On 1 January 2006, Debtor and Borrower borrowed from Creditor and Lender Php 1,000,000. Under their contract, Debtor and Borrower shall pay Creditor and Lender the loan on 31 December 2006 together with interest at the rate of ten percent (10%) per annum. The contract further provided that should they default, Debtor and Borrower shall pay Creditor and Lender a penalty equal to ten percent (10%) of the total amount due.

1. On 31 December 2006, Debtor and Borrower did not pay the loan obligations to Creditor and Lender. A month after, Debtor and Borrower tendered payment of the principal and accrued interests to Creditor and Lender. Creditor and Lender accepted the payment but demanded payment of the penalty. Are Debtor and Borrower liable to pay the penalty?
2. Assuming Debtor and Borrower tendered payment of the principal and accrued interests to Creditor and Lender on 31 December 2006 and the latter unjustifiably refused to accept the payment, will Debtor and Creditor still be liable to pay (a) the principal, (b) the interests as of and after 31 December 2006, and (c) the penalty?
3. Assuming Debtor became insolvent sometime in June 2006, can Creditor demand from Debtor and Borrower payment of the loan obligations by 1 July 2006? Assuming Borrower would pay on 1 July 2006, how much should Borrower pay Creditor?