Policy declaration and purpose
- Section 1 declares that the rehabilitation of those who have suffered the ravages of war is a prime concern of the Government.
- Section 1 states that the State’s policy is to extend condonation of interests to provide fair and just terms and conditions.
- Section 1 is intended to give debtors of the Government or Government owned or controlled corporations opportunities to rehabilitate and to pay prewar obligations.
Amended coverage of unpaid interest
- Section 2 amends Section 2 of Republic Act No. 401.
- Section 2 provides that all unpaid interest in favor of the Government or Government owned or controlled corporations accruing from January 1, 1942 to December 31, 1945 on all debts and obligations outstanding on December 8, 1941 shall not be demandable.
- Section 2 condones the interest in the following cases:
- (a) When the debtor was unable to pay an obligation that became due and demandable, or interest that should have been paid during January 1, 1942 to December 31, 1945, because of the refusal of the latter to accept payment or because of the failure of the creditors to open business during the period.
- (b) When the debtor was unable to pay due and demandable obligations or pay interest during the period because the debtor was prevented by activity in the resistance movement against the enemy or by imprisonment, arrest, or detention by the enemy, resulting in inability to freely pursue normal work.
- (c) When the debtor was unable to pay due and demandable obligations or pay interest during the period because of penury caused by the ravages of war, financial restrictions imposed by whatever authority in connection with prosecution by the enemy of the war, or loss of ordinary sources of income or control over them as a result thereof.
- (d) When the debtor was unable to pay due and demandable obligations or pay interest during the period because the creditor’s assets were under the control of the enemy and/or administered through the so-called Enemy Alien Property Custodian or other enemy instrumentality, and the debtor paid the interests believing such payment was valid and effective to the creditor, or because of fear that failure to comply would lead to reprisals on the debtor’s person or property.
- Section 2 provides a conditional additional condonation rule: if the debtor voluntarily pays the entire pre-war unpaid principal obligation on or before December 31, 1952, the interests on such principal obligation corresponding from January 1, 1946 to the date of payment are likewise condoned.
Application of interest payments to principal
- Section 3 amends Section 3 of Republic Act No. 401.
- Section 3 provides that interests paid on debts or obligations outstanding on December 8, 1941, corresponding to January 1, 1942 to December 31, 1945, shall be applied to the principal obligation.
- Section 3 limits this application to cases where the principal obligation is still outstanding.
- Section 3 requires that the payment must be made from or after February 28, 1945 up to the date of the effectivity of this Act.
Severability
- Section 4 inserts Section 3-A into Republic Act No. 401.
- Section 3-A establishes that if any section of the Act, or part thereof, is held invalid, the remainder of the section or the remainder of the Act is not affected.