THE MUNICIPALITY OF MALABANG, LANAO DEL SUR, AND AMER MACAORAO BALINDONG, PETITIONERS, VS. PANGANDAPUN BENITO, HADJI NORODIN MACAPU­NUNG, HADJI HASAN MACA­RAMPAD, FREDERICK V. D…

The petitioner Amer Macaorao
Balindong is the mayor of Malabang,
Lanao del Sur, while the
respondent Pangandapun Be­nito 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 President Carlos P. Garcia, out of barrios and sitios^[1]
of the latter municipality.

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 respective offices, relying on the ruling of
this Court in Pelaez v. Auditor General^[2]
and Municipality of San
Joaquin v. Siva.^[3]

In Pelaez this Court, through
Mr. Justice (now Chief Jus­tice) Concepcion,
ruled:  (1) 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 (2)
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 this Court 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deemed repealed by the subsequent adop­tion of the Constitution, in 1935, which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.”

On the other hand, the respondents, while admitting the facts
alleged in the petition, nevertheless argue that the rule an­nounced in Pelaez can have 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.

It is indeed true that, generally, an inquiry into the legal
existence a municipality is reserved to the State in a proceed­ing for quo
warranto or other direct proceeding, and that
only in a few exceptions may a private person exercise this function of
government.^[4]
But the rule disallowing collateral attacks applies only where the municipal
corporation is at least a de facto corpo­ration.^[5]
For where it is neither a corporation de jure
nor de fac­to, but a nullity, the rule is that its existence may
be questioned collaterally or directly in any action or proceeding by any one
whose rights or interests are affected thereby, including the ci­tizens of the
territory incorporated unless they are estopped by
their conduct from doing so.^[6]

And so the threshold question is whether the municipality
of Balabagan
is a de facto corporation. 
As earlier stated, the claim that it is rests on the fact that it was orgnized before the promulgation of this Court’s decision
in Pelaez.^[7]

Accordingly, we address ourselves to the question whe­ther a
statute can lend color of validity to an attempted organiza­tion of a
municipality despite the fact that such statute is subse­quently declared
unconstitutional.

This has been a litigiously prolific question, sharply divid­ing
courts in the United States.  Thus, some hold that a de facto
corporation cannot exist where the statute or charter creating it is
unconstitutional because there can be no de facto corporation where there can
be no de jure one,^[8]
while others hold otherwise on the theory that a statute is binding until it is
condemned as unconstitutional.^[9]

An early article in the Yale Law Journal offers the follow­ing
analysis:

“It appears that the true basis for deny­ing to the
corporation a de facto status lay in the absence of any
legislative act to give vitality to its creation.  An examination of the cases holding, some of
them unreservedly, that a de facto office or municipal
corporation can exist under color of an unconstitutional statute will reveal that
in no instance did the invalid act give life to the corpo­ration, but that
either in other valid acts or in the constitution itself the office or the
corporation was potentially created. …

“The principle that color of title under an unconstitutional statute
can exist only where there is some other valid law under which the organiza­tion
may be effected, or at least an authority in potentia
by the state constitution, has its counterpart in the negative propositions
that there can be no co­lor of authority in an unconstitutional statute that
plainly so appears on its face or that attempts to authorize the ousting of a de
jure or de facto muni­cipal
corporation upon the same territory; in the one case the fact would imply the
imputation of bad faith, in the other the new organization must be re­garded as
a mere usurper. …

“As a result of this analysis of the cases the following
principles may be deduced which seem to reconcile the apparently conflicting
decisions:

“I.  The color of
authority requisite to the organization of a de facto municipal
corporation may be:

“1.  A valid law enacted by
the legislature.

“2.  An unconstitutional law,
valid on its face, which has either (a) been upheld for a time by the courts or
(b) 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

“II.  There can be no de
facto municipal corporation unless either directly or potentially, such
a de jure corporation is authorized by
some legislative fiat.

“III.  There can be no color
of authority in an unconstitutional statute alone, the invalidity of which is
apparent on its face.

“IV.  There can be no de
facto corporation created to take the place of an existing de jure corporation, as such organization would clearly
be an usurper.”^[10]

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.  Indeed, in Municipality
of San Joaquin v. Siva,^[11]
this Court granted a similar petition for prohibition and nullified an
executive order creating the municipa­lity of Lawigan
in Iloilo on the basis of the Pelaez ruling,
despite the fact that the municipality was created in 1961, before section 68
of the Administrative Code, under which the President had acted, was
invalidated.  Of course the issue of de
facto municipal corporation did not arise in that case.

