ACT NO.

3952
ACT NO. 3952 (As Amended) - THE BULK SALES LAW

Section 1. This Act shall be known as "The Bulk Sales Law."

Purpose and general scheme of the Bulk Sales Law. 1 — (a) Purpose. — Bulk Sales Act is designed to prevent
the defrauding of creditors by the secret sale in bulk of substantially all of a merchant's stock of goods. (b)
General scheme — The general scheme of these statutes is to declare such bulk sales fraudulent and void as to
creditors of the vendor, or presumptively so, unless specified formalities are observed, such as the demanding
and the giving of a list of creditors, the giving of actual or constructive notice to such creditors, by record or
otherwise, and the making of an inventory. (27 C.J. Sec. 881.)

Constitutionality of the Law. — The Bulk Sales Law is constitutional. (Liwanag v. Menghraj, 40 Off. Gaz. 1441.)
Bulk sales statutes have been sustained as a constitutional exercise of the police power, and as such not in
violation of the constitution prohibiting the enactment of laws which shall deprive any person of life, liberty, or
property without due process of law, or which shall deny to such person the equal protection of the laws. Nor
do they infringe constitutional provisions guaranteeing the right of acquiring, possessing, and protecting
property. (27 C.J. Sec. 882.)

Construction of the Law. — These statutes should be read as a whole for purposes of construction. As they are
of a penal character, and in derogation of common law, and of the right to alienate property without restriction,
they are to be strictly construed, and are not to be extended by construction to situations not clearly intended
thereby. However, these statutes should be construed and applied with a view to cure the evil at which they are
aimed, which is the defrauding of creditors by secret bulk sales. (27 C.J. Sec. 884.)

Effect of the Bulk Sales Law as to other fraudulent conveyances. — The effect of bulk sales laws is to create a
new type or kind of fraudulent conveyance (Kelley-Buckley Co. v. Cohen, 195 Mass 585, 81 N.E. 297; Riley
Pennsylvania Oil Co. v. Symmonds, 195 Mo. A. 111, 190 S.W. 1038; Joplin Supply Co. v. Smith, 182 Mo. A. 212,
167 S.W. 649); hence, the provisions of Arts. 1381–1389 of the new Civil Code will not have the effect of
modifying the Bulk Sales Law, and will be applicable only as suppletory law insofar as they are not in conflict
with said law.

Sec. 2. Any sale, transfer, mortgage or assignment of a stock of goods, wares, merchandise, provisions, or
materials otherwise than in the ordinary course of trade and the regular prosecution of the business of the
vendor, mortgagor, transferor, or assignor, or any sale, transfer, mortgage, or assignment of all, or substantially
all, of the business or trade theretofore conducted by the vendor, mortgagor, transferor, or assignor, or of all,
or substantially all, of the fixtures and equipment used in and about the business of the vendor, mortgagor,
transferor; or assignor, shall be deemed to be a sale and transfer in bulk, in contemplation of this Act: Provided,
however, That if such vendor, mortgagor, transferor, or assignor, produces and delivers a written waiver of the
provisions of this Act from his creditors as shown by verified statements, then, and in that case, the provisions
of this section shall not apply.

What shall be deemed to be a sale and transfer in bulk. 2 — A sale and transfer in bulk is any sale, transfer,
mortgage or assignment (1) of a stock of goods, wares, merchandise, provisions, or materials otherwise than in
the ordinary course of trade and the regular prosecution of the business of the vendor, mortgagor, transferor,
or assignor, or (2) of all, or substantially all, of the business or trade theretofore conducted by the vendor,
mortgagor, transferor, or assignor, or (3) of all, or substantially all, of the fixtures and equipment used in and
about the business of the vendor, mortgagor, transferor, or assignor. (Sec. 2, Bulk Sales Law.)

Same; Exceptions to the rule. 3 — It will not be deemed a sale and transfer in bulk in contemplation of this Act,
(1) if such vendor, mortgagor, transferor, or assignor produces and delivers a written waiver of the provisions
of this Act from his creditors as shown by verified statements (Sec. 2, Bulk Sales Law), or (2) if such vendor,
mortgagor, transferor, or assignor is an executor, administrator, receiver assignee in insolvency, or public
officer, acting under judicial process. (Sec. 8, Bulk Sales Law.)

Term "sellers," explained. — The statutes generally do apply to retail merchants, traders, or dealers, and
generally only to persons of that class. (27 C.J. Sec. 888.)

