Simplicio A. Palanca v. Court of Appeals (Special Former Eleventh Division)

Summary

Supreme Court denied petition challenging validity of escalator clause in real property installment sale contract. Petitioner Palanca sold land to Sanicas brothers under contract containing clause adjusting unpaid balance based on peso-dollar exchange rate fluctuations. When buyer consigned payment computed without escalator adjustment, seller refused claiming higher amount due. Lower courts ruled against escalator clause based on Civil Code Article 1250 requiring extraordinary inflation. Supreme Court affirmed denial but on different grounds, ruling escalator clause violates Republic Act No. 529 (Cuenco Law) which prohibits domestic obligations requiring payment measured by foreign currency. Decision preserves Philippine peso's role as exclusive currency for domestic transactions and maintains public confidence in national monetary system.