Santos v. Arsenio
Pursuant to a lending business venture proposed by Nieves Reyes, Zabat introduced Santos and Nieves to each other. The three then made an agreement that Santos would act as the financier of the business, while Nieves acted as bookkeeper and Zabat as credit investigator, respectively. The three met Gregera, whom represented Monte Maria, for a loan of the said corporation with Gregera receiving commission. After some time, however, Santos and Nieves found out that Zabat was conducting his own private dealings another competing corporation. Thus, Zabat was terminated as a partner.
Ultimately, Gregera protested for the recovery of his unpaid commissions. Thus, Santos filed a complaint for the recovery of a sum of money and damages against Nieves Reyes and Arsenio Reyes (who replaced Zabat) for allegedly misappropriating Gregera’s commission. Nieves contested that she was a partner of Santos and that she merely received her share in the profits as proven by the execution of an agreement with Gregera which showed that she was a partner with a share in the profits of the agreement. She also averred that she was an industrial partner of the partnership with her contributing her industry.
Santos, nevertheless, maintained that Nieves was merely an employee and that he merely secured her services as bookkeeper. His real partnership was with Gregera.
Was there a partnership that existed between Santos, Nieves, and Zabat?
Yes. The Court held that there was indeed a partnership as applying the NCC definition on partnerships. The Court agreed with Nieves in that she acted as an industrial partner without which the business could not have operated. The partnership indeed existed despite the lack of formalities regarding their business relationship and corresponding interests – which were ultimately and merely formalized as shown by the Articles of Agreement executed with Gregera defining the share of profits and corresponding obligations of each party. Moreover, the termination of Zabat technically dissolved the first partnership, but the said partnership is said to have continued in existence since it had not undergone the proper procedure relative to dissolution.