UNITED STATES v.

DIAZ-CONDE

FACTS:
On December 30, 1915, Bartolome Oliveros and Engracia Lianco accomplished and delivered to
the defendants a contract (named ‘Exhibit B’) which stated that the Oliveros and Lianco had borrowed
from the latter a sum of three hundred pesos (Php 300), and by virtue of the terms of said contract,
Oliveros and Lianco obligated themselves to pay to the defendants interest at the rate of five percent (5%)
per month, payable within the first ten days of each and every month, the first payment to be made on the
January 10, 1916. On May 1, 1916, Act no. 2655 or the Usury Law came into effect. The law stated that
that the legal rate of interest for the loan or forbearance of any money, goods or credits, […] 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. A complaint was filed in the Court of First Instance of the city of Manila on
May 6, 1921, charging the defendants with a violation of the Usury Law (Act No. 2655). Upon said
complaint they were arrested, charged, and pleaded not guilty. On September 1, 1921, the case was
finally brought on for trial. At the end of the trial, with consideration to the evidences cited in court, Hon.
M. V. del Rosario, judge, found that the defendants were guilty of the crime charged in the complaint and
sentenced each of them to pay a fine of P120 and, if they cannot meet their debt obligations, the
defendants would suffer subsidiary imprisonment in accordance with the provisions of the law. From that
sentence each of the defendants made an appeal.
Contention of the State: The lower court, in the course of its opinion, stated that at the time of
the execution and delivery of said contract, there was no law in force in the Philippine Islands that
punishes usury. However, the defendants had collected a usurious rate of interest after the adoption of
the Usury Law in the Philippine Islands (Act No. 2655), Therefore, they were guilty in the violation of that
law and should be punished in accordance with its provisions.
Contention of the Accused:
(a) The contract upon which the alleged usurious interest was collected was executed before Act
No. 2655 was adopted.
(b) The time that the said contract was made (December 30, 1915), there was no usury law in
force in the Philippine Islands.
(c) Act No. 2655 did not become effective until the May 1, 1916, or four months and a half after
the contract was executed.
(d) The said law could have no retroactive effect or operation
(e) The said law impairs the obligation of a contract.
For all of said reasons the judgment imposed by the lower court should be revoked; that the
complaint should be dismissed, and that they should each be discharged from the custody of th e law.

ISSUE
WoN the Usury Law has a retroactive effect in this case.
WoN the law impaired the contract.

RULING
The Supreme Court en banc promulgated on February 14, 1922 its ruling on the case of The
United States vs Vicente Diaz Conde and Apolinaria R. De Conde (G.R. No. L-18208). The court has
decided that the acts complained of by the defendants did not constitute a crime at the time they were
committed. A law imposing a new penalty, 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 of the contract was made must govern its interpretation and application. Laws must be
construed prospectively and not retrospectively. If a contract is legal at its commencement, it cannot be
rendered illegal by any subsequent legislation. If that were permitted, then the obligations of a contract
might be impaired, which is prohibited by Philippine law.
Ex post facto laws, unless they are favorable to the defendant, are prohibited in this jurisdiction.
Every law that makes an action, done before the passage of the law, and which was innocent when done,
criminal, and punishes such action, is an ex post facto law. The Legislature is prohibited from adopting a
law which will make an act done before its adoption a crime, as in the case of Act No. 2655. A law may be
given a retroactive effect in civil action, providing it is curative in character, but ex post facto laws are
absolutely prohibited unless its retroactive effect is favorable to the defendant.
The complaint was therefore dismissed, and the defendants were discharged from the custody of
the law with costs.