THE UNITED STATES v.
DIAZ-CONDE Contention of the Accused:
42 Phil. 766 (Outline)
G.R. No. L-18208, February 14, 1922 (Resource)
Plaintiff-appellee: THE UNITED STATES
Defendants-appellants: Vicente Diaz Conde and Apolinaria R. De Conde
What happened:
     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.
(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 the law.
Ruling of the Supreme Court:
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.