Chapter 15

The Bulk Sales Law

(Republic Act No. 3952)
General Purpose:

The purpose of this law is to prevent the defrauding of

creditors by the secret sale or disposal in bulk of all or
substantially all of a merchant's stock of goods.
Coverage:
Under Section 2 of the Bulk Sales law, a sale is a sale in bulk
within the contemplation of the Bulk Sales Law when:
(a) there is a sale, transfer, mortgage or assignment of a stock
of goods, wares, merchandise, provisions or materials other
than in the ordinary course of trade and regular prosecution
of business,
(b) the sale is of all or substantially all of the business or trade,
or
(c) when the sale is of all or substantially all of the fixtures and
equipment used in business (Sec. 2, Act. No. 3952)
 "stocks in trade“ refers to those which are kept for sale in
a mercantile house

 "merchandise“ means such things as are usually bought

and sold by merchants.

 "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
Bulk sales laws generally apply to retail merchants, traders
and dealers.

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 its business, which is not engaged in the business
of selling stocks in trade.
People vs. Wong Szu Tung

The Court of Appeals held that the sale of a foundry

shop was not covered by the Bulk Sales Law, for what
was sold was the shop itself, together with the goodwill
and credits, equipment, tools and machinery, including
a Dodge truck. These items did not constitute a sale of a
stock of merchandise, goods, wares, provisions or
materials in bulk as what was provided in Secton 2 of the
Bulk Sales Law.