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Municipality of Malabang v.

Pangandapun Benito
27 SCRA 533, G.R. L-28113, March 28, 1969
Petitioner Amer Balindong is the mayor of Malabang, Lanao del Sur while the respondents include the
mayor and councilors of Balabagan, Lanao del Sur. On March 15, 1960, Balabagan was created under EO 386 by
then President Carlos Garcia. Petitioners, however, brought an action for prohibition to nullify said executive order
and to restrain respondents from performing the functions of their respective office.
Respondents countered that 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 5 years before the
institution of this action. It contended that as a de facto corporation, its existence cannot be collaterally attacked,
althought it may be inquired into directly in an action for quo warranto at the instance of the State and not of an
individual, like Balindong.
WON the municipality of Balabagan is a de facto corporation considering that it was organized under a statute
subsequently declared void.
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 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.
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,
bonds issued by a board of commissioners created under an invalid statute are 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."

La Campana Coffee Factory, Inc. v. Kaisahan ng mga Manggagawa sa La Campana

93 Phil. 160, G.R. L-5677, May 25, 1953
Tan Tong, has since 1932 been engaged in the business of buying and selling gaugau under the trade
name La Campana Gaugau Packing with an establishment in Binondo, Manila, which was later on transferred in
Quezon City. Later, Tan Tong and his family organized a family corporation known as La Campana Coffee Factory
Co., Inc., with its principal office still located in the same place as that of La Campana Gaugau Packing.
Before said corporation was formed, Tan Tong entered into a bargaining agreement with Phil. Legion of
Organized Workers (PLOW) to which the union of Tan Tongs employees was affiliated. Later on, these employees
formed an organization, Kaisahan ng mga Manggagawa sa La Campana (Kaisahan), and applied for registration in
the Department of Labor as an independent entity.
Subsequently, Kaisahan demanded for higher wages and more privileges addressed to La Campana Starch
and Coffee Factory. However, the demand was not granted, and the same matter was not settled amicably. The
Department of Labor then certified the dispute before the CIR.
The corporations (combined) and the PLOW moved for the dismissal of the case on the ground that the
action is directed against two different entities with distinct personalities, the La Campana Starch Factory and the
La Camapana Coffee Factory, Inc. However, such motion was denied by the CIR.
A Motion for Reconsideration was filed on the ground that CIR has no jurisdiction over the case.

WON the two corporations are separate entities and thus the jurisdictional number required by law was not met.
No. La Campana Gaugau Packing and La Campana Coffee Factory are operating under one single management,
that is, as one business though with two trade names. It is true that the coffee factory is a corporation and, by legal
fiction, an entity existing separate and apart from the persons composing it Tan Tong and his family. However, it
is settled that this fiction of law, which has been introduced as a matter of convenience and to subserve the ends
of justie, cannot be invoked to further an end subversive of that purpose.
In the case at bar, Tan Tong owns the gaugau factory and is also the exclusive owner of the coffee factory
apart from his family. The CIR found that the two factories have only 1 office, 1 management, and 1 payroll, and
that the laborers of both factories are interchangeable.
Hence, the attempt to make the two factories appear as two separate businesses is but a device to defeat
the ends of the law and should not be permitted to prevail.
There being only one entity, CIR has jurisdiction to take cognizance over the case since the number of
employees of La Campana Gaugau Packing involved in the case is more than the jurisdictional number required,
which is 31.