Page 34 - Obligations & Contracts Module 1-2

*In Case No Application Has Been Made

1. Apply payment to the most onerous

2. If debts are of the same nature and burden, application shall be made to all proportionately

SPECIAL RULES/FORMS OF PAYMENT - Special Forms:

a. Application of Payments

b. Dacion en Pago – mode of extinguishing an obligation whereby the debtor set against, in

favor of the creditor, property for the satisfaction of monetary debt; extinguish up to amount of

property unless w/ contrary stipulation; A special form of payment because 1 element of payment

is missing: IDENTITY:

°Governed by law on sales

° Conditions for a valid dacion:

1) If creditor consents, for a sale presupposes the consent of both parties

2) If dacion will not prejudice the other creditors

3) If debtor is not judicially declared insolvent

c. Cession/Assignment in Favor of creditors – the process by which debtor transfer all the

properties not subject to execution in favor of creditors is that the latter may sell them and thus,

apply the proceeds to their credits; extinguish up to amount of net proceeds ( unless w/ contrary

stipulation ); Kinds:

1. Legal – governed by the insolvency law

2. Voluntary – agreement of creditors