In 1983 PHILCREDIT extended loans to Rivett-Strom Machineries, Inc. (RlVETT-STROM), consisting of US$10 Milllion for the cost of machineries imported and directly paid by PHILCREDIT, 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-a-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 set tied 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.
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