In Norton v. Shelby County,^[12]
Mr. Justice Field said:  “An
unconstitutional act is not a law; it confers no rights; it imposes no duties;
it affords no protection; it creates no office; it is, in legal
contemplation, as inoperative as though it had never been passed.”
Accordingly, he held that bonds issued by a board of commissioner’s created
under an invalid statute were unenforce­able.

Executive Order 386 “created no office.” This is not to
say, however, that the acts done by the municipality
of Balabagan
in the exercise of its corporate powers are a nullity because the executive
order “is, in legal contemplation, as inoperative as though it had never
been passed.” For the existence of Executive Order 386 is “an
operative fact which cannot justly be ignored.” As Chief Justice Hughes
explained in Chicot County Drainage District v. Baxter State Bank:^[13]

“The courts below have proceeded on the theory that the Act of
Congress, having been found to be unconstitutional, was not a law; that it was
inoperative, conferring no rights and imposing no duties, and hence affording
no basis for the challenged decree. 
Norton v. Shelby County, 118 U.S. 425, 442, Chicago, I. & L. Ry. Co. v. Hackett, 228 U.S. 559, 566.  It is quite clear, however, that such broad
statements as to the effect of a deter­mination of unconstitutionality must be
taken with qualifications.  The actual existence
of a statute, prior to such a determination, is an operative fact and may have
consequences which cannot justly be ignored. 
The past cannot always be erased by a new judicial declaration.  The 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 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 the light of
the nature both of the statute and of its previous application, demand
examination.  These questions are among
the most difficult of those which have engaged the attention of courts, state
and federal, and it is manifest from numerous decisions that an all-inclusive
statement of a principle of abso­lute retroactive invalidity cannot be
justified.”

There is then no basis for the respondents’ apprehension that the
invalidation of the executive order creating Balabagan
would have the effect of unsettling many en act done in reliance upon the
validity of the creation of that municipality.^[14]

ACCORDINGLY, 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.  No pronouncement as to costs.

Concepcion, C.J., as clarified in the concurring opinion of J.
Fernando.

Reyes, JBL, Dizon, Makalintal, Zaldivar, Sanchez, and Capistrano, JJ., concur.

Fernando, J., concurs fully
and, in addition, submits a separate opinion.

Teehankee and Barredo, JJ., did not take part.

^[1]
The barrios and sitios are Barorao,
Baguiangan, Kalilangan, Balabagan, Itil, Banago, Budas, Igabay, Magolalong, Da­goan, Matimus, Bongabon and Lusain.

^[2]
64 O.G. 4781 (1965).

^[3]
L-19870, March 18, 1967, 19
SCRA 599.

^[4] E.g.,
1 E. McQuillin, The Law of Municipal Corporations,
sec. 3.49, p. 592 (3rd ed. 1949).

^[5]
Hunt v. Atkinson, (Tex. Com. App.), 12 S.W. 2d 142, 145 (1929), rev’g 300 S. W. 656 (1927).

^[6] E.
McQuillin, op. cit. supra,
note 4, at sec. 3.50, p. 595-96.

^[7] Supra,
note 2.

^[8] E.g.,
Brandenstein v. Hoke,
101 Cal. 131, 35 P. 562 (1894)
(levee district organized under statute earlier declared to be unconstitutional);
Atchison T. & S.F.R.R. v. Board of Comm’rs,
58 Kan. 19, 48 P. 583 (1897)
(county organized under statute void on its face).

^[9] See,
e.g., Lang v. City
of Bayonne, 74 N.J.L. 455, 68 A. 90
(1907); St. Louis v. Shields,
62 Mo. 247 (1876); School Dis­trict No. 25, v. State, 29 Kan. 57 (1882)

^[10] Tooke, De Facto Municipl
Corporations under Unconstitutional Statutes, 37 Yale L.J. 935, 951-53
(1928).

^[11] Supra,
note 3.

^[12]
118 U.S. 425,
442 (1886) (emphasis added).

^[13]
308 U.S. 371,
374 (1940); accord:  Rutter v. Esteban, 93 Phil. 68 (1953); Manila Motor
Co., Inc. v. Flores, 99 Phil. 739 (1956);
Fernandez v. Cuerva & Co., L-21114, Nov. 28, 1967, 21 SCRA 1102.

^[14] Compare
the technique of prospective overruling in Linkletter
v. Walker, 381 U.S. 618
(1965), refusing to give retros­pective effect to Mapp
v. Ohio, 367 U.S. 643
(1961) (exclu­sionary rule), with that in Johnson v. New
Jersey, 384 U.S. 719 (1966) holding that the rule
concerning counsel as announced in Gideon v. Wainwright, 372 U.S. 335
(1963) was to be applied retrospectively.

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