How to Deal With a Guy Who Gives You an iPhone

My buddy gave me his iPhone 4 after dropping it, breaking the screen and getting an iPhone 5 right away. After I offered to pay him, he said, "I was going to throw it away anyways, so just have it for free" Do I owe him anything? Well, he asked for it back for some reason. My gut instinct is that I only owe him a sucks to suck when he asks. That's from clueless in Cleveland.