ARTICLE 1239

 PAYMENT BY AN INCAPACITATED PERSON

FREE DISPOSAL OF THE THING DUE

- the thing to be delivered must not be subject to any claim or lien or encumbrance of a third person

CAPACITY TO ALIENATE

-the person is not incapacitated to enter into contracts (Articles 1327, 1329)

General Rule:

In obligations to give, payment by one who does not have free disposition of the thing due or capacity to
alienate it IS NOT VALID.

Exception: Article 1427.

Hence, the creditor cannot be compelled to accept payment where the person paying has no capacity to
make it.

Example:

A, a minor, entered into a contract without the consent of his parents. In the said contract, A was
supposed to pay to B the sum of P1 million. B did not know of A’s minority, and when A voluntarily paid
him the money, B accepted the sum.

Out of this amount, B spent P800,000. Later, the parents of A learned of the transaction, and brought an
action in court to recover the P1 million paid to B.

How much can the parents recover from B?

Answer: The parents can recover only P200,000 inasmuch as the P800,000 had already been spent in
good faith.
ARTICLE 1240

Payment to Whom Payment Shall be Made:

1. To the person in whose favor the obligation has been constituted (the creditor)

2. His successor in interest (like heirs)

3. Any person authorized to receive it (authorization may be by agreement or by law)

 If the recipient is not authorized, the payment generally is not valid (without prejudice to Article
1241).

Example:

1. Payment was made to a person not authorized by the seller to receive payment.

B brought a certain electric plant from S. B paid C who was authorized by S to look for buyers of the
plant. There was no evidence that C had authority to receive payment. S brought action to recover the
price.

Is there valid payment to S?

Answer: No. C was not duly authorized by S to receive the payment. Where a person in making payment
solely relied upon the representation of an agent as to this authority to receive payment, such payment
is made at his own risk and where the agent was not so authorized, such payment is not a valid defense
against the principal.

2. Payment was made to the widow of second marriage of deceased, after demand had been
made by heirs of deceased by his first marriage.

C was creditor of D. The first wife of C died and C married again. After the death of C, the plaintiffs,
children of C by this first marriage, demanded payment from D. D paid instead the widow of the second
marriage of C.
Is there payment of debt?

Answer: No. The wife of the second marriage had no right whatsoever to receive the payment,
especially so that a demand had already been made by the plaintiffs. D made an undue payment.

ARTICLE 1241

1. PAYMENT TO AN INCAPACITATED PERSON

 NOT VALID unless:

 The incapacitated person has kept the thing delivered

 Insofar as the payment has been beneficial to him

 IN THE ABSENCE OF BENEFIT:

 The legal representative of the incapacitated person can demand a new payment on
behalf of his ward

 The incapacitated person himself is allowed to claim new payment, should he regain
capacity.

A good example of beneficial payment to the incapacitated person is when the money has been used for
proper hospital or psychiatric expenses.

2. PAYMENT TO A THIRD PARTY NOT DULY AUTHORIZED

 The payment is valid ONLY to the extent of benefits to the creditor.

  The creditor was benefited by the payment made by the debtor to a third person is not
presumed.

 WHEN BENEFIT TO CREDITOR NEED NOT BE PROVED:

 Subrogation of the payer in the creditor’s rights

 Ratification by the creditor

 Estoppel on the part of the creditor (If by creditor’s conduct, the debtor has been
led to make the payment)

ARTICLE 1242

 Payment to third person in possession of credit (valid payment)

 Requisites:

 Payment by payor must be in good faith (presumed)

 The payee must be in possession of the creditor itself (not merely the document
evidencing the credit)

Example:

X found a negotiable promissory note payable to bearer.

(If the maker thereof pays in good faith to X, the debt is extinguished, even if X was not entitled to it.)

If the promissory note was payable to a specific person Y, then payment to X is not valid, because X
would be the possessor only of the document, not the credit itself.

ARTICLE 1243

 Payment made AFTER judicial order to retain

 The judicial order may have been prompted by an order of attachment, injunction or
garnishment (garnishment takes place when the debtor of a debtor is ordered not to
pay the latter so that preference would be given to the latter’s creditor).
Example:

A owes B P1,000,000. B, in turn, owes C P100,000.

C brings action against B, who, however, claims insolvency but admits the credit which he has over A.

Before A pays B, A is summoned into the proceeding, and asked to retain the debt in the meantime.
Thus, the debt is garnished.

The reason is A should not pay B, and instead he should pay C, should C be adjudged the creditor of B.
Any payment made by A to B in the meantime is considered invalid under the law.

ARTICLE 1244

 The very prestation due must be complied with

1. The 1st par. refers to real obligation to deliver a specific thing. A thing different from that due
cannot be offered or demanded against the will of the creditor or debtor, as the case may be.

2. The 2nd par. refers to personal obligation. The act to be performed or the act prohibited cannot
be substituted against the obligee’s will.

Example:

A is obliged to give B a Jaguar car. Not having any Jaguar car, A wants B to accept a Rolls Royce, a more
expense car, but B refuses to accept. Is B justified legally in refusing to accept?

Answer: Yes. Even if the Rolls Royce be more valuable than the Jaguar, if B does not want the Rolls
Royce, he cannot be compelled to accept it. The terms of the contract form the law between the parties,
and the subject matter cannot be changed without the consent of the parties.

 INSTANCES WHEN ARTICLE 1244 DOES NOT APPLY:

 In case of facultative obligations

 In case there is another agreement resulting in either dation in payment or novation

 In case waiver by the creditor (expressly or impliedly)

ARTICLE 1245

DATION IN PAYMENT

 Is the conveyance of ownership of a thing by the debtor to creditor as an accepted equivalent of

performance of a monetary obligation

 REQUISITES in order that there be a valid dation in payment:

 There must be performance of the prestation in liue of payment

 There must be some difference between the prestation due and that which is given in
substitution

 There must be an agreement between the creditor and debtor that the obligation is
immediately extinguished by reason if the performance of a prestation difference from
that due.

The law of sales governs because dation in payment because in dation in payment – the transfer or
conveyance of ownership of a thing as an accepted equivalent of performance - really partakes in one
sense of the nature of sale