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Question
Alfonso mistakenly pays Bruno PHP 1,000,000 believing Bruno owes him a settled debt. In truth, no debt exists. Bruno accepts the money in good faith and uses PHP 420,000 to pay his suppliers, PHP 360,000 to pay a bank loan he owes, and keeps PHP 220,000 as cash. After Alfonso discovers the error, he demands the return of PHP 1,000,000. Bruno contends that his good faith and the funds' application to discharge his own obligations justify retaining at least part of the sum, and that he should not be liable for the full amount. a)Identify the primary doctrine governing this scenario and state the controlling rule. b)Does Bruno's good faith affect his obligation to return the money? Explain with respect to restitution and possible damages. c)Apply the rule to the facts and state the result for Alfonso and Bruno, including whether any interest or fruits are involved and why.