G.R. No. 187240 October 15, 2014
CARLOS A. LORIA, Petitioner, vs. LUDOLFO P. MUÑOZ, JR., Respondent.

FACTS

Respondent Ludolfo P. Muñoz, Jr., engaged in construction, filed a complaint for sum of money and damages against petitioner Carlos A. Loria. Muñoz alleged that in August 2000, Loria invited him to advance ₱2,000,000.00 for a subcontract of a ₱50,000,000.00 river-dredging project in Guinobatan. Loria represented that he would arrange for Elizaldy Co, owner of Sunwest Construction and Development Corporation, to be the lowest bidder, and that after the award, Sunwest would subcontract ₱10,000,000.00 worth of the project to Muñoz. Muñoz accepted. On October 2, 2000, Muñoz had ₱3,000,000.00 released from his bank account to a certain Grace delos Santos, from whom Loria obtained the money. Four days later, ₱1,800,000.00 was returned to Muñoz. On January 10, 2001, Loria collected the balance. After deducting personal loans, Muñoz issued a check for ₱481,800.00 to Loria, who acknowledged receipt. The project was awarded to Sunwest, but no part was subcontracted to Muñoz. After demands for the return of the ₱2,000,000.00 were unheeded, Muñoz filed the complaint. The Regional Trial Court ruled in favor of Muñoz, ordering Loria to return ₱2,000,000.00 as actual damages with interest. The Court of Appeals affirmed the award of actual damages but deleted the awards for exemplary damages and attorney’s fees. Loria filed a petition for review, arguing the principle of unjust enrichment does not apply because the underlying agreement was void for being contrary to law and public policy, and that the parties were in pari delicto.

ISSUE

1. Whether Loria initially obtained ₱3,000,000.00 from a certain Grace delos Santos.
2. Whether Loria is liable for ₱2,000,000.00 to Muñoz.

RULING

1. The first issue involves a question of fact. In a petition for review under Rule 45, only questions of law are entertained. The Supreme Court found no compelling reason to deviate from the factual findings of the trial and appellate courts, which were based on Muñoz’s testimony and a check voucher signed by Loria acknowledging receipt of a total of ₱2,000,000.00. Therefore, this issue is not proper for review.
2. Yes, Loria is liable. The principle of unjust enrichment under Article 22 of the Civil Code applies. The elements are present: (a) Loria was enriched, (b) Muñoz suffered a loss, (c) the enrichment was without just or legal ground, and (d) there is no other available action. Loria’s defense of in pari delicto (that both parties were at fault for an illegal contract) is unavailing. The agreement, which involved facilitating the award of a government contract, was indeed void for being contrary to public policy and statutes like the Anti-Graft and Corrupt Practices Act. However, the in pari delicto rule is not absolute. An exception exists when the agreement is not repugnant to public policy and where one party is not equally at fault, or when public policy considerations demand that the plaintiff be allowed to recover. In this case, allowing Loria to keep the money would be contrary to equity and justice. The payment was made for a service that was not only unfulfilled but also illegal. To permit Loria to retain the benefit would unjustly enrich him at Muñoz’s expense. Therefore, Loria is ordered to pay Muñoz ₱2,000,000.00 in actual damages with legal interest of 12% per annum from the filing of the complaint until June 30, 2013, and 6% per annum from July 1, 2013 until full payment.