Spouses Antonio Pailano, Jr. v. The Court of Appeals

Summary

This civil case involves a property dispute between brothers Antonio and Mariano Pailano over a 220 sq. meter lot in Bago City. Antonio sold his share to Mariano through an accommodation transaction, with Mariano immediately executing a deed acknowledging Antonio remained the true owner and promising reconveyance upon demand. When Mariano obtained title and mortgaged the property to PNB, he refused Antonio's demand for reconveyance. The RTC dismissed Antonio's complaint, but the Court of Appeals reversed, declaring co-ownership without ordering specific relief. The Supreme Court modified the decision, ordering reconveyance and partition despite the existing mortgage, awarding moral damages and attorney's fees for Mariano's bad faith. The case establishes important precedents on accommodation sales, co-ownership rights, and the effect of mortgages on property partition under Philippine civil law.