Atty. Danilo C. Reyes

February 26, 1980 Atty. Danilo C. Reyes Reyes and Reyes R-111 Limketkai Building Ortigas Ave.,Greenhills San Juan, Metro-Manila Sir : This has reference to your letter dated November 8, 1979 requesting opinion of this Commission relative to the sale of delinquent stocks. llcd It appears that after having complied with Section 41 of the Corporation Law, as amended, the corporation conducted a public bidding for the sale of its delinquent shares of stock. No bidder however appeared to bid at the time and place designated in the notice of delinquency and sale. The Corporate Secretary therefore stated that he is reserving the right of the corporation to bid for the delinquent stocks and that the formal bid will be made during the next meeting of the Board of Directors. In the light of the foregoing facts, you would like to know: "1. Is the reservation of the Corporate Secretary to formally bid for the delinquent stocks during the next meeting of the Board valid? 2. Is it necessary that the actual bidding by the Corporation be made during the date of sale inspite of the fact that there were no bidders who came during the public sale? The provision of law pertinent to your queries states explicitly that: "SECTION 44. ... If at the sale of the stock for unpaid subscription, no bidder offers to pay the amount due with expenses of advertising and costs of sale, the same may be bid in by the corporation , through the secretary or clerk or president or any shareholder thereof, and the amount of subscription due, together with the expenses of advertising and costs of sale, shall be credited as paid in full on the books of the corporation and entry of the transfer of the stock to the corporation made." (Corporation Law, as amended) It is plain from the language of the aforequoted provision of law that if there are no outside bidders, the corporation may made the bid, if it desires to do so. Evidently, the statutory language is permissive or enabling because it authorizes or permits certain action to be taken by those to whom it is addressed or whom it concerns, at their option or in their discretion, but does not imperatively require it. (Black, Interpretation of Law, pp. 534-540).Consequently, we do not see any legal constraint against the prerogative of the Corporate Secretary in reserving the right of the corporation to bid formally until the next meeting of the Board of Directors. It follow also that it is not necessary that the actual bidding by the corporation be made during the date of the sale since there are no other bidders thereto and since the law itself does not prescribe in mandatory terms such course of action. Secondly, please note that although the public has already been apprised of the date, place and hour of sale specified in the notices of delinquency and sale of stock for unpaid subscription, the same however may be extended from time to time for a period of not more than thirty (30) days by order of the board of directors. (Secs. 43, 46 of the Corporation Law, as amended). Corollary thereto, we see no reason why the corporation may not made its bid at some later time if, admittedly, no bidder offers to pay the amount due together with the advertising expenses and costs of sale. Please be advised accordingly. Very truly yours, For the Chairman: (SGD.) ROSARIO N. LOPEZ Director Corporate and Legal Department