MALABANG v. BENITO, G.R. No. L-28113, March 28, 1969 (Digested Case)

Re: De facto municipal corporation

FACTS: Petitioners assailed the validity of EO 386 of the then President Carlos P. Garcia, which created the Municipality of Balabagan out of barrios and sitios of Malabang. Petitioner relied on the ruling in Pelaez v. Auditor General while respondent contended that  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.

WON:

(1) WON the controverted matter may be attacked collateraly.

(2) WON EO 386 is constitutional.

HELD:

(1) Yes. It is indeed true that, generally, an inquiry into the legal existence of 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. But the rule disallowing collateral attacks applies only where the municipal corporation is at least a de facto corporations. 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.

(2) No. 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".