Our contract says I must pay in a foreign currency, but it's now impossible to get that currency - what am I supposed to pay in?

The general rule: pay in the stipulated currency

Article 1249 begins with the parties' own agreement. It provides that the payment of debts in money shall be made in the currency stipulated. So if your contract fixed a foreign currency as the money of payment, that is the starting point — you are expected to pay in the currency the two of you chose. Philippine law respects a stipulation of foreign currency in a contract; it is not automatically void. The obligation is to hand over the agreed currency, and ordinarily that is exactly what you would do. Your difficulty only arises because that first step has become impossible, which is the situation the article goes on to address.

The fallback when the currency is unavailable

The article does not leave you stranded. It continues: and if it is not possible to deliver such currency, then in the currency which is legal tender in the Philippines. So when the stipulated foreign currency genuinely cannot be delivered, the law substitutes Philippine legal tender in its place. You discharge the debt in pesos, ordinarily reckoned at the appropriate exchange value so the creditor receives what the obligation is worth. The practical answer to your question is therefore straightforward: pay in Philippine pesos, because the impossibility of delivering the agreed currency shifts payment to the country's own legal tender.

'Not possible' is a real test, not mere inconvenience

The fallback turns on impossibility, and that word does real work. It is not enough that the foreign currency has become expensive, awkward, or troublesome to source; the delivery must be genuinely impossible before you can fall back on pesos. A temporary dip in supply that you can still overcome with reasonable effort is different from a currency that truly cannot be obtained. Because a creditor may dispute whether the threshold is met, it is wise to be able to show why the stipulated currency really cannot be delivered — the substitution rests on that genuine impossibility, not on a preference to pay in pesos.

A related rule in the same article

Article 1249 also governs paying by instruments rather than cash. It states that the delivery of promissory notes payable to order, or bills of exchange or other mercantile documents shall produce the effect of payment only when they have been cashed, or when through the creditor's fault they are impaired. In other words, handing over a check or note does not by itself pay the debt — payment happens when the instrument is actually collected. This is a rule about the medium of payment, not the amount you owe, which remains whatever the contract fixed. So the currency shifts to pesos on impossibility, but the sum due still tracks the original obligation.

Cases citing this provision

These Supreme Court decisions cite the provision above. We list them so you can read them yourself; the summaries of what each decided are not ours to give.

• Cebu Int'l. Finance Corp. vs. Court of Appeals & Vicente Alegre, G.R. No. 123031, October 12, 1999 — read the decision on LawPhil →
• Benjamin Evangelista vs. Screenex, Inc., represented by Alexander G. Yu, G.R. No. 211564, November 20, 2017 — read the decision on LawPhil →
• Myron C. Papa vs. A.U. Valencia And Co. Inc., et al, G.R. No. 105188, January 23, 1998 — read the decision on LawPhil →
• Ma. Julieta B. Bendecio and Merlyn Mascariñas vs. Virginia B. Bautista, G.R. No. 242087, December 7, 2021 — read the decision on LawPhil →

Related provisions

• Civil Code, Article 1249 — Currency of Payment; Payment by Instruments