I'm Giancarlo Enrico S. Pozon, a Wushu instructor, investor and Barrister... That's right, Barrister; I graduated from law school and took the Bar Exams, now I'm waiting for the results. I created this blog to make Philippine Law easy to understand for the average person. It's all about free legal advice. There are many law blogs. But the problem is that many of them are written for lawyers and law students. They use words that can't be understood by ordinary people.
Many lawyers, judges and law students consider themselves as superior to most human beings because of their knowledge of the law. It bothers me since the law is supposed to serve society. Since the law is meant to serve society as a whole, it is important that is must be understood by everybody.
This does not mean that we should all become lawyers. It means that although law is a highly specialized profession, the first duty of everybody in this profession is to make the law understandable to all; that's why all these articles are free legal advice.
Like I said, this blog is about law -but it's for the ordinary people, not the lawyers. It's for the ordinary folk so they will know what is good and bad for them, and that making them aware of the law will help us all improve society as a whole. This is free legal advice for everybody!
A sale is considered in bulk in any of the following instances:
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
2.) There is a written waiver from the creditors
3.) If the sale is made by an executor, administrator, receiver or assignee in insolvency proceedings or a public officer acting under judicial process
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.
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