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TITLE IX : MERGER AND CONSOLIDATION

Sec. 76. Plan or merger of consolidation. Two or more corporations may merge into a single
corporation which shall be one of the constituent corporations or may consolidate into a new single
corporation which shall be the consolidated corporation.
The board of directors or trustees of each corporation, party to the merger or consolidation, shall
approve a plan of merger or consolidation setting forth the following:
1. The names of the corporations proposing to merge or consolidate, hereinafter referred to as the
constituent corporations;
2. The terms of the merger or consolidation and the mode of carrying the same into effect;
3. A statement of the changes, if any, in the articles of incorporation of the surviving corporation in case
of merger; and, with respect to the consolidated corporation in case of consolidation, all the statements
required to be set forth in the articles of incorporation for corporations organized under this Code; and
4. Such other provisions with respect to the proposed merger or consolidation as are deemed necessary
or desirable. (n)
Sec. 77. Stockholders or members approval. Upon approval by majority vote of each of the board of
directors or trustees of the constituent corporations of the plan of merger or consolidation, the same
shall be submitted for approval by the stockholders or members of each of such corporations at
separate corporate meetings duly called for the purpose. Notice of such meetings shall be given to all
stockholders or members of the respective corporations, at least two (2) weeks prior to the date of the
meeting, either personally or by registered mail. Said notice shall state the purpose of the meeting and
shall include a copy or a summary of the plan of merger or consolidation. The affirmative vote of
stockholders representing at least two-thirds (2/3) of the outstanding capital stock of each corporation
in the case of stock corporations or at least two-thirds (2/3) of the members in the case of non-stock
corporations shall be necessary for the approval of such plan. Any dissenting stockholder in stock
corporations may exercise his appraisal right in accordance with the Code: Provided, That if after the
approval by the stockholders of such plan, the board of directors decides to abandon the plan, the
appraisal right shall be extinguished.
Any amendment to the plan of merger or consolidation may be made, provided such amendment is
approved by majority vote of the respective boards of directors or trustees of all the constituent
corporations and ratified by the affirmative vote of stockholders representing at least two-thirds (2/3) of
the outstanding capital stock or of two-thirds (2/3) of the members of each of the constituent

corporations. Such plan, together with any amendment, shall be considered as the agreement of merger
or consolidation. (n)
Sec. 78. Articles of merger or consolidation. After the approval by the stockholders or members as
required by the preceding section, articles of merger or articles of consolidation shall be executed by
each of the constituent corporations, to be signed by the president or vice-president and certified by the
secretary or assistant secretary of each corporation setting forth:
1. The plan of the merger or the plan of consolidation;
2. As to stock corporations, the number of shares outstanding, or in the case of non-stock corporations,
the number of members; and
3. As to each corporation, the number of shares or members voting for and against such plan,
respectively. (n)
Sec. 79. Effectivity of merger or consolidation. The articles of merger or of consolidation, signed and
certified as herein above required, shall be submitted to the Securities and Exchange Commission in
quadruplicate for its approval: Provided, That in the case of merger or consolidation of banks or banking
institutions, building and loan associations, trust companies, insurance companies, public utilities,
educational institutions and other special corporations governed by special laws, the favorable
recommendation of the appropriate government agency shall first be obtained. If the Commission is
satisfied that the merger or consolidation of the corporations concerned is not inconsistent with the
provisions of this Code and existing laws, it shall issue a certificate of merger or of consolidation, at
which time the merger or consolidation shall be effective.
If, upon investigation, the Securities and Exchange Commission has reason to believe that the proposed
merger or consolidation is contrary to or inconsistent with the provisions of this Code or existing laws, it
shall set a hearing to give the corporations concerned the opportunity to be heard. Written notice of the
date, time and place of hearing shall be given to each constituent corporation at least two (2) weeks
before said hearing. The Commission shall thereafter proceed as provided in this Code. (n)
Sec. 80. Effects or merger or consolidation. The merger or consolidation shall have the following
effects:
1. The constituent corporations shall become a single corporation which, in case of merger, shall be the
surviving corporation designated in the plan of merger; and, in case of consolidation, shall be the
consolidated corporation designated in the plan of consolidation;

