G.R. No. 182177, 30 March 2011


Spouses Maximo and Dulcisima Cañeda mortgaged to petitioner Richard Juan, employee and nephew of respondent Gabriel Yap, Sr., two parcels of land in Talisay, Cebu to secure a loan of ₱1.68 million, payable within one year. On 30 June 1998, petitioner, represented by Solon, sought the extrajudicial foreclosure of the mortgage. Although petitioner and respondent participated in the auction sale, the properties were sold to petitioner for tendering the highest bid of ₱2.2 million. No certificate of sale was issued to petitioner, however, for his failure to pay the sale’s commission.

On 15 February 1999, respondent and the Cañeda spouses executed a memorandum of agreement (MOA) where (1) the Cañeda spouses acknowledged respondent as their “real mortgagee-creditor while Richard Juan is merely a trustee of respondent; (2) respondent agreed to allow the Cañeda spouses to redeem the foreclosed properties for ₱1.2 million; and (3) the Cañeda spouses and respondent agreed to initiate judicial action “either to annul or reform the [Contract] or to compel Richard Juan to reconvey the mortgagee’s rights. Three days later, the Cañeda spouses and respondent sued petitioner in the Regional Trial Court of Cebu City (trial court) to declare respondent as trustee of petitioner vis a vis the Contract, annul petitioner’s bid for the foreclosed properties, declare the Contract “superseded or novated” by the MOA, and require petitioner to pay damages, attorney’s fees and the costs. The Cañeda spouses consigned with the trial court the amount of ₱1.68 million as redemption payment.

In his Answer, petitioner insisted on his rights over the mortgaged properties. Petitioner also counterclaimed for damages and attorney’s fees and the turn-over of the owner’s copy of the titles for the mortgaged properties.


Whether an implied trust arose between petitioner and respondent, binding petitioner to hold the beneficial title over the mortgaged properties in trust for respondent.


Yes, the existence of an implied trust is factual.

An implied trust arising from mortgage contracts is not among the trust relationships the Civil Code enumerates. The Code itself provides, however, that such listing “does not exclude others established by the general law on trust. Under the general principles on trust, equity converts the holder of property right as trustee for the benefit of another if the circumstances of its acquisition makes the holder ineligible “in good conscience [to] hold and enjoy [it]. As implied trusts are remedies against unjust enrichment, the “only problem of great importance in the field of constructive trusts is whether in the numerous and varying factual situations presented there is a wrongful holding of property and hence, a threatened unjust enrichment of the defendant.”

Applying these principles, this Court recognized unconventional implied trusts in contracts involving the purchase of housing units by officers of tenants’ associations in breach of their obligations, the partitioning of realty contrary to the terms of a compromise agreement,and the execution of a sales contract indicating a buyer distinct from the provider of the purchase money. In all these cases, the formal holders of title were deemed trustees obliged to transfer title to the beneficiaries in whose favor the trusts were deemed created.

 * Case digest by  Aisha Mie Faith M. Fernandez, LLB-1, Andres Bonifacio Law School, SY 2017-2018