Term "creditors," explained. — The term "creditors" as descriptive of the persons in whose favor the statute
declares a bulk sale fraudulent and void is usually not restricted to any particular class of creditors, but includes
all persons who were creditors of the seller at the time of the sale, although their claims had not been reduced
to judgment, or were not due, and although they were not creditors for merchandise, but were merely general
creditors of the seller in other transactions. But only those who were creditors at the time of the sale complained
of are entitled to the benefits of the statute; creditors whose claims came into existence subsequent to the sale
are not protected thereby. (27 C.J. Sec. 888.)

Waiver and estoppel of creditors. — Creditors may waive the right to the benefit of the bulk sales statutes, or
estop themselves to claim that the sale was invalid because the requirements of the bulk sales statutes were
not complied with. The benefit of the statutes is for those who take the steps prescribed thereby in order to
protect their claims. There is no estoppel unless the conduct was relied on by the other party to his prejudice,
in accordance with the rule as to estoppel generally. (27 C.J. Sec. 887.)

Term "stock, " explained. — The common use of the term "stock" when applied to the goods in a mercantile
house refers to those which are kept for sale. (Albrecht v. Cudihee, 37 Wash. 206, 208, 79 P. 628.)

Term "merchandise," explained. — We think that "merchandise," as used in this act, must be construed to mean
such things as are usually bought and sold in trade by merchants. (People's Sav. Bank v. Van Allsburg, 165 Mich.
524, 526, 131 N.W. 101.) "Merchandise" means something that is sold every day, and is constantly going out of
the store and being replaced by other goods. (Boise Credit Men's Ass'n. v. Ellis, 26 Ida. 438, 449, 144 P. 6, L.R.A.
1915 E, 917.) Thus, "merchandise" may include a stock of meat and other merchandise such as is usually sold
in a market (Virginia-Carolina Chemical Co. v. Bouchelle, 12 Ga. A. 611, 78 S.E. 51), or liquors kept in a saloon
for sale (Marshon v. Toohey, 38 Nev. 248, 148 P. 357); but land and buildings are not "goods, wares, and
merchandise" within the statute. (McMillen v. Nelson, [N. D.] 181 N.W 618; National Trust Co. v. Nadon, 8 Sask.
L. 41, 24 Dom. L.R. 742, 30 West L.R. 588, 7 West Wkly. 1067; Barthels v. Sloance, 7 Sask, L. 376.)

Term "fixtures," explained. — When used in statutes of this character, it refers to such articles of merchandise
usually possessed and annexed to the premises occupied by them to enable them better to store, handle, and
display their wares and which are commonly known as trade fixtures, although removable without material
injury to the premises at or before the end of tenancy. (Brown v. Quigley, 165 Mich. 337, 130 N.W. 690, 34
L.R.A.N.S. 218 [foll. People's Sav. Bank v. Van Allsburg, 165 Mich. 524, 131 N.W. 101.].) But a store building
containing a stock of merchandise and being used for transactions of mercantile business is not a fixture. The
statute has reference to trade fixtures connected with the business and not to the building in which the business
is carried on. (Robbins v. Fuller, [Ark.] 229 S.W. 8; McMillen v. Nelson, [N. D.] 181 N.W. 618.)

"Exempt properties," not within the law. — Bulk sales statutes are intended to operate only on property to which
creditors may look for satisfaction of their claims and consequently have no application to property which is
exempt. (27 C.J. Sec. 889.) See "Property exempt from execution," Sec. 12, Rule 39, Rules of Court. See also
Sec. 35, Act No. 3428, as amended; Arts. 223 et seq., and 1708, new Civil Code; and Sec. 17, Rep. Act No. 1161
(refer to annotations placed above Sec. 48, Insolvency Law, in Volume 2.)

Sec. 3. It shall be the duty of every person who shall sell, mortgage, transfer, or assign any stock of goods,
wares, merchandise, provisions or materials in bulk, for cash or on credit, before receiving from the vendee,
mortgagee, or his, or its agent or representative any part of the purchase price thereof, or any promissory note,
memorandum, or other evidence therefor, to deliver to such vendee, mortgagee, or agent, or if the vendee,
mortgagee, or agent be a corporation, then to the president, vice-president, treasurer, secretary or manager of
said corporation, or, if such vendee or mortgagee be a partnership firm, then to a member thereof, a written
statement sworn to substantially as hereinafter provided, of the names and addresses of all creditors to whom
said vendor or mortgagor may be indebted, together with the amount of indebtedness due or owing, or to
become due or owing by said vendor or mortgagor to each of said creditors, which statement shall be verified
by an oath to the following effect:

PHILIPPINE ISLANDS ) S.S.

