There is dation in payment when property is alienated to the creditor in satisfaction of a debt in

money. (Article 1245)

There is dacion en pago when property is alienated to the creditor in satisfaction of a debt in
money. Here, the debtor delivers and transmits to the creditor the former’s ownership over a
thing as an accepted equivalent of the payment or performance of an outstanding debt.
Requirements of dacion en pago are: (1) consent of the creditor, (2) not prejudicial to another
creditor and (3) debtor not insolvent declared by a judicial decree.

Law of Sales. This is because 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.

Article 1250. In case an extraordinary inflation or deflation of the currency stipulated should
supervene, the value of the currency at the time of the establishment of the obligation shall be the
basis of payment, unless there is an agreement to the contrary.

An amount in U.S. dollars may be paid in its equivalent amount in local currency in the
conversion rate prevailing at the time of payment.

Application of payment is the designation of the debt to which the payment must be applied
when the debtor has several obligations of the same kind in favor of the same creditor.