G.R. No. 180988 - Julie's Franchise Corp. vs. Ruiz

Case Summary (G.R. No. 180988)

Franchise Relationships and Termination Dispute

On 28 July 1999, respondent Dancel, as franchisee, entered into two franchise agreements with petitioner corporation, as franchiser, covering two Julie’s bakeshop outlets located in Rizal Avenue, Dipolog City, and Sindangan, Zamboanga del Norte. On 8 March 2000, respondent Dancel executed a third franchise agreement with petitioner corporation for a bakeshop on Balintawak Street, Dipolog City. In 2003, respondent Dancel decided to renew the franchise agreements for the three bakeshops. Three months before expiration, petitioner corporation evaluated the bakeshops and found performance favorable. In 2004, respondent Dancel paid renewal fees for a five-year extension covering all three bakeshops. After respondent Dancel and business partner Jose Rodion Uy dissolved their partnership, petitioner corporation informed respondent Dancel that it was terminating the three franchise agreements, and that the extended term of the franchises would expire on 30 June 2005. The trade name and business style “Julie’s Bakeshop” had originated with Rodrigo M. Gandionco, Sr., and Uy was the son-in-law of that original owner.

Civil Case No. 6108 and the Initial Denial of Provisional Relief

On 22 June 2005, respondent Dancel filed before the trial court a complaint for specific performance with prayer for a Writ of Preliminary Injunction or Temporary Restraining Order, docketed as Civil Case No. 6108. The trial court denied the application for lack of jurisdiction. When the trial court denied a motion for reconsideration, respondent Dancel filed a petition for certiorari with the Court of Appeals, docketed as CA-G.R. SP No. 00740.

Court of Appeals’ Ruling Granting the Writ

In January 2006, the Court of Appeals resolved to grant a Temporary Restraining Order, effective for 60 days from notice, restraining petitioner corporation from terminating the franchise agreements. On 14 August 2006, the Court of Appeals rendered a decision whose dispositive portion directed the RTC Branch 10 to issue the writ of preliminary injunction with dispatch, conditioned upon the requirements of law, until the case on the merits would be resolved. The Court of Appeals ruled that the RTC had jurisdiction to issue the writ because the franchises subject to termination were bakeshop outlets located within the trial court’s territorial jurisdiction. It applied the rule that injunctive control is limited to acts committed or about to be committed within the territorial boundaries of the province or city where the court sits. It acknowledged that the decision to pre-terminate may have been made in Cebu City, where petitioner corporation’s main office was located, but it emphasized that the implementation and effects would occur in Dipolog City and Zamboanga del Norte, where the RTC has authority. The Court of Appeals found a grave abuse of discretion in the RTC’s earlier denial based on an alleged lack of jurisdiction, and it found that the complaint alleged reasonable grounds to support provisional relief. It also denied petitioner corporation’s motion for reconsideration, holding that respondent Dancel’s right to the writ was clear in view of the franchise fees petitioner corporation had demanded and received for the entire five-year period starting 2004 until 2009.

Petitioners’ Attempted Review and Finality of the Appellate Decision

Petitioner corporation then filed a petition for review on certiorari with the Court. In a Resolution dated 12 February 2007, the Court denied the petition for being filed beyond the reglementary period of 15 days. Petitioner corporation twice moved for reconsideration, and the Court denied both motions. Thus, the Court of Appeals decision became final and executory.

Proceedings in Civil Case No. 6108 and the Issuance of the Writ

On 27 March 2007, respondent Dancel filed a Motion for the Issuance of a Writ of Preliminary Injunction. In a Joint Resolution dated 19 July 2007, the trial court resolved to issue the writ in accordance with the Court of Appeals decision, which had already become final. On 23 July 2007, the trial court issued a Writ of Preliminary Mandatory and Prohibitory Injunction directing petitioner corporation and those acting on its behalf: to refrain from terminating the three franchise agreements; to deliver supplies, materials, and ingredients necessary for uninterrupted operation of the bakeshops; and to allow respondent to use the trade name “Julie’s Bakeshop,” related signages and packaging, and to advertise himself as a franchisee of JFC (Julie’s Franchise Corporation). Petitioner corporation filed a motion for reconsideration on 7 August 2007. While it was pending, petitioner corporation also filed a Motion to Dissolve or Lift the Preliminary Injunction on 11 September 2007, and later filed an amended version on 20 September 2007. The trial court denied the amended motion in a Resolution dated 8 October 2007. Petitioner corporation then filed a motion for reconsideration on 5 November 2007 and, on 11 November 2007, a very urgent motion for inhibition and suspension of proceedings. The trial court denied those motions in a Resolution dated 16 November 2007. Meanwhile, on 14 November 2007, petitioners received summons regarding indirect contempt proceedings filed in another branch—RTC Branch 9—by respondent Dancel.

