QuestionsQuestions (Republic Act No. 671)
The State’s policy is to extend the condonation of interests to give debtors (of the Government or government-owned or controlled corporations) opportunities to rehabilitate and to enable them to pay their prewar obligations under fair and just terms.
It condones all unpaid interest in favor of the Government (or government-owned or controlled corporations) accruing from January 1, 1942 to December 31, 1945 on debts/obligations outstanding on December 8, 1941.
The obligations must be outstanding on December 8, 1941.
When the debtor was unable to pay an obligation that became due and demandable, or the interests that should have been paid during the period, due to (1) refusal of the creditor to accept payment or (2) failure of the creditors to open business during the same period.
When the debtor was prevented from paying because of activity in the resistance movement, or imprisonment/arrest/detention by the enemy, resulting in inability to freely pursue normal work.
Penury caused by the ravages of war; financial restrictions imposed by any authority in connection with the enemy’s prosecution of the war; or loss of ordinary sources of income or control over them as a result.
If the creditor’s assets were under enemy control and/or administered through the Enemy Alien Property Custodian or other enemy instrumentality, and the debtor paid the interests under the belief that payment was valid and effective, or out of fear that noncompliance would lead to reprisals.
If the debtor voluntarily pays the entire unpaid principal obligation on or before December 31, 1952, the interests on such principal corresponding from January 1, 1946 to the date of payment are also condoned.
Interests paid on debts/obligations outstanding on December 8, 1941 corresponding to Jan. 1, 1942 to Dec. 31, 1945 by the debtors mentioned in Section 2 shall be applied to payment of the principal obligation, if the principal is still outstanding and if the interest payment is made from or after February 28, 1945 up to the effectivity of the Act.
Yes. The interest paid is applied to the principal only if the principal obligation is still outstanding.
Only interests paid from or after February 28, 1945 up to the effectivity of the Act are covered for application to the principal.
It triggers further condonation of interest from January 1, 1946 up to the date of payment, in addition to the condonation already contemplated by the statute.
Severability: If any section or part is held invalid, the remainder of the section or of the Act shall not be affected.
Fifteen days after its publication in the Official Gazette.
The Government or government-owned or controlled corporations.
It specifically condones unpaid interest accruing during the defined prewar period; it also provides rules for application and additional condonation when principal is voluntarily paid within a deadline.