G.R. No. 147012 ; January 29, 2004
CRISTINO O. ARROYO, JR. and SANDRA R. ARROYO, Petitioners, vs. EDUARDO A. TADURAN, Respondent.

FACTS

Respondent Eduardo Taduran and petitioner Cristino Arroyo, Jr. were cousins. In 1988, they verbally agreed to form a corporation and acquire a suitable office. Pursuant to this, Arroyo obtained a loan from the Commercial Bank of Manila, secured by Taduran’s time deposit with the same bank, to purchase a condominium unit from Cityland Development Corporation. Title was issued in the name of Arroyo and his wife, petitioner Sandra Arroyo. When the loan matured, Taduran instructed the bank to apply his ₱500,000 time deposit to fully settle the loan obligation.
Petitioners subsequently failed to pay certain obligations to Cityland, leading to the extrajudicial foreclosure of the unit, which they later redeemed. Taduran discovered petitioners were using the property and demanded the transfer of title to him, alleging Arroyo acted merely as his agent in the purchase. Upon refusal, Taduran filed a complaint for specific performance, reconveyance, and damages.

ISSUE

Whether the trial court and the Court of Appeals erred in ordering petitioners to indemnify respondent Taduran the amount of ₱500,000 despite dismissing the complaint for reconveyance due to insufficient proof of agency or trust.

RULING

The Supreme Court denied the petition and affirmed the lower courts’ decisions. The legal logic is clear: while the evidence was insufficient to establish an agency or a trust relationship that would justify reconveyance of the property title, a distinct and enforceable obligation to indemnify arose from the petitioners’ own judicial admissions and the application of equitable principles.
The trial court correctly found that title remained with Arroyo as the named borrower and purchaser, making the source of the loan payment immaterial to ownership. However, it created a right to indemnification because Taduran’s funds were used to extinguish Arroyo’s personal loan. This obligation was conclusively established by Arroyo’s judicial admission during trial and in their petition, where they explicitly acknowledged the debt. A judicial admission is binding and requires no further proof. Furthermore, the grant of indemnity, though not the primary relief prayed for, was justified under the respondent’s plea for “other reliefs equitable and just” to prevent unjust enrichment at another’s expense. Requiring a separate action for recovery would contravene the efficient administration of justice. Thus, the dismissal of the reconveyance action did not preclude the monetary award based on a proven and admitted indebtedness.