G.R. No. 147012 - Arroyo, Jr. vs. Taduran

Petitioners Cristino O. Arroyo, Jr. and Sandra R. Arroyo filed a petition for review against respondent Eduardo A. Taduran.
The case originated from a complaint for specific performance, reconveyance, and damages in the Regional Trial Court, which dismissed the complaint for reconveyance but ordered petitioners to indemnify respondent in the amount of P500,000 with legal interest.
The relationship between the parties is familial, as Eduardo Taduran and Cristino Arroyo, Jr. are cousins.

In 1988, a verbal agreement was made between respondent Taduran and petitioner Arroyo, Jr. to form a corporation and acquire a condominium unit.
Petitioner Arroyo, Jr. purchased a condominium unit from Cityland Development Corporation for P348,718.30, financing the purchase through a loan secured by respondent Taduran's time deposit.
Upon loan maturity, respondent Taduran's time deposit of P500,000 was used to pay off the loan, and the title to the condominium was released to petitioners.

Petitioners failed to meet their obligations to Cityland Development Corporation, leading to the extrajudicial foreclosure of the condominium unit, which they later redeemed.
Respondent Taduran demanded the delivery of the title and other documents, asserting that the title should be transferred to him based on their verbal agreement.
Petitioners denied the existence of an agency relationship and claimed ownership of the property.

The trial court found insufficient evidence to establish an agency relationship between the parties.
It noted that the source of the P500,000 was not material to the ownership of the condominium unit, which remained with petitioner Arroyo, Jr.
The court concluded that while reconveyance could not be ordered due to the lack of evidence of title, respondent Taduran was entitled to indemnification for the time deposit applied to the loan.

Petitioners appealed, arguing that the trial court's decision was contradictory, as it denied reconveyance yet ordered indemnification.
The Court of Appeals affirmed the trial court's decision, emphasizing that petitioners admitted their obligation to repay the amount used from respondent's time deposit.
The appellate court found that the trial court correctly ruled on the indemnification despite the lack of a specific prayer for it in the complaint.

Petitioners contended that the trial court lacked authority to order indemnification since it was not explicitly requested in the complaint.
The court clarified that the material allegations in the complaint determine the relief entitled to the plaintiff, not merely the legal conclusions or specific prayers.
The factual basis for the claim included the return of the P500,000, which was necessary to satisfy petitioners' indebtedness.