Implied Trust in Mortgage Contracts

An implied trust arising from mortgage contracts is not among the trust relationships the Civil Code enumerates.14 The Code itself provides, however, that such listing “does not exclude others established by the general law on trust x x x.”15 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].”16 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.”17

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,18 the partitioning of realty contrary to the terms of a compromise agreement,19 and the execution of a sales contract indicating a buyer distinct from the provider of the purchase money.20 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.


About Erineus

Born on December 28, 1965, Surallah, South Cotabato, Southern Mindanao, Philippines.
This entry was posted in Obligations and Contracts, Trust and tagged . Bookmark the permalink.

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