Title
Riviera Golf Club, Inc. vs. CCA Holdings, B.V.
Case
G.R. No. 173783
Decision Date
Jun 17, 2015
Riviera Golf breached management and royalty agreements with CCA Holdings, leading to two lawsuits. SC ruled second complaint barred by res judicata, splitting of cause of action, and invalid non-waiver clause.
res judicata
breach of contract
collection of unpaid fees
A

Case Summary (G.R. No. 173783)

Factual Background

Riviera Golf owned and operated a 36-hole golf course and facilities in Silang, Cavite. On October 11, 1996, Riviera Golf entered into a Management Agreement with CCA Holdings for a five-year term under which Riviera Golf paid a monthly Base Management Fee and an incentive Management Fee. The parties also executed a co-terminous Royalty Agreement granting licensing rights in exchange for specified royalty percentages on membership and share sales. Riviera Golf paid some amounts but defaulted on licensing fees and reimbursements in September 1997 and failed to pay management and incentive fees in June 1999. Riviera Golf then sent a letter dated October 29, 1999, purporting to pre-terminate the Management and Royalty Agreements.

First Complaint and Compromise Agreement

CCA Holdings filed a complaint for sum of money with damages before the RTC, Branch 146, Makati City (Civil Case No. 01-611) in April 2001 to recover unpaid fees. The parties pursued an extrajudicial settlement and executed a Compromise Agreement. The RTC approved the Compromise Agreement on April 25, 2002. Paragraph 4 of the Compromise Agreement contained a clause stating that the execution or payment under the compromise shall not be construed as a waiver of plaintiff’s rights or cause of action, “if any, arising from or relative to the pre-termination of the parties’ Management and Royalty Agreements,” and that such rights were subject to whatever claims and defenses the defendant may have relative thereto.

Second Complaint, RTC Dismissal and Grounds

Subsequently, CCA Holdings demanded US$390,768.00 as projected net income for the unexpired two-year term of the Management Agreement and filed a second complaint for sum of money and damages in Civil Case No. 03-399 before RTC, Branch 57, Makati City. Riviera Golf filed a motion to dismiss on August 6, 2003, invoking res judicata and the prohibition against splitting of a single cause of action. The RTC, Branch 57, granted the motion and dismissed Civil Case No. 03-399 on the ground that the two actions involved identical causes of action and subject matter, and that CCA Holdings had the opportunity to raise all claims in the first action. The RTC interpreted the Compromise Agreement’s reservation clause as qualified and insufficient to permit independent subsequent litigation on the same cause.

Court of Appeals' Decision

CCA Holdings appealed. The Court of Appeals, in its January 11, 2006 decision, set aside the RTC order and remanded the case for trial on the merits. The CA reasoned that there was no identity of causes of action because the test for identity is whether the same evidence is necessary to sustain the two suits and, in the CA’s view, the sets of evidence differed. The CA further held that there was no impermissible splitting because Riviera Golf violated separate primary rights under the Management Agreement and that Paragraph 4 of the Compromise Agreement recognized CCA Holdings’ right to seek damages arising from premature termination. Riviera Golf’s motion for reconsideration before the CA was denied in a July 5, 2006 resolution.

Petition to the Supreme Court

Riviera Golf petitioned the Supreme Court seeking review of the CA decision, arguing that the filing of the second complaint violated res judicata and the prohibition against splitting a single cause of action. Riviera Golf contended that the facts and documentary evidence necessary to support the second complaint were the same as those presented in the first action, that the breach was already total by the time of the first complaint, and that the reservation clause in the Compromise Agreement did not legitimately preserve the claims asserted in the second action.

Respondent's Contentions

CCA Holdings maintained that the two actions sought relief for distinct wrongs: the first for unpaid fees already accrued, the second for damages representing expected profits lost by reason of the unilateral and premature termination. CCA Holdings argued that the documentary evidence in each action differed in material respects and alternatively contended that Riviera Golf was estopped from asserting res judicata by virtue of the non-waiver clause in the Compromise Agreement.

Issues Presented to the Court

The parties framed the issues as: (1) whether the filing of Civil Case No. 03-399 by CCA Holdings violated the prohibitions against res judicata and splitting of a single cause of action, and (2) whether the Court of Appeals correctly interpreted Paragraph 4 of the Compromise Agreement, and if so, whether the parties could validly stipulate to an agreement that effectively permitted splitting or defeated res judicata.

Supreme Court's Ruling on Res Judicata

The Court found the petition meritorious and held that the second complaint was barred by res judicata. The Court recalled the definition and requirements of res judicata, citing Section 47(b) and (c) of Rule 39, Rules of Court, and set out the four requisites: final judgment, jurisdiction, judgment on the merits, and identity of parties, subject matter, and causes of action. The Court found the first three requisites present because the RTC decision in Civil Case No. 01-611 approving the Compromise Agreement was final, on the merits, and by a court with jurisdiction. The Court concluded that the fourth requisite—identity of parties, subject matter, and causes of action—was likewise satisfied.

Application of the Identity and Same-Evidence Tests

The Court applied the established same evidence test to determine identity of causes of action. It held that although the two complaints were styled differently, both derived from alleged breaches of the same Management and Royalty Agreements and thus involved the same subject matter. The Court emphasized that a cause of action may give rise to several reliefs but that a single cause of action may not be split into separate suits. The Court identified common documentary evidence presented in both actions, including the Management Agreement, the Royalty Agreement, a Fees Receivable Report amounting to USD 97,122.00, and Riviera Golf’s October 29, 1999 termination letter. The Court held that the same evidence would support and establish the claims in both suits, thereby demonstrating identity of causes of action.

Timing of Breach and the Prohibition Against Splitting

The Court observed that the breaches alleged—the nonpayment of fees and the premature termination—occurred by 1999, prior to the filing of the first complaint in 2001. Because the breach was already complete and total at the time of the first suit, all reliefs arising from that breach were then available. The Court explained that where a contract is entire and the breach is total, al

...continue reading

Analyze Cases Smarter, Faster
Jur helps you analyze cases smarter to comprehend faster, building context before diving into full texts. AI-powered analysis, always verify critical details.

About Privacy Terms