ELUAO VS.

CASTEEL
26 SCRA 475
FACTS:
Nicanor Casteel filed a fishpond application for a big tract of swampy land in the then Sitio of Malalag
(now the Municipality of Malalag), Municipality of Padada, Davao for three times since 1940 but no
action was taken thereon by the authorities concerned. Despite the said rejection, Casteel did not lose
interest. Meanwhile, several applications were submitted by other persons for portions of the area covered
by Casteel's application, one of them was Felipe Deluao, uncle of Casteel.
Because of the threat poised upon his position by the above applicants who entered upon and spread
themselves within the area, Casteel sought financial aid from his uncle Deluao with which to finance the
needed improvements on the fishpond. Hence, a wide productive fishpond was built. But despite the
improvements introduced, Casteels application was still rejected. He then appealed the rejection made
with the Secretary of Agriculture and Natural Resources.
Pending appeal, Inocencia Deluao (wife of Felipe Deluao) and Nicanor Casteel executed a contract
denominated as contract of service whereby Deluao hires and employs the Casteel. The latter will be
the Manager and sole buyer of all the produce of the fish that will be produced from said fishpond while
the former will be the administrator of the same she having financed the construction and improvement of
said fishpond. At the same time, Inocencia Deluao executed a special power of attorney in favor of Jesus
Donesa, extending to the latter the authority to represent her in the administration of the fishpond.
Meanwhile, the Secretary of Agriculture and Natural Resources issued a decision stating that Nicanor
Casteel should be, as hereby it is, reinstated and given due course for the area applied for. Nicanor Casteel
then forbade Inocencia Deluao from further administering the fishpond, and ejected the latter's
representative, Donesa, from the premises.
Alleging violation of the contract of service entered into between Deluao and Casteel, Deluao filed an
action in the CFI for specific performance and damages against Casteel and one Juan Depra (who, they
alleged, instigated Casteel to violate his contract).
ISSUES:
Whether agreement made by the parties created a contract of co-ownership
The reinstatement of Casteel over the subject land constitute a dissolution of the partnership between him
and Deluao

HELD:
The evidence preponderates in favor of the view that the initial intention of the parties was not to form a
co-ownership but to establish a partnership Inocencia Deluao as capitalist partner and Casteel as
industrial partner the ultimate undertaking of which was to divide into two equal parts such portion of
the fishpond as might have been developed by the amount extended by the plaintiffs-appellees, with the
further provision that Casteel should reimburse the expenses incurred by the appellees over one-half of
the fishpond that would pertain to him. This can be gleaned, among others, from the letter of Casteel to
Felipe Deluao showing the intention to divide the fishpond.