In case obligation has a PENAL CLAUSE 5 REQUISITES OF VALID CESSION

General Rule: Penalty takes the place of damages & interest in 1. 1 debtor& 2 or more creditors
case of non-compliance. 2. Debtor is in partial/total insolvency.
Exceptions: 3. Debtor to deliver ALL his property to creditors
1. Stipulation states. 4. Debt is due & demandable.
2. Debtor refuse to pay penalty. 5. Creditors must sell the properties & apply the proceeds to their
3. Debtor guilty of fraud in performance of obligation. respective credits proportionately.

NULLITY OF PRINCIPAL OBLIGATION OR THE PENAL CLAUSE c. DACION IN PAYMENT (dacion en pago)
Nullity of principal obligation = nullity of penal clause - alienation of property to the creditor in satisfaction of debt
Nullity of penal clause = NOT nullity of principal obligation
3 REQUISITES OF DACION IN PAYMENT
10 MODES OF EXTINGUISHMENT OF OBLIGATIONS 1. Consent of creditor
1. Payment or performance 2. NOT prejudicial to another creditor
2. Prescription 3. Debtor not insolvent declared by a judicial decree
3. Compensation
4. Confusion/merger CESSION DACION IN PAYMENT
5. Condonation/remission all properties NOT all properties
6. Fulfillment of resolutory condition require more than 1 creditor NOT require all creditors
7. Annulment NOT act of novation act of novation
8. Rescission NOT transfer ownership transfer ownership
9. Novation requires partial/total insol- may happen during solvency
10. Loss of thing due vency of debtor

1. PAYMENT/PERFORMANCE d. TENDER OF PAYMENT & CONSIGNATION

- Payment means delivery of money & performance of obligation TENDER OF PAYMENT act of offering the creditor what is due to
him w/ a demand that the creditor accept it
2 PLACE OF PAYMENT CONSIGNATION act of depositing thing due w/ the court when
1. At place agreed upon creditor cannot/refuses acceptance of payment
2. If w/o agreement
a. Object is indeterminate paid at domicile of DEBTOR 5 REQUISITES OF CONSIGNATION
b. Object is determinate place of thing at the time of 1. Debt due.
constitution of obligation 2. Creditor refused the tender of payment w/o just cause
3. Notice of consignation already given to persons interested in
4 SPECIAL MODES OF PAYMENT fulfillment of obligation
a. Application of payment 4. Consignation of thing/amount due
b. Cession 5. Subsequent notice of consignation to interested persons
c. Tender of payment & consignation
d. Dacion in payment 5 VALID CONSIGNATION W/O PREVIOUS TENDER OF PAYMENT
1. Creditor is absent/unknown.
a. APPLICATION OF PAYMENT 2. Creditor is incapacitate to receive at time it is due.
- designation of debt to w/c payment must be applied when 3. Creditor refused give a receipt, w/o just cause.
debtor has several obligations of same kind in favor of same 4. 2 or more persons claim the right to collect.
creditor. 5. Title of obligation lost.

3 REQUISITES OF APPLICATION OF PAYMENT 2. LOSS OF THING DUE

1. Only 1 debtor & 1 creditor - perishes, disappears, or goes out of commerce; existence is
2. 2 or more debts, same kind unknown; cannot be recovered
3. All debts are due
4. Insufficient payment to exinguish ALL debts 3 REQUISITES TO EXTINGUISH OBLIGATION DUE TO LOSS
1. Determinate thing.
3 RIGHTS TO MAKE APPLICATION OF PAYMENT 2. W/o debtors fault.
1. Right belongs to CREDITOR. 3. No delay.
2. If debtor does not avail, creditor can give him receipt
designating the debt from which payment will be applied. 3. CONDONATION/REMISSION
3. If debtor accepts the receipt, he cannot complain unless THERE - gratuitous abandonment of right by the creditor
IS just cause to invalidate the contract.
3 REQUISITES OF A VALID CONDONATION/REMISSION
b. CESSION 1. It must be gratuitous.
- debtor abandons ALL his property for creditors benefit to obtain 2. Accepted by obligor.
payment from proceeds of his property 3. Obligation is demandable.