BOURNS v. CARMAN f.

As far as the evidence shows, it seems that the business was conducted by
Partnership - Distinguished From: Cuentas En Participacion | Dec. 4, 1906| Mapa, J.
Nature of Case: Action to Recover a Sum of Money
Digest maker: Alex Austria
SUMMARY: Bourns entered into a contract to saw lumber for Lo-Chim-Lim. Bourns sued
Carman et al. as co-partners of the lumberyard business of Lo-Chim-Lim. SC held that
Carman et al. were not liable to pay the $437.50 that they allegedly owed Bourns, because
the nature of the "partnership" in this case was only that of a "cuentas en participacion", which
means that Bourns has no right to demand from Carman the payment of the sum of money.
DOCTRINE:
v Cuentas En Participacion = a partnership whose existence 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 aside from the one who managed the
business. (Art. 239, Old Code of Commerce)
v Those who contract with the person under whose name (in this case, Lo-Chim-
Lim's name) the business of such partnership of cuentas en participacion 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, Old Code of
Commerce)
FACTS:
Plaintiff Bourns seeks to recover $437.50 from a balance due on a lumber sawing
contract for the lumberyard of one Lo-Chim-Lim. Lo-Chim-Lim personally agreed to
pay for the work himself.
Bourns brought this action against Lo-Chim-Lim and his co-defendants (Appellant
Carman et al.) jointly, alleging that at the time they made the contract, they were the
joint proprietors and operators of the lumberyard, which was doing business under
the name and style of Lo-Chim-Lim.
CFI dismissed the action as to Defendant D.M. Carman and Fulgencio Tan-Tongco,
on the ground that they were NOT partners of Lo-Chim-Lim. The rest of their co-
defendants (Vicente Palanca and Go-Tuaco) were however fined for the $437.50 that
Bourns claims. In the end, it was only Vicente Palanca and Go-Tuaco who were
adjudged by the CFI as co-participants in Lo-Chim-Lim's lumberyard.
This case was brought to Court to clear up whether there was a partnership between
Palanca, Go-Tuaco, Fulgencio Tan-Tongco, D.M. Carman, and Lo-Chim-Lim, because
the evidence presented in this case doesn't actually point to a partnership.
Lo-Chim-Lim in his own name, although he gave a certain share to Carman
et al.
g. Since the contracts that Lo-Chim-Lim made with Bourn were made
individually in Lo-Chim-Lim's name, and there was no evidence that there
was a partnership contracted in any other form, the partnership is one of
cuentas en participacion.
h. The nature of Lo-Chim-Lim's business was a simple one. It was conducted
by Lo-Chim-Lim exclusively in his own name and no one else's.
i. A partnership whose existence 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 of
cuentas en participacion defined in Art. 239 of the Code of Commerce.
j. Those who contract with the person under whose name (in this case, Lo-
Chim-Lim's name) the business of such partnership of cuentas en
participacion 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.)
k. Bourns then has no right to demand from Carman the payment of $437.50
owed to him, as it was Lo-Chim-Lim who was the only one who contracted
with him.
RULING: Bourns' action lacks a legal foundation and should be DISMISSED.
ADDITIONAL NOTES:
(Guys sorry wala talaga akong mahanap ng Code of Commerce kasi super old Code na siya as
in before 1900s pa :( So eto lang nahanap ko.)
From Dietrich v. Freeman: In a partnership of cuentas en participacion, under the provisions of
Article 242 of the Code of Commerce, those who contract with the person in whose name the
business of such a partnership was conducted shall have only the right of action against such
person and not against other persons interested.

ISSUE/S & RATIO:

1. WON there was a partnership between Lo-Chim-Lim and Carman et al.?
NO! There was only a cuentas en participacion.
a. The alleged partnership between Lo-Chim-Lim and Carman et al. was
formed by verbal agreement only.
b. There was NO evidence showing that the agreement was reduced to
writing, nor was it ever recorded in a public instrument.
c. The partnership had NO corporate name.
d. Bourns himself admitted that the partnership was engaged in business
under the name and style of Lo-Chim-Lim only.
e. It does not appear that there was any mutual agreement between the
parties, and if there was any, it was not shown what the agreement was.