Short answer. Ordinarily no. Article 1250 adjusts the amount only where an extraordinary inflation or deflation of the stipulated currency supervenes, and even then only if there is no agreement to the contrary. Routine loss of purchasing power between borrowing and repayment does not qualify.

What the law says

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.

Civil Code, Article 1250 — Extraordinary Inflation or Deflation. Read the full provision →

The default is nominalism

A peso owed is a peso paid. Borrow a hundred thousand pesos and you repay a hundred thousand pesos plus whatever interest was agreed, however much less that sum buys by the time it falls due. Article 1250 is the narrow exception: 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. It does not create a general right to revalue debts. It addresses a currency that has come apart, and it cuts both ways — deflation would revalue the debt upward, to the creditor's advantage.

What 'extraordinary' has to mean

The word carries the entire weight of the provision, and it is doing exclusion rather than inclusion. Ordinary movement in a floating currency is the background condition every contracting party lives with; it is foreseeable, it is priced into the interest rate, and treating it as extraordinary would make Article 1250 swallow the rule that a debt is a fixed sum. A borrower arguing for adjustment is not describing a difficult year or a weak exchange rate. He is asserting that the currency itself lost its character between the making of the obligation and its maturity, which is a far higher and far rarer claim.

The clause that overrides all of it

Article 1250 applies only unless there is an agreement to the contrary, so read the contract before reading the article. An escalation clause, an indexation formula, a repricing provision or a right to adjust the interest rate is such an agreement, and lenders commonly include one. Denominating the loan in a foreign currency is another way of allocating the same risk: Article 1249 requires payment in the currency stipulated, so a dollar loan is repaid in dollars and the peso's behaviour is the borrower's problem, not the lender's. Whichever party drafted the document has usually already decided who carries inflation.

What is really being disputed

In practice, arguments framed as inflation claims turn out to be about something else — interest that compounded further than expected, penalties that ran while the loan was in default, or a long-delayed judgment. Those are questions about the contract's own terms rather than about the currency. So work out the arithmetic first: the principal, the rate, the periods, and what was actually paid and when. If the complaint is that the total has grown unreasonably, the provisions on interest and penalties are the ones to examine, not Article 1250.

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.

Related provisions

Note. Statute text quoted on this page is reproduced from the official enactment and is linked to the full provision. The explanation around it is general legal information from Vivas & Nobles Law Office, not legal advice. Whether it applies to your situation depends on facts only a lawyer reviewing them can assess.