PEOPLE OF THE PHILIPPINES, HERMOGENES CONCEPCION, JR., AS CITY FISCAL OF MANILA, MANUEL R. PAMARAN, AS INVESTIGATING ASSISTANT FISCAL AND JOSE G. LUKBAN, DIRECTOR, NATIONAL BURE…

On January 2, 1962, the City
Fiscal of Manila received a criminal complaint of the Department of Justice
against Martiniano Abad and
Cosme P. Garcia, together with Jorge B. Vargas, Gaudencio L. Mascareñas, Victorino Arambulo, Bartolome San Diego and George M. O’Keefe (directors of the
Continental Oil Company) for violation of Section 17-1/2 of Act No. 1459
(Corporation Law) and Section 5 of Republic Act No. 3019 (Anti-Graft Law), which
was docketed as I.S. No. 62-202.

The crime allegedly committed
arose from the purchase of a lot by Continental Oil Company from the Xavier
School, Inc. for the construction and operation of a large supermarket and
applying the income therefrom continuously to finance
its ordinary business expenses incident to the development of its mining
concessions, as contrary to the purpose clause of its articles of
incorporation.

While the said complaint was
under preliminary investigation, one Gus B. Dodds
filed a minority stockholder’s suit before the Court of First Instance of Rizal (Civil Case No. 6935) on January 17, 1962, against the
members of the Board of Directors of the Continental Oil Company, to restrain
the latter from proceeding with their conditional deed of sale of the subject
lot to one Jose A. Roxas and to take such steps with
the view of annulling or rescinding the same, claiming the purchase of the lot
to be valid because it was done by the corporation’s directors not for the
purpose of investing its funds for a purpose different from its business
purpose, in the sense of engaging in the supermarket business as a fixed and
principal commercial activity, but for the purpose of immediately putting its
idle corporate capital for use in a temporary but profitable business scheme
contemplated to last, and for the purpose of financing the corporation’s huge
financial needs during the time that the corporation is unable to produce from
its primary business end of mining.

Meanwhile, the proposed sale of
the subject lot was taken by the board of directors after the Securities and
Exchange Commission notified the Continental Oil Company that such investment
was contrary to the purpose clause of the articles of incorporation of the said
company and requested the latter to take immediate corrective measures in the
premises.

On January 24, 1962, respondents
Martiniano Abad and Cosme P. Garcia intervened in the aforementioned civil suit
and filed a third-party complaint before the same Court of First Instance,
against herein petitioners, praying, among other things, that said petitioners
be enjoined from proceeding with the investigation of the criminal complaint
because of the existence of a prejudicial civil question created with the
institution of the civil case, that is, whether or not the acquisition of the
property from Xavier School, Inc. constituted a violation of the corporation
law.

The following day, or on January
25, 1962, the respondent Judge issued an ex-parte
restraining order directing, among others, that pending the resolution of the
application for writ of preliminary injunction, the herein petitioners are
enjoined from proceeding with the investigation of the criminal
complaint.

On January 30, 1962, the
petitioners filed a motion for the dissolution and lifting of the restraining
order and at the same time answered the third-party complaint wherein they
contended that the Court of First Instance of Rizal
did not have jurisdiction to hear and decide an action for injunction and
prohibition as well as to enjoin a preliminary investigation being held in
Manila.

After due hearing, on March 20,
1962, the respondent Judge issued an order denying the petitioners’ motion to
dissolve the restraining order and directed the issuance of the writ of
preliminary injunction prayed for in the third-party complaint, which, pursuant
to the said order, a writ of preliminary injunction was issued against the
petitioners on April 5, 1962. Hence, this petition raising the issue as to the
jurisdiction of the respondent judge to issue a restraining order and writ of
preliminary injunction enjoining the petitioners from proceeding with the
preliminary investigation of the complaint.

This Court, thru its resolution
dated April 11, 1962, ordered the herein respondent to file an answer to the
petition and issued the writ of preliminary injunction prayed for, restraining
the respondent Judge from enforcing his orders dated January 25, 1962, March 20,
1962, and April 5, 1962, in the Civil Case No. 6953 of the Court of First
Instance of Rizal. Due to the writ of preliminary
injunction issued by this Court, the City Fiscal of Manila scheduled the
continuation of the preliminary investigation of the criminal complaint on April
14, 16 and 17, 1962, but the hearings were postponed upon petition of the
respondents.

On April
13, 1962,
the defendants and defendants-intervenors in Civil
Case No. 6953 of the Court of First Instance of Rizal
filed with this Court an urgent Motion For Stay,
praying that the effectivity of the writ of
preliminary injunction be held in abeyance and that they be given opportunity to
give their side. But since the writ of preliminary injunction was already
issued, the respondents filed a motion on April 17, 1962, for dissolution of the
preliminary injunction on the ground that the writs of injunction and
prohibition were sought by them from the Court of First Instance of Rizal, not through a complaint but through a third-party
complaint and that a prejudicial civil question was
raised.

Subsequently, a motion was filed
by petitioners praying to set aside the order of Judge Mencias dated July 17, 1962 granting the motion for
exclusion of defendants and third-party plaintiffs from Civil Case No. 6953. We
decided to defer action on these various motions filed by the parties until the
final resolution of the case on the merits.

The main issue now before this
Court is: Can the Judge of the Court of First Instance of Rizal issue a restraining order and writ of preliminary
injunction enjoining the City Fiscal of Manila from proceeding with the
preliminary investigation of a criminal complaint if before the former a civil
action with prejudicial question is raised?

On the issue of jurisdiction to
take cognizance of the petition for certiorari and prohibition with preliminary
injunction, it is already a settled rule that the jurisdiction or authority of
courts of first instance to control or restrain acts by means of writ of
injunction is limited to acts which are being committed or about to be committed
within the territorial boundaries of their respective provinces and districts.
(Alhambra Cigar and
Cigarette Manufacturing Co., Inc. v. The National
Administrator of Regional Office No. 2, etc., et al, G. R. No. L-20491,
August 31,
1965, and
the cases cited therein)

The contention of the respondents
that the decisions of this Court cited in the Alhambra Cigar and Cigarette case,
supra, do not apply in the instant case because they sought the writs of
injunction and prohibition from the Court of First Instance of Rizal not through a complaint but through a third-party
complaint, is untenable for we agree with the observation of the Solicitor
General that there is no basic difference and fundamental reason for making a
distinction in the issuance of the writ whether through an original complaint or
third-party complaint.

Another point to be considered is
that, “as a general rule, an injunction will not be granted to restrain a
criminal prosecution.” (Kwong Sing v. City of Manila,
41 Phil. 103; Gorospe v. Peñaflorida, 101 Phil. 886; University of the Philippines
v. City Fiscal of Quezon City, G. R. No. L-18562, July 31,
1961; and Lava v. Gonzales, G.R.
No. L-23048,
July 31,
1964)

We do not have to discuss whether
there is a prejudicial question involved in this case, for even assuming that
there is, still the Judge of the Court of First Instance of Rizal cannot enjoin the City Fiscal of Manila from
proceeding with the preliminary investigation of the complaint, the latter being
outside of the territorial jurisdiction of the former.

WHEREFORE, the petition is hereby granted
and the writ of preliminary injunction dated April 11,
1962,
restraining the respondent Judge from enforcing his questioned orders, is hereby
made permanent. No costs.

Concepcion, C.J., Reyes, J. B. L., Barrera,
Dizon, Makalintal, Bengzon, J. P., Zaldivar, Sanchez
and Ruiz
Castro, JJ., concur.