2. The separate existence of the constituent corporations shall cease, except that of the surviving or the
consolidated corporation;
3. The surviving or the consolidated corporation shall possess all the rights, privileges, immunities and
powers and shall be subject to all the duties and liabilities of a corporation organized under this Code;
4. The surviving or the consolidated corporation shall thereupon and thereafter possess all the rights,
privileges, immunities and franchises of each of the constituent corporations; and all property, real or
personal, and all receivables due on whatever account, including subscriptions to shares and other
choses in action, and all and every other interest of, or belonging to, or due to each constituent
corporation, shall be deemed transferred to and vested in such surviving or consolidated corporation
without further act or deed; and
5. The surviving or consolidated corporation shall be responsible and liable for all the liabilities and
obligations of each of the constituent corporations in the same manner as if such surviving or
consolidated corporation had itself incurred such liabilities or obligations; and any pending claim, action
or proceeding brought by or against any of such constituent corporations may be prosecuted by or
against the surviving or consolidated corporation. The rights of creditors or liens upon the property of
any of such constituent corporations shall not be impaired by such merger or consolidation. (n)

Corporate Law Case Digest: Edward J. Nell Co. V. Pacific Farms Inc. (1965)
G.R. No. L-20850
November 29, 1965
Lessons Applicable: Types of Acquisitions / Transfers (Corporate Law)

FACTS:
March 21, 1958: Pacific Farms Inc. (Pacific) purchased as highest bidder from a bank auction 1,000
shares of stock of Insular Farms for P285,126.99 and BOD of Insular as reorganized, then caused its
assets, including its leasehold rights over a public land in Bolinao, Pangasinan, to be sold to Insular

for P10,000.00 and paid for the other assets of Insular Farms.
October 9, 1958: Edward J. Nell Co. (Edward) in Civil Case No. 58579 of the Municipal Court of
Manila against Insular Farms, Inc. (Insular) a judgment for the sum of P1,853.80 unpaid balance for a
pump sold with interest plus P125 attorney's fees and P84.00 as costs.

August 14, 1959: A writ of execution, issued after the judgment had become final returned
unsatisfied, stating that Insular Farms had no leviable property.

November 13, 1959: Edward filed the present action against Pacific upon the theory that Pacific is
the alter ego of Insular Farms
CA affirmed Municipal Court: dismissed the complaint
ISSUE: W/N Pacific Farms is an alter ego of Insular Farms

HELD: NO. Appeal Affirmed


GR: where one corporation sells or otherwise transfers all of its assets to another corporation, the
latter is not liable for the debts and liabilities of the transferor
EX:
1. where the purchaser expressly or impliedly agrees to assume such debts - no proof
2. where the transaction amounts to a consolidation or merger of the corporations - not claimed
3. where the purchasing corporation is merely a continuation of the selling corporation; - no proof
4. where the transaction is entered into fraudulently in order to escape liability for such debts - no
proof
price paid was fair and reasonable

PNB vs. Andrada Electric & Engineering Co.Case Digest


Philippine National Bank vs. Andrada Electric & Engineering Co.
[GR 142936, 17 April 2002]

Facts: On 26 August 1975, the Philippine national Bank (PNB) acquired the assets of the Pampanga Sugar
Mills (PASUMIL) that were earlier foreclosed by the Development Bank of the Philippines (DBP) under
LOI 311. The PNB organized the ational Sugar Development Corporation (NASUDECO) in September
1975, to take ownership and possession of the assets and ultimately to nationalize and consolidate its
interest in other PNB controlled sugar mills. Prior to 29 October 1971, PASUMIL engaged the services of
the Andrada Electric & Engineering Company (AEEC) for electrical rewinding and repair, most of which
were partially paid by PASUMIL, leaving several unpaid accounts with AEEC. On 29 October 1971, AEEC
and PASUMIL entered into a contract for AEEC to perform the (a) Construction of a power house
building; 3 reinforced concrete foundation for 3 units 350 KW diesel engine generating sets, 3 reinforced
concrete foundation for the 5,000 KW and 1,250 KW turbo generator sets, among others. Aside from the
work contract, PASUMIL required AEEC to perform extra work, and provide electrical equipment and
spare parts. Out of the total obligation of P777,263.80, PASUMIL had paid only P250,000.00, leaving an
unpaid balance, as of 27 June 1973, amounting to P527,263.80. Out of said unpaid balance of
P527,263.80, PASUMIL made a partial payment to AEEC of P14,000.00, in broken amounts, covering the
period from 5 January 1974 up to 23 May 1974, leaving an unpaid balance of P513,263.80. PASUMIL and
PNB, and now NASUDECO, allegedly failed and refused to pay AEEC their just, valid and demandable
obligation (The President of the NASUDECO is also the Vice-President of the PNB. AEEC besought said

official to pay the outstanding obligation of PASUMIL, inasmuch as PNB and NASUDECO now owned and
possessed the assets of PASUMIL, and these defendants all benefited from the works, and the electrical,
as well as the engineering and repairs, performed by AEEC).

