THE MUNICIPALITY OF MALABANG, LANAO DEL SUR, and AMER MACAORAO BALINDONG, petitioners, vs. PANGANDAPUN BENITO, HADJI NOPODIN MACAPUNUNG, HADJI HASAN MACARAMPAD, FREDERICK V. DUJERTE MONDACO ONTAL, MARONSONG ANDOY, MACALABA INDAR LAO, respondents. G.R. No

 Doctrine: A corporation organized under a statute subsequently declared invalid cannot acquire the status of a ‘de facto’ corporation unless there is some other statute under which the supposed corporation may be validly organized.

FACTS:
​Petitioner Amer Macaorao Balindong is the mayor of Malabang, Lanao del Sur. Respondent Pangandapun Bonito is the mayor, and the rest of the respondents are the councilors, of the municipality of Balabagan of the same province. Balabagan was formerly a part of the municipality of Malabang, having been created on March 15, 1960, by Executive Order 386 of the then Pres. Carlos P. Garcia, out of barrios and sitios of the latter municipality. SC – The petitioners brought this action for prohibition to nullify Executive Order 386 and to restrain the respondent municipal officials from performing the functions of their office. The petitioners based their arguments on the SC’s ruling in Pelaez v. Auditor General and Municipality of San Joaquin v. Siva. In Pelaez case SC ruled: that section 23 of Republic Act 2370 [Barrio Charter Act, approved January 1, 1960], by vesting the power to create 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 create municipalities,” and that section 68 of the Administrative Code, insofar as it gives the President the power to create municipalities, is unconstitutional (a) because it constitutes an 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 power over local governments to mere supervision. As SC summed up its discussion: “In short, even if it did not entail an undue delegation of legislative powers, as it certainly does, said section 68, as part of the Revised Administrative Code, approved on March 10, 1917, must be deemed repealed by the subsequent adoption of the Constitution, in 1935, which is utterly incompatible and inconsistent with said statutory enactment.” The respondents contend that the rule announced in Pelaez has no application in this case because 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 before this was declared unconstitutional, its officers having been either elected or appointed, and the municipality itself having discharged its corporate functions for the past five years preceding the institution of this action. It is contended that as a de facto corporation, its existence cannot be collaterally attacked, although it may be inquired into directly in an action for quo warranto at the instance of the State and not of an individual like the petitioner Balindong.

ISSUE:
Whether the municipality of Balabagan is a de facto corporation.

RULING:
NO. A corporation organized under a statute subsequently declared invalid cannot acquire the status of a ‘de facto’ corporation unless there is some other statute under which the supposed corporation may be validly organized. The following principles were deduced by the SC: 1. The color of authority requisite to the organization of a de facto municipal corporation may be: (a) A valid law enacted by the legislature (b) An unconstitutional law, valid on its face, which has either - been upheld for a time by the courts or - not yet been declared void; provided that a warrant for its creation can be found in some other valid law or in the recognition of its potential existence by the general laws or constitution of the state. 2. There can be no de facto municipal corporation unless either directly or potentially, such a de jure corporation is authorized by some legislative fiat. 3. There can be no color of authority in an unconstitutional statute alone, the invalidity of which is apparent on its face. 4. There can be no de facto corporation created to take the place of an existing de jure corporation, as such organization would clearly be a usurper. In the cases where a de facto municipal corporation was recognized as such despite the fact that the statute creating it was later invalidated, the decisions could fairly be made to rest on the consideration that there was some other valid law giving corporate vitality to the organization. Hence, in the case at bar, the mere fact that Balabagan was organized at a time when the statute had not been invalidated CANNOT conceivably make it a de facto corporation, as, independently of the Administrative Code provision in question, there is no other valid statute to give color of authority to its creation.

​The petition is GRANTED. Executive Order 386 is declared void, and the respondents are hereby permanently restrained from performing the duties and functions of their respective offices