2. Fernando Santos vs.

Spouses Arsenio and Nieves Reyes

368 SCRA 262 (2001

Facts:
This is a petition for review on certiorari assailing CA decision which affirmed the RTC
decision. Santos and Nieves Reyes verbally agreed that Santos would act as financier
while Nieves and Meliton Zabat would act as solicitors for membership and collectors of
loan payment. 70% of the profits would go to Santos while Nieves and Zabat would get
15% each. 
It was a lending venture business.

Nieves introduced Gragera of Monte Maria Corp, who obtained short term loans for the
partnership in consideration of commissions. In 1986, Nieves and Zabat executed an
agreement which formalized their earlier verbal agreement. But, Santis and Nieves later
discovered that Zabat engaged in the same lending business. Hence, Zabat was
expelled from the partnership. On June 1987, Santos filed a complaint for recovery of
sum of money and damages against the respondents, alleging them as employees who
misappropriated the funds. Respondents assert they were partners and not mere
employees. Santos claimed that after discovery of Zabat's activities, he ceased infusing
funds thereby extinguishing the partnership. 

Issue:
Whether or not the parties' relationship was one of partnership or of employer-employee

Held:
Yes they were partners. By the contract of partnership, two or more persons bind
themselves to contribute money, property or industry to a common fund, with the
intention of dividing the profits among themselves.  The "Articles of Agreement"
stipulated that the signatories shall share the profits of the business in a 70-15-15
manner, with petitioner getting the lion's share.  This stipulation clearly proved the
establishment of a partnership.

Indeed, the partnership was established to engage in a money-lending business,

despite the fact that it was formalized only after the Memorandum of Agreement had
been signed by petitioner and Gragera.