Petition for Certiorari and the Issues Raised

On 28 December 2007, petitioners filed the present Rule 65 petition for certiorari. They sought to annul the 19 July 2007 Joint Resolution and the subsequent 8 October 2007 and 16 November 2007 resolutions. They also sought to restrain Judge Bautista from taking cognizance of the indirect contempt proceedings in Civil Case No. 6320. Petitioners raised multiple issues, substantially arguing that Judge Ruiz acted without or in excess of jurisdiction and with grave abuse of discretion when he: issued the writ to enjoin acts allegedly committed or about to be committed outside territorial boundaries; extended or effectively enforced the franchise term by granting provisional relief despite alleged expiration; granted provisional relief despite alleged prejudgment; declined to inhibit due to alleged prejudgment; failed to grant summary judgment based on alleged judicial admissions and lack of cause of action; granted provisional relief despite alleged absence of a right in esse; failed to grant a preliminary injunction in favor of petitioner corporation to protect intellectual property rights as a registered company; and permitted enjoinment of the two Dipolog City courts enforcing the writ during the pendency of the petition, including whether indirect contempt proceedings could be enjoined.

Nature and Limits of Certiorari Under Rule 65

The Court emphasized that a special civil action for certiorari under Rule 65 corrects errors of jurisdiction or grave abuse of discretion amounting to lack or excess of jurisdiction. It restated that grave abuse of discretion refers to a capricious or whimsical exercise of judgment equivalent to lack of jurisdiction. For certiorari to issue, the abuse must be grave and must show arbitrariness or despotism akin to an evasion of a positive duty or virtual refusal to perform the duty enjoined, or action contemplated by law as equivalent to acting without jurisdiction. The Court also underscored that certiorari is confined to errors of jurisdiction, not to errors of judgment, and that allegations must raise jurisdictional matters. The Court further invoked the doctrinal limits: as held in People v. Court of Appeals, certiorari does not lie to correct errors of judgment, which are instead reviewable by appeal or a petition for review on certiorari under Rule 45.

Effect of the Final and Executory Court of Appeals Decision

On the first, second, third, and sixth issues, which directly questioned the propriety of issuing the Writ of Preliminary Injunction, the Court found no grave abuse of discretion amounting to lack or excess of jurisdiction. It held that Judge Ruiz had merely issued the writ in accordance with the Court of Appeals decision in CA-G.R. SP No. 00740, which had already attained finality. The Court stressed that the question of the trial court’s authority to issue the writ had already been resolved by the Court of Appeals on 14 August 2006. It also noted that finality attached because petitioner corporation’s appeal to the Court was denied for being filed beyond the reglementary period. The Court reiterated that, except for clerical errors, a final judgment can no longer be modified even if a party argues that the judgment was erroneous in fact or law. It reasoned that allowing relitigation would leave no end to litigation.

Errors of Judgment and Non-Reviewability in Certiorari

As to the fifth and seventh issues, the Court treated the arguments as involving errors of judgment, which are beyond the ambit of certiorari. For the fifth issue, petitioners invoked summary ju

Case Syllabus (G.R. No. 180988)

Parties and Procedural Posture

Julie’s Franchise Corporation and several named individuals and attorneys were petitioners seeking certiorari under Rule 65 of the Rules of Civil Procedure.
The respondents were Hon. Chandler O. Ruiz, in his capacity as Presiding Judge of the Regional Trial Court, Branch 10, Dipolog City; Hon. Yolinda C. Bautista, in her capacity as Presiding Judge of the Regional Trial Court, Branch 9, Dipolog City; and Richard Emmanuel G. Dancel.
Petitioners sought to annul a Joint Resolution dated 19 July 2007 that denied their motion to dismiss, denied their motion for summary judgment, and denied their application for preliminary injunction in Civil Case No. 6108.
Petitioners also sought review of Judge Ruiz’s Resolution dated 8 October 2007, which denied their motion to lift the injunction, and Resolution dated 16 November 2007, which denied their motion for reconsideration and their motion for inhibition and suspension of proceedings.
Petitioners further asked for restraint against Judge Bautista from taking cognizance of indirect contempt proceedings in a separate case, Civil Case No. 6320, filed by respondent Dancel.
The Court dismissed the petition for lack of merit.

