Extinguishment; Payment (1995)

In  1983  PHILCREDIT  extended  loans  to  Rivett-Strom Machineries,   Inc.   (RIVETTT-

STROM),   consisting   of US$10 Million for the cost of machineries imported and directly paid
by PHTLCREDIT, and 5 Million in cash payable in installments over a period of ten (10) years
on the basis of the value thereof computed at the rate of exchange of the U.S. dollar vis-à-vis the
Philippine peso at the time of payment.

RIVETT-STROM made payments on both loans which if based on the rate of exchange in 1983
would have fully settled the loans.

PHILCREDIT contends that the payments on both loans should be based on the rate of
exchange existing at the time of payment, which rate of exchange has been consistently
increasing, and for which reason there would still be a considerable balance on each loan.

Is the contention of PHILCREDIT correct? Discuss fully.

SUGGESTED ANSWER:

As regards the loan consisting of dollars, the contention of PHILCREDIT is correct. It has to be
paid in Philippine currency computed on the basis of the exchange rate at the TIME  OF
PAYMENT  of  each  installment,  as  held  in Kalalo v. Luz, 34 SCRA 337.As regards the P5
Million loan in Philippine pesos, PHILCREDIT is wrong. The payment thereof cannot be
measured by the peso-dollar exchange rate. That will be violative of the Uniform Currency Act
(RA, 529] which prohibits the payment of an obligation which, although to be paid in Philippine
currency, is measured by a foreign currency. (Palanca v. CA,238 SCRA 593).

Liability; Lease; Joint Liability (2001)

Four  foreign  medical  students  rented  the  apartment  of Thelma for a period of one year. After

one semester, three of them returned to their home country and the fourth transferred to a
boarding house. Thelma discovered that they  left  unpaid  telephone  bills  in  the  total  amount
of P80,000.00.  The  lease  contract provided  that  the  lessees shall pay for the telephone
services in the leased premises. Thelma demanded that the fourth student pay the entire amount
of the unpaid telephone bills, but the latter is willing to pay only one fourth of it. Who is correct?
Why?