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Juan V Yap- Implied trust founded on equity

FACTS: Caneda spouses mortgaged their 2 lands in Cebu to Richard

Yap(nephew and employee of Respondent) to secure a loan of 1.6m
contract was prepared by Atty Solon.
Petitioner represented by atty Solon extra-judicially foreclosed the
property and subsequently sold at a public auction
Property was sold petitioner highest bidder for 2.2 M no cert of title
was issued because petitioner was not able to pay the sales

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 there is a wrongful holding of property and hence,
a threatened unjust enrichment of the defendant

Yap(respondent) entered to MOA with Caneda spouses.

MOA contained
1) spouses acknowledge yap as the TRUE mortgagor-creditor
2) Spouses was allowed to redeem property for 1.2M
3) to initiate judicial action "either to annul or reform the Contract or
to compel Richard Juan to RECONVEY the mortgagees rights" to
Spouses and Respondent filed with RTC of Cebu to declare
respondent as trustee of petitioner and, annul petitioners bid for the
foreclosed properties and declare the Contract "superseded or
novated" by the MOA, and require

Caeda spouses acknowledged respondent as the lender from whom

they borrowed the funds secured by the Contract. They did so in the
MOA and Dulcisima Caeda reiterated the concession on the stand.
When the spouses asked for extension of the payment, they sought it
from the respondents and not the petitioner. Petitioner was a
stranger to the contract.
Solon, the notary public who drew up and notarized the Contract,
testified that he placed petitioners name in the Contract as the
mortgagor upon the instruction of respondent.

ISSUE WON an implied trust arose between the petitioner and


Respondent himself explained that he found this arrangement

convenient because at the time of the Contracts execution, he was
mostly abroad and could not personally attend to his businesses in the
country. Respondent disclosed that while away, he trusted petitioner,
his nephew by affinity and paid employee, to "take care of

HELD: SC AFFIRMS CA - Implied Trust in Mortgage Contracts

Lastly respondent was the one who shouldered the foreclosure.

Spouses consigned 1.6M in court as redemption payment

RTC ruled against respondent REVERESED by CA

An implied trust arising from mortgage contracts is not among the

trust relationships the Civil Code enumerates under 1447.