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PHILIPPINE REPORTS ANNOTATED VOLUME 007

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Case Title:
FRANK S. BOURNS, plaintiff and
appellee, vs. D. M. CARMAN ET AL.,
defendants and appellants. VOL. 7, DECEMBER 4, 1906 117
Citation: 7 Phil., 117 Bourns vs. Carman
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[No. 2800. December 4, 1906.]

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FRANK S. BOURNS, plaintiff and appellee, vs. D. M. CARMAN ET AL., defendants
and appellants.

1. PARTNERSHIP OF "CUENTAS EN PARTICIPACIÓN."·A partnership constituted in

such a manner that its existence was only known to those who had an interest in the
same, there being no mutual agreement 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, is exactly the accidental
partnership of cuentas en participación defined in article 239 of the Code of Commerce.

2. ID.·Those who contracted with the person in whose name the business of a
partnership of cuentas en participación is conducted, shall have only the right of action
against such person and not against the other persons interested, and the latter, on the
other hand, shall have no right of action against the third person who contracted with
the manager unless such manager formally transferred his right to them. (Art, 242,
Code of Commerce.)

APPEAL from a judgment of the Court of First Instance of Manila.

The facts are stated in the opinion of the court.
W. A. Kincaid, for appellants.
J. N. Wolfson, for appellee.

MAPA, J.:

The plaintiff in this action seeks to recover the sum of $437.50) United States
currency, balance due on a contract for the sawing of lumber for the lumber yard of Lo-
Chim-Lim. The contract relating to the said work was entered into by the said Lo-
Chim-Lim, acting as in his own name with the plaintiff, and it appears that the said
Lo-Chim-Lim personally agreed to pay for the work himself. The plaintiff, however,
has brought this action against Lo-Chim-Lim and his codefendants jointly, alleging
that, at the time the contract was made, they were the joint proprietors and operators
of the said lumber yard engaged in the purchase and sale of lumber under the name
and style of Lo-Chim-Lim. Apparently the plaintiff tries to show by the

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118 PHILIPPINE REPORTS ANNOTATED

Bourns vs. Carman

words above italicized that the other defendants were the partners of Lo-Chim-Lim in
the said lumber-yard business.
The court below dismissed the action as to the defendants D. M. Carman and
Fulgencio Tan-Tongco on the ground that they were not the partners of Lo-Chim-Lim,
and rendered judgment against the other defendants for the amount claimed in the
complaint with the costs of proceedings. Vicente Palanca and Go-Tauco only excepted
to the said judgment, moved for a new trial, and have brought the case to this court by
bill of exceptions.
The evidence of record shows, according to the judgment of the court below, "That
Lo-Chim-Lim had a certain lumber yard in Calle Lemery of the' city of Manila, and
that he was the manager of the same, having ordered the plaintiff to do some work for
him at his sawmill in the city of Manila; and that Vicente Palanca was his partner,
and had an interest in the said business as well as in the profits and losses thereof *
* *," and that Go-Tauco received part of the earnings of the lumber yard in the
management of which he was interested.
The court below accordingly found that "Lo-Chim-Lim, Vicente Palanca, and Go-
Tauco had a lumber yard in Calle Lemery of the city of Manila in the year 1904, and
participated in the profits and losses of the business and that Lo-Chim-Lim was the
managing partner of the said lumber yard." In other words, that the appellants were,
according to the court below, coparticipants with the said Lo-Chim-Lim in the business
in question.
Although the evidence upon this point as stated by the court below is not entirely
satisfactory, it can not be said, however, that it is plainly and manifestly in conflict
with the above finding of that court. Such finding should therefore be sustained.
The question thus raised is, therefore, purely one of law and reduces itself to
determining the real legal nature of the participation which the appellants had in Lo-
Chim-Lim's lumber yard, and consequently their liability toward the plaintiff, in
connection with the transaction which gave rise to the present suit.

119

VOL. 7, DECEMBER 4, 1906 119

Bourns vs. Carman

It seems that the alleged partnership between Lo-Chim-Lim and the appellants was
formed by verbal agreement only. At least there is no evidence tending to show that
said agreement was reduced to writing, or that it was ever recorded in a public
instrument.
Moreover, that partnership had no corporate name. The plaintiff himself alleges in
his complaint that the partnership was engaged in business under the name and style
of Lo-Chim-Lim only, which according to the evidence was the name of one of the
defendants, On the other hand, and this is very important, it does not appear that
there was any mutual agreement between the parties, and if there were any, it has not
been shown what that agreement was. As far as the evidence shows it seems that the
business was conducted by Lo-Chim-Lim in his own name, although he gave to the
appellants a share of the earnings of the business; but what that share was has not
been shown with certainty. The contracts made with the plaintiff were made by Lo-
Chim-Lim individually in his own name, and there is no evidence that the partnership
ever contracted in any other form. Under such circumstances we find nothing upon
which to consider this partnership other than as a partnership of cuentas en
participación. It may be that, as a matter of fact, it is something different, but the
uncertain and scant evidence introduced by the parties does not permit of any other
designation of this partnership. We see nothing, according to the evidence, but a
simple business conducted by Lo-Chim-Lim exclusively, in his own name, and under
his own personal management, he having effected every transaction connected
therewith also in his own name, the names of the other persons interested in the
profits and losses of the business nowhere appearing. A partnership constituted in
such a manner, the existence of which was only known to those who had an interest in
the same, there 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, is exactly the
accidental partnership

120

120 PHILIPPINE REPORTS ANNOTATED

United States vs. Palmadres

of cuentas en participación defined in article 239 of the Code of Commerce.

Those who contract with the person under whose name the business of such
partnership of cuentas en participación is conducted, shall have only a right of action
against such person and not against the other persons interested, and the latter, on
the other hand, shall have no right of action against the third person who contracted
with the manager unless such manager formally transfers his right to them. (Art. 242
of the Code of Commerce.) It follows, therefore, that the plaintiff has no right to
demand from the appellants the payment of the amount claimed in the complaint, as
Lo-Chim-Lim was the only one who contracted with him. The action of the plaintiff
lacks, therefore, a legal foundation and should be accordingly dismissed.
The judgment appealed from is hereby reversed and the appellants are absolved of
the complaint without express provision as to the costs of both instances. After the
expiration of twenty days let judgment be entered in accordance herewith, and ten
days thereafter the cause be remanded to the court below for execution. So ordered.

Arellano, C. J., Torres, Johnson, Carson, Willard, and Tracey, JJ., concur.

Judgment reversed.

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