US v. Diaz Conde
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Riann BilbaoUS v. Diaz Conde
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Riann Bilbao2. US v. Diaz Conde, G.R. No.
L-18208, 14 February 1922
cases was in 1918, the Philippines was part of the U.S. at that time
On December 30, 1915, complainants Bartolome Oliveros and Engracia Lianco entered into a
contract with the defendants concerning a debt of P300. Oliveros and co. were obligated to pay
5% interest per month within the first ten days of every month. On May 1, 1916, Act No. 2655
(Usury Law) took effect. The law stated that that the legal rate of interest for the loan or
forbearance of any money, goods or credits xxx shall be 12% per annum. Any amount of interest
paid or to be paid in excess of that fixed by law is considered usurious, therefore unlawful.
On May 6, 1921, Vicente Diaz Conde and Apolinaria R. De Conde were charged with violating the
Usury Law in the Court of First Instance of the city of Manila. They were found guilty, sentenced to
pay a fine of P120 and in case of insolvency, to suffer subsidiary imprisonment in accordance with
the provisions of law. Lower court stated that upon delivery and execution of the contract, there
was no law punishing usury. But after the adoption of Usury law, defendants had collected a
usurious rate of interest rate and for that they are guilty of a violation of the said law and should
be punished accordingly.
Defendants appealed to the Supreme Court, contending the following:
a) said usurious amount was collected before the Usury law took effect
b) when the contract was made, there is no Usury law in the Philippines
c) usurious law took effect four months after the contract was executed
d) said law could not have retroactive effect or application
e) said law impairs the obligation on contract
Issue is whether or not the defendants could be charged with violating the Usury law
SC held that NO, laws adopted after the execution of a contract, changing or altering the rate of
interest, cannot be made to apply to such contract without violating the provisions of the
constitution which prohibit the adoption of a law "impairing the obligation of contract." A law
imposing a new penalty, or a new liability or disability, or giving a new right of action, must not be
construed as having a retroactive effect. It is an elementary rule of contract that the laws in force
at the time the contract was made must govern its interpretation and application. Laws must be
construed prospectively and not retrospectively. Ex post facto laws, unless they are favorable to
the accused, are prohibited in this jurisdiction. Acts complained of by the defendants did not
constitute a crime at the time they were committed.