Because of the failure and refusal of PNB, PASUMIL and/or NASUDECO to pay their obligations, AEEC
allegedly suffered actual damages in the total amount of P513,263.80; and that in order to recover these
sums, AEEC was compelled to engage the professional services of counsel, to whom AEEC agreed to pay
a sum equivalent to 25% of the amount of the obligation due by way of attorney's fees. PNB and
NASUDECO filed a joint motion to dismiss on the ground that the complaint failed to state sufficient
allegations to establish a cause of action against PNB and NASUDECO, inasmuch as there is lack or want
of privity of contract between the them and AEEC. Said motion was denied by the trial court in its 27
November order, and ordered PNB nad NASUDECO to file their answers within 15 days. After due
proceedings, the Trial Court rendered judgment in favor of AEEC and against PNB, NASUDECO and
PASUMIL; the latter being ordered to pay jointly and severally the former (1) the sum of P513,623.80
plus interest thereon at the rate of 14% per annum as claimed from 25 September 1980 until fully paid;
(2) the sum of P102,724.76 as attorney's fees; and, (3) Costs. PNB and NASUDECO appealed. The Court
of Appeals affirmed the decision of the trial court in its decision of 17 April 2000 (CA-GR CV 57610. PNB
and NASUDECO filed the petition for review.

Issue: Whether PNB and NASUDECO may be held liable for PASUMILs liability to AEEC.

Held: Basic is the rule that a corporation has a legal personality distinct and separate from the persons
and entities owning it. The corporate veil may be lifted only if it has been used to shield fraud, defend
crime, justify a wrong, defeat public convenience, insulate bad faith or perpetuate injustice. Thus, the
mere fact that the Philippine National Bank (PNB) acquired ownership or management of some assets of
the Pampanga Sugar Mill (PASUMIL), which had earlier been foreclosed and purchased at the resulting
public auction by the Development Bank of the Philippines (DBP), will not make PNB liable for the
PASUMIL's contractual debts to Andrada Electric & Engineering Company (AEEC). Piercing the veil of
corporate fiction may be allowed only if the following elements concur: (1) control not mere stock
control, but complete domination not only of finances, but of policy and business practice in respect
to the transaction attacked, must have been such that the corporate entity as to this transaction had at
the time no separate mind, will or existence of its own; (2) such control must have been used by the
defendant to commit a fraud or a wrong to perpetuate the violation of a statutory or other positive legal
duty, or a dishonest and an unjust act in contravention of plaintiff's legal right; and (3) the said control
and breach of duty must have proximately caused the injury or unjust loss complained of. The absence
of the foregoing elements in the present case precludes the piercing of the corporate veil. First, other
than the fact that PNB and NASUDECO acquired the assets of PASUMIL, there is no showing that their
control over it warrants the disregard of corporate personalities. Second, there is no evidence that their

juridical personality was used to commit a fraud or to do a wrong; or that the separate corporate entity
was farcically used as a mere alter ego, business conduit or instrumentality of another entity or person.
Third, AEEC was not defrauded or injured when PNB and NASUDECO acquired the assets of PASUMIL.
Hence, although the assets of NASUDECO can be easily traced to PASUMIL, the transfer of the latter's
assets to PNB and NASUDECO was not fraudulently entered into in order to escape liability for its debt
to AEEC. Neither was there any merger or consolidation with respect to PASUMIL and PNB. The
procedure prescribed under Title IX of the Corporation Code 59 was not followed. In fact, PASUMIL's
corporate existence had not been legally extinguished or terminated. Further, prior to PNB's acquisition
of the foreclosed assets, PASUMIL had previously made partial payments to AEEC for the former's
obligation in the amount of P777,263.80. As of 27 June 1973, PASUMIL had paid P250,000 to AEEC and,
from 5 January 1974 to 23 May 1974, another P14,000. Neither did PNB expressly or impliedly agree to
assume the debt of PASUMIL to AEEC. LOI 11 explicitly provides that PNB shall study and submit
recommendations on the claims of PASUMIL's creditors. Clearly, the corporate separateness between
PASUMIL and PNB remains, despite AEEC's insistence to the contrary.

