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CODE OF COMMERCE JOINT ACCOUNTS “CUENTAS EN PARTICIPACION” Art.

239 Merchants may interest themselves in the transaction of other merchants, = contributing thereto the amount of capital they may agree upon, = and participating in the favorable or unfavorable results thereof = in the proportion they may determine. Art. 240. With regard to their formation, = joint accounts shall be subjected to any formality, = and may be privately contracted orally or in writing, = and their existence may be proved by any of the means accepted by law, = in accordance with the provisions of Art. 51.
Art. 51 Commercial contracts = shall be valid = and shall give rise to obligations = and causes of action in suits = whatever the form and language in which they may be executed = the class to which they belong = and the amount they may involve = provided their existence is shown by any means established by civil law. However, the testimony of the witness alone = shall not be sufficient to prove the existence of a contract which involves an amount exceeding 1,500pesetas = unless supported by some other evidence.

Art. 241 In the transactions treated of in the foregoing articles = no commercial name common to all the participants can be adopted, = nor can any further direct credit be made use of = except that of the merchants who transact and manage the business in his own name and under his individual liability. Art. 242. Persons transacting business with the merchant carrying on the joint business (manager) = shall only have a right of action against the third person who made the transaction with the manager = unless said manager formally cedes his rights to them. Art. 243. The liquidation shall be effected by the manager, = and after the transactions have been concluded, = he shall render a proper account of its results.

Notes: Villanueva
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= has a personality separate and distinct from the partners = can adopt a partnership name = general partners are all managers in the partnership = all general partners may be liable even up to the extent of their personal properties = and may therefore be sued by third persons 2 . however. A business arrangement whereby = a merchant interests himself (contributing merchant) in the transaction of another merchant (managing merchant = by contributing capital = and participating in the results thereof Commonly called as “accidental partnership” = and there is no indication to the public that there is an existing arrangement = because only the ostensible (apparent) partner is conducting the business. The person carrying on the joint business – Can be sued by and is liable to persons transacting with such partner. = making contributions thereto. No common fund is created And no juridical personality is conferred The managing merchant = makes and directs transactions in his own name and individual personality Privity is established solely between the contributing merchant and the managing merchant = thus. Joint Account (cuentas en participacion) A business arrangement whereby = two or more persons interest themselves in the business of another. = and participating in the results of the business in the proportion they may determine (Article 239. No formality is required. the contributing merchant and the contractees of the managing merchant have no contractual cause of action against each other = the contributing merchant should not. the Civil Code on general partnerships would govern. = and participating in the favorable and unfavorable results thereof = in the proportion they may determine.What is a joint account? (cuentas en participacion) Concept: = a joint account is an arrangement = whereby merchants may interest themselves in the transaction of other merchants. = otherwise. Distinguished from Partnership Joint Account Partnership As to juridical personality = has no juridical personality (has no separate personality from the partners) As to business name = no commercial name common to all participants adopted in joint account As to management = only the ostensible partner manages and transacts business in his own name and under his individual liability As to parties in cases = only the ostensible partner Ie. by representation or by his acts. = contributing thereto the amount of capital they may agree upon. Code of Commerce). hold himself out as a partner.

Case in point: Frank Bourns vs. 1906) Those who contract with the person under whose name the business of such partnership of cuentas en participacion is conducted. 2270 of the Civil Code = the original Spanish text of the Code of Commerce = the term used is “cuentas en participacion” = which shows that joint accounts are not actually partnership arrangements = since no separate juridical personality arises = which conclusion is reinforced by the fact that the Civil Code refers to a partnership as a “sociedad” = Cuentas en participacion or joint accounts = was impliedly acknowledged by the SC in CIR vs.Unlike partnership. = being no mutual agreements between the partners = and without a corporate name indicating to the public in some way = that there were other people besides the one who ostensibly managed and conducted the business. = (Art 242 of the code Of Commerce. Cuentas en participacion A partnership the existence of which = was only known to those who had an interest in the same. 4. = shall have no right of action against the third person who contracted with the manager = unless such manager formally transfers his right to them. Dec. 1906) 3 . Liability for losses as a limited partner = up to the extent of investment c. = shall have only a right of action against such person = and not against the other persons interested. Where the business is sufficiently large.) (Bourns vs Carman. In the absence of stipulation = share in profits will be in proportion to that of a limited partner b. Similarity with Partnership a. = and the latter. L-2880. a joint account does not have a common fund nor it can adopt a firm name. = appointment of a receiver is allowed in case of mismanagement by the merchant = the provisions on Joint Accounts under the Code of Commerce = are still in force despite the repealing clause of Art. = is exactly the accidental partnership of cuentas en participacion defined in article 239 of the Code of Commerce. GR No. on the other hand. DM Carman. 1960) = which held that a joint account takes place when a third person is financially interested in the business of a merchant = but does not give rise to the creation of a juridical person = the person financially interested in the business of the merchant = has no right to interfere with the affairs of the merchant = and no person dealing with the merchant has a right to sue such financially interested person = since there is no contractual privity. Right to an accounting d. Cojuanco (109 Phil 443.