Contractual Relationship and Background Facts

Respondent Dancel, as franchisee, entered into two franchise agreements with petitioner corporation on 28 July 1999 over bakeshop outlets in Rizal Avenue, Dipolog City, and Sindangan, Zamboanga Del Norte.
On 8 March 2000, respondent Dancel entered into a third franchise agreement over the bakeshop on Balintawak Street, Dipolog City.
In 2003, respondent Dancel decided to renew the franchise agreements covering the three Julie’s bakeshops.
Three months before expiration, petitioner corporation evaluated performance and the results were favorable.
In 2004, respondent Dancel paid renewal fees for the next five years covering all three bakeshops.
After dissolution of respondent Dancel’s partnership with his business partner, petitioner corporation informed respondent Dancel that it was terminating the three franchise agreements and that the extended term would expire on 30 June 2005.
The decision identified that Uy was the son-in-law of Rodrigo M. Gandionco, Sr., the original owner of the trade name and business style “Julie’s Bakeshop.”

Underlying Suit and Initial Denial of Injunction

On 22 June 2005, respondent Dancel filed in the trial court a complaint for Specific Performance with prayer for a Writ of Preliminary Injunction or Temporary Restraining Order, docketed as Civil Case No. 6108.
The trial court denied respondent Dancel’s application for a writ of preliminary injunction or TRO on the stated ground of lack of jurisdiction.
When the trial court denied the motion for reconsideration, respondent Dancel filed a petition for certiorari with the Court of Appeals, docketed as CA-G.R. SP No. 00740.

Court of Appeals Ruling and Finality

In January 2006, the Court of Appeals granted a Temporary Restraining Order effective for 60 days from notice, restraining petitioner corporation from terminating the franchise agreements.
On 14 August 2006, the Court of Appeals issued a decision directing the trial court to issue the writ of preliminary injunction with dispatch, conditioned upon the requirements of law, until resolution on the merits.
The Court of Appeals held that the trial court had jurisdiction to issue the writ of preliminary injunction because the acts sought to be restrained were being implemented within the trial court’s territorial jurisdiction.
The Court of Appeals reasoned that although the decision to pre-terminate the renewed five-year contract may have been made in Cebu City, the implementation and effects were in Dipolog City and Zamboanga Del Norte, where the trial court sits.
The Court of Appeals concluded that the trial court gravely abused its discretion when it denied the prayer based on its claimed lack of jurisdiction.
The Court of Appeals also found that the complaint alleged reasonable grounds to support the prayer for a TRO or writ of preliminary injunction.
Petitioners’ motion for reconsideration was denied, and the Court of Appeals emphasized the clarity of respondent Dancel’s right to injunctive relief due to the payment and receipt of franchise fees for the five-year period.

Supreme Court’s Procedural Bar

Petitioner corporation filed a petition for review on certiorari with the Court, but the Court denied it in a Resolution dated 12 February 2007 for being filed beyond the 15-day reglementary period.
Petitioners twice moved for reconsideration, and the Court denied both motions.
As a result, the Court of Appeals decision attained finality and executory status.

Trial Court’s Joint Resolution and Issuance of Writ

On 27 March 2007, respondent Dancel filed a motion for the issuance of a writ of preliminary injunction in the trial court.
In a Joint Resolution dated 19 July 2007, the trial court resolved to issue the writ of preliminary injunction in accordance with the Court of Appeals decision which had become final and executory.
On 23 July 2007, the trial court issued a Writ of Preliminary Mandatory and Prohibitory Injunction.
The writ directed petitioner corporation, its agents, employees, and all persons acting on its behalf to refrain from terminating the three franchise agreements.
The writ further required the delivery of supplies, materials, and ingredients necessary for the uninter