Mcleod v. NLRCFACTS:
Mcleod was the acting vice-president and general manager of Peggy Mills Inc. (PMI) from Jun 1980Dec.1992 (12 years).
When PMIs employees staged a strike, PMI stopped its operations permanently starting July 1992.
PMI informed its employees including Mcleod of its closure and paid its employees, including managerial
employees, their unpaid wages, sick and vacation leave, prorated13thmonth pay and separation pay
except Mcleod.
PMI and Mcleod ended their employer-employee relationship in Dec. 1992.
PMI assets transferred all its rights, title and interests in the Assets by way of dation in payment to Sta.
Rosa Textiles Inc (STRI).
The, SRTI hired Mcleod as consultant and not as employee until Dec. 1993.
In Feb. 1995, Mcleod filed a complaint for retirement benefits, vacation and sick leave benefits, nonpayment of unused airline tickets, holiday pay, underpayment of salary and 13th month pay against PMI
and SRTI along with the other two companies (FILSYN,FETMI) which use the same address as PMI
and SRTI and Patricio Lim (president of PMI).
ISSUE:
WON Mcleod is entitled for the payment of vacation and sick leave, holiday pay,underpayment of salary
and his 13th month pay, non-payment of unused airline tickets?
RULING:

Since Mcleod cant present evidence like appointment letters or employment contracts, payrolls,
organization charts, SSS registration, personnel list or even testimony of his co-employees to support his
allegation of employer-employee relationship between him and any of FILSYN, SRTI, AND FETMI
therefore, he cant have cause of action against these corporations.
WHEREAS, in payment to SRTC for PMIs liability, PMI has agreed to transfer all its rights, title and
interests in the Assets by way of a dation in payment to SRTC, provided that simultaneous with the
dation in payment, SRTC shall grant unto PMI the right to lease the Assets under terms and conditions
stated hereunder;
As a rule, a corporation that purchases the assets of another will not be liable for the debts of the selling
corporation, provided the former acted in good faith and paid adequate consideration for such assets,
except when any of the following circumstances is present:
(1) Where the purchaser expressly or impliedly agrees to assume the debts,
(2) Where the transaction amounts to a consolidation or merger of the corporations,
(3) Where the purchasing corporation is merely a continuation of the selling corporation, and
(4) Where the selling corporation fraudulently enters into the transaction to escape liability for those
debts
Mcleod cause of action is only against his former employer, PMI.
On Patricios personal liability, there is no evidence that he acted with malice or bad faith in terminating
Mcleods services to warrant his personal liability. PMI had no other choice but to stop plant operations
because of the serious business losses that it had suffered. The mere fact Patricio was the president PMI
is not a ground to conclude tha the is solidarily liable with PMI for Mcleods money claim.
Mcleod is not entitled to payment of vacation leave and sick leave as well as to holiday pay. As
president/plant manager, Mcleod is a managerial employee who is excludedfrom the coverage of Title I,
Book III of the labor code.
Mcleod is entitled to payment of vacation and sick leave only if he and PMI had agreed on it. In this
case, there is no showing that Mcleod and PMI had an agreement concerning payment of these
benefits.
Mcleods underpayment of his 13th month pay in Dec. 1993 is unavailing. Mcleod andPMI employeremployee relationship ended in 1992. Since Mcleod was no longer an employee, he was not entitled to
the 13th month pay.
Also unavailing is Mcleods claim that he was entitled to the non-payment of unused airline tickets for
the period covering 1989-1992. PMI has no company policy granting its officers and employees expenses
for trips abroad. PMI never promised Mcleod that it would continue to grant him this benefit.
Regarding the underpayment of salary, Mcleod cant pretend that his monthly salary of
P60,000 was reduced without his consent. It was explained to him that PMI was short in finances that
his salary would have reduced. Since the last salary that Mcleod received form PMI was P50,495, this is
now the basis in computing his retirement benefits.

