BULK SALES LAW

Case Overview and Summary

The Bulk Sales Law

Definitions and Coverage (Section 2):
- Defines a "sale and transfer in bulk" as any sale, transfer, mortgage, or assignment of:
  • A stock of goods, merchandise, provisions, or materials not in the ordinary course of business
  • All or substantially all of the business, trade, fixtures, or equipment
- Excludes transactions where the vendor produces a written waiver from creditors

Sworn Statement of Creditors (Section 3):
- Before receiving payment, the vendor must provide the buyer with a sworn statement listing:
  • Names and addresses of all creditors
  • Amounts owed or to be owed to each creditor
- The statement must be verified under oath

Fraudulent and Void Sale (Section 4):
- Any bulk sale without providing the sworn statement and applying the proceeds to pay creditors pro rata is fraudulent and void

Inventory and Notification (Section 5):
- At least 10 days before the sale, the vendor must:
  • Make a detailed inventory showing quantities and cost prices
  • Notify all creditors listed in the sworn statement of the sale details

False Statements (Section 6):
- Knowingly making or delivering a false or incomplete sworn statement violates the law

Nominal Consideration Transfers (Section 7):
- It is unlawful to transfer bulk goods without consideration or for nominal consideration

Exclusions (Section 8):
- The law does not apply to executors, administrators, receivers, assignees in insolvency, or public officers acting under judicial process

Registration and Fees (Section 9):
- The sworn statement must be registered with the Bureau of Commerce
- A fee of 5 pesos is charged for registration

Administration and Enforcement (Section 10):
- The Director of the Bureau of Commerce and Industry administers and enforces the law
- The Director can prescribe rules and regulations for enforcement

Penalties (Section 11):
- Violating the law can result in:
  • Imprisonment of 6 months to 5 years
  • Fine not exceeding 5,000 pesos
  • Both imprisonment and fine, at the court's discretion