevated to the then Intermediate Appellate Court, which, on June 30, 1983, reversed the trial
court.^[2]
The record does not show why the separate motions for reconsideration filed by
the appellees were resolved only on January 27, 1987.  At any rate, the petitioners have seasonably
come to this Court to ask for the reversal instead of the respondent court and
the reinstatement of the order of the trial court.

We find that the Court of Appeals did not err in setting aside
the order of dismissal and remanding the case for further proceedings.  We disagree, however, with the reason for its
decision.

The respondent court held that the appellees
should have pleaded the special defense that they were not real
parties-in-interest in their motion to dismiss, conformably to the omnibus
motion rule.  Not having done so, they
are deemed to have waived that ground, which therefore could not be used as the basis of the motion to
dismiss.

The omnibus motion rule embodied in Rule 15, Section 8, of the
Rules of Court reads as follows:

Sec. 8. Omnibus motion. – A motion attacking a pleading or a proceeding shall
include all objections then available, and all objections not so included shall
be deemed waived.

This is reiterated in Rule 9, Section 2, which also provides for
the exceptions thus:

Sec. 2. Defenses and objections not pleaded deemed waived. –
Defenses and objections not pleaded either in a motion to dismiss or in an
answer are deemed waived, except the failure to state a cause of action which
may be alleged in a latter pleading, if one is permitted, or by motion for
judgment on the pleadings, or at the trial on the merits; but in the last instance,
the motion shall be disposed of as provided in section 5, Rule 10 in the light
of any evidence which may have been
received.  Whenever it appears that the
court has no jurisdiction over the subject matter, it shall dismiss the action.

The petitioners invoke Rules 16, Section 1, of the Rules of Court
and argue that “the defense of not being a real party-in-interest” is not one of the grounds
enumerated therein for a motion
to dismiss.  Consequently, they could not
have pleaded it in their motion to dismiss but only in their answer as a
special defense.

There seems to be a misconception here of the term “real
party-in-interest.”

As defined, a real party-in-interest is the party who stands to
be benefited or injured by the judgment in the suit, or the party entitled to
the avails of the suit.^[3]
Rule 3, Section 2, of the Rules of Court provides explicitly that “every
action must be prosecuted and defended in the name of the real
party-in-interest.” The party-in-interest is one who prosecutes or defends
and is benefited or injured. 
The term applies not only to the plaintiff but to the defendant, and the
suit may be dismissed if neither of them is a real party-in?interest.^[4]
If the suit is not brought in the name of or against the real
party-in-interest, a motion to
dismiss may be filed on the ground that the complaint states no cause of
action.^[5]

Indeed, even if the special defense was not invoked in the motion to dismiss, it would still not be
deemed waived because it is one of the two exceptions mentioned in Rules 9,
Section 2, to the omnibus motion rule. 
The first is lack of
jurisdiction, which can be invoked any time, even on appeal.  The second is lack of a cause of
action, which can be raised even during the trial on the merits.

 It is understandable if in granting the
motion for a preliminary hearing on the special defense, the trial judge relied
on Rule 16, Section 5, of the Rules of Court, providing as follows:

Section 5. Pleading grounds as affirmative defenses. – Any
of the grounds for dismissal provided for in this rule, except improper venue,
may be pleaded as an affirmative defense, and a preliminary hearing may be had
thereon as if a motion to
dismiss had been filed.

However, the following doctrine laid down in The Heirs of Juliana
Clavano v. Genato^[6]
should have guided him to the contrary, and correct, conclusion:

Besides, under this section a preliminary hearing may be had on the
affirmative defenses as if a
motion to dismiss had been filed.  During
such preliminary hearing evidence may be admitted.  Nevertheless, We believe that the respondent Judge committed an error in conducting a preliminary hearing on the private respondent’s affirmative
defenses.  It is a well-settled rule that in a motion to dismiss based on the ground that
the complaint fails to state a cause of action, the question submitted to the
court for determination is the sufficiency of the allegations in the complaint
itself.  Whether those allegations are
true or not is beside the point, for their truth is hypothetically admitted by
the motion.  The issue rather is:  admitting them to be true, may the court
render a valid judgment in
accordance with the prayer of the complaint? 
Stated otherwise, the sufficiency of the cause of action must appear on
the face of the complaint in order to sustain a dismissal on this ground.  No
extraneous matter may be considered nor facts not alleged, which would require
evidence and therefore must be raised as defenses and await the trial.  In other words, to determine the sufficiency
of the cause of action, only the facts alleged in the complaint, and no others
should be considered.

The respondent Judge departed from this rule in conducting a
hearing and in receiving evidence in support of the private respondent’s
affirmative defense, that is, lack of cause of action.

But despite all the foregoing observations, we feel that the
trial court may also have erred in holding that the petitioners were mere
agents of a disclosed principal and so could not be held liable on the
complaint.

In  disclaiming liability,
the petitioners point to the stipulation on Responsibility in the Travel
Pass ‘73 Plan brochure that
“Tour Services, Inc. and/or their agents” are acting “as agents
for the passengers.” They stress further that the Miscellaneous Charge
Order issued to Alcuaz indicated that the amount of $218.00 was payable to Tour
Services, Inc. and not to either of them. 
This would mean that, if at all, they were acting as agents of Tour
Services, Inc. and not as principal obligors.

Without arriving at any factual conclusion, the Court believes it
would be useful to make a more careful appraisal of the evidence, particularly the terms
and conditions of the brochure distributed by the petitioners and the
significance of the Miscellaneous Charges Order which was issued by TWA.  We note that even the trial court observed
the active participation of TWA in the promotion of the travel pass plan as an
additional source of revenue for its airline business.

It is also worth noting that if the petitioners were indeed
acting as agents of the passengers, as the brochure stipulates, they could still
be held liable under Article 1909 of the Civil Code, which provides:

The agent is responsible not only for fraud, but also for
negligence, which shall be judged with more or less rigor by the courts,
according to whether the agency was or was not for a compensation.

The private respondent* is
entitled to prove that the petitioners did not provide adequately for the
pre-paid hotel accommodations of Alcuaz, who had to
incur additional expenses and was compelled to cut short his business trip
because of his depleted dollar allocation. 
It was not established that the petitioners received any confirmation of
the hotel reservations they sent and yet they did not follow up their request
nor did they inform Alcuaz that they had not received
confirmation.  This procedure should have
been followed by the petitioners as so provided in the Travel
Pass ‘73 USA.

We sustain the respondent court in ruling that the trial court should not have dismissed the
complaint, albeit nor for the reasons given in the challenged decision.  Our finding is that, because the petitioners
are real parties?in-interest as defendants in the suit below, the motion
to dismiss for lack of a cause of action should not have been granted.

WHEREFORE, the petition is DENIED, with costs against the
petitioners.  It is so ordered.

Narvasa, (Chairman), Griño-Aquino, and Medialdea, JJ., concur.

Gancayco, J., on leave.

^[1]
Rollo, p. 61.

^[2]
Penned by Justice Quetulio-Losa, with Gaviola and Caguioa, JJ., concurring.

^[3]
Salonga v. Warner Barnes & Co., Ltd., 88
Phil. 125.

^[4]
Salmon & Pacific Commercial Co. v. Tan Cueco,
36 Phil. 556.

^[5]
Regalado, Remedial Law Compendium, Vol. 1, 1988 ed.,
p. 51.

^[6]
80 SCRA 217.

* Only Decision Systems Corp. now
in view of the Manifestation and Motion of Manuel A. Alcuaz,
Jr. dated August 3, 1989.