Since PMI has no retirement plan, Sec. 5 Rule II of the Rules Implementing the New Retirement Law
would apply. With Mcleod having worked with PMI for 12 years, he is entitled to a retirement pay
equivalent to month salary for every year of service.

ACT No. 3952


THE BULK SALES LAW (as amended)
AN ACT TO REGULATE THE SALE, TRANSFER, MORTGAGE OR ASSIGNMENT OF GOODS, WARES,
MERCHANDISE, PROVISIONS OR MATERIALS, IN BULK, AND PRESCRIBING PENALTIES FOR THE
VIOLATION OF THE PROVISIONS THEREOF
Section 1. This Act shall be known as "The Bulk Sales Law."
Sec. 2. Sale and transfer in bulk. 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 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.
Sec. 3. Statement of creditors. 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
PROVINCE OR CITY OF _________________}
Before me, the undersigned authority, personally appeared __________________ (vendor,
mortgagor, agent or representative, as the case may be), bearing cedula 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 of the
creditors of ________________ (vendor, or 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
or materials are a part, other than as set forth in said statement.
______________________
Subscribed and sworn to before me this _______ day of ______, 19___, at ________
Sec. 4. Fraudulent and void sale, transfer or mortgage. 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.
Sec. 5. Inventory. 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 or
mortgage, 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 conditions of the sale, transfer, mortgage, or
assignment.
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.

Sec. 10. The provisions of this Act shall be administered by the Director of the Bureau of Commerce and
Industry, 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 not less than six months, nor more than five years, or fined in sum not exceeding five
thousand pesos, or both such imprisonment and fine, in the discretion of the court.
Sec. 12. This Act shall take effect on its approval.

People v Wong Szu Tung


50 OG 4876PAREDES; March 26, 1954
NATURE
Appeal from a judgment of the CFI of Manila
FACTS
- Accused Tung (Chinese) was the owner of the Kim Tay Seng Foundry Shop in Caloocan, Rizal, built on
the land of Ocampo.
- Tung owed Ocampo over P2000 for rental of the lands, which he failed to pay, despite demands.
- Ocampo threatened to sue Wong, and ordered the closing of the shop so that no one could buy
anything from it.
- When someone (Lim Guan) offered to buy the shop, Ocampo had his lawyer prepare the deed of sale,
which Wong signed. Ocampo received the P2500 from the sale and applied it as payment for the rentals
in arrears.
- Wong was also indebted to Shurdut Mills Supply Co., Inc., forP1,591.25. A complaint was filed to
recover that amount, and judgment was obtained against Wong. When a representative of the Company
went to the shop to demand payment, the shop had already been sold to Lim Guan.
= Trial Court found Wong guilty of violating Section 3 of the Bulk Sales Law, declaring that he willfully
and voluntarily sold his shop, and that he received the purchase price thereof, without delivering to
Guan a written statement containing the names and addresses of his creditors and the amounts of
indebtedness due and owing them, as required by law.
- Bulk Sales Law (Act No 3952) Section 3:It shall be the duty of every person who shall sell, mortgage,
transfer, or assignany 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 therefore, 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 thereafter 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
ISSUE
WON Wong violated Section 3 of the Bulk Sales Law
HELD
NO
ReasoningWong was pressed to sign the deed of sale by his creditor Ocampo. With threats of closing the shop and
court action for eviction, the accused was practically forced into signing the deed of sale.BUT, even if he hadnt been forced to sign the deed, he still would not be criminally liable. ActNo. 3925
is penal in nature and should be construed strictly against the State. The object of sale was not covered
by the provision. What was sold was the shop itself, together with the goodwill, credits, equipment,
tools, and machineries, which are not the stock of merchandise, goods, wares, provisions or materials in
bulk contemplated in theprovision.
- Meaning of merchandise according to a couple of American cases: Something that is sold every day,
and is constantly going out of the store and being replaced by other goods; must be construed to mean
such things as are usually bought and sold in trade by merchantsMeaning of stock: The common use of the term stock when applied to goods in a mercantile house
refers to those which are kept for sale.
A foundry shop, which does not sell merchandise, is not included in said law.
Disposition
We are of the opinion that the guilt of the appellant Wong Szu Tung has not been proven beyond
reasonable doubt; consequently, the judgment appealed from is reversed, and the said appellant
acquitted, with costs