Before me, the undersigned authority, personally appeared _________ (vendor, mortgagor, agent or
representative, as the case may be), bearing Res. Cert. No. _____________ issued at _________ on the
__________ day of ___________, who, by me being first duly sworn, upon his oath, deposes and states that
the foregoing statement contains the names of all the creditors of ______________ (vendor, mortgagor)
together with their addresses, and that the amount set opposite each of said respective names, is the amount
now due and owing, and which shall become due and owing by _____________ (vendor or mortgagor) to such
creditors, and that there are no creditors holding claims due or which shall become due, for, or on account of
goods, wares, merchandise, provisions or materials purchased upon credit or on account of money borrowed, to
carry on the business of which said goods, wares, merchandise, provisions of materials are a part, other than as
set forth in said statement.

_______________________
(Signature of vendor, etc.)

Subscribed and sworn to before me this ___________ day of __________, 19____, at ____________

Sufficiency of statement. — Substantial compliance with the statute is essential to validity of the sale or transfer.
(In re Calvi, 185 Fed. 642; Peck v. Hibben, 185 Ind. 623, 114 N.E. 216; Interstate Shirt, etc. Co. v. Windham,
165 Mich. 648, 131 N.W. 102.) A verbal statement that the seller had no creditors is not sufficient compliance
with a statute requiring the statement to be in writing and under oath. (Peck v. Hibben, supra.) If the seller has
no creditors, an unequivocal statement of this fact is necessary in the statement. (Interstate Shirt, etc. Co. v.
Windham, supra; Fitzhugh v. Munnell, 92 Or. 47, 179 P. 679.) An affidavit stating that a stock sold is "entirely
free from debt and that there is no encumbrance thereon, except a certain chattel mortgage given to" a specified
person is insufficient as against existing creditors of the seller. (Interstate Shirt, etc. Co. v. Windham, supra.)
The statute contemplates not only creditors whose claims are due but those whose claims are not due and the
statement must state the facts as to both class of creditors if both exist and if there are none such, the latter
fact must be stated. The statement is ineffectual if it fails to give the addresses of the creditors. If the statement
is defective on its face, the buyer accepts it at his peril. (Fitzhugh v. Munnell, supra.)

Effect of false statement. — If the statement is fair upon its face and the buyer has no knowledge of its
incorrectness, and nothing to put him on inquiry about it, he will be protected in his purchase. (International
Silver Co. v. Hull, 140 Ga. 10, 78 S.E. 609, 45 L.R.A.N.S. 492; Fitzhugh v. Munnell, 92 Or. 47, 179, P. 679; Coach
v. Gage, 70 Or. 182, 138 P. 847.) If the seller misrepresents the amount of his indebtedness, the creditor has no
remedy against the goods sold, but he can prosecute the seller criminally. (Seltzer v. Peddi, 24 Pa. Dist. 456, 41
Pa. Co. 677.) The statute declares the sale void only on the failure of the purchaser to do what is required of
him. It does not declare the sale void if the list of creditors furnished by a vendor under oath is not in fact "full,
accurate and complete." It does not in any way make the purchaser responsible for any incorrectness in the list.
We think it would be unreasonable to so construe it. (Glantz v. Gardiner, 40 R.I. 397, 100 A. 913, 916, L.R.A.
1917 L. 226.)

Sec. 4. Whenever any person shall sell, mortgage, transfer, or assign any stock of goods, wares, merchandise,
provisions or materials, in bulk, for cash or on credit, and shall receive any part of the purchase price, or any
promissory note, or other evidence of indebtedness for said purchase price or advance upon mortgage, without
having first delivered to the vendee or mortgagee or to his or its agent or representative, the sworn statement
provided for in section three hereof, and without applying the purchase or mortgage money of the said property
to the pro rata payment of the bona fide claim or claims of the creditors of the vendor or mortgagor, as shown
upon such sworn statement, he shall be deemed to have violated this Act, and any such sale, transfer or
mortgage shall be fraudulent and void.

What are prohibited are secret conveyances. — What are prohibited are secret conveyances, those made
unaccompanied by a sworn list of creditors and without previous payment of their credits, and those made
gratuitously or for a nominal consideration. Thus, the Bulk Sales Law does not include within its prohibition
sales or mortgages made by a debtor to one of his creditors in preference to another. (Go v. Phil. Nat. Bank, 40
Off. Gaz. 2065; see also Sec. 7, Bulk Sales Law.)

