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Obligations and Contracts - Trusts - Case 128 - Juan Vs Yap, Sr.

The Supreme Court affirmed the Court of Appeals' ruling that an implied trust existed between petitioner Richard Juan and respondent Gabriel Yap, Sr. over a mortgage contract. The facts show Juan, as Yap's employee and nephew, acted as trustee in a loan from Yap to the Cañeda spouses, secured by mortgaged properties. After foreclosure, Juan and Yap participated in the auction but properties were sold to Juan. A memorandum of agreement and subsequent lawsuit alleged Juan merely held beneficial title over the properties in trust for Yap. The Supreme Court found principles of unjust enrichment and implied trusts apply to recognize Juan's obligation to transfer title to Yap as the beneficiary for whom the implied trust was created.

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200 views2 pages

Obligations and Contracts - Trusts - Case 128 - Juan Vs Yap, Sr.

The Supreme Court affirmed the Court of Appeals' ruling that an implied trust existed between petitioner Richard Juan and respondent Gabriel Yap, Sr. over a mortgage contract. The facts show Juan, as Yap's employee and nephew, acted as trustee in a loan from Yap to the Cañeda spouses, secured by mortgaged properties. After foreclosure, Juan and Yap participated in the auction but properties were sold to Juan. A memorandum of agreement and subsequent lawsuit alleged Juan merely held beneficial title over the properties in trust for Yap. The Supreme Court found principles of unjust enrichment and implied trusts apply to recognize Juan's obligation to transfer title to Yap as the beneficiary for whom the implied trust was created.

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MaanParrenoVillar
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JUAN VS YAP, SR.

G.R. No. 182177; 30 March 2011


NATURE:
Petition for review of the ruling of the Court of Appeals finding petitioner Richard Juan as trustee of an
implied trust over a mortgage contract in favor of the respondent Gabriel Yap, Sr.
PONENTE:
Carpio, J.
FACTS:
The spouses Maximo and Dulcisima Caeda mortgaged to petitioner Richard Juan (petitioner), employee
and nephew of respondent Gabriel Yap, Sr. (respondent), two parcels of land in Talisay, Cebu to secure a
loan of P1.68 million, payable within one year. 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 P2.2 million. No certificate of sale was
issued to petitioner, however, for his failure to pay the sales commission.
Respondent and the Caeda spouses executed a memorandum of agreement (MOA) where (1) the Caeda
spouses acknowledged respondent as their "real mortgagee-creditor x x x while Richard Juan [petitioner]
is merely a trustee" of respondent; (2) respondent agreed to allow the Caeda spouses to redeem the
foreclosed properties for P1.2 million; and (3) the Caeda spouses and respondent agreed to initiate
judicial action "either to annul or reform the [Contract] or to compel Richard Juan to reconvey the
mortgagees rights" to respondent as trustor. Three days later, the Caeda 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 petitioners bid for the foreclosed properties, declare the Contract
"superseded or novated" by the MOA, and require petitioner to pay damages, attorneys fees and the
costs. The Caeda spouses consigned with the trial court the amount of P1.68 million as redemption
payment. Petitioner insisted on his rights over the mortgaged properties. Petitioner also counterclaimed
for damages and attorneys fees and the turn-over of the owners copy of the titles for the mortgaged
properties.
ISSUE:
Whether an implied trust arose between petitioner and respondent, binding petitioner to hold the
beneficial title over the mortgaged properties in trust for respondent
HELD:
Yes, there is an implied trust between the petitioner and the respondent.
RATIO DECIDENDI:
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 x x x." 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 x x x 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 x x x 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. We see no reason to bar the recognition of the same obligation in a mortgage
contract meeting the standards for the creation of an implied trust.
DECISION:
Petition is DENIED and the Decision of the Court of Appeals is AFFIRMED.
/mpv

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