Municipality of Malabang v. Benito
REITERATIONFacts
The Antecedents: The underlying dispute concerns the validity of Executive Order No. 386, issued by the President, which created the municipality of Balabagan from territories previously belonging to the municipality of Malabang. The petitioner, Amer Macaorao Balindong, is the mayor of Malabang, and the respondents are the mayor and councilors of the newly created municipality of Balabagan. The petitioner seeks to nullify the executive order and prevent the respondent officials from exercising their powers. Procedural History: The petitioners initiated this action by filing a petition for prohibition. They sought to have Executive Order No. 386 declared void and to restrain the respondent municipal officials of Balabagan from performing their duties. The case was brought before the Supreme Court, which considered the arguments presented by both parties, including the respondents' defense that Balabagan was a de facto corporation. The Petition: The petitioners are seeking a writ of prohibition to nullify Executive Order No. 386, arguing that the President's power to create municipalities under Section 68 of the Administrative Code has been rendered unconstitutional by previous Supreme Court rulings, specifically Pelaez v. Auditor General and Municipality of San Joaquin v. Siva. They contend that this executive order, lacking a constitutional basis, is void and that the officials appointed or elected under it have no legal authority to act. The petition relies on the principle that an unconstitutional act is inoperative and confers no rights or duties.
Issue(s)
Whether Executive Order 386, which created the municipality of Balabagan, is void. Whether the municipality of Balabagan can be considered a de facto corporation whose existence cannot be collaterally attacked. Whether the declaration of unconstitutionality of Executive Order 386 has retroactive effect, nullifying all acts performed by the municipality of Balabagan prior to the declaration.
Ruling
The petition is granted. Executive Order 386 is declared void, and the respondents are permanently restrained from performing the duties and functions of their respective offices.
Ratio Decidendi
On the validity of Executive Order 386: The Court reiterated the ruling in Pelaez v. Auditor General, which declared Section 68 of the Administrative Code unconstitutional for undue delegation of legislative power and for being incompatible with the 1935 Constitution. Consequently, Executive Order 386, issued under this unconstitutional provision, is void. The Court emphasized that an unconstitutional act is inoperative as though it had never been passed, conferring no rights and imposing no duties. On whether Balabagan is a de facto corporation: The Court held that Balabagan could not be considered a de facto corporation. While generally, the existence of a de facto corporation organized under color of a statute cannot be collaterally attacked, this rule applies only if it is at least a de facto corporation. For a de facto corporation to exist, there must be a color of authority, which can stem from a valid law or an unconstitutional law that is valid on its face and has not yet been declared void, provided a warrant for its creation can be found in some other valid law or the constitution. In this case, Executive Order 386 was the sole basis for Balabagan's creation, and since it was void from the beginning, it conferred no color of authority. Therefore, Balabagan was not even a de facto corporation and its existence could be questioned directly or collaterally. On the effect of the declaration of unconstitutionality: Citing Chicot County Drainage District v. Baxter State Bank, the Court clarified that while an unconstitutional statute is inoperative, its existence prior to the declaration of unconstitutionality is an operative fact that cannot justly be ignored. The past cannot always be erased by a new judicial declaration. The Court acknowledged that questions of vested rights, status of prior determinations, and public policy must be considered. However, in this specific case, the primary issue was the legal existence of the municipality itself, not necessarily the validity of specific acts performed by its officers in reliance on its supposed existence. The Court's ruling focused on restraining future actions of the respondents, implying that while past acts might be considered operative facts, the municipality's legal existence was nullified.
Main Doctrine
A municipality organized under an executive order that is later declared unconstitutional cannot be considered a de facto corporation if there is no other valid law providing color of authority for its creation. However, the existence of such an executive order prior to its declaration of invalidity is an operative fact that cannot justly be ignored.