Same; Effect of lack of sworn list of creditors. 4 — A sale made of all the effects in the vendor's store without
the buyer being furnished a sworn list of creditors as required by Sec. 3, is null and void irrespective of the good
or bad faith of the buyer, and judgment creditors may treat such sale as never having been made and proceed
to have execution levied on the properties thus sold. (Chin Asing v. Uy Gongco & Co., [CA] 40 Off. Gaz. 11th
Supp. 142.)

Rights and liabilities; As between purchaser and creditors. 5 — A purchaser in violation of the Bulk Sales Act
acquires no rights in the property purchased as against the creditors of the seller. His status is that of trustee,
or receiver for the benefit of all the creditors of the seller. As such he is responsible for the disposition of the
property. The fact that he has mingled the goods with his own so as to destroy their identity, or that he has
resold the property, does not divest him of his liability to creditors, but on the contrary operates to impose a
personal liability. Application by the seller of the proceeds of a bulk sale to the payment of some of his creditors
does not affect the buyer's liability to other creditors who received none of the proceeds. Where a purchaser
does not comply with the law, the mere fact that on his request the creditor sought to collect from the seller
does not raise an estoppel against him to sue them on his primary liability to them. (27 C.J. Sec. 892.)

Same; As between purchaser and seller. — The bulk sales statutes do not in any way affect the validity of the
transfer as between the immediate parties thereto. A sale not in compliance with the bulk sales statute is valid
as against all persons other than creditors. Notwithstanding a noncompliance with the statutes, title to goods
transferred passes to the transferee as between the parties to the transfer, where it remains until divested by
proceedings instituted by a creditor for that purpose. If the seller has been guilty of fraud to the injury of the
buyer, or if there has been an entire failure of the consideration, the seller cannot hide behind the statute and
thus avoid liability to the purchaser. So the statute does not preclude the seller from recovering the purchase
price of a sale made in violation of its terms; but, where a sale is void for noncompliance with the bulk sales
statutes, it cannot as between the parties be made to operate to give the vendee a lien for the money he has
paid. The vendee, having acted in violation of the law, does not come into equity with clean hands, and is not in
a position to ask for any remedy in a court of equity. It is not a ground to rescind an entire contract by which
property is exchanged for merchandise, without complying with the statutes, that there is a partial failure of
consideration by reason of the fact that creditors assert rights to a part of the merchandise, but damages to the
extent to which the buyer was injured will be awarded. (27 C.J. Sec. 893.)

Same; Between creditors and subsequent purchasers. 6 —The statute does not confer on the creditors of the
vendor who fail to comply with its requirements the right to pursue the property in whosoever hands it may fall.
To authorize the giving of relief to creditors it must be shown that the holder of the property transferred is the
fraudulent vendee himself or some person who took the property from him with knowledge that the transfer
was fraudulent. The statutes do not render an innocent purchaser for value from the original purchaser liable to
creditors of the original seller nor affect his title to the property. But if the circumstances are such as to bind
the subsequent purchaser with constructive notice that the sale to his vendor was fraudulent, the property will
be liable in his hands to creditors of the original vendor. (27 C.J., Sec. 894.)

Remedies available to creditors. — Under the general prevailing rule that mere non-compliance with the statute
does not render the purchaser personally liable to creditors, an ordinary action against the purchaser by
creditors to obtain a money judgment will not lie, unless the purchaser has sold or otherwise disposed of, or
dealt with, the property, so as to become personally liable to creditors for the value of it. The proper remedy is
one against the goods to subject them to the payment of the debt, such as execution, attachment, garnishment,
or by a proceeding in equity. (27 C.J. Sec. 895.)

Same; Replevin. — A creditor of the seller cannot maintain replevin against the purchaser to recover property
sold in contravention of the Bulk Sales Act. But the purchaser may maintain replevin to recover property seized
on attachment or execution against the seller, and in such action the validity of the sale may be determined. (27
C.J. Sec. 900.)

