U.S. v.

Diaz-‐Conde
42 Phil. 766 (1922)

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
was to be made on January 10, 1916.
On May 1, 1916, Act no. 2655 or the Usury Law came into effect. The Law stated 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.

Issue: WON the Usury law would apply to the appellants considering that they
executed the contract before the passage of said law.

Held:

No. The court held 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 were 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. To make
It applicable in the present Case would Make it an ex-‐ post facto law.