Case 1: A was indebted to B, who was insane at the time of the payment, at the amount of P1,000.

B bought
something that was supposed to be free for P1,000. B’s guardian tried to claim from A the debt due. A contented
that his obligation was already extinguished by the payment he tendered and made to B.

Question 1: Is the payment made by a to B, a person who is incapacitated person, valid?

Article 1241
Payment to a person who is incapacitated to administer his property shall be valid if he has kept the thing
delivered, or insofar as the payment has been beneficial to him.

Payment made to a third person shall also be valid insofar as it has redounded to the benefit of the creditor. Such
benefit to the creditor need not be proved in the following cases:

1.) If after the payment, the third person acquires the creditor’s rights;
2.) If the creditor ratifies the payment to the third person;
3.) If by the creditor’s conduct, the debtor has been led to believe that the third person had authority to receive the
payment. (1163a)

First paragraph of Article 1241:

Two instances in which the payment can be valid:

(1) If the incapacitated person to whom the payment was made has kept the thing delivered; or
(2) Insofar as the payment has been beneficial to him. (In the second instance, the validity of the payment extends
only insofar as it redounded to the payee’s benefit).

Question 2:
What if B, during his insanity and during his keeping and possession of the P1,000, was defrauded into buying a
pair of shoes which was actually P500?

Question 3:
In case B argued that the shoes bought was not beneficial to him, should he bear the burden of proof?

Second paragraph of Article 1241:

Payment to unauthorized or third person is valid only up to the extent of benefit that redounded to the benefit of the
creditor. But the debtor has the burden of proof to prove that the payment has redounded to the benefit of the creditor,
except in the following cases:

1.) If after the payment, the third person acquires the creditor’s rights;
2.) If the creditor ratifies the payment to the third person;
3.) If by the creditor’s conduct, the debtor has been led to believe that the third person had authority to receive the
payment.

1.) If after the payment, the third person acquires the creditor’s rights

Example:
A owes B. However, B decides to transfer his rights to C. A, unaware of this transfer, makes a payment to B.
Subsequently, B informs A about the transfer of rights to C. In this case, A's payment to B is still valid because C has
acquired the rights of the original creditor, B.

2.) If the creditor ratifies the payment to the third person;

Example:
A owes B. Without B’s authorization, his friend, C, collects the payment from A on his behalf. Later, B learns about this
and, instead of rejecting the payment, he approves and accepts it. In this scenario, B's ratification of the payment made by
A to C validates the transaction.

3.) If by the creditor’s conduct, the debtor has been led to believe that the third person had authority to receive the
payment.

Example:
A, a debtor, receives a letter from his creditor, B, stating that her colleague, C, is authorized to collect payments on her
behalf. Relying on this information, A makes a payment to C. If B later claims that C had no authority, A may be
considered to have fulfilled his obligation because B's conduct led him to believe that C had the authority to receive
payments.