Municipality of Malabang v. Benito be collaterally attacked, except via quo warranto at the instance of the State.

2
G.R. No.L-28113 / March 28, 1969 / Castro, J./LOCGOV/MPESQUIVIAS (It was organized before Pelaez was promulgated.)
NATURE Action for prohibition
PETITIONERS Municipality of Malabang, Lanao del Sur, Amer Macaorao Balindong ISSUES & RATIO.
RESPONDENTS Pangandapun Benito, Hadji Norodin Macapunung, et al. 1. WON Balabagan is a de facto corporation – NO
(WON a statute can lend color of validity to an attempted organization of a
SUMMARY. The petitioners seek to nullify EO 386, which created the municipality of municipality despite the fact that such statute is subsequently declared
Balabagan in Lanao del Sur, and to restrain the respondent municipal officials from unconstitutional – See ratio)
performing their official functions, per the ruling of the court in Pelaez, which held that the
Presidential power to create municipalities was unconstitutional. Respondents argue this This question has divided US Courts. Some hold that a de facto corporation cannot exist
doesn’t apply because Balabagan was a de facto corporation. SC ruled it wasn’t. Per existing where the statute or charter creating it is unconstitutional because there can be no de
analyses, there can be no de facto corporation where there can be no de jure one. As, facto corporation where there can be no de jure one, while others hold otherwise on the
independently of the Administrative Code provision in question, there is no other valid theory that a statute is binding until it is condemned as unconstitutional.
statute to give color of authority to its creation, there is no de facto corporation.
DOCTRINE. There can be no de facto municipal corporation unless either directly or An article in the Yale Law Journal offers the following principles:
potentially, such a de jure corporation is authorized by some legislative fiat. 
 I. The color of authority requisite to the organization of a de facto municipal
corporation may be:
FACTS. 1. A valid law enacted by the legislature. 

 Balindong is the mayor of Malabang, Lanao del Sur, while Benito is the mayor (and the 2. An unconstitutional law, valid on its face, which has either (a) been upheld for
rest of the respondents are councilors) of the municipality of Balabagan, of the same a time by the courts or (b) not yet been declared void; provided that a warrant
province. Balabagan was formerly a part of Malabang, having been created on March for its creation can be found in some other valid law or in the recognition of its
15, 1960, by EO 386 of the then President Carlos P. Garcia, out of barrios and sitios of potential existence by the general laws or constitution of the state. 

the latter municipality. II. There can be no de facto municipal corporation unless either directly or
 The petitioners brought this action for prohibition to nullify Executive Order 386 and to potentially, such a de jure corporation is authorized by some legislative fiat. 

restrain the respondent municipal officials from performing the functions of their III. There can be no color of authority in an unconstitutional statute alone, the
respective offices, relying on the ruling of this Court in Pelaez v. Auditor General (and invalidity of which is apparent on its face. 

Municipality of San Joaquin v. Siva1): IV. There can be no de facto corporation created to take the place of an existing
o Sec. 23 of the Barrio Charter Act (RA 2370), by vesting the power to create de jure corporation, as such organization would clearly be a usurper.
barrios in the provincial board, is a “statutory denial of the presidential
authority to create a new barrio and implies a negation of the bigger power to The mere fact that Balabagan was organized at a time when the statute had not been
create municipalities”; invalidated cannot conceivably make it a de facto corporation, as, independently of
o Sec. 68 of the Administrative Code, insofar as it gives the President the power the Administrative Code provision in question, there is no other valid statute to give
to create municipalities, is unconstitutional (a) because it constitutes an color of authority to its creation.
undue delegation of legislative power and (b) because it offends against
section 10(1) of article VII of the Constitution, which limits the President’s In fine, EO 386 “created no office.” HOWEVER, this is not to say that the acts done by
power over local governments to mere supervision. the municipality of Balabagan in the exercise of its corporate powers are a nullity, for
 Respondents: the existence of Executive Order 386 is “an operative fact which cannot justly be
o The rule (^) announced in Pelaez can have no application in this case because ignored.”
unlike the municipalities involved in Pelaez, the municipality of Balabagan is
at least a de facto corporation, having been organized under color of a statute The effect of a determination of unconstitutionality must be taken with qualifications. The
before this was declared unconstitutional. Following this, its existence cannot effect of the subsequent ruling as to invalidity may have to be considered in various
aspects—with respect to particular relations, individual and corporate, and particular

2 Court: “The rule disallowing collateral attacks applies only where the municipal corporation is at least a
1The Court granted the petition for prohibition and nullified an executive order creating the municipality
de facto corporation. For where it is neither a corporation de jure nor de facto, but a nullity, the rule is
of Lawigan in Iloilo on the basis of the Pelaez ruling, despite the fact that the municipality was created in
that its existence may be questioned collaterally or directly in any action or proceeding by any one
1961, before section 68 of the Administrative Code, under which the President had acted, was
whose rights or interests are affected thereby, including the citizens of the territory incorporated unless
invalidated. The issue of de facto municipal corporation did not arise in this case.
they are estopped by their conduct from doing so.”
 conduct, private and official. Questions of rights claimed to have become vested, of
status, of prior determinations deemed to have finality and acted upon accordingly, of
public policy in light of the nature of both of the statute and of its previous application,
demand examination.

DECISION.
Petition granted. EO 386 void, respondents permanently restrained from performing the
duties and functions of their respective offices.

NOTES.
Concurring, Fernando, J.

 The effect of a declaration of unconstitutionality of legislative acts must be viewed

realistically. He cites Chicot County Drainage District v. Baxter State Bank: Although the
general rule is that an unconstitutional statute—confers no right, creates no office,
affords no protection and justifies no acts performed under it x x x there are several
instances wherein courts, out of equity, have relaxed its operation x x x or qualified its
effects since the actual existence of a statute prior to such declaration is an operative
fact, and may have consequences which cannot justly be ignored.
 For executive acts, it must be the same. The act stricken down, whether proceeding
from the legislature or the Executive, could in the language of the Chicot County case,
be considered, prior to the declaration of invalidity, as “an operative fact and may have
consequences which cannot justly be ignored.”
 There would be an unjustified deviation from the doctrine of separation of powers if a
consequence attached to the annulment of a statue is considered as not operative
where an executive order is involved.
 He clarifies the Pelaez ruling: If there be admission of the force of the assertion that the
Pelaez opinion went no further than to locate in the challenged Executive orders
creating municipal corporations an act in excess of statutory authority; then our decision
in this case is all the more noteworthy for the more hospitable scope accorded the
Chicot doctrine. For as originally formulated, it would merely recognize that during its
existence, prior to its being declared violative of the constitute, the statute must be
deemed an operative fact. Today we decide that such a doctrine extends to a
Presidential act held void not only on the ground of unconstitutional infirmity but
also because in excess of the statutory power conferred.