Sec. 5. It shall be the duty of every vendor, transferor, mortgagor, or assignor, at least ten days before the sale,
transfer or execution of a mortgage upon any stock of goods, wares, merchandise, provisions or materials, in
bulk, to make a full detailed inventory thereof and to preserve the same showing the quantity and, so far as is
possible with the exercise of reasonable diligence, the cost price to the vendor, transferor, mortgagor or assignor
of each article to be included in the sale, transfer, mortgage, or assignment, and notify every creditor whose
name and address is set forth in the verified statement of the vendor, transferor, mortgagor, or assignor, at
least ten days before transferring possession thereof, personally or by registered mail, of the price, terms and
conditions of the sale, transfer, mortgage, or assignment. 7

Sufficiency of notice. — No notice other than the one prescribed by the statute will be sufficient (In re Thompson,
242 Fed. 602; Maultrie Grocery Co. v. Holmes-Hartsfield Co., 22 Ga. A. 512, 96 S.E. 346) and a substantial
compliance with the requirements as to notice is essential (Stuart v. Elk Horn Bank, etc. Co., 123 Ark. 265, 185
S.W. 263, Ann. Cas. 1918A 268.) Thus, if the list furnished is not verified as required by statute, and omits to
name certain creditors who are not notified, the sale is void as to such creditors, whether their omission was
fraudulent or otherwise. (Williams v. J.W. Crowdus Drug Co. [Tex. Civ. A.] 167 S.W. 187.)

Same; Time of notice. — Where the statute requires the vendor, transferor, mortgagor or assignor to notify
personally or by registered mail every creditor "at least ten days before transferring possession" of any stock
of goods, wares, merchandise, provisions or materials, in bulk, it is sufficiently complied with by sending notice
by registered mail at least ten days before transferring possession thereof. It is not necessary that the notice
shall have been received ten days before such transfer of possession. (See Wyone Shoe Co. v. Daniels, 136 Ga.
192, 71 S.E. 1.)

Sec. 6. Any vendor, transferor, mortgagor or assignor of any stock of goods, wares, merchandise, provisions or
materials, in bulk, or any person acting for, or on behalf of any such vendor, transferor, mortgagor, or assignor,
who shall knowingly or willfully make, or deliver or cause to be made or delivered, a statement, as provided for
in section three hereof, which shall not include the names of all such creditors, with the correct amount due and
to become due to each of them, or shall contain any false or untrue statement, shall be deemed to have violated
the provisions of this Act.

Sec. 7. It shall be unlawful for any person, firm or corporation, as owner of any stock of goods, wares,
merchandise, provisions or materials, in bulk, to transfer title to the same without consideration or for a nominal
consideration only.

Sec. 8. Nothing in this Act contained shall apply to executors, administrators, receivers, assignees in insolvency,
or public officers, acting under judicial process.

Sec. 9. The sworn statement containing the names and addresses of all creditors of the vendor or mortgagor
provided for in section three of this Act, shall be registered in the Bureau of Commerce. For the registration of
each such sworn statement a fee of five pesos shall be charged to the vendor or mortgagor of the stock of goods,
wares, merchandise, provisions or materials, in bulk. (As amended by Rep. Act No. 111.)

Sec. 10. The provisions of this Act shall be administered by the Director of the Bureau of Commerce, 5 who is
hereby empowered, with the approval of the Department Head, to prescribe and adopt from time to time such
rules and regulations as may be deemed necessary for the proper and efficient enforcement of the provisions of
this Act.

Sec. 11. Any person violating any provision of this Act shall, upon conviction thereof, be punished by
imprisonment for not less than six months, nor more than five years, or fined in a sum not exceeding five
thousand pesos, or by both such imprisonment and fine, in the discretion of the court.

Rules as to subsidiary imprisonment. — No subsidiary imprisonment should be imposed on an accused found

Sec. 12. This Act shall take effect on its approval.

1.) There is a sale, transfer, mortgage or assignment of stock other than in the
ordinary course of business
2.) All or substantially all of the trade or business is sold, transferred or
mortgaged
3.) All or substantially all of the fixtures and equipment of the business are sold

The purpose of the bulk sales law (Act 3952) is to prevent the defrauding of
creditors by secret sale or disposal in bulk of all or substantially all of the
merchant's stock or goods. "Substantially" means 80%. It doesn't only apply to
creditors whose claims are already due at the time of the sale, but also to those
whose claims aren't due but are already existing at the time of the sale.

The bulk sales law will not apply to the following:

1.) Sales/transfers in the ordinary course of trade or business

When a bulk sale is made, the seller must do the following:

1.) Deliver a sworn statement containing a list of all his creditors with the
corresponding amounts of indebtedness to the buyer
2.) Apply the payment received from the sale pro rata to the claims of the
creditors as shown in the sworn statement
3.) Make a full and detailed inventory of the stock to be sold/mortgaged in bulk
4.) Inform the creditors of the sale at least 10 days before it actually takes place

Penalties

Violations of the bulk sales law makes the sale valid between the parties but void
for the affected creditors. The buyer will hold the property in trust for the seller
and is liable to the seller's creditors for properties forming part of the bulk and
already disposed by him.

