Case Summary (G.R. No. 77356)
Factual Background
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 Travel Wide Associated Sales (Phils.), Inc. and Trans World Airlines, Inc. had failed to honor obligations under the Travel Pass 73 U.S.A. package, consisting of a TWA ticket and prepaid hotel accommodations, for which the plaintiffs had paid in Manila.
Pleadings and Pretrial Events
On May 16, 1975, Trans World Airlines, Inc. filed a motion to dismiss for failure to state a cause of action; the trial court ordered the plaintiffs to amend, which they did on June 27, 1975. On July 7 and July 11, 1975, respectively, TWA and Travel Wide filed new motions to dismiss the amended complaint, which were denied on July 11, 1975, the court finding the allegations sufficiently particular. A joint answer was filed on September 5, 1975, asserting as a special defense that the defendants were not the real parties-in-interest because they acted only as agents of a disclosed principal.
Preliminary Hearing, Dismissal and Intermediate Appellate Court Action
At pre-trial on October 27, 1975, the special defense was reiterated and the defendants obtained a Joint Motion for Preliminary Hearing of Special Defense. Despite plaintiffs' opposition that the defense was waived for not being raised in the motions to dismiss, the trial court held a preliminary hearing and, by order dated September 13, 1976, dismissed the complaint, finding that Travel Wide was merely the general agent of TWA and that TWA itself was agent for a disclosed principal, Tour Services, Inc., so that neither defendant was a real party-in-interest.
Intermediate Appellate Court Reversal and Further Proceedings
The trial court’s dismissal was appealed to the then Intermediate Appellate Court, which on June 30, 1983, reversed the dismissal and remanded the case for further proceedings. The record shows that separate motions for reconsideration filed by the appellees were resolved only on January 27, 1987. The petitioners then filed the present petition to this Court seeking reversal of the appellate court and reinstatement of the trial court’s dismissal.
Issues Presented
The principal legal questions were whether the defendants waived the defense that they were not real parties-in-interest by failing to include it in their motions to dismiss under the omnibus motion rule; whether the trial court erred in conducting a preliminary hearing and receiving evidence on the asserted special defense; and whether the petitioners were, as a matter of law, mere agents of a disclosed principal and thus not liable on the complaint.
Parties' Contentions
The petitioners argued that the defense of not being a real party-in-interest is not among the grounds enumerated for a motion to dismiss under Rule 16, Section 1, and therefore could not properly be raised in a motion to dismiss but only as a special defense in the answer. The respondents contended that the defense related to the adequacy of the complaint to state a cause of action and therefore was cognizable under the omnibus motion rule in Rule 15, Section 8, and Rule 9, Section 2, and could be raised by motion or at later stages.
Supreme Court Ruling
The Court denied the petition and affirmed the Court of Appeals’ setting aside of the trial court’s dismissal, although the Court rejected the appellate court’s reasoning that the appellees had waived the defense by not including it in their motions to dismiss. The Court held that the dismissal should not have been granted because the petitioners were real parties-in-interest as defendants and therefore the ground relied upon by the trial court was unsustainable.
Legal Basis and Reasoning
The Court examined the omnibus motion rule in Rule 15, Section 8, and the provision in Rule 9, Section 2, which deems defenses and objections not pleaded in a motion to dismiss or in an answer as waived, but expressly excepts lack of jurisdiction and failure to state a cause of action. The Court explained that the concept of a real party-in-interest is that of the party entitled to the avails of the suit and that Rule 3, Section 2 requires actions to be prosecuted or defended in the name of the real party-in-interest. The Court concluded that the question whether the suit was brought against the real party-in-interest may be presented as a motion to dismiss for failure to state a cause of action and therefore is one of the exceptions to waiver under Rule 9, Section 2. The Court further cautioned that a motion to dismiss for failure to state a cause of action ordinarily tests the sufficiency of the allegations on the face of the complaint and does not permit reception of extraneous evidence; reliance on Rule 16, Section 5 to conduct a preliminary hearing with evidence was inconsistent with the doctrine in
...continue readingCase Syllabus (G.R. No. 77356)
Parties
- Travel Wide Associated Sales (Phils.), Inc. and Trans World Airlines, Inc. were the petitioners below and the petitioners in this Court.
- Decision Systems Corporation and Manuel A. Alcuaz, Jr. were the respondents below and the respondents in this Court.
- Only Decision Systems Corporation remained as respondent at the time of this decision pursuant to the manifestation and motion of Manuel A. Alcuaz, Jr.
Facts
- Plaintiffs purchased a package called Travel Pass 73 U.S.A. that combined a TWA ticket and hotel accommodations and paid for the package in Manila.
- Plaintiffs alleged that Travel Wide and TWA failed to comply with obligations under the Travel Pass and thus filed a complaint in the Regional Trial Court of Manila in March 1975.
- The Travel Pass brochure contained a stipulation on Responsibility stating that "Tour Services, Inc. and/or their agents" acted "as agents for the passengers."
- A Miscellaneous Charge Order issued to Alcuaz indicated that the amount of $218.00 was payable to Tour Services, Inc. and not to Travel Wide or TWA.
- The trial court observed active participation by TWA in promoting the Travel Pass plan as an additional revenue source for its airline business.
Procedural History
- TWA filed a motion to dismiss on May 16, 1975, contending the complaint did not state a cause of action.
- Plaintiffs amended their complaint on June 27, 1975, and TWA and Travel Wide renewed motions to dismiss on July 7 and July 11, 1975, which were denied on July 11, 1975, the trial court finding the allegations "sufficiently particular."
- Defendants filed a joint answer on September 5, 1975, asserting as a special defense that they were not real parties-in-interest because they acted as agents of a disclosed principal.
- The trial court granted a Joint Motion for Preliminary Hearing of Special Defense and on September 13, 1976 dismissed the complaint on the ground that neither defendant was a real party-in-interest.
- The Intermediate Appellate Court reversed the dismissal on June 30, 1983.
- The separate motions for reconsideration by the appellees were resolved only on January 27, 1987 according to the record.
- The petitioners elevated the matter to this Court seeking reinstatement of the trial court's dismissal.
Issues Presented
- Whether the trial court erred in granting a preliminary hearing and dismissing the complaint on the ground that the defendants were not real parties-in-interest.
- Whether the appellees waived the defense of not being real parties-in-interest by failing to include it in their motions to dismiss in conformity with the omnibus motion rule.
- Whether the Court of Appeals erred in setting aside the trial court's dismissal.
Contentions of Parties
- The petitioners contended that the defense of not being a real party-in-interest was not a ground for dismissal under Rule 16, Section 1, and therefore could not be raised in a