Law Summary
Definitions and Application
- "Sale and transfer in bulk" means transactions involving a stock of goods or substantially all of a business.
- Applies when such transactions occur outside regular business operations.
- Written waiver from creditors exempts the transaction from the Act's provisions.
Duty to Deliver Sworn Statement of Creditors
- The vendor, mortgagor, transferor, or assignor must provide a sworn statement before receiving any payment or promissory note.
- The statement must list names, addresses, and amounts owed to all creditors.
- The oath must confirm completeness of the creditor list and accuracy of amounts.
- The statement is delivered to the vendee, mortgagee, or their responsible officers or partners.
Fraudulent Sale, Transfer, or Mortgage
- Receiving payment or note without delivering the sworn statement is a violation.
- Failure to apply purchase or mortgage money pro rata to bona fide creditors renders the transaction fraudulent and void.
Inventory and Notification Requirements
- Vendor must prepare a detailed inventory at least ten days before the transaction.
- Inventory should indicate quantity and, where possible, cost price of each item.
- Vendor must notify each creditor listed in the verified statement of the sale terms at least ten days before transferring possession.
- Notification can be personal or by registered mail.
Prohibition Against False Statements
- Making or delivering a false or incomplete sworn statement about creditors is unlawful.
- Includes knowingly omitting creditors or misstating amounts.
Prohibition of Nominal Consideration Transfers
- It is illegal to transfer title to stock of goods without consideration or for nominal consideration.
Exceptions to the Law
- Does not apply to executors, administrators, receivers, assignees in insolvency, or public officers acting under judicial process.
Registration of Sworn Statement
- Sworn statements must be registered with the Mercantile Registry of the Bureau of Commerce and Industry.
- A registration fee of two pesos is charged to the vendor or mortgagor.
Enforcement and Rulemaking Authority
- The Director of the Bureau of Commerce and Industry administers the Act.
- The Director, with approval from the Department Head, may prescribe rules and regulations for enforcement.
Penalties for Violation
- Violators are subject to imprisonment from six months to five years.
- Fines may be imposed up to five thousand pesos.
- Courts may impose either or both penalties.
Effectivity
- The Act took effect upon approval on December 1, 1932.