[MENTION=6791461]Amatiel[/MENTION] and [MENTION=6701872]AaronOfBarbaria[/MENTION]: The rules on passive checks are a little confusing.
The rules for passive checks (PHB, pg 175) says that they "can represent the average result for a task done repeatedly, such as searching for secret doors over and over again, or can be used when the DM wants to secretly determine whether the characters succeed at something without rolling dice, such as noticing a hidden monster."
However, the sidebar on hiding (PHB, pg 177) states that you make a stealth check "contested by the Wisdom (Perception) check of any creature that actively searches for signs of your presence."
Under "Passive Perception", it adds "When you hide, there's a chance someone will notice you even if they aren't searching. To determine whether such a creature notices you, the DM compares your Dexterity (Stealth) check with that creature's passive Wisdom (Perception) score ..."
So you're both correct really. The general rule is that passive checks can be used to represent repeated activities - like "taking 10" in previous editions of D&D. However, when it comes to the specifics of hiding, a creature's passive Perception is only used to detect someone when it's not actively searching for anyone. Otherwise it's an actively contested check between Stealth and Perception.