B2022 REPORTS ANNOTATED
Juan v Yap
I. Recit-ready summary
By virtue of a Loan Contract, Cañeda Spouses mortgaged two parcels of
land to Richard Juan. The Spouses failed to pay hence, Juan sought
foreclosure of the property and he won the highest bid. However
subsequently, the Cañeda Spouses executed a MOA with respondent Yap.
Under this, the Spouses and Yap agree that Yap is the real mortgage-
creditor in the Contract and Juan is merely a trustee of Yap. The Spouses
and Yap then filed a case to declare the Contract superseded/novated by the
MOA and to annul the previous bid of Juan. RTC sided with Juan. CA
reversed
ISSUE: Whether an implied trust arose between Juan and Yap, binding Juan
to hold the beneficial title over the mortgaged properties in trust for Yap?
YES
[SYLLABUS DOCTRINE] Although an implied trust arising from
mortgage contracts is not among those enumerated, Art. 1147 provides that
such listing “does not exclude others established by general law on trust.”
Under the general principals on trust, equity converts the holder of a
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.” Implied trusts are remedies against unjust enrichment, the “only
problem of great importance in 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
[PAROL EVIDENCE IN FAVOR OF YAP] 1) The Cañeda spouses
acknowledged Yap as the lender from whom they borrowed the funds
secured by the Contract, 2) Solon testified that he placed Juan's name in the
Contract as the mortgagor upon the instruction of Yap who was always
abroad and 3) it was Yap who shouldered payment for foreclosure expenses
and no certificate of sale was issued to Juan. Clearly then, Juan holds title
over the mortgaged properties only because respondent allowed him to do
so. The demands of equity and justice mandate the creation of an implied
trust between the two.
II. Facts of the case
Purported Trustee: Richard Juan
Purported Trustor: Gabriel Yap
G.R. NO: 182177
ARTICLE; TOPIC OF CASE: Art. 1447; Listing of implied trusts not exclusive: Founded on equity
VOL 32 [March 30, 2011]
Juan v Yap
 [BASIS OF THE IMPLIED TRUST] The Caneda spouses
mortgaged to Juan, employee and nephew of Yap, two parcels of
land in Talisay, Cebu to secure a loan. The Contract was prepared
and notarized by Atty. Antonio Solon (Solon). Juan, represented
by Solon, sought the extrajudicial foreclosure of the mortgage.
Although Juan and Yap participated in the auction sale, the
properties were sold to Juan for tendering the highest bid of P2.2
million. No certificate of sale was issued to Juan, however, for his
failure to pay the sale’s commission.
 [MAIN TRANSACTION OF TRUST] Yap and Caneda spouses
executed a memorandum of agreement where
1. Caneda spouses acknowledged Yap as their “real
mortgagee-creditor…while Juan is merely a trustee of
Yap
2. Yap agreed to to allow the Caneda spouses to redeem the
foreclosed properties for1.2 million
3. The Caneda spouses and Yap agreed to initiate judicial
action “either to annul or reform the contract or to compel
Juan to reconvey the mortgagee’s rights to Yap as trustor
 [CANEDA SPOUSES AND YAP MOVE TO IMPLEMENT
MOA/TRUST] Three days later, the Caneda spouses and Yap
sued Juan in the Regional Trial Court of Cebu City to declare
Juan as trustee of Yap, annul Juan’s bid for the foreclosed
properties, declare the Contract “superseded or novated” by the
MOA, and require Juan to pay damages, attorney’s fees and costs.
 RTC: Declared Juan the “true and real” mortgagee, ordering Yap
to pay moral damages and attorney’s fees, and requiring Yap to
deliver the titles in question to Juan. The trial court, however,
granted the Cañeda spouses' prayer to redeem the property and
accordingly ordered the release of the redemption payment to Juan.
In arriving at its ruling, the trial court gave primacy to the terms
of the Contract, rejecting Yap’s theory in light of his failure to
assert beneficial interest over the mortgaged properties for nearly
four years
 CA: set aside the RTC’s ruling. Declared Yap as the Contract’s
mortgagee.
o Solon testified that he drew up the Contract naming Juan
as mortgagee upon instructions of Yap;
PONENTE: Carpio, J.
DIGEST MAKER: Stefi
 B2022 REPORTS ANNOTATED
Juan v Yap
o
Dulcisima Cañeda acknowledged Yap as the creditor
from whom she and her husband obtained the loan the
Contract secured; and
o Yap shouldered the payment of the foreclosure expenses.
 [POINTS OF CONTENTION]
o Juan: relies on the terms of the Contract and argues that
Yap’s proof of a resulting trust created in his favor is
weak
o Yap: the pieces of parol evidence the CA used to anchor
its ruling are more than sufficient to prove the existence
of an implied trust between him and Juan
III. Issue/s
1. Whether an implied trust arose between Juan and Yap, binding
Juan to hold the beneficial title over the mortgaged properties in
trust for Yap? YES.
IV. Ratio/Legal Basis
Implied trust in mortgage contracts
 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. We see no reason to bar the recognition of the
G.R. NO: 182177
ARTICLE; TOPIC OF CASE: Art. 1447; Listing of implied trusts not exclusive: Founded on equity
VOL 32 [March 30, 2011]
Juan v Yap
same obligation in a mortgage contract meeting the standards for
the creation of an implied trust.
Parol Evidence Favor Yap
 [Juan was a stranger to the loan agreement] The Cañeda
spouses acknowledged Yap as the lender from whom they
borrowed the funds secured by the Contract. They did so in the
MOA and Dulcisima Cañeda reiterated the concession on the
stand. True enough, when the Cañeda spouses sought an extension
of time within which to settle their loan, they directed their request
not to Juan but to Yap who granted the extension.
 [For Yap’s convenience because Yap was always abroad]
Secondly, Solon, the notary public who drew up and notarized the
Contract, testified that he placed Juan's name in the Contract as the
mortgagor upon the instruction of Yap because at the time of the
Contract's execution Yap 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 everything."
 [Yap paid for foreclosure + Juan without certificate of sale]
Lastly, it was Yap, not Juan, who shouldered the payment of the
foreclosure expenses. Juan’s failure to explain this oddity, coupled
with the fact that no certificate of sale was issued to him (despite
tendering the highest bid) for his non-payment of the commission,
undercuts his posturing as the real mortgagor.
 Clearly then, Juan holds title over the mortgaged properties only
because respondent allowed him to do so. The demands of equity
and justice mandate the creation of an implied trust between the
two, barring petitioner from asserting proprietary claims
antagonistic to his duties to hold the mortgaged properties in trust
for respondent.
V. Disposition
WHEREFORE, we DENY the petition. We AFFIRM the Decision
dated 23 November 2007 and Resolution dated 6 March 2008 of the Court
of Appeals
VI. Notes
PONENTE: Carpio, J.
DIGEST MAKER: Stefi
 B2022 REPORTS ANNOTATED VOL 32 [March 30, 2011]

Juan v Yap Juan v Yap

G.R. NO: 182177 PONENTE: Carpio, J.

ARTICLE; TOPIC OF CASE: Art. 1447; Listing of implied trusts not exclusive: Founded on equity DIGEST MAKER: Stefi