G.R. No. 47411 ; June 27, 1941
J. A. WOLFSON, petitioner-appellant, vs. MANILA STOCK EXCHANGE, respondent-appellee.

FACTS

Petitioner J. A. Wolfson assisted in organizing the Manila Stock Exchange, a non-stock corporation, for a nominal fee and agreed to act as its temporary secretary. In recognition of his services, the original incorporators, at a meeting on August 16, 1927, unanimously adopted a resolution electing Wolfson as an honorary member for life, granting him all rights and privileges of a regular member except the right to vote and exempting him from all dues and assessments. A certificate of membership was issued to him on September 1, 1927. Nine years later, on September 4, 1936, Wolfson wrote to the Exchange requesting a copy of its revised rules and regulations. The Exchange responded that the rules pertained only to regular members and contained no provisions for honorary members. After further correspondence, the Exchange’s board of directors, on October 2, 1936, unanimously adopted a resolution rescinding Wolfson’s honorary life membership. Wolfson then filed a petition for a writ of mandamus to compel the Exchange to revoke the rescinding resolution and restore his membership rights. The Court of First Instance of Manila denied the writ and ordered Wolfson to surrender his membership certificate for cancellation, prompting this appeal.

ISSUE

Whether the resolution of August 16, 1927, electing Wolfson as an honorary life member of the Manila Stock Exchange, is valid and enforceable.

RULING

The Supreme Court ruled that the resolution was invalid and unenforceable. The Court affirmed the lower court’s judgment and denied the petition for mandamus.
The Court based its decision on the following points:
1. Violation of Corporate By-Laws: The election did not comply with the mandatory procedure prescribed in the Exchange’s by-laws. The by-laws specified that membership was limited to male persons aged 21 and above who carry on or desire to carry on the business of stockbroker. Applicants were required to submit a written application, have it posted for seven days, and be voted upon by the Board of Directors, which required three affirmative votes. Members were also liable for an entrance fee and annual subscriptions. Wolfson, a practicing attorney, never alleged or proved he desired to be a stockbroker. His election bypassed all these requirements, and the by-laws contained no provision authorizing the creation of an “honorary membership” or for exempting anyone from the established procedures and fees.
2. Lack of Corporate Authority: The incorporators who passed the resolution in 1927 had no power to create a new class of membership not provided for in the articles of incorporation or by-laws. Their act was ultra vires and therefore void.
3. Estoppel by Laches: Wolfson was estopped from asserting his claim due to inaction and delay. For nearly a decade, he made no claim to his membership rights. During this period, the Exchange’s membership increased from the original incorporators to thirty, with new members purchasing seats for substantial sums (up to P85,000) without knowledge of Wolfson’s claim. By his silence, Wolfson allowed the public and the new members to believe no such life membership existed, and it would be inequitable to allow him to assert it now to the prejudice of those who relied on the apparent state of affairs.
The Court held that mandamus does not lie to enforce an invalid right. The right sought to be enforced must be certain and clear, which Wolfson’s was not. Consequently, the writ was properly denied.