The Bulk Sales Law

The Bulk Sales Law
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.
Acceptance of delivery and payment of purchase price
The buyer is obligated to accept delivery and to pay the price of the thing sold at the time
and place[1] stipulated in the contract.[2]Except as otherwise agreed upon, the buyer is not
required to accept delivery by installments.[3]
Reasonable opportunity to examine
If the buyer has not yet previously examined goods delivered to him, he is deemed not to
have accepted them unless and until he has had a reasonable opportunity of examining
them for the purpose of ascertaining whether they are in conformity with the contract if
there is no stipulation to the contrary.[4] If the seller physically tenders delivery of the goods
to the buyer, the seller is required, upon request of the buyer, to afford the buyer a
reasonable opportunity of examining the goods for the purpose of ascertaining whether they
are in conformity with the contract.[5]
Goods delivered to a carrier

If the seller delivers the goods to a carrier pursuant to an agreement or order from the
buyer, upon the terms that the goods are not to be delivered by the carrier to the buyer until
he has paid the price, whether such terms are indicated by marking the goods with the
words collect on delivery, or otherwise, the buyer is not entitled to examine the goods
before the payment of the price, in the absence of agreement or usage of trade permitting
such examination.[6]
Implied acceptance
The buyer is deemed to have accepted the goods in any of the following situations:
1. If he intimates to the seller that he has accepted them; [7]
2. If the goods have been delivered to him, and he does any act in relation to them
which is inconsistent with the ownership of the seller; [8] or
3. If, after the lapse of a reasonable time, he retains the goods without intimating to the
seller that he has rejected them.[9]
Non-discharge of seller from liability
Unless otherwise stipulated or by implied agreement, the buyers acceptance of the goods
does not discharge the seller from liability in damages or other legal remedy for breach of
any promise or warranty in the sales contract.[10] However, the buyer is required to give
notice to the seller of the breach in any of the warranty within a reasonable period of time
after the buyer knows or ought to know of such breach; otherwise, the seller will not be held
be liable for such breach.[11]
Buyer not obligated to return goods despite refusal to accept
Except as otherwise agreed upon, if goods are delivered to the buyer, and he refuses to
accept them, having the right so to do, he is not bound to return them to the seller, but it is
sufficient if he notifies the seller that he refuses to accept them.[12] Ife he voluntarily
constitutes himself a depositary thereof, he will be liable as such.[13]
Buyer owes interest from delivery to payment
The buyer is required to pay interest for the period between the delivery of the thing and the
payment of the price, in the following three cases: (a) should it have been so stipulated; (b)
should the thing sold and delivered produce fruits or income; or (c) should he be in default,
from the time of judicial or extrajudicial demand for the payment of the price.[14]
Right to suspend payment
The buyer may suspend payment of the price until the seller has caused to stop the
disturbance or danger in cases where the buyer is disturbed in the possession or ownership
of the thing acquired, or if he has reasonable grounds to fear such disturbance, by a
vindicatory action or a foreclosure of mortgage.[15] Such right of suspension will not apply if
the seller has given security for the return of the price in a proper case, or it has been
stipulated that, notwithstanding any such contingency, the vendee is bound to make the
payment.[16] The right of suspension does not cover a mere act of trespass.[17]
Rescission of sale for fear of loss of immovable property sold and price
The seller may initiate an action for rescission of the sale if he has reasonable grounds to
fear the loss of immovable property sold and its price.[18]
Payment after expiration of period in a sale of immovable property
In a sale of immovable property with a stipulation that failure to pay the price at the agreed
time rescission will take place by right, the buyer may still pay, even after the expiration of
the period, as long as no demand for rescission of the contract has been made upon him
either judicially or by a notarial act.[19]
Rescission of sale of movable in favor of seller
The rescission of the sale will take place by right in the interest of the seller in case the
buyer upon the expiration of the period fixed for the delivery of the thing, should not have
appeared to receive it, or, having appeared, he should not have tendered the price at the
same time, unless a longer period has been stipulated for its payment.[20]

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The Bulk Sales Law

A sale is considered in bulk in any of the following instances:

Goods delivered to a carrier

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