Also, the seller can be punished with a prison term of 6 months to 5 years and/or
a fine of up to Php5,000.00.

Whenever one sells all or substantially all of his assets, both the lawyer of the buyer
and of the seller often require the seller to comply with the requirements of the Bulk
Sales Law (the Law) before the sale actually takes place. The Law requires certain
inconvenient formalities to be complied with before a sale of transfer in bulk of items
specified in the Law may take place, other than in the ordinary course of business.
Under the Law, if the seller is unable to obtain a written waiver from all his creditors
of the provisions of the Law, the sale will be void as against the seller’s creditors, unless
the seller delivers to the purchaser a list of his creditors with the amount owing to
each, conducts an inventory of the assets and gives prior notice of at least 10 days to
his creditors of the proposed sale and the terms of the proposed sale. However, in
most cases, the sale of all or substantially all of one’s assets is not covered by the Law,
for the Law covers only the bulk sales contemplated in Section 2.

What is a Bulk Sales? Under Section 2, a sale or transfer is in bulk if it involves any
sale, transfer, mortgage or assignment of "(a) a stock of goods, wares, merchandise,
provisions or materials otherwise than in the ordinary course of trade and the regular
prosecution of the business of the vendor, mortgagor, transferor, or (b) all or
substantially all of the business or trade theretofore conducted by the vendor,
mortgagor, transferor, or assignor, or (c) all or substantially all of the fixtures and
equipment used in or about the business of the vendor, mortgagor, transferor or
assignor."

The common meaning of the term "stocks in trade" when applied to goods in a
mercantile house refers to those which are kept for sale. The term "merchandise",
when used in bulk sales laws, means such things as are usually bought and sold by
merchants. Upon the other hand, when used in bulk sales laws, the term "fixtures"
refer to such articles of merchandise usually possessed and affixed to the premises
occupied by them to enable them to better store, handle and display their wares and
which are commonly known as trade fixtures, although they can be removed without
material injury to the premises before or at the end of tenancy (1 Martin, Philippine
Commercial Laws [1988] 509-510; 2 Agbayani, Commentaries and Jurisprudence on
the Philippine Commercial Laws ([1992] 775-776).

Law Applies to Merchants. Bulk sales laws generally apply to retail merchants, traders
and dealers and generally only to persons of that class (1 Martin, op. cit. 509). On the
basis of Section 2, the Bulk Sales Law does not apply to a bulk sale by a manufacturer
because of the nature of the latter’s business, i.e., it is not engaged in the business of
selling stocks in trade (2 Agbayani, op. cit. 776). The sale of an entire automobile repair
shop, together with its goodwill, credit, machineries, tools and because this would
involve the sale of a business engaged in rendering services and not the sale of goods
(Gopengco, Compendium of Commercial Law [1983] 598). In addition, the sale of a
barber shop would not be covered by the Law, since no stocks in trade are really
involved in the operation of a barber shop (Vitug, Pandect of Commercial Law and
Jurisprudence [1997] 803.

Applicable Jurisprudence. In People vs. Wong Szu Tung, CA-G.R. No. 9776-R, March
26, 1954, 50 0.G. 4867, the Court of Appeals held that the sale of a foundry shop was
not covered by the Bulk Sales Law, where what was sold was the shop itself, together
with the goodwill and credits, equipment, tools and machinery, including a Dodge
truck, because this did not constitute a sale of a stock of merchandise, goods, wares,
provisions or materials in bulk. I have been unable to find any jurisprudence to the
contrary. In People vs. Wong Szu Tung, the Court of Appeals also reaffirmed the rule
of statutory construction that should be applied in construing the Bulk Sales Law.
Because the law is penal in nature, the Court declared that it must be strictly construed
against the State and liberally in favor of the accused. The law should not be extended
by construction to situations not clearly intended thereby (1 Martin, op. cit. 507).

In the words of retired Supreme Court Justice Jose Vitug: "The essential provisions of
the law, i.e., Section 3 to 7, inclusive, specifically and repeatedly mention ‘stock of
goods, wares, merchandise, provisions or materials in bulk’ in their application, a
situation which conveys that the legislative intent is merely to govern the bulk sales of
stocks in trade, and/or fixtures and equipment used in that business, by the vendor,
transferor, mortgagor or assignor (Vitug, op. cit. 803)."
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law-does-not-apply-all-bulk-sales#IuMbkufwIzOABFOy.99a