TRUST

PENALBER VS. RAMOS

G.R. No. 178645. January 30, 2009
Facts: Petitioner operated a hardware store in a building along
Bonifacio St., Tuguegarao, Cagayan, which stood in a
commercial lot owned by Maria Mendoza, from whom the
petitioner rented the same. In 1982, petitioner allowed
respondents to manage the store. In 1984, Mendoza put the
Bonifacio property for sale. Having no funds, Petitioner
allegedly entered into a verbal agreement with respondents
stipulating that the latter shall buy the property in behalf of the
petitioner and the consideration for the lot shall be paid from
the accumulated earnings of the store. On September 20, 1984,
respondents returned the management of the store to the
petitioner with an inventory showing a difference of
P116,946.15. The petitioner then demanded from the
respondents the reconveyance title of the property but the latter
refused. Petitioner argues that the respondents are mere
trustees of the property and thus, are under moral and legal
obligation to reconvey the property to her. Petitioner further
argues that the difference in the inventory proves that such
amount was used to pay for the purchase price of the property.
Respondents, on the other hand, contend that they have the full
ownership of the property because they paid for it out of their
own funds. The petitioner filed a case before the RTC which
rendered a judgment in favor of the petitioner, which was later
on reversed by the Court of Appeals.

Issue: Whether there is a valid and enforceable trust.

Held: No, the Court ruled that petitioner’s allegations as to the

existence of an express trust agreement with respondent
spouses Ramos, supported only by her own and her son
Johnson’s testimonies, do not hold water. A resulting
difference of P116,946.15 in the beginning inventory of the
stocks of the hardware store and the second inventory thereof,
by itself, is not conclusive proof that the said amount was used
to pay the purchase price of the Bonifacio property, such as
would make it the property of petitioner held merely in trust by
